TMI Blog2016 (3) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... emption. In view thereof, though M/s. Poddar Trust is a prohibited person within the meaning of section 13(3) of the Act, however, the transaction of ₹ 42,69,615/- does not fall within the provisions of section 13(1)(d) read with section 11(5) of the Act. In view thereof, the assessee is entitled to the exemption under section 11 of the Act. - Decided in favour of assessee - ITA Nos. 579/JP/2012 - - - Dated:- 5-2-2016 - SHRI T.R.MEENA, AM AND SHRI LALIET KUMAR, JM For The Revenue: Shri O.P. Bateja (Addl.CIT) For The Assessee : Shri Rajeev Sogani (C.A.) ORDER PER SHRI LALIET KUMAR, J.M. The present appeal filed by the revenue is arising from the order dated 20.03.2012 passed by the learned CIT (A)-II, Jaipur for the A.Y. 2009-10. The revenue has raised the following ground of appeal :- On the facts and in the circumstances of the case, the ld. CIT (Appeals) has erred in Allowing exemption u/s 11 of the I.T. Act, 1961 notwithstanding the fact that assessee trust violated the provisions of section 13(1)(c) and 13(2)(a)/(b)/(g) of the I.T. Act, 1961. 2. The brief facts of the case are that the respondent assessee is a Society is registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13(2)(a)/(b)/(g) in particular and therefore AO has denied the exemption to the assessee and has taken the amount of ₹ 70,01,172/- to the total income of the assessee. 3. Against the order passed by the AO, assessee has filed appeal before ld. CIT (A). The ld. CIT (A) has allowed the appeal of the assessee and has granted the exemption under section 11 of the IT Act. 4. Now the Revenue is before us. 4.1. The ld. D/R for the Revenue relied upon the order of the AO and has submitted that Poddar Trust is a specified person in terms of section 13(3) of the Act and has submitted that the judgments relied upon by the ld. CIT (A) in the matter of Thanthi Trust 239 ITR 502 (SC) and Acme Educational Society 326 ITR 146 (Delhi) are not applicable to the facts and circumstances of the case. He has submitted that the order of the AO is required to be upheld. 4.2. On the contrary, the ld. A/R of the assessee has submitted that the ld. CIT (A) has examined the scope of specified person within the meaning of section 13(3) of the IT Act and has come to the conclusion that Poddar Trust is not a specified person. It was also held that the loan so given was not an investment but wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 13(3) of the IT Act and further that the loans have been given and received from Poddar Trust. Section 13(3) provides as under :- Section 13(3) : The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, namely :- (a) The author of the trust or the founder of the institution; (b) Any person who has made a substantial contribution to the trust or institution [that is to say, any person whose total contribution up to the end of the relevant previous year exceeds (fifty) thousand rupees]; (c) Where such author, founder or person is a Hindu undivided family, a member of the family; (cc) any trustee of the trust or manager (by whatever name called) of the institution]; (d) Any relative or any such author, founder, person,(member, trustee or manager) as aforesaid; (e) Any concern in which any of the persons referred to in clauses (a), (b), (c) [(cc)] and (d) has a substantial interest. Section 13(1) ( c ) provides as under :- Sec. 13(1)(c) : in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof - (i) If such trust or institution has been created or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the preceding sub-clauses. 87 [Explanation.-For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or esta-blished or incorporated with the object of deriving income, profits or gains;] Thus it is clear that a Trust registered under the trust Act in which the family member of the assessee is /are having interest comes within the realm of section 13(3)(b) of the Act and is a prohibited person . Therefore, in our view, the AO was right in concluding that the transaction has taken place between the prohibited person. 5.4 The contention of the assessee that transaction like current account was going on between both the trusts and both the trusts were lending money to each other, in fact goes against the assessee in view of the judgment of Hon ble Delhi High Court in the matter of DCIT vs. Charanjiv Charitable Trust in ITA No. 321 to 323 of 2013, (2014) 233 Taxman 071 (Delhi) wherein in para 25 the identical contentions have been dealt with by the Hon ble High Court and after consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n no defence to the assessee as that would have been a clear case of monies lent or continue to be lent without interest or security. It is only in order to get out of the clutches of the said clause that the assessee appears to have conceived of a device and entered into documentation with APIL to make it appear as if the monies were not lent to APIL, but were given for the purpose of acquiring lands under agreements to sell, for the objects of the trust. This explains why the assessee admitted before the assessing officer in its first letter that it had not taken possession of the lands, but resiled from that position in its second letter, realising its faux par, citing some clauses in the agreements. Taking possession of the lands has not been established as a fact by adducing evidence. 26. The argument of the counsel for the assessee that the CIT (Appeals) and the Tribunal have entered concurrent findings of fact which should not normally be disturbed unless they are perverse is technically correct; however, we are in agreement with the submission of the counsel for the revenue that the findings of the CIT (Appeals) (for the assessment year 2006-07) and the Tribunal are su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is placed anywhere, as in any one's hands for safe-keeping, something entrusted to the care of another. These two expressions have been used in a cognate sense and have to be understood as such. In order to constitute an investment the amount laid down should be capable of any result of any income, return or profit to the investor and in every case of investment, the intention and positive act on the part of the investor should be to earn such income, returns, profit in order to constitute an investment, the monies shall be laid out in such a manner as to acquire some species of property which would bring in an income to the investor. A loan, on the other hand, is granting temporary use of money, or temporary accommodation. The words 'investment', 'deposit' and 'loan' are certainly different. Section 11(5) refers to pattern of investment by the assessee. Section 11(5) was introduced by the Finance Act, 1983, with effect from April 1, 1983, i.e., for and from the assessment year 1983-84. It prescribes the forms and modes of investing and depositing money referred to in section 11(2)(b). Subsequently, new forms and modes have been added. Section 13(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignificant. In view of the order passed by the Commissioner of Income-tax (Appeals) in the case of Nav Bharati Educational Society, Ms. Bansal's allegation with regard to entry scam also does not survive. Consequently, there is no substantial question of law involved in the present appeal and accordingly, the appeal is dismissed but with no order as to costs. 5.5 The reliance of the ld. A/R on the judgment of CIT vs. Maa Vaishnav Education Society, (2013) 38 Taxmann.com 193, so far as prohibited person is concerned ,in our view is not applicable. 5.6 Having held that the Poddar Trust comes within the list of prohibited persons under section 13(3), now we are left to examine the transaction which has taken place between the assessee and the said M/s. Poddar Trust. The AO, after examination has found that the assessee has given a loan of ₹ 42,69,615/- to PMTI College, a unit of M/s. Poddar Trust which is a prohibited person within the meaning of section 13(3) of the Act. In our view, the fact of giving the loan by the assessee trust to M/s. Poddar Trust does not violate section 13(1)(d) read with section 11(5) of IT Act, 1961, as the said loan is neither an investm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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