Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

IILM Foundation Versus ADIT (Exemption) And ADIT (E) , New Delhi

2017 (11) TMI 638 - ITAT DELHI

Denying the benefit of exemption u/s. 11 and 12 - appellant had made payment to specified persons within the meaning of Sec. 13(3) in violation of Sec. 13(1)(c) - payment of salary to Mrs. Malvika Rai - Held that:- Mrs. Malvika Rai is related to the Trustee and is being given a hefty salary of ₹ 16,20,000/- p.m. despite the fact that she is just a graduate and the assessee had not furnished any details as to how the educational qualification of Mrs. Malvika Rai is commensurate with the sal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ents who had been sent abroad to pursue higher studies on scholarship being awarded by the trust. No such resolution of the trust has also been placed either before AO as well as Ld. CIT(A). It is futile exercise on the part of the assessee to justify the benefit given to the persons specified u/s. 13. If the conscience of the assessee was clear then why it had not disclosed this fact in the audit report. Hence, there is a clear cut violation of the provisions of section 13 and accordingly, AO a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

refore not exempt. Further the trust is also hit by the provision of Section 13(1)(c). In view of the above, we are of the considered view that action of the Ld. CIT(A) in upholding the action of the AO in treating the scholarship given to Ms. Aarti Rai, as being in violation of provisions of section 13(1)(c) of the Act is correct one and the same does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the ground raised by the assessee. - Assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nce and expansion of the institute. It was held that upto 15% of profit could be considered as reasonable and legitimate. Thus, the Hon’ble Supreme Court of India has observed that the profit rate upto 15% is reasonable for charitable organization. However, in this case it was observed that the profit rate is varying between 44.6% for the assessment year 2006-07 and 48.43% for the assessment year 2007-08. From this it goes to show that the organization is existing for the purpose of profit and n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rt of the assessee to return the money which is lying with it in the form of security deposit, hence, the same cannot be regarded as income of the assessee. But the fact remains that this attitude of the assessee in not returning the security deposit of former students goes to show that it is running the school/ institute on commercial principles. As a charitable institution the assessee should return the money suo-moto after adjusting the dues, but the assessee is not carrying out this exercise .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t assessee is maintaining luxury cars like Toyoto Camry, Hyundai Sonata and Honda Accord and has claimed expenses of ₹ 14,18,836/-. No log book was maintained, which establish that the said cars were being used by the trustees for their own benefit, hence, 50% of such expenditure was rightly upheld by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the same and reject the ground raised by the assessee. - Disallowing scholarship expenses paid to Ms. Aa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

since the assessee has already been disallowed the benefit of section 11 and the income has to be computed as business income therefore the donation of ₹ 37,900/- cannot be regarded as business expenditure and the action of the Ld. CIT(A) is a correct one and therefore, we uphold the same and reject the ground raised by the assessee. - ITA No. 1142/Del/2011, ITA No. 1214/Del/2011, ITA No. 2675/Del/2013, ITA NOS. 2871 and 2872/DEL/2014 - Dated:- 8-11-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mmon, identical and inter-connected, hence, these appeals were heard together and are being disposed of by this common order for the sake of convenience. We first deal with Assessee & Revenue Appeals for the assessment year 2007-08. 2. The grounds raised in Assessee s Appeal for AY 2007-08 read as under:- 1. That on the facts and circumstances of the case, the order, dated 31.12.2010, having been passed by the Commissioner of Income Tax(Appeals) without affording adequate opportunity of bein .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

missioner of Income Tax(Appeals) erred on facts and law in upholding the finding of the assessing officer that payment of salary of ₹ 16,20,000/- to Mrs. Malvika RaiJa.J1tamounts to payment to specified persons within the meaning of Sec. 13(3) in violation of Sec. 13(1)(c) of the Act, despite the fact that the payment made to her was towards he services rendered. 2.2 That the Commissioner of Income Tax (Appeals) erred on facts and in law in observing that the appellant had failed to justif .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in law in alleging that the appellant had not mentioned the name of persons who had been extended similar scholarship facilities. 3.2 That the Commissioner of Income Tax (Appeals) erred on facts and in law in holding that the scholarship amount incurred by Ms. Aarti Rai in UK, was in violation of section 11 (1)( a) of the Act on the ground that exemption is allowed only for charitable purposes in India. 4. The Commissioner of Income Tax (Appeals) erred on facts and in law in upholding the findi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

income of the appellant as a business entity, after holding the activities of the appellant to be non-charitable under section 2(15) of the Act. 5. That the Commissioner of Income Tax(Appeals) erred on facts and in law in not adjudicating the alternative ground raised by the appellant that, assuming without admitting, there were violation(s) of section 13, still exemption under section 11/12 of the Act should not have been denied with respect to the entire income. Without prejudice: 6. While com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

running on commercial principles. 7. While computing income of the appellant as a business entity after denying exemption under sections 11/12 of the Act, the Commissioner of Income Tax (Appeals) erred on facts and in law in: (a) affirming the action of the assessing officer in making ad-hoc addition of repairs and car maintenance expenses amounting to ₹ 7,09,468/- on the round that no log book was maintained by the appellant. (b) failing to appreciate that simply because no log book was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing salary of paid to Mrs. Malvika Rai. 9. While computing Income of the appellant as a business entity after denying exemption under sections 11/12 of the Act, the Commissioner of Income Tax (Appeals) erred on facts and in law in confirming disallowance of donation paid of ₹ 37,900/-. 10. That the Commissioner of Income Tax (Appeals) erred on facts and in law in confirming imposition of interest under section 234B and 234C of the Act. The appellant craves leave to add, alter, amend, or va .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

