TMI Blog2020 (11) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... 05, when identically exemption was denied by the AO - DR has not brought to our notice any distinguishing facts vis a vis those years. Further in subsequent assessment years, i. e from A. Y 2010 - 11 TO A. Y 2014 - 15, the Revenue made no such addition to the income of the assessee society in scrutiny assessment u/ s 143 (3) of the Act. No reason for holding the rent paid by the assessee society to Sh Amar Jyot Singh in the impugned year as unreasonable. CIT(A) has gone on a totally different tangent for holding so stating that the fact that the assessee society purchased further tracts of land when it should have purchased the land taken on lease so as to do away with the rent payment, shows that undue benefit was being given by the assessee society to the lessor Shri Amarjyot Singh - No merit in this reasoning of the Ld. CIT(A) particularly when the assessee had demonstrated that the land purchased was not lying surplus with it but had been put to use for furthering the objective of the assessee society of imparting education. The assessee we have noted had filed a complete detail of usage of land both owned and leased by it - when the entire land was required by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rent of ₹ 69,00,000/- for renting out 54600 Sq Ft of area to the society without commenting on quantum of excessive payment in the absence of any cogent material on record whereas despite the fact that the society is running a fully residential school and the reasonability of rent, necessity and utilization of the land and building owned by the society and land and building taken on rent by the society was amply demonstrated before the AO and CIT (A)-II and the rent is paid to Sh A.J. Singh for use of the premises at ₹ 10.53 per sq ft per month which is much less than the market rent of such type of premises in that area. 2. The orders of The Ld CIT (Appeals)-II confirming the orders of the learned Deputy Commissioner of Income Tax (Exemptions) are against the law and facts of the case on account of Judicial inconsistency as the cases of the assessee for the last so many years are being regularly assessed u/s 143(3) by different assessing officers without any adverse inference on the above issue of payment of rent. 3. The orders of The Ld CIT (Appeals)-II confirming the orders of the learned Deputy Commissioner of Income Tax (Exemptions) are against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich a rent of ₹ 69,00,000/- had been paid which came to ₹ 10.53 per Sq Ft per month. In addition to rent for almost 1/3 rd covered area out of 2 Acres of land, balance land was being used by the school for play grounds, roads etc without any additional charges. That the rent paid to Sh A.J Singh was much less than the rental value of such properties in that vicinity. In this regard, for the purpose of establishing the reasonableness of the rent paid, the Ld. Counsel for the assessee drew our attention to various documents demonstrating the fact that the rent paid for the impugned property at ₹ 10.53 per sq.ft. per month considering the fact that the rented land was approximately 54600 sq.ft. for which the rent of ₹ 69 lacs was paid annually, was much less than the rent value of the same property in the vicinity placed at paper book pages 4 to 18 as under: Rent deed leasing out property to Punjab National Bank at ₹ 28. 84 per sq ft per month Rent deed leasing out property to M/ s Hot Millions at ₹ 32 per sq ft per month Rent deed leasing out property to ING Vysya Bank at ₹ 62 per sq ft per month 7. He further pointed out from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply of assessee), which comes ₹ 126. 37 per sq.ft. per annum, which is higher side compared to market rate. In the above facts, i t show that the payment to its sister concern are not genuine and reasonable, which is not allowable u/ s 13 (1 (c) r. w. 13 (3) of I. T. Act, 1961. 8. Referring to the same he contended that it is evident that the AO had no basis for holding the rent as unreasonable and that his findings were merely based on surmises and conjectures. He, therefore, contended that it had been established by the assessee beyond doubt that the rent paid to Capt. Amarjyot Singh Gyani one of the trustees of the assessee trust was reasonable and, therefore, there was no reason at all to deny exemption to the u/ s 13 (1) (c) read with section 13 (3) of the Act 9. The Ld. DR, on the other hand, relied on the orders of the authorities below. 10. The next contention raised by the Ld. Counsel for the assessee was against the reasoning of the Ld. CIT(A) for arriving at the conclusion that undue benefit had been given to the trustee by way of rent paid. The Ld. Counsel for the assessee pointed out that the Ld. CIT(A) had arrived at the aforesaid finding on a total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvisaged in section 13 of the Act. The entire payment is held to be unreasonable in terms of section 13(2) of the Act. In view of above discussion, ground of appeal no. 1 is partly allowed. 11. Countering the same the Ld. Counsel for the assessee contended that the entire land in possession of the assessee society both owned by it (approximately 10 acres) (54. 03 bighas) and that leased by it from the trustee i. e. 17. 10 bighas was utilized for the purpose for which the society had been established i. e. for imparting education. Our attention was drawn to the page No. 3 of Paper Book- 2 detailing the same. The Ld. Counsel for the assessee contended that the assessee society having utilized the entire land for the purpose of imparting education and the findings of the Ld. CIT(A) that the assessee society ought to have first purchased the leased land thus taking away with the requirements of paying the rent, makes no sense since the assessee required both the leased land and owned land for imparting the education as no part of it was kept idle. The Ld. Counsel for the assessee, therefore, contended that merely because the assessee society had not utilized its funds to purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 TO A. Y 2014 - 15, the Revenue made no such addition to the income of the assessee society in scrutiny assessment u/ s 143 (3) of the Act. 16. In view of the aforesaid facts there is we find no reason for holding the rent paid by the assessee society to Sh Amar Jyot Singh in the impugned year as unreasonable. The AO we have noted has given no reason for holding the rent as unreasonable or on the higher side, except for merely stating so, without even addressing the comparable instances cited by the assessee before it to establish the reasonableness of the rent paid. The Ld. CIT(A), we find, has gone on a totally different tangent for holding so stating that the fact that the assessee society purchased further tracts of land when it should have purchased the land taken on lease so as to do away with the rent payment, shows that undue benefit was being given by the assessee society to the lessor Shri Amarjyot Singh. We do not find any merit in this reasoning of the Ld. CIT(A) particularly when the assessee had demonstrated that the land purchased was not lying surplus with it but had been put to use for furthering the objective of the assessee society of imparting education. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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