TMI Blog2017 (1) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... already been offered to tax in the return of income for the year under consideration and there is nothing further which can be brought to tax in the hands of the assessee’s trust. Coming to the advance advanced to Smt. Madhu Adukia is concerned it is not in dispute that the class rooms were actually constructed in F.Y. 2012-13 out of the said advance, the class rooms were constructed on premises provided by Smt. Madhu Adukia without any charges to Gyan Sindhu Girls college and the advance has subsequently been refunded. The intent of such an advance is clearly for promoting and supporting the girls education and which has been demonstrated through building of class rooms. Merely because the money has been routed through Smt Madhu Adukia, it cannot be said that she has benefitted out of such advances in any manner. Further, there is no income which has been generated in the hands of the assessee’s trust out of such advances which can be brought to tax. AO is directed to allow the exemption u/s 11 to the assessee trust and the additions made by the AO are hereby deleted. - Decided in favour of assessee - ITA No. 903/JP/16 - - - Dated:- 11-1-2017 - Shri Kul Bharat, JM And Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much as the transfer was not direct to the Gyan Sindhu Girls College which might have similar objects , but to the trustee for building rooms on her land. (ii) In respect of advance of ₹ 22,16,000/- to M/s Rajakala Industries Pvt. Ltd. the assessee s submission regarding an amount of ₹ 20 lakhs is acceptable to the extent that it is the opening balance and has already been considered by the AO and the CIT(A) in A.Y. 2011-12 as a violation u/s 13 of the Act. No evidence has been produced by the assessee that the advance was given after ensuring adequate security or adequate interest. (iii) The assessee s submission that the advance was for the objects of the trust is not maintainable as the legislature has provided other methods for helping an organisation having similar objects. 2.1 Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A). The ld. CIT(A) deleted the addition made by the AO by holding that it is seen that the advance of ₹ 20,00,000/- is coming from the last year and the ITAT in assessee s own case for A.Y. 2011-12 has held that the same is for the purpose of the trust. The amount of ₹ 2,1,6,000/- is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant trust has violated the provisions of section 13 of the Act as the same has become infructious in the facts and circumstances of the present case. The AO is accordingly, directed to allow exemption to the appellant trust u/s 11 and the addition made by the AO and confirmed by CIT is hereby deleted. 2.3 It was further submitted that the advance of ₹ 20 lacs was given by the trust to M/s Rajkala Industries Pvt. Ltd on 27.08.2010 as per the understanding dated 16.08.2010 as the trust has entrusted M/s Rajkala Industries Pvt. Ltd to search for a suitable land for construction of Kitchen and start manufacturing meal on pilot basis for one month with the recruited staff , before handing over the operational infrastructure to the trust for further running. The understanding also envisaged that the company was to start the project before the end of the F.Y. otherwise the advance would carry interest @12%. The company vide its letter dated 28.03.2011 after making detailed study recommended not to establish such project as the land was available neither at a suitable nor at affordable rate and therefore the project was dropped. Accordingly, the amount of ₹ 20 lacs with in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading of this proviso, it is evident that where the whole or any part of the relevant income is not exempt u/s 11 or 12 because of the provisions of section 13(1)(c) or 13(1)(d) tax is chargeable on the relevant income or part of the relevant income at the maximum marginal rate . Therefore, in case there is violation of section 13, the entire income of the trust is not liable to tax at MMR but only the relevant part of the income which violates section 13 attracts the MMR. In the present case, even if it is held that there is violation of section 13, the entire income of the trust is not liable to tax at MMR but only the relevant part of the income which violates section 13 attracts the MMR. In the present case, even if it is held that there is violation of section 13 then only the amount of ₹ 20 lacs given to M/s Rajkala Industries Pvt. Ltd. and ₹ 10 lacs given to Smt. Madhu Adukia out of the income of the trust is chargeable to tax at MMR in as much as out of the total income of ₹ 1,46,09,448/-, only ₹ 30 lacs violates the provisions contained in section 13(1)(c) or 13(1)(d). Even this amount cannot be subject to tax in view of the principle of law as deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench which has been passed after taking into consideration the decision of Hon ble Supreme Court in Working Women s Forum and others. 2.8 In respect of advance of ₹ 22,16,000/-to M/s Rajkala Industries (P) Ltd., the assessee s submission regarding advance of ₹ 20 lacs has already been accepted by the AO to the extent that ₹ 20,00,000 is the opening balance at the beginning of the year under consideration and it is only an amount of ₹ 2,16,000/- which pertains to the year under consideration. As far as ₹ 20 lacs is concerned, the same was subject matter before Coordinate Bench in A.Y. 2011-12 and it was held therein that there is no income generated on the said amount of ₹ 20 lacs in A.Y. 2011-12 and there is nothing which can be brought to tax in the hands of the trust in A.Y. 2011-12. Regarding balance amount of ₹ 2,16,000/- which pertains to the year under consideration, the same has already been offered to tax in the return of income for the year under consideration and there is nothing further which can be brought to tax in the hands of the assessee s trust. 2.9 Now coming to the advance of ₹ 17,76,269/- advanced to Smt. Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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