another family Trust & therefore is violation u/s. 13(3) of the I.T. Act. 2. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 4. The grounds raised in Revenue s Appeal for the assessment year 2008-09 read as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing violation of provisions of section 13(1)(b) of the Act and thereby availing the benefit of exemption u/s. 11 & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e CIT(A) justified in allowing the assessee which has violated section 13(1)(c) w.r.t. section 13(3) of the Act? The same issue for the previous assessment year 2007-08 has been decided in favour of the revenue by the Ld. CIT(A). 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing exemption u/s. 11(1)(a) and 13(3) for usage of vehicles and other assets by trustees or specified persons u/s. 13(3) without assessee providing any evidence in form of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lowing violation of provisions of section 2(15) and 13(1)(c) of the Income Tax Act, 1961 and thereby availing the benefits of exemptions u/s. 11 & 12 without considering the fact stated by the AO and giving reasons for the same. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of salary paid to Ms. Malvika Rai, which is excessive in nature and not commensurate to her education, experience and duties and has bee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ime of hearing. ASSESSEE & REVENUE APPEALS (A.Y. 2007-08) 6. The brief facts of the case are that return for the assessment year 2007-08 was filed on 31.10.2007 disclosing NIL income. The case was selected for scrutiny as per norms and notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred as the Act) was issued on 30.7.2008 and in response to the same and subsequent notices including notice u/s. 142(1) of the Act, the AR of the assessee society appeared from time to time and s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stitutions were operated by the assessee with a clear profit motive, and as business organization instead of a charitable one; the founders and controlling members have appropriated certain part of surplus fund for furtherance of their own need. In view of this, AO held that the activities of the assessee are held to be not charitable within the meaning of section 2(15) of the I.T. Act, 1961 from the nature of actual activities, accounts and transactions and as such the assessee is not entitled .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tly allowed the appeal of the assessee. Aggrieved with the impugned order, the Assessee as well as Revenue are in cross appeals before the Tribunal on some of the issues mentioned in their respective appeals. 6. Ld. Counsel of the assessee has filed a copy of Synopsis in support of his arguments and relied upon the decisions mentioned in the Synopsis and also the decision of the Hon ble Supreme Court of India in the case of Charanjiv Charitable Trust vs. DIT(E), New Delhi reported in [2014] 52 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Facts in brief are that the appellant is a charitable trust settled vide Trust Deed dated 1.02.2001 for the predominant charitable object of imparting education. The appellant-trust was initially declared/setup in the name of Ram Krishan Kulwant Rai Charitable Trust and subsequently, the name of the trust was changed to IILM Foundation vide amendment of Trust Deed dated 26th July, 2007. In furtherance of its predominant object of imparting education, during the year under consideration, theappe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the year under consideration, the appellant filed return of income declaring Nil income on 3151 October, 2007 after claiming exemption under sections 11112 of the Income Tax Act, 1961 ( the Act ). • Assessment has, however, been completed vide order dated 16th November, 2009 under section 143(3) of the Act, assessing the income of the appellant at ₹ 5,96,90,549. In the assessment order, the appellant has primarily been denied exemption claimed under sections 11112 of the Act and asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of being heard to the appellant, in gross violation of principles of natural justice. • In support of the aforesaid, your Honour's kind attention is invited to the following: a) In the assessment order, the assessing officer alleged that the appellant violated the provisions of section 13(1)(c) of the Income-tax Act, 1961 ( the Act ) on account of payment of remuneration to Mrs. Malvika Rai, without affording any opportunity of being hear a to the appellant [Issue specifically raised vi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ions of section 13(1)(c) of the Act on account of payment of remuneration and scholarship to Ms. Aarti Rai, without affording any opportunity of being heard to the appellant, in violation of principles of natural justice [Issue specifically raised vide grounds of appeal Nos.3 to 3.2]. c) The assessing officer, while making addition on account of refundable security deposit, proceeded to draw adverse inference on the basis of details available on record, without affording any opportunity of being .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or admission of additional evidences in support of grounds of appeal Nos. 2 to 2.2. It is respectfully submitted that for reasons elaborately set out in the said application; the additional evidences now being filed before-the Hon'ble bench may kindly be admitted and taken into consideration in terms of Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. Emphatic reliance in this regard is placed on the decision of the jurisdictional Delhi High Court in the case of CIT vs. Text Hundr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evidence. The relevant observations of the Court are reproduced hereunder: 13. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. ' The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect. (emphasis supplied) • Your Honour's kind attention in this regard is also invited to the decision of the Hon'ble Delhi High Court in the case of CIT v. Virgin Securi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

