TMI Blog2021 (8) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... major components of construction cost, the alleged disallowance seems to be made merely on assumption basis as there is no direct evidence to show that any such disallowance was even called for. On merits the assessee deserve to succeed as the documents filed before lower authorities and before us, are sufficient enough to demonstrate that the alleged purchase from M/s. Prateek Enterprises and M/s Saluja Enterprises are genuine and CTD bars purchased through bills issued by both these concerns have been utilized in the construction of the building of the society. Thus, Ld. AO was not justified in making addition - Finding of Ld. CIT(A) is set aside and the grounds raised by the assessee for A.Ys. 2006-07, 2007-08 2008-09 challenging this issue of bogus purchase are allowed. Assessement u/s 153A - As regards the legal issue raised by the assessee that no addition was called for since no incriminating material relating to the alleged bogus purchase was found during the search u/s 132 of the Act at assessee premises, additions made only on the basis of 3rd party information and opportunity of cross examination was not provided, we observe that this is an admitted fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty has no merits. Thus, the finding of Ld. CIT(A) is set aside and ground no.1 (1.1 to 1.4) raised by the assessee for A.Y. 2009- 10 is allowed. Addition for the alleged benefit given to M/s. Siddharth Kapoor Infrastructure Pvt. Ltd. (in short SKIPL) in violation of section 13(1)(c) - HELD THAT:- As the alleged sum is not a payment to SKIPL but actually it is in the nature of loan by assessee society to the other group society AESS which is running education institution and is registered u/s 12AA of the Act and the same being not in the nature of investment and deposit is not hit by the provision of section 13(3) of the Act and thus no addition/disallowance of the said sum was called for by the Ld. AO. We, thus, set aside the finding of Ld. CIT(A) and delete the addition and allow ground no.2 (2.1 to 2.4) raised by the assessee. Encashment of FDR - It is clear from the audit report that the part of the proceeds of FDRs has been given as loan to HTPL and interest has been charged thereon and it is also an established fact that the HTPL is providing services of giving school buses to the assessee society. The remaining portion of the FDR encashment is given to M/s Ayushmati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t after giving effect to exemption under Provisions of section 10(23C)(vi) there cannot be any income of the appellant trust which can be charged to tax. In view of exemption been already granted u/ s 10(23C)(vi) there can't be any income of the appellant trust which is liable to tax even ignoring the Provisions of section 11 of the Act. Therefore, even if the benefits of section 11 is denied than too there can be no income of the appellant trust on which tax can be collected from it in view of the provisions of section 10(23C)(vi) of the Act considering the approval granted to the appellant trust. Therefore, after giving effect to exemption under provisions of section 10(23C)(vi) there cannot be any income of the appellant trust which can be charged to tax as the total income of the Appellant society is exempted and hence the addition of ₹ 1,99,21,499/ sustained by the Ld CIT (A) is uncalled for and the same is set aside. Common ground no.1 raised by the assessee for A.Y. 2009-10 2010-11 is allowed. - IT(SS)A No.69 to 73/Ind/2019, IT(SS)A No.126 to 128/Ind/2019, IT(SS)A No.74 to 76/Ind/2019, IT(SS)A No.129 & 130/Ind/2019 - - - Dated:- 28-7-2021 - Hon ble Manish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that no opportunity of cross examination of S.N Sharma was required. This finding is not justified both in law on facts. That the addition is based on hind the back of the Appellant without any opportunity of hearing being provided of cross- examination makes such addition in complete breach of principle of natural justice and on this ground alone the impugned addition of ₹ 15,00,000/- deserves to be deleted. 1.6 That the finding of Cit(A) that by making the payment of ₹ 15,00,000 the appellant society used /misapplied the funds of the society is perverse and deserves to be deleted. 1.7 That the Ld. CIT(A) has incorrectly arrived at the finding that by debiting society has reduced receipt over expenditure. The said amount was debited to building construction account which was a balance sheet item and not claimed as expenditure and thus such a finding by the Ld. CIT(A) is perverse. 