TMI Blog2017 (9) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... ). The Revenue is unable to point out any distinction on facts or law therein. We therefore decline the instant substantive ground as well. Treating development fund as assessee’s taxable income - Held that:- It is no more in dispute that this assessee is a registered trust(supra). Learned counsel for the assessee takes us to pages 16 to 18 of the paper book indicating it to have utilized the impugned development fund in relevant previous year. A co- ordinate bench in ITO vs. J. D. Tytler School Society (2014 (1) TMI 974 - ITAT DELHI) holds that such a development fund forming part of student fee as utilized in their amenities and welfare is in the nature of capital receipt not assesseable as income. We therefore find no reason to upset CIT(A)’s above extracted conclusion. This fifth substantive ground is accordingly rejected. Expenditure on donation to Delhi Public School as part of expenditure - Held that:- There is again no discussion in assessment order. We however find that hon’ble jurisdictional high court’s decision in Sarla Devi Sarabhai Trust’s case (1988 (3) TMI 53 - GUJARAT High Court) already decides the very issue in assessee’s favour. We therefore affirm the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in considering the investment in fixed assets amounting to ₹ 13,51,02,167/- as applied to Charitable purpose and allowed as deduction from the amount of income. 8. The CIT(A) has erred in law and on facts in allowing the depreciation of ₹ 13360206/- on fixed assets claimed as deduction u/s.11 of the Act, ignoring that benefit of deduction has already been given in the very first year by way of application of income. 3. Learned Departmental Representative refers to Revenue s first substantive ground that this assessee / trust is not registered u/s.12AA of the Act. We find no merit in the instant plea as page 31 of the paper book sufficiently indicates that the DIT(E), Ahmedabad had passed assessee s registration order u/s.12AA of the Act wayback on 27.02.2003. There is no change in facts thereafter suggesting any modification in assessee s status as a registered charitable trust. The Revenue therefore fails in its substantive ground. 4. The Revenue s second and third substantive ground assail correctness of the lower appellate order on law and on facts reversing Assessing Officer s action disallowing /adding rent (s) paid to M/s. Ramesh Prasad Satyanarayan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enka HUF. During the course of appellate proceedings, the appellant has submitted that the total area of the land itself, the investment made by the land owners is not relevant for the purpose of determining the reasonableness of the rent by the appellant Trust because what has been leased as the entire land, includes both N.A. as well as non-N.A. land along with construction. N.A. land has been utilized for the purpose of construction, whereas non-N.A. land has been utilized for the purpose of play-area, garden, etc. which are also part of the school activities. Further, the appellant has submitted that in the case of Smt. Manjula Goenka, the amount which has been spent on construction of the school building is ₹ 1,10,67,812/- and in case of Ramesh Prasad Goenka HUF the amount spent on construction for school building is ₹ 3r56,34,129/- totaling Rs,4,67,01,941/-, the entire building has been constructed by these co-owners and being leased to the appellant Trust for the purpose of school building for the period of 30 years in the year 2004. It is also seen that during the course of assessment proceedings, the appellant has submitted the copy of Valuation Repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial rent is being paid and therefore, the same is considered as excessive. The rent cannot be excessive or otherwise, without comparing with; what is the rent paid without considering the prevailing rent and other circumstantial conditions such as lease period, type of use, period of lease, etc. It is also seen that in the earlier years the rent paid as per agreement has been allowed to the appellant as deduction to the appellant on the basis of same agreement and book value. The AO has not discussed about the lease agreement in his order. The appellant has also submitted that both the persons are assessed to tax on maximum marginal rate and regularly filing return of income. Therefore, I am of the view that there is no diversion of income also, as contended by the A.O. The appellant has further submitted in its submission dated 13/12/2012 that the property had been acquired by the land-owners long back in the year 2003 and thereafter prices of the property has increased many folds and details of the construction has also been provided. The appellant has also relied on the judgment of the Hon'ble High Court of Gujarat m the case of Surat City Gymkhana and submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the location of the house and the fact that no material has been brought on record indicating that the same is excessive, rent paid to the persons covered u/s. 13(3) has been held to be reasonable and accordingly, cancellation of registration by the A.O. has been held to be improper. During the course of appellate proceedings, the appellant has also drawn my attention to the judgment of Hon'ble ITAT, Ahmedabad in the case of Adharshila Education ... Vs Department of Income Tax vide FTA No. 2221/Ahd/2008 dated 30/11/2010, wherein the similar issue has been decided as under: Regarding disallowance out of claim of building rent and bus rent belonging to Adharshila Associates we are of the view that reasonableness of payments in respect of such assets cannot be decided on the basis of rate of interest. Rate of interest in respect of liquid cash is different whereas rental income in respect of building is different. It cannot be equated with interest. The AO should have given example to show that market rate of property situated similarly is lesser. There should be proper comparable cases. It was pointed out in the written submission that similar rent was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) s findings under challenge. The Revenue s second and third substantive grounds are accordingly rejected. 7. Next comes Revenue s fourth substantive ground that the CIT(A) has erred in law and on facts in deleting corpus fund addition of ₹ 94,60,000/- made in assessee s income. Learned Authorized Representative points out that there is no specific discussion in assessment order dated 22.01.2013. He then states that the corresponding computation in page 8 of the above assessment order added the impugned corpus fund amount as assessee s income. The CIT(A) on the other hand holds in para 8.2 that such a corpus is not assessable as taxable income as per case law DIT(E) vs. N. H. Kapadia Education Trust (2012) 20 taxmann.com 702 (Ahd) and ITO vs. Sardar Vallabhbhai Education Society (2012) 26 taxmann.com 174 (Ahd.). The Revenue is unable to point out any distinction on facts or law therein. We therefore decline the instant substantive ground as well. 8. The Revenue s fifth substantive ground seeks to revive Assessing Officer s action treating development fund amount of ₹ 32,69,000/- as assessee s taxable income. We notice herein as well that the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure. There is again no discussion in assessment order. The Assessing Officer has added the impugned sum in page 8 tabulation. The CIT(A) s order accepts assessee s arguments as follows: 11.2 I have considered the facts of the case, assessment order and the submissions made by the appellant. Ground No. 6 is related to disallowance of Donation of ₹ 48,73,831/- given by the Appellant. The A.O. has not discussed in his Assessment Order the reason why he has disallowed the same but it appears that he has disallowed the same treating the Appellant as AOP. As per provisions of sec. ll(l)(a) of the Act, the Trust has to apply its income for the purpose of charitable purposes and there is no bar on a Trust not to donate to another Trust. Donation given to another Trust is tantamount to application of income. The appellant has relied upon the decision of Hon'ble Gujarat High Court in the case of CIT v. Sarladevi Sarabhai Trust [1988] 172 ITR 698, wherein it is held that when a Donor Trust which itself a Charitable trust donates its income to another trust, the provisions of sec. 11(1)(a) can be said to have been met with by such Donor Trust. Accordingly, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new dharamshala was an application of income towards the charitable purposes of the trust . In all the judgments it has been held by the higher authorities that the amount utilized for Requiring Fixed assets is allowable as application of income as per sec. 11(1)(a) of the Act. There are two separate issues one is pertaining to application of income and other is computation of income. In application of income of trust, amount applied for acquiring fixed assets is considered as eligible, therefore this ground of appeal is allowed and AO is directed to allow amount of investment in the fixed assets as part of application of income as per sec. 11(1)(a). 13. Heard both the sides. Learned Departmental Representative quotes case law Lissie Medical Institutions vs. CIT 348 ITR 344 (Kerla) to contend that the CIT(A) had rightly made the impugned disallowance. He however fails to dispute that the same goes contrary to hon ble jurisdictional high court s decision in case of Satyavardhan Patel Hindu Dharamshala Trust (supra). We therefore express our respectful agreement with hon ble jurisdictional high court s decision to affirm the CIT(A) s findings under challenge. 14. The Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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