39;remand report from the AO. While submitting his report, the AO had not objected to the admission of the additional evidence, but had merely, reiterated the contentions in the assessment orders. It is only after considering the remand report, the CIT (A) had admitted the additional evidence. It cannot be disputed that this additional evidence was crucial to the disposal of the appeal and had a direct bearing on the quantum of claim made by the assessee. Plea of the assessee which was taken bef .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the appeal. In the facts of this case, therefore, we are of the opinion' that on this aspect, no substantial question of law arises. [Emphasis supplied] • It has similarly been held in the following decisions: CIT vs. Hewlett Packard India: 314 ITR 55 (Del) CIT vs. Chandra Kant Sahu Bhai: 202 Taxman 262 (Del) CIT vs. Betterways Finance: ITA 995 of 2009 (Del) CIT vs. Chittosoh Motors: 11 taxmann.com 81 (P&H) Atlas Cycle Industries Ltd vs. CIT : 133 ITR 231 (P&H) Jatia Investment .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that payments were made in violation of the provisions of section 13(1)( c) of the Act. Before drawing adverse inference conclusion, the assessing officer never allowed any opportunity of being heard to the appellant, nor confronted the appellant with any such inference sought to be drawn by him. Before the CIT(A), the appellant submitted following brief profile alongwith justification for paying salary to Mrs. Malvika Rai [refer pages 86-87 of paper book]: Re: Salary paid to Mrs. Malvika Rai Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

larly involved in the interaction with various academicians, educationists, Vice Chancellors and faculties of several Universities and Management Institutes of USA , UK and other countries, with a view to upgrade the level of providing education in the various educations institutions of which she is a part. Furthermore, it is respectfully submitted that Mrs. Malvika Rai, after completing her Graduation from Jesus & Marry College, Delhi University, has been actively involved in the field of e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

society. The CIT(A) however decided the issue against the' appellant observing asunder: 9.2 The submission given by the appellant and the objections of the assessing officer has been perused. It is seen that Mrs. Malvika Rai is related to the trustee' and is being given a hefty salary of ₹ 16.20,000 p.m. despite the fact that she is just a graduate and the appellant had not furnished any details as to how the educational qualification of Mrs. Malvika Rai is commensurate with the s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

8377; 16,20,000 on per month basis, whereas the fact was that the said amount represented salary paid to Mrs. Malvika Rai annually and not monthly. • Further, the CIT(A) upheld the above disallowance primarily oil the ground that he appellant has not furnished any details as to how the educational qualification of Mrs. Malvika Rai is commensurate with the salary which she is drawing. • In this regard, it is respectfully submitted that the appellant had submitted before the CIT(A) the p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h arya Director 90,000 June, 2007 1,20,000 December , 2008 1,20,000 February, 2009 Mrs. Sapna Popli Assistant Director 1,01,166 October, 2007 1,35,331 January, 2009 1,31,786 February, 2009 Mrs. Sandhya Prakash Principal, Banyan Tree School 85,670 October, 2007 On the basis of the aforesaid, it was submitted that the aforesaid senior faculty members of the appellant were getting almost equal salary/ remuneration. It was further submitted that the aforesaid persons were merely looking after a part .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere that the CIT(A) did not take into consideration the aforesaid details/ information filed by the appellant, during the appellate proceedings, to substantiate the fact that Mrs. Malvika Rai had actually rendered services to the appellant. The CIT(A) has, however, observed that the appellant was unable to show that the salary paid was commensurate with the educational qualification of Mrs. Malvika Rai. In this regard, it is respectfully submitted that the only requirement in law is that the sal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ai to the appellant and / or such services were not commensurate with the salary paid, if the same is received against the experience of over two decades of Mrs. Rai in the educational field. • To further. buttress the aforesaid contentions, the appellant has placed on record the following additional evidences under Rule 29 of the ITA T Rules, to demonstrate actual rendering of services by Mrs. Malvika Rai :- Copies of extracts from the brochure of IILM -UBS (refer page Nos. 1-4 @ 2); - Com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ons. The law only provides that if payment is made to persons mentioned in section 13(3) of the Act in respect of services rendered by such persons, the same should not be unreasonable. Emphatic reliance in this regard is placed on the decision of Hon'ble Delhi High Court in the case of Pariwar Seva Sansthan: 254 ITR 268 (Del) (refer pages 38 - 39 of Paper Book of case laws). In that case, the Revenue filed appeal against the decision of the Tribunal holding that since payments made to parti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in law the Tribunal was correct in allowing the benefit under section 11 of the Income Tax Act, 1961 without appreciating that the assessee had violated the provisions of section 13(I)(c) and 13(1)(d) of the Act? 2. We find that the Commissioner (Appeals) decided in favour of the assessee on all aspects in the revenue's appeal for the assessment year 1995-96. The Tribunal affirmed conclusion of the Commissioner (Appeals) with the following observations: We have considered the rival submissio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. It was in existence since 1981 and it was allowed exemption under section 11 of the Act in earlier years. The reasons given for refusing exemption under section 11 by the Assessing Officer for the assessment year in question have been given hereinbefore. These reasons were payment of salary, rent, etc., to Mrs. Sudha Tewari, Chief Executive Officer and Project Coordinator, rent of the house to Mr. G.K. Tewari, husband of Mrs. Sudha Tewari, loan to Tyagi Foundation and expenditure incurred on c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A). On consideration of the materials on the file, the past record of the society, the year to year services rendered by Mrs. Sudha Tewari from its inception, we are satisfied that the salary, rent, etc., paid to her was reasonable and was not excessive and the ld. CIT(A) was justified in rejecting these as not valid grounds for rejecting the claim of exemption under section 11 of the Act. ……….. …….. 3. For the assessment year 1996-97, the assessee primarily ch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

