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TMI Blog2017 (1) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the amount of Rs. 3,33,57,0007- paid by the assessee as advance to M/s Delhi Guest House Pvt. Ltd. (DGHPL) was for charitable purposes, ignoring the fact that the expenditure for conversion of property owned by DGHPL was the responsibility of DGHPL and not of the assessee. 4. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 2. The brief facts of the case are as under: Assessee is a charitable trust set up on 28.07.2004 and was registered under section 12A of the Act. For the year under consideration return was filed by assessee, declaring nil income after claiming exemption under section 11 of the Act. Thereafter the return was processed under section 143(1) on 19.03.2009. Subsequently, the assessment was reopened under section 147, and notice under section 148 was issued to the assessee on 30.03.2011. Ld. AO at the time of issuance of the notice under section 148 was of the opinion that the investment in shares of the trust property is prohibited under section 13 (1) (d) (ii a) of the Act and that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted as per the mandate of section 11 (5), on or before 31st of March 2006. However, said shares were converted in the year 2012, and assessing officer was right in denying the exemption claimed by the assessee under section 11 and 12 of the Act. Ground No. 3 7. She further highlighted that in the balance sheet assessee as on 31.03.2007 had shown under the head other loans and advances, a sum of Rs. 5,76,57,000/-, which included a sum of Rs. 3,33,57,000/- as advanced to Delhi Guesthouse Pvt. Ltd., a company in which assessee was holding a stake of more than 53.36% by virtue of the trust deed, and the balance sum of Rs. 2,39,00,000/- as settlement amount paid to a tenant in respect of immovable property. Ld. DR at this juncture admitted that the revenue has not raised any ground before this tribunal in respect of the advances made to the tenant in respect of immovable property. 8. She submitted that the sum advanced to Delhi Guesthouse Private Ltd., amounts to application of corpus towards non-charitable purposes, and therefore cannot be held eligible for the benefit of exemption under section 11 and 12 of the Act. She thus submitted that assessee cannot claim benefit under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Ltd., decided to pay charges aggregating to Rs. 5,22,48,022/- to convert the property from leasehold to freehold and the share of the assessee in respect of the conversion fee amounted to Rs. 3.33 crores. Ld. Counsel submitted that the said amount was advanced to assessee by one of the executor of the estate of Dr. Bhai Mohan Singh, temporarily which was paid by the assessee towards conversion charges. He vehemently submitted that no part of the corpus or trust property was applied by the assessee for non charitable purposes by making such aforesaid payment. The assessee received the funds from the executor of estate of Dr Bhai Mohan Singh, which was in turn used to discharge the obligation towards the payment of conversion charges to Delhi Guesthouse Pvt. Ltd., It has been submitted by Ld. Counsel that the aforesaid payment was in the interest of assessee as it was a major shareholder in Delhi Guesthouse Pvt. Ltd., and such conversion would enhance the value of the property held by Delhi Guesthouse Pvt. Ltd., which in turn could enhance the value of shares held by assessee in Delhi Guesthouse Pvt. Ltd., He thus submitted that assessee should be allowed exemption of such amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o mention that remand proceedings is an opportunity to AO to make comment on the submission of the appellant before the Appellate Authority as well as on the documents furnished before the Appellate Authority during the course of the appellate proceedings. But, AO has made a report in a very mechanical manner. By virtue of the restraint order of the Hon'ble Delhi High Court, it cannot be said that appellant was holding shares for more than the period and has violated the provisions of Sec. 11(5) read with Sec. 13(l)(d) of the IT Act, as per which he was supposed to dispose off the shares within one year or by the date 31.3.2006, as has been observed at page 4 of the order. In the instant case appellant was prevented to dispose off the shares by virtue of order of Hon'ble Delhi High Court as per which there was restraint so as to dispose off the shares. As soon as Hon'ble Delhi High Court has lifted the restraint by order dated 27.4.2012, appellant has sold its entire shareholding as on 16.7.2012. So, after considering these documents, this is the finding of the fact that there is no violation as per provisions of Sec. 11(5) read with Sec. 13(l)(d) of the IT Act and this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sconceived. Accordingly, payment of Rs. 3,33,57,0007- in form of advance to DGHPL, the Id. AR of the appellant has submitted copy of correspondences which are available at page no. 65 to 71 of the Paper Book. In this regard, it is found that the payment has been for conversion from lease hold to free hold of the property and payment has been made as per details available at page no 71, wherein, it has been mentioned that it is on behalf of Bhai Mohan Singh Foundation towards full and final settlement of their share of conversion charges of the property. The payment has been made vide three cheques dated 29.9.2006, totaling Rs. 3,33,57,000/-. I have gone through the correspondence in this regard, which are the clinching evidence so as to prove that for conversion of property from lease hold to free hold, the appellant trust being a shareholder, has contributed towards share of such charges to the tune of Rs. 3,33,57,000/-. It is further noticed that Executor of estate Dr. Bhai Mohan Singh granted temporary loan of Rs. 3,33,57,000/- to the appellant trust, which was paid by the appellant trust towards conversion charges which cannot be said as payment has been made for non-charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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