2. That without prejudice to aforesaid ground since the addition of ₹ 15 Lac has been confirmed in the assessment/appeal order of S.N. Sharma as being unexplained then the same addition cannot be again made in the hands of appellant society as unexplained expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only possible provision was section 153C and not section 153A. 1.5 That the Ld. CIT (A) was not justified either in law or on facts in arriving at a conclusion that no opportunity of cross examination of Shri Sunil Khundewal and Shri Narendra Sharma was required, this finding is not justified both in law on facts. That the addition is based Oil affidavit given Shri Sunil Khandewal Shri Narendra Sharma in case of third person and using that affidavits behind the back of the Appellant without any opportunity of rebutting such affidavits and cross examination of Shri Sunil Khandewal and Shri Narendra Sharma makes such addition in complete breach of principle of natural justice and on this ground alone the impugned addition deserves to be deleted. 2.That without prejudice to aforesaid ground, the quantum of addition sustained by the Ld. CIT (A) is arbitrary, excessive, . high under the facts and circumstances of the case. There is no justification for the Ld. CIT(A) to sustain addition @ 40%. There is no justification either in law or on facts to sustain addition @40%. There is no justification either in law or on facts to arrive @40% disallowance. ITSS(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C and not u/s 153A. 1.5 That the Ld. CIT (A) was not justified either in law or on facts in arriving at a conclusion that no opportunity of cross examination of Shri Sunil Khandewal and Shri Narendra Sharma was required. This finding is not justified both in law on facts. That the addition is based on affidavit given Shri Sunil Khandewal Shri Narendra Sharma in case of third person and using that affidavits behind the back of the Appellant without any opportunity of rebutting such affidavits and cross examination of Shri Sunil Khandewal and Shri Narendra Sharma makes such addition in complete breach of principle of natural justice and on this ground alone the impugned addition of ₹ 2,10,800 deserves to be deleted. 2. That without prejudice to aforesaid ground, the quantum of addition sustained by the Ld. CIT (A) is arbitrary, excessive, . high under the facts and circumstances of the case. There is no justification for the Ld. CIT(A) to sustain addition @ 40%. There is no justification either in law or on facts to sustain addition @40% disallowance. ITSS(A) No.72/Ind/2019 Assessment Year 2008-09 1. That. the is no jurisdiction either in law or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in arriving at a conclusion that no opportunity of cross examination of Shri Sunil Khandewal and Shri Narendra Sharma was required. This finding is not justified both in law on facts. That the addition is based on affidavit given Shri Sunil Khandewal Shri Narendra Sharma in case of third person and using that affidavits behind the back of the Appellant without any opportunity of rebutting such affidavits and cross examination of Shri Sunil Khandewal and Shri Narendra Sharma makes such addition in complete breach of principle of natural justice and on this ground alone the impugned addition of ₹ 1,14,000/- deserves to be deleted. 2. That without prejudice to aforesaid ground, the quantum of addition sustained by the Ld. CIT (A) is arbitrary, excessive, . high under the facts and circumstances of the case. There is no justification for the Ld. CIT(A) to sustain addition @ 40%. There is no justification either in law or on facts to sustain addition @40% disallowance. ITSS(A) No.73/Ind/2019 Assessment Year 2009-10 1.That there is no justification either in law or in facts for the Ld. CIT (A) to sustain the addition of ₹ 17,00,000/- as alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase of Land by Mls Siddharth Kapoor Infrastructure by taking cognizance of section 13 (3) of the Act without looking into crucial fact that the Appellant and M/ls Ayushmati Educational Society belong to same group concern and such payments are not violated and hit by the provision contain under section 13(3) of the Act. 2.3 The Ld. Lower authority erred in taking the view that Appellant by making payment of ₹ 36,08,666/- to farmers on behalf of M/s Ayushmati Educational Society has benefited directly to the persons referred to in Section 13 (3) of the Act without going into the real and pivotal reason that the said transaction was actually a loan transaction between appellant and M/s Ayushmati Educational Society both enjoying registration U/S 12AA as education organization. 2.4 The Ld. Commissioner of Income-tax (Appeals) erred in upholding the action of the Assessing Officer in making the impugned addition of ₹ 36,08,666/- in as much as the assessment order has been framed in violation and utter disregard to the principles of natural justice in as much as, amongst others, the Assessing Officer has not given the documents/statements of farmers take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions u/s 13(1)(c) r.w.s 13(3) of the act and the provisions of section 11 12 are not applicable to the case of the assessee society? 