muneration/ salary/ allowance, etc., to parties covered under section 13(3) are for the services rendered, there is no benefit so as to hold violation of section 13 (1 )( c) of the Act, It has further been held the onus is on the Revenue to prove that the payment made to the persons specified in section 13(3) of the Act is unreasonable by placing on record the material to show the market value, the services rendered and how the payment made is excessive and unreasonable:- ITO vs. Virendra Singh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o show how the remuneration! payment made is excessive and reasonable. * Pertinently, the CIT(A) in the appellant's own case for assessment years 2008-09 and 2009-10 held that there is no violation of section 13(1)(c) of the Act, after taking into consideration the entire material! evidences placed on record: - CIT(A) for AY 2008-09 - refer pgs. 1-31 of PB of Case Laws @ 17-22,31 CIT(A) for A Y 2009-10 - refer pgs. 32-37 of PB of Case Laws @ 36-37 • It is also pertinent to note that eve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he contention of the Ld. DR that clause No. 28 of the Trust Deed (refer page 9 of the Paper Book) prohibits payment of remuneration, it is submitted that the said clause only prohibits any payment in the capacity of Trustee; simpliciter. There is, in fact, no payment of remuneration! salary for services rendered to the trustees in the capacity as such. On the contrary, payment has been made to Ms. Malvika Rai for rendering services in various capacities mentioned supra. It is reiterated that so .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by her to the institution. Apart from the salary, the appellant gave scholarship of ₹ 13.36 lacs to Ms. Aarti Rai for pursuing higher education, as part of arrangement to engage her after pursuing the education for rendering services to the appellant-trust. • The facts relating to the aforesaid, as pointed before the CITCA) [refer pages 88-89 of paper book] are as under: • Ms. Aarti Rai was first appointed in July'2003 in IILMUBS. Thereafter, she worked in World School, Gur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

subject to the condition that these students would serve the institution, for a minimum period of 5 years after completion of their studies abroad, at reduced salary which would be decided by the Director of the Institute. B. Scholarships to Employees/Faculties for Higher Studies Scholarships are given to the employees of the appellant who intends to pursue higher studies from abroad, Such scholarships are provided subject to the condition that these employees would serve the institution, after .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rked Honorary for the appellant. On perusal of the aforesaid, it will be kindly appreciated that the aforesaid scholarship paid to Ms. Aarti Rai is very much justified and not at all unreasonable/ excessive and cannot, in any manner, be considered as giving of any undue benefit to her by the appellant. CIT(A)'s findings While upholding the order of the assessing officer, the CIT(AJ held that the appellant failed to mention the name of persons who has been extended similar scholarship and als .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

milar sponsorships to various other faculties like Ms. Meena Bhatia and Ms. Sangeeta Yadav, who are not persons specified under section 13(3) of the Act, for upgrading their educational skills, which further supports the contention of the appellant that scholarship is given to aspiring faculty members. On perusal of the aforesaid, it will kindly be appreciated' that there is no violation of section 13(1)(c) of the Act on account of payment of remuneration and scholarship to Ms. Aarti Rai. &b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n any case, payment of expenditure outside India would not result in violation of section 13(l)(c) of the Act, as alleged by the lower authorities. Further, the allegation of the Ld. DR! AO that payment made to Ms. Aati Rai was not disclosed, is, it is .submitted; factually incorrect inasmuch as scholarship expenditure was clearly declared as a separate line 'item in the Income and Expenditure Account (refer page 50 of Paper Book). For the aforesaid reasons, it is respectfully submitted that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ard to the profitability of the immediately preceding assessment year 2006-07. In this regard, it is submitted that while coming to the aforesaid conclusion, the assessing officer failed to notice. that -the appellant, in fact, applied 92.83% of its income for charitable purposes during the year under consideration (refer page 52 of the paper book). Kind attention is further invited to the following table reproduced in the order of the CIT(A) for assessment year 2008-09 to demonstrate the positi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der acquisition of fixed assets and other capital expenditure, which were shown in the statement of utilization of income filed alongwith the return of income, as application of income for charitable purposes, contrary to the settled legal position that amount spent towards capital expenditure also tantamount to application of income for charitable purposes, as has been held in the following decisions: S. RM M.CT.M Tiruppani Trust vs. CIT: 230 ITR 637 (SC) [refer pg. 240-243 of case law PB] St. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, the conclusion drawn by the AO/ CIT(A) on the basis of the profits, without taking into consideration capital expenditure incurred for charitable purposes, is incorrect and legally unsustainable. As regards the allegation of the assessing officer that there is no iota of evidence of charitable intent of the appellant, and that the appellant has been catering only to the elite class of the society, and that nothing has been submitted to show that poor/ EWS category of students were given conces .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in this regard, may be made to the following decisions: • CIT vs. Krishi Utpadan Mandi Samiti, Purva, Unnao: 231 CTR 505 (All.) • CIT vs. Surji Devi Kunji Lal Jaipuria Charitable Trust (No.1): 186 ITR 728 (All.) • Hiralal Bhagwati vs. CIT: 246-ITR 188 (GJlj.) • Gaur Brahmin Vidya Pracharini Sabhavs .. CIT: 129 TTJ 627 (Del) [refer pg. 211-220 @219 of case law PB] • Indo American Society vs. ADIT: 96 ITD 61 (Mum.) [refer pg. 221- 225 @224 of case law PB] • St. Don Bo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(Uttarakhand), it was held that the society was not entitled to exemption under section 1O(23)(iiiad) as there was surplus in its account books after meeting all expenses incurred towards imparting education and it had invested said surplus in fixed assets like furniture and buildings with a view to expand institution and to earn more income. • On perusal of the aforesaid, it will kindly be noticed that the CIT(A) relied upon the decision of the CIT vs. Queen Educational Society: [2009] 17 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on the activity of education primarily for educating persons, the fact that it makes 'surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit [refer para 11 on page 258]; (b) elaborately dealt with the decision of the Uttarakhand HC and specifically reversed the said decision [refer para 19 & 20 on. page 260]; (c) concurred with the decisions of the Delhi He in the case of Lawrence Educati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CIT: 372 ITR 699 (SC) - American Hotel Lodging Association Education Institute v. CBDT: 301 ITR 86 (SC) - CIT v Delhi Kannada Education Society: 246 ITR 731(Del.) - Tolani Education Society v. Dy. Dl'I'(Exemptions)- 351 ITR 184 (Born.) - (approved by SC Queen's Educational Society v CIT in 372 ITR 699) Shree Karndar Education trust v, ITA: 243 Taxman 76 (Guj.) In view of the aforesaid, it is respectfully submitted that the AO/ CIT(A) erred in holding that the appellant was not entitl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uld have been denied only to the extent of expenditure/ income to the extent of alleged violation under section 13 of the Act, for the reasons elaborated hereunder.- • Section 13 of the ACJ spells out certain circumstances in which. the exemption provided under sections 11/12 will not be available. Further section 164(2) and 164(3) of the Act reads as under: [(2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. (3) In a case where the relevant income is derived from property held under trust in part only for charitable or religious purposes or is of the nature referred to in sub-clause (iia) of clause {24) of section 2 or is of the nature referred to in sub-section (4A) of section 11, and either the relevant income applicable to purposes o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r section 1 J)as if such part (or such part as so reduced) were the total income of an association of persons; and (b) the tax on that part of the relevant income which is applicable to purposes other than charitable or religious purposes, and which is either not specifically receivable on behalf or for the benefit of anyone person or in respect of which the shares of the beneficiaries are. indeterminate or unknown, at the maximum marginal rate. ………………&h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

