TMI Blog2020 (9) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... about more than two decades. No change of facts and circumstances are brought on record and no independent evidence with a specific relation to the property in dispute is available on record. Merely because the other charitable trust guilty property for accommodation of the person covered under section 13(3) of the Act, such a fact ipso facto does not lead to the addition in the hands of the assessee without first clinching the issue with corroborative piece of evidence. We therefore, hold that there is no justification for addition made by the learned Assessing Officer by invoking the provisions under section 13(2 )( b) Order:- a) Provisions of Section 13(2 )(B) are not applicable to the case of the assessee b) No individual benefit has been derived with regard to the lease transactions c) Alternate ground becomes infructuous d) Corpus donations are in the nature of capital receipts in the instant case and hence doesn t constitute a part of income and expenditure statement. - ITA No. 1641/Del/2019 - - - Dated:- 3-6-2020 - Ms. Sushma Chowla, Vice President And Dr. B. R. R. Kumar, Accountant Member For the Assessee : Sh. R. M. Mehta, Sr. Adv. For the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing educational and medical institutions/providing medical relief, namely, as a special purpose vehicle to effectuate the charitable activities of HLI in the areas of relief to the poor, education and medical relief. Hamdard Dawakhana (Wakf) as a charitable institution has been enjoying the benefits of section 11 and 12 of the Income-tax Act, 1961 ( the Act ) and also exemption under section 10(23C)(iv) of the Act. The assessee enjoyed the benefit of sections 11 and 12 of the Act all the while till the assessment year 2007-08, but in the year assessment year 2007 -08 the learned Assessing Officer rejected the claim for exemption under section 11 and 12 of the Act to the assessee for the years 2007-08, 2008-09, 2009 - 10, 2010 -11, 2011 -12, 2012 -13 and 2013-14 on the ground that there had been a violation of the provisions of section 13(2)( b) of the Income Tax Act, 1961 (for short the Act ) read with the provisions of section 13 (3 )(b) of the Act vis- - vis the letting of properties at the Asif Ali Road and Rajdoot Marg, New Delhi owned by the assessee to another trust, namely, Hamdard Dawakhanna (Wakf) at the rents alleged to be lower than the prevailing market rates. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two estate agents under section 133(6 ) of the Act from one HSN Reality Services and CB Richard Ellis South Asia private limited. 7. Ld. CIT(A), on consideration of the material available on record and in the light of the submissions made on either side, observed that the onus to prove the basis for the addition was on the learned Assessing Officer; that the examination of the facts reveal that such a onus was not discharged by the Revenue because the learned Assessing Officer was completely misdirected by placing the onus on the assessee; that the assessing officer had acted entirely on the basis of information on the Internet without confronting the assessee with any evidence and that also under legal notion that something which was in the public domain need not be confronted to the affected party; that the learned Assessing Officer having accepted that there was no mechanism with the Department to undertake valuation of rent should not have applied the provisions under section 13 of the Act entirely on surmises and conjectures without the existence of evidence including the so- called collaborative evidence; that the property at Asaf Ali road was tenanted to HLI as far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, but the learned Assessing Officer maintained that the said information is available on Internet and can also be accessed from the Internet which is a public domain and the Department has no method to have valuation of rent done independently by any government agency. 10. As a matter of fact, in the order for the assessment year 2008 -09, Ld. CIT(A) dealt with this aspect in detail and recorded a finding that the learned Assessing Officer cannot say that the information collected by him has already been in the public domain and not obtained behind the back of the assessee, inasmuch as the Assessing Officer is duty bound to confront the assessee with such information if it is to be used against the assessee in any proceedings. CIT(A) further found that it is an admitted fact that the property of the assessee at Asaf Ali Road was tenanted to Hamdard Wakf as far back as in the year 1981 with a periodical increase in the rent and in numerous assessments framed under section 143 (3) of the Act, the Assessing Officer accepted the agreement between the parties finding no ground to invoke the provisions of section 13(2)( b) of the Act/13 (3) of the Act; whereas the property at C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rent received by the assessee was ₹ 24 Lacs whereas the valuation as per the MCD was ₹ 18,11,619 /- which was increased every three years, namely, by 2009-10, it was ₹ 20 .64 Lacs as against the valuation of MCD ₹ 18,11,619, by 2011 - 12 it was ₹ 63.13 lakhs and by 2014-15 it was ₹ 90 .96 Lacs as against ₹ 21 .47 lakhs and ₹ 25.37 lakhs respectively in respect of the Asaf Ali road property. Likewise, the rent received by the assessee in respect of Chanakya Puri property was ₹ 18 Lacs, ₹ 19 .8 lakhs, ₹ 37 .61 Lacs, and ₹ 54 .24 Lacs by 2006-07, 2010 -11, 2011 -12 and 2014-15 respectively as against the corresponding MCD value of ₹ 1 .80 Lacs, ₹ 1.80 Lacs, ₹ 8.74 Lacs and 10 .48 lakhs respectively for such years. 14. Moreover, the lease agreement in question was executed on 16 /7/1982 in respect of Asaf Ali road property and also for this period this agreement was accepted in the same set of facts and circumstances without raising any objection. It is submitted on behalf of the assessee that, the assessee gave property on rent to another charitable trust which perhaps has given the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her charitable trust guilty property for accommodation of the person covered under section 13(3) of the Act, such a fact ipso facto does not lead to the addition in the hands of the assessee without first clinching the issue with corroborative piece of evidence. We therefore, hold that there is no justification for addition made by the learned Assessing Officer by invoking the provisions under section 13(2 )( b) of the Act read with section 13( 3) of the Act and we direct him to delete the same. 17. Ground No. 6 relates to the alternative ground taken by the assessee before the Ld. CIT(A) stating that in the event that exemption is not allowed, a sum of ₹ 9,43,81,000/- has to be excluded from the taxable income. 18. Ld. CIT(A), on this aspect, observed that as per the definition of income as contained in section 2(24)(iia) of the Act, income includes voluntary contributions received, and further the said voluntary contributions are not included in total income by virtue of the provisions of section 12(1 ) of the Act which deems such contributions to the income derived from property held under the trust. According to him, once the provisions of section 11 are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions received by the assessee forms part of the corpus of trust and thus capital receipt are not liable to tax. The objects of the assessee as discussed above clearly established that they are in the nature of providing education, medical relief and relief to the poor and no evidence is available on record to say that the assessee has been providing services in the nature of business. We, therefore, are of the considered opinion that the corpus donation is a capital receipt irrespective of whether the institution enjoys the benefit of Section 11 or not, but particularly in this case, it is consistently held in the preceding paragraphs that the assessee is entitled to exemption under section 11 of the Act and, therefore, the question of subjecting the corpus donations to tax does not arise. We accordingly direct the assessing officer to delete the addition made on this account. 6. To conclude, we hereby hold that, a) Provisions of Section 13(2 )(B) are not applicable to the case of the assessee b) No individual benefit has been derived with regard to the lease transactions c) Alternate ground becomes infructuous d) Corpus donations are in the nature of capital rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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