3. On the facts and circumstances of the case, whether the Ld. CIT(A) is correct in directing the AO to allow deduction on account of Capital expenditure even though the assessee has violated the provisions of section 13(1)(c) r.w.s 13(3) of the Act and the provisions of section 11 and 12 are not applicable to the case of assessee society? 4. Any other grounds may be adduced at the time of hearing. IT(SS) A No.128/2019 Assessment Year 2010-11 1. On the facts and circumstances of the case, whether the Ld. CIT(A) is correct in directing the AO to allow exemption u/s 11 of the Act, even though the assessee society has violated the provisions of 13(1)(c) r.w.s 13(3) of the Act, thereby the provisions of sec 11 or 12 are not applicable to the case of assessee society? 2. On the facts and circumstances of the case, whether the Ld. CIT(A) is correct deleting the additions of ₹ 153,30,530/- being income in the form of FDR is utilized by the society for the benefits of its members? 3. On facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 r/w (Circular NCJH112015, dated: 21.1.2015) and thus prior to 2014 the appellant could claim exemption both u/s 10(23C)(vi) and section 11. 1.3 That the Ld. CIT (A) erred in not taking into cognizance that for the year under Consideration Appellant Society was entitled for exemption u/s 10 23c (vi) of the Act and thus the total income of the Appellant society is exempted and hence the addition of ₹ 1,99,21,499/. is illegal, arbitrary and without jurisdiction. 2.Without prejudice to above ground, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in denying the exemption u/s. 11 by holding that the case of appellant is hit by section 13(1)(c) read with section 13(2)(a) and section 13(1)(d) and that too disregarding the fact that the reason for making payment of ₹ 1,99,21,499/- to farmers on behalf of M/s Siddharth Kapoor Infrastructure was for taking that particular land on lease from M/s Siddharth Kapoor Infrastructure for the purpose of sport related activity and the said fact was evident from the lease deed registered on 20/02/2009 for 20 years for using of said land for the purpose of sport related activity. 2.1 The. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10(23C)(vi) and section 11. 2.That on the facts and in the circumstances of the case, the Ld. CIT(A) and Ld. AO erred in confirming the disallowance of legitimate depreciation amounting ₹ 7,71416/- (as per SLM Method) in the Appellate proceeding and in assessment proceedings u/s.153A of the I. T. Act because during search proceedings no incriminating material or evidence was found or seized which could have justified such a disallowance u/s 153A. (ii) Revenue has raised following grounds of appeal:- IT(SS) A No.129/Ind/2019 Assessment Year 2009-10 1.Whether on facts circumstances of the case, Ld. CIT(A) is correct in deleting the denial of exemption u/s 11 of ₹ 34,07,25,659/- for A.Y. 2009- 10 even though the assessee society has applied income of the society for the benefit of the persons referred to section 13(3) of the Act and the said violation is held to be correct in view of the section 13(1)(c) of the Act? 2.Whether on facts circumstances of the case, Ld. CIT(A) is correct in directing the A.O to allow deduction of ₹ 8,27,57,688/- in A.Y 2009-10 u/s 11(1)(a) of the act, even though the assessee society has violated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails submitted before the A. O during the assessment proceedings? Any other ground may be adduced at the time of hearing 4. As the issue raised in all these appeals are mostly common and the assessee(s) relate to same group, these were heard together at the request of all the parties and are being disposed off by this common order for the sake of convenience and brevity. We will first take up the appeals at the instance of assessee and Revenue in the case of RKDF Education Society wherein the assessee is in appeal for A.Ys. 2004- 05, 2006-07, 2007-08, 2008-09 2009-10 and Revenue is in appeal for A.Ys. 2008-09 to 2010-11. 5. Brief facts of the case as culled out from the records are that the assessee is a registered society with the Registrar of Societies and also registered u/s 12AA of the Income Tax Act 1961 (in short the Act) since 13.08.1999. The assessee society is running following Educational institutions under its aegis:- S.No. Name of the institutions 1 RKDF Institute of Science Technology 2 RKDF College of Technolo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04-05 2005-06 certain additions were made by the Ld. AO u/s 143(3) of the Act vide order dated 29.12.2006 and 28.12.2007 and the issue relating to the additions went up to the Hon'ble jurisdictional High Court and same were decided in favour of the assessee. 