13(3) of the Act. • However, the section categorically provides that tax shall be charged on the 'relevant income' or 'part of relevant income' which has forfeited exemption at the maximum . marginal rate. Thus, on a conjoint reading of section 13(1) and section 164 of the Act, it may be observed that taxability of the income of an organization forfeiting exemption under section 13(1)© or 13(1)(d), shall be charged at maximum marginal rates of tax only on that part of i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Act, it may be observed that taxability of the income of an organization forfeiting exemption under section 13(1)(c) or 13(1)(d), shall be charged at maximum marginal rates of tax only on that part of income which has forfeited exemption. Thus, where the trust contravenes the provisions of section 13(1)(c) or (d) of the Act, the maximum marginal rate will apply only to that part of the income which has forfeited exemption. Further, the language of section 13(1)© and (d) also support .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to specified persons. Your Honour's kind attention 10 this regard is invited to Circular No. 387 dated] 06.07.1984 [(1985) 152 ITR (Sat.) 1 at 20) which clarifies the aforesaid position:. The relevant extracts of the said circular has been reproduced as under: 28. 6. It may- be, noted that new sub-section (l A) inserted in section 161 of the Income-tax Act, which provides for taxation of the entire income received by trusts at the maximum marginal rate is applicable only in the case of priva .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t in regard to investment pattern or use of the trust property for the benefit of the settlor, etc., contained in section J3(l)(c) and (d) of that Act, the said rate will not apply to the business profits of such trusts which are otherwise chargeable to tax. In other words. where such a trust contravenes the provisions of section 13(1)(c) or (d) of the Act, the maximum marginal rate of income-tax will apply only to that part of the income which has forfeited exemption under the said provisions. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

benefit under section 11 would not be available only to the extent of application of income or property for the benefit of person referred to in section 13(3) of the Act. The same could not, however, the Tribunal further held, result in total denial of exemption under section 11 of the Act. The pertinent observations of the Tribunal read as under: 8. We have considered the rival submissions. Section 13 operates as an exception to section 11 of the Act. Section 13 treats only the difference betw .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er the rent charged by the assessee from its sister concern was adequate rent ( emphasis supplied). Further appeal preferred by the Revenue against the aforesaid decision of the Tribunal has been dismissed by the Delhi High Court in the case reported as DIT V. Span Foundation: 178 Taxman 436 [refer pages 121- 122 of Case Laws PB]. • You Honour's kind attention, in this regard, is also invited to the decision of the Calcutta High Court in the case of Birla Vidhya Vihar: 136 ITR 445 where .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tinently, SLP filed by the Revenue against the aforesaid judgment of the High Court has been dismissed by the Hon'ble Supreme Court in SLP No. 22223 of 2015 (Refer page 116 of case laws paper book). • Similarly, the Hon'ble Madras High Court in the case of CIT vs. Working Women's Forum: 365 ITR 353 (Mad) (refer pages 117-119 @ 118 of Case Law Paper book) held that on account of violation of section 13 (1) entire exemption under section 11 of the Act cannot be denied. SLP filed b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Pages 131-133 @ 132 of Case law paper book] Manockjee Cowasjee Petit Charities vs. DIT(E): 148 TTJ 181 (Mum. TM) [refer Pages 134-152 @ 148, 151 of Case law paper book] ACIT vs. Idicula Trust Society: 52 SOT 1 (Del) • ..... .Jamsetji Tata Trust vs. JDIT (Exemption) ITAT : 161 TTJ 742 (Mum) [refer Pages 173 193 @188 of Case law paper book] Reliance placed by the Ld. DR on the decision of the Hon'ble Delhi High Court in the case of DIT (Exemption) v. Charanjiv Charitable Trust: 223 Taxman .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urt has been pleased to admit SLP filed by the assessee against the aforesaid decision of the Hon 'ble High Court, which is reported in 228 Taxman 58 (SC); c) Thirdly, the Hon'ble High Court has not taken into consideration its earlier decision in the case of Span Foundation (supra) wherein the Hon'ble Court affirmed the decision of the Tribunal holding that in case of violation of section 13, entire exemption under section 11 of the Act cannot be denied; d) Fourthly, the Hon'ble .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

