TMI Blog2018 (4) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... trust which is claiming exemption u/s 11 cannot have commercial transaction with a company in which the trustees are directors. The only condition in such transaction can be that the transaction should be at appropriate value and no undue benefit accrues to either of the transacting parties. The copy of account of the assessee trust as appearing in the books of the company was filed before the Assessing Officer. Further, there is no finding by the Assessing Officer that the asset claimed to be purchased by the assessee trust was not recorded in the books of trust as on the date of search. Thus, there is no need to interfere with the findings of the CIT(A). - I.T.A .No. 4014/DEL/2015 (A.Y 2009-10), I.T.A .No. 4015/DEL/2015 (A.Y 2010-11), I.T.A .No. 4016/DEL/2015 (A.Y 2011-12) - - - Dated:- 30-1-2018 - Shri G. D. Agrawal, President and Ms Suchitra Kamble, Judicial Member Appellant by Sh. Sandeep Sapra, Adv Respondent by Sh. Raja Ram Sapra, CIT DR ORDER PER BENCH These appeals are filed by the Revenue against the order dated 27/03/2015 passed by CIT(A)-Meerut for Assessment Year 2009-10. 2. The grounds of appeal are identical therefore the grounds of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to in section 13(3) of the Act, and hence taxed the entire amount of excess of income over expenditure of the assessee. 4. Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) held in Para 4.5 held as under:- 4.5. I have gone through the assessment order as well as the remand report of the AO. I have also gone through various submission made by the AR of the appellant. In this case, the AO has denied the benefit of exemption u/s 11 ^ on the ground that funds of the appellant trust were utilized for the personal benefit of trustees of the appellant trust. The AO has pointed out two such instances of violation of the provision of section 13 which are mentioned in para 3.1 3.2 above. It is seen from the assessment order itself that the appellant trust was registered on 19.02.1988. Thus, the trust has been enjoying benefit of registration u/s 12A and exemption of income u/s 11 year after year. It has also not been denied that the appellant trust was not involved in educational activities which is the main object of the trust. The AO has noted in the assessment order that during the year, the trust was involved in education activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the personal benefits of its trustee namely Sh. Jitendra Singh Bajwa. The fact that the car was registered in the name of Sh. Jitendra Singh Bajwa cannot lead to presumption of diversion of motor vehicle for use of the trustee in his personal capacity. On a similar question of fact, it has been so held by the IT AT Hyderabad in the case of Deputy Director of Income Tax (Exemption) Vs Society for the Poor and Oppressed (2010) 5 ITR (Trib) 388. Further, reliance is placed on the judgment given by ITAT Ahmedabad in the case of DIT (Exemption) Vs N.H. Kapadia Education Trust (2012) 136 ITD 111 (Ahd). Considering the totality of facts, I have come to a conclusion, that the AO has not been able to establish that the appellant trust has violated the provision of section 13 as far as the issue of use of Mercedes car is concerned. 2.1 The issue of transaction between the appellant trust and M/s Godwin Construction Pvt. Ltd.: The AO has discussed in her assessment order that the purpose of payment by the trust to the company is not mentioned in the seized documents. The appellant had tried to explain that the purpose of this transaction was for purchase of a plot of land. A memorandu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous papers were found which shows that the trustees have received/withdrawn money from the trust fund for their personal benefits. The AO has obtained explanation of the appellant on this point. Thereafter, no further discussion has been made by the AO in the assessment order. It is therefore understood that the AO has found the explanation of the appellant as satisfactory on this matter. 4.7. The AO has quoted the judgment given by the Hon ble Allahabad High Court in the case of CIT Vs Audh Educational Society (2011) 15 Taxman 235. However, the facts of this case are distinguishable from the facts of the case of the appellant. In the case quoted by the AO, the appellant trust has given interest free loan in violation of provision of section 13(1)(c) where as in the appellant s case there are no such facts. 4.8. On the basis of discussions made in above paragraphs, I have come to a conclusion that the AO has not been able to establish that the case of appellant trust is hit by the violation of section 13. In this situation, there is no justification in denying the exemption u/s 11 12 to the appellant. The AO is therefore directed to allow the exemption u/s 11 12. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction between two interrelated parties by way of memorandum cannot be treated as reliable. The CIT(A) is right in holding that the transactions referred to by the Assessing Officer are between the trust and a company which is engaged in the business of real estate development. There is no bar in the statute that a trust which is claiming exemption u/s 11 cannot have commercial transaction with a company in which the trustees are directors. The only condition in such transaction can be that the transaction should be at appropriate value and no undue benefit accrues to either of the transacting parties. The copy of account of the assessee trust as appearing in the books of the company was filed before the Assessing Officer. Further, there is no finding by the Assessing Officer that the asset claimed to be purchased by the assessee trust was not recorded in the books of trust as on the date of search. Thus, there is no need to interfere with the findings of the CIT(A). Ground No. 4 to 5 are dismissed. 9. In result, all the three appeals of the Revenue are partly allowed for statistical purpose. (Order pronounced in the Open Court on 30th January, 2018.) - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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