TMI Blog2017 (11) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... et rate and there is a proper security. The assessee trust is deriving interest on loan given to wife of one of the trustees and the loan is secured by the gold ornaments. Therefore, it cannot be said that loan had been given by the assessee-trust with inadequate security or free of interest, therefore, exemption u/s 80G(5)(vi) of the Income Tax Act, 1961 should not be denied. - Decided in favour of assessee. - ITA No.2023/Kol/2014 - - - Dated:- 25-9-2017 - SHRI A. T. VARKEY, JM AND DR. A.L.SAINI, AM For The Appellant : Shri P. J. Bhide, FCA For The Respondent : Shri G. Hangshing, CIT(DR) ORDER Per Dr. Arjun Lal Saini, AM: The captioned appeal filed by the assessee, is directed against an order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant craves leave to submit further grounds and to amend, alter or otherwise modify the grounds already taken, if necessary, before or at the time of hearing of Appeal. 4.The brief facts qua the issue are that the assessee had filed an application on 30.04.2014 in Form No.10G seeking renewal of exemption u/s 80G(5)(vi) of the Income Tax Act, 1961. The Director of Income Tax (Exemption), Kolkata, on perusal of the application and income and expenditure accounts filed along with the application, observed that, the trust had given loan to Ms. ShrutiMohta, wife of one of the trustees, Shri R. Mohta in violation of provisions of section 11(5) of the I. T. Act, 1961. Section 11(5) of the Income Tax Act prescribes the mode where the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of clause (c) and clause (d)] of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub- section (3),- (a). if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub- section (3) for any period during the previous year without either adequate adequate interest or both; security or Therefore, the ld. Counsel for the assessee had submitted before us that there was no violation of section 11(5) of the Act because the assessee trust had taken the adequate security of gold ornaments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal held that the interest charged was not inadequate. So far as the lease rent of the building is concerned, it is brought to our notice that the property called Kamla Castle, Mussorie, was leased out at a meagre rent of ₹ 1,250 per month. It was submitted that it is a big bungalow at an important hill station and, therefore, the rent stipulated must be deemed to be inadequate. The Tribunal, however, pointed out that this property was donated by Sir PadampatSinghania in the previous year'' relevant to the asst. yr. 1971-72 and its value, as per the balance-sheet, was ₹ 2,86,347. The Tribunal also took into consideration the fact that properties in hill stations do not fetch income throughout the year but only dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Director of Income Tax (Exemption), which we have already noted in our earlier para and is not being repeated for the sake of brevity. 7.Having heard the rival submissions and perused the materials available on record, we are of the view that there is no violation of the provisions of section 11(5) of the Act because the assessee trust has taken the adequate security by way of gold ornaments and the loan was secured and bearing interest @12% per annum which was more than the prevailing rate in the market. Therefore, this loan given by the trust is not for personal benefit of the trustee or wife the trustee. The assessee trust is charging interest more than the market rate and there is a proper security. Section 13(2)(a) clearly says th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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