]. e) Fifthly, the Hon'ble Karnataka High Court and Hon'ble Madras High Court after taking into consideration circular issued by the Board held that the entire exemption cannot be withdrawn on account of violation under section 13 of the Act and against the said decisions SLP filed by the Revenue stands dismissed by the Hon'ble Supreme Court [referred supra]. For the aforesaid cumulative reasons, it is submitted that reliance placed by the Ld. DR on the decision of the Hon'ble De .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nds of appeal Nos. 1 to 5, it is submitted as under: • In this ground, the appellant has challenged the addition of ₹ 34,41,987 made by the assessing officer out of the security deposit refundable to the students, which is unsustainable for the reasons stated as under: The appellant received refundable security deposit from the students taking admission in various institutes/ schools run by the appellant. As and when the student leaves the institute/ school and, clears all the dues an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

efundable security HDFC Bank Expense Expense 22,75,226 Student Security 1999-2002 4,19,564 Student Security 2001-2004 8,65,734 Source and nature unexplained Total 35,60,524 Less: Miscellaneous income shown 1,18,537 Understatement of income 34,41,987 The assessing officer, failed to appreciate that debit in the student security account aggregating to ₹ 22,75,226, which has been treated as income, were, in fact, repayment! adjustment out of the student security amount. The assessing officer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

security deposit at any time after leaving the school. • The CIT(A) held that although the appellant's 'obligation to - refund-the above security deposits exist, but since the appellant did not refund the same, suo-motu, the appellant was running on commercial principles. • The aforesaid observations of the CIT(A) are contradictory and without judicious appreciation of the facts of the case inasmuch it has not been appreciated that appellant was under an obligation to refund t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

enged ad-hoc disallowance ₹ 7,09,468, being 50% of the maintenance and fuel expenses on cars amounting to ₹ 14,18,936, on the ground that log books were not maintained by the appellant. • It is submitted that the aforesaid expenses were incurred in respect of the three cars, being Honda Accord, Camry and Sonata owned by the appellant, which were utilized by officials of the appellant in order to discharge various official duties. During the course of assessment proceedings the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is placed on the following decisions wherein it has been held that no ad-hoc disallowance could be made by the assessing officer out of expenditure- claimed by the assessee: - Friends Clearing Agency V. CIT: 332 ITR 269 (Del) [refer Pages 303-306 @-305/ para 10 of case law paper book] - Dwarka Prasad Agarwal v. ITO:_ 52 ITD 239 (Cal) [refer Pages 312-316 @ 31-61 para 15 of Case law paper book]. , _ - Mahendra Oil Cake Industries Pvt. Ltd; v, ACIT: 55 TTJ n 1 (Ahd.) ACIT v. Amtek Auto Ltd.: 112 T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

huge respect and substantial demand in the education sector. To attract and retain good faculty, it is thus, necessary for the appellant to make available good resources for discharging official duties. • The CIT(A) apart from upholding the findings of the assessing officer also held that since no log book was maintained by the appellant, it is therefore inferred that the same has been used by the trustees of the appellant for their personal benefit. In this regard, it is submitted that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctures and surmises is erroneous and is liable to be set aside. Re: Ground of Appeal No.8 • The assessing officer, in view of findings given in the context of payment of salary to Mrs. Malvika Rai and also scholarship expenses of Ms. Aarti Rai, proceeded to disallow the same while computing the income of the appellant- holding that such expenses were attributable to the members of the Rai family. • The aforesaid action of the assessing officer, as upheld by the CIT(A), is erroneous and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bmitted by the Ld. Counsel of the Assessee as under, with regard to ITA No. 1214/Del/2011 (AY 2007-08) (Revenue s appeal) :- • The .assessee-respondent seek to place on record synopsis in supplement to the arguments addressed during the course of hearing before the Hon'ble Bench. • Facts in brief have already been set out in the synopsis filed in the assessee's appeal, which are not repeated here for the sake of brevity. • The assessee's ground-wise contentions are bri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ues are-discussed hereunder: Re (a): Payment of ₹ 2.72 cr for purchase of land • As stated in synopsis filed in assessee's 'appeal, during the year under consideration, the assessee was running the following three schools: (1) Banyan Tree World School at Gurgaon. (2) IILM Under Graduate Business School at Lodhi Road. (3) IILM Early College at Lodhi Road. Apart from the aforesaid, the assessee was also contemplating setting up institute under the name and style of IILM Academy .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aforesaid two separate and independent transactions of payment for purchase of land for its own purpose and payment of loan to RKSCT and incorrectly held that the assessee had made payment of ₹ 2.72 crores to WBHIDCO, Kolkata for acquisition of land in the name of IILM Academy of Higher Learning being run by RKSCT. • As stated above, the aforesaid, for thepurpose of setting up institute in the name of IILM Academy of Higher Learning at New Town, Kolkata the assessee purchased land fr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

B @page 47 of the paper book]; (c) The amount due to WBHIDCO was shown as liability [refer Schedule A @ pages 48 of the paper book]. • It will thus, kindly be appreciated that payment of ₹ 2. 72 crares for purchase of land to WBHIDCO, was, in fact, made for acquisition of land by the assessee itself and was not made on behalf of RKSCT, as incorrectly inferred by the assessing officer. • The contention of the assessing officer that the assessee had utilized funds for acquiring ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssing officer. The said loan was received back by the assessee within the year under consideration. • Pertinently, 'RKSCT' is also a charitable trust engaged primarily in the field of education activities and duly registered under section 12A of the Act. Kind attention, in this regard, is invited to the following: Copy of registration certificates under sections 12A and 80G the Act issued to RKSCT [refer pages 134-137 of the paper book]; - Trust Deed of RKSCT [refer pages 126-133 @1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntly held that giving of loan one charitable trust to another charitable trust amounts to application of income for charitable purposes- DIT(E) vs. Pariwar Sewa Sansthan: 254 ITR 268 (Del.) [refer pages 38 - 39 of Paper Book of case laws]. DIT (E) vs. Acme Educational Society: 326 ITR 146 (Del.) [refer pages 373 - 377 of Paper Book of case laws- II]. • It may also be pertinent to mention here that donations given by the assessee to RKSCT in the earlier years has been allowed as application .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ITR.913 (Cal.) - CIT vs. Shri Ram Memorial Foundation : 269 ITR 35 (Dei.) '.' - DIT (E) vs. Bagri Foundation: 233 CTR 538 (Del.) - CIT vs. Nirmala Bakubhai Foundation: 226 ITR 394 (Guj.) - CIT V. HPS Social Welfare Foundation: 235 CTR 330 (Del.) - ITO vs. RKKR Foundation: ITA No. 253/Luc./09(Luck.) • Moreover, it is further respectfully, submitted that even otherwise RKSCT, being a charitable trust, could not be regarded as a person falling within the definition of specified person .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stees (refer Sarladevi Sharabahai Trust vs. CIT 172 ITR 698 (Mad.) As regards the so called violation of section 11(5) of the Act on account of non-investment / deposit of funds in the modes prescribed in the said section, it is respectfully submitted that: (a) the aforesaid requirement is only applicable to income accumulated under section 11 (2) of the Act (i.e., accumulation on account of nonapplication to the extent of 85%), which is not the present case since during the year under considera .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssions and relied upon the decision of the Hon ble Delhi High Court in the case of DIT(E) vs. Charanjiv Charitable Trust reported in [2014] 43 taxmann.com 300 (Delhi). The contents mentioned in the Written Submissions are reproduced hereunder:- 1. It is undisputed that i) Shri Kulwant Rai is founder{setter} of the Trust. He is also life time Trustee by virtue of clause 7{e} of the trust. By virtue of clause 7{c} of the Trust, he has all the powers not only regarding appointment and terms and con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ified persons' u/s 13{3}. iv) As per clause 30 of the trust deed, no expenditure outside India is allowed without prior approval of CBDT. v) No approval (prior or otherwise) has been taken for spending the trust money for payment of fee of Ms. Aarti Rai to London School of economics and stay charges at London(UK). 2. There was attempt to conceal the vital information regarding spending the trust money for payment of fee of Ms. Aarti Rai to London School of economics and stay charges at Londo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e-K. ii) As per Report in form lOB, there are specific columns (nos. 3,4 and 8)(ref. page # 43/44 of PB) for reporting expenditure to or for benefit of persons specified uls 13(3). However, negative answer has been mentioned therein to show that no such expenditure is made. iii) Last para on page # 12 of the assessment order shows that only minimum information was provided in this respect and only name 'Aarti' was disclosed and no further information was provided. In fact AO had to guess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed for objects of the trust and given as a loan, exemption u/s 11 and 12 is not available. 3.3 It is stated that the loan is given for 'purpose' of school building but no supporting evidence is furnished. 3.4 In the trust deed, there is no clause of extending loan. The reliance of assessee on 'assistance' is far-fetched. 3.5 As per clause 5 (a) (iii) of the RK & Sons Charitable trust is having objects to open, found (sic), establish, equip, finance, assist, maintain, or contr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot provide definite link of the land in the books with the land in question i.e. taken from WBHIDCO Ltd. at Kolkata. 6. As regards to employment and remuneration to Smt. Malvika Rai and Ms. Aarti Rai and scholarship to Ms. Aarti Rai, it is submitted that even providing employment and selecting for any kind of scholarship, in today's scenario is a benefit. It is not the case of the assessee that these employment and scholarship were provo ed by open competition. 7. Regarding remuneration, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he post and resolution for creation and filing of the said post is produced. The trust has chairman and other trustees to look after the affairs of the trust. As per the trust deed their services or supposed to be without any remuneration. (ref: clause 28 of the trust deed- page #9 of PB). 9. Provision of income tax act as well as proprietary demands transparency, 'arms length approach' is to be adopted in dealing with persons covered u/s 13(3) and the establishment connected to such per .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ure and therefore needs no adjudication. 7.2 Apropos ground no. 2 to 2.2 raised in Assessee s appeal is concerned, we find that Mrs. Malvika Rai is related to the Trustee and is being given a hefty salary of ₹ 16,20,000/- p.m. despite the fact that she is just a graduate and the assessee had not furnished any details as to how the educational qualification of Mrs. Malvika Rai is commensurate with the salary which she is drawing. Thus the Ld. CIT(A) was correct in upholding the action of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nvoked the provisions of section 13(1)© and observed that the trust had granted scholarship of ₹ 13.36 lakhs to Mr. Aarti Rai for pursuing a course in London School of Economics and the assessee also could not furnish the details of the expenditure incurred on her stay in UK. The details regarding the payment of scholarship of to Ms. Aarti Rai were also not disclosed and it was only after the AO asked the detail of the persons to whom scholarship had been paid that the name of Ms. Aar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is a clear cut violation of the provisions of section 13 and accordingly, AO as well as Ld. CIT(A) has rightly denied the benefit of section 11. We note that scholarship given to Ms. Aarti Rai has been incurred in foreign currency and has been paid in UK i.e. to say the application of money has taken place outside India. For claiming exemption u/s. 11 the application of funds has to take place within India. Otherwise the approval of the Board is required which can grant exemption on the facts o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion of the Ld. CIT(A) and reject the ground raised by the assessee. 7.4 Apropos ground no. 4 to 4.2 raised in Assessee s appeal is concerned, which is relating to upholding the finding of the AO that the assessee exists for the sole purpose of profit making and not for the purpose of charity, we find that after the profit and loss A/c is prepared according to normal business practice it is observed that the profit margin of the assessee is 44.6% for the asstt. year 06-07 and 48.43% for the asstt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

licies, etc. The Court based on an earlier landmark decision by the Supreme Court in TMA Pai Foundation case held that every institution is free to advise its own fee structure subject to the limitation that there can be no profiteering and no capitation fee charged directly or indirectly, or in any form. The Court further held that no profiteering does not imply that the institutions cannot have reasonable surplus for future sustenance and expansion of the institute. It was held that upto 15% o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rightly upheld the action of the AO by observing that assessee exists for the sole purpose of profit making and not for the purpose of charity, which does not need any interference on our part, hence, we uphold the same and reject the ground raised by the assessee. 7.5 Apropos ground no. 5, relating to not adjudicating the alternative ground raised by the assessee is concerned, as we have alreadyup the action of the Ld. CIT(A) in the preceding paragraphs that there is clear cut violation of sect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

02. Since the assessee has not refunded the security deposit therefore he treated the amount which was still in possession of the assessee as its income under the head miscellaneous income. It is true that the liability to refund the money does not cease and it is obligatory on the part of the assessee to return the money which is lying with it in the form of security deposit, hence, the same cannot be regarded as income of the assessee. But the fact remains that this attitude of the assessee in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e benefit of section 11 of the Act. In view of the above, we uphold the action of Ld. CIT(A) in affirming the addition of ₹ 34,41,987/- out of refundable security deposit of the students and reject the ground raised by the assessee. 7.7 Apropos ground no. 7, relating to affirming of action of AO in making adhoc addition of 50% of repairs and car maintenance expenses amounting to ₹ 7,09,468/-, on the ground that no log book was maintained by the assessee is concerned, we find that AO .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rming the action of the AO in disallowing scholarship expenses of ₹ 13,35,905/- paid to Ms. Aarti Rai is concerned, we find that this expenditure cannot be regarded as an expenditure incurred to run the business nor can the same be allowed as discussed in preceding paras in the case of Trust, hence, the addition of ₹ 13,35,905/- was rightly upheld by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the same and accordingly, reject the ground raised b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee. 7.10. The ground no. 10 relating to confirming imposition of interest u/s 234B and 234C of the Act is concerned, we find that this issue consequential in nature, hence need not be adjudicated. 7.11 In the result, the ITA No. 1142/Del/2011 (AY 2007-08) stands dismissed. ITA NO. 1214/DEL/2011 [2007-08] (REVENUE S APPEAL) 8. With regard to issue relating to granting of relief to the assessee trust in r/o the payment of ₹ 2.72 crores for purchase of land for Ram Krishan & Sons Charitab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the name. of the appellant. It was further seen that IILM Academy of Higher Learning was the actual beneficiary of this loan advanced to WBHIDCO and that this institute was owned by Ram Krishan and Sons Charitable Trust. Since the assessee had advanced money to another trust controlled by the same family therefore the assessing officer was of the opinion that it violated the provisions of section 11 (5) as well as section 13(1)( c )(ii). However, the assessee on the other hand has stated that th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

T the assessee had stated that the said trust is also a charitable trust registered u/s. 12A and thus advancing this amount to the said trust in any case does not violate the provisions of section 13(l)(c)and 13(2)(g). We note that the fact remains that RKSCT is a charitable trust which is registered u/s. 12(A) of the IT Act and in fact in the assessment order it was observed that the assessee had stated the same before the AO. In fact there is no bar for one charitable trust donating or advanci .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version