9. In the instant appeal at the instance of assessee pertaining to A.Ys.2004-05, 2006-07 to 2009-10, during the course of assessment proceedings various observations were made by the Ld. AO alleging that the assessee society has directly or indirectly used or applied the Sciety s, fund for the benefit of persons referred to in section 13(3) of the Act, which thus disentitles the assessee to claim benefit of exemption u/s 11 of the Act. Ld. AO after considering the submissions of the assessee was of the view that the assessee is not entitled to claim benefit of exemption u/s 11 of the Act in view of the following additions made for various AYs: i) Addition at ₹ 15 lakhs towards unexplained expenses debited in the name of Shri S. N. Sharma for A.Y. 2004- 05 ii) Additions for unexplained expenses/bogus purchase from M/s. Prateek Enterprises M/s. Saluja Enterprises at ₹ 1,09,43,000/-, ₹ 5,27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given relief to assessee, also referred to Paper book dated 11th June 2021 containing letter dated 3rd June 2019 and various documents filed by the Revenue in support of the grounds raised in their appeals. 14. We have heard rival contentions and perused the records placed before us and carefully gone through the detailed submissions filed by the both the parties and also considered the judgments referred and relied by Ld. Sr. Counsel for the assessee. We will first take up issues raised in the assessee s appeal 15. First issue raised by the assessee for A.Y. 2004-05 relates to addition of ₹ 15,00,000/- for alleged unexplained expenditure for the amount paid to Shri S.N. Sharma. 16. Facts pertaining to this issue are that during the search a loose paper Annexing A-1/1/6, page no.38 was seized from the residence of Shri S.N. Sharma which was a deposit slip of State Bank of Indore in the account in the name of Shri S.N. Sharma wherein Cheque No.072347 dated 30.01.2004 for ₹ 15 lakhs was deposited. This cheque was issued by the assessee society (RKDF Education Society). Mr. S.N. Sharma stated that this amount was taken as loan. Ld. AO however, noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l deal on the merits of this issue. We, note that the facts remain undisputed that the alleged transaction is through banking channel. Accounts of the society are regularly audited and income Tax Returns stood filed on 01.11.2004 which was subsequently assessed u/s 143(3) on 29.12.2006. The fact is that the alleged amount was given on loan to Shri. S.N. Sharma is accepted by S.N. Sharma also in his statement. This amount was repaid by the Mr. S.N. Sharma to the assessee society subsequently. It is contended that there was a mistake in punching the transaction in the account books as the accountant inadvertently debited the building construction account, rather then debiting the account of S.N. Sharma to be shown as loan given to Mr. S.N. Sharma. This mistake was subsequently rectified. 20. We, find merit in the submission of the Ld. Sr. counsel for the assessee and are of the considered view thatsince there was a mistake on the part of accountant and transaction carried out through banking channel and amount recorded in books of account, no disallowance of ₹ 15,00,000/- paid to Shri S.N. Sharma was called for. The finding of Ld. CIT(A) is thus set aside and the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ₹ 68,66,000/- from M/s. Saluja Enterprises. In F.Y. 2006-07, assessee showed purchase of ₹ 5,27,000/- from M/s. Saluja Enterprises and in F.Y. 2007-08, appellant showed purchase of CTD Bars of ₹ 2,85,000/- from M/s. Prateek Enterprises. These figures hage been rounded off to the nearest multiple of ₹ 1,000/- by the A.O. As per contents of assessment order, the A.O. supplied the appellant the copies of affidavits filed by them. The A.O. has discussed in assessment order that the appellant, during assessment proceedings, submitted that it had purchased CTD Bars Irorn M/~ Prateek Enterprises M/'$ Saluja Enterprises fur construction work in the college premises of appellant society. The appellant further contended that copy of affidavit belonged to Shri Sunil Khandelwal who was neither proprietor nor key managerial person in the firm and the name of society was nowhere mentioned in his statement. The appellant raised before the A.a. that department had not made any enquiry from the appellant u/s 133(6) of the Act. The appellant claimed that society genuinely purchased the material and payments were made through bank account. Appellant produced various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60.66 43.67% 2. 2006-07 Saluja Enterprises 17583 8.85% Others 181087.78 91.15% Total 198670.78 100% 3. 2007-08 Pratik Enterprises 7990.76 100% Total 7990.76 100% Consolidated Chart Financial year Name of party Weight (In Kg) Total weight consumed (In %) 2005-06 To 2007-08 Pratik Enterprises 156378.39 18.58% Saluja Enterprises 226983.93 26.96% Others 458548.44 54-46% Total 841910.76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purchase from Prateek (in Rs.) Purchase from others (in Rs.) 2005-06 2,72,82,075/- 58,65,750/- 40,76,845/- 58,66,370/- 2006-07 1,41,18,557/- 5,27,015/- -- 15,66,027/- 2007-08 38,02,078/- -- 2,85,000/- -- Total 4,52,02,710/- 63,92,765/- 43,61,845/- 74,32,397/- The value of estimated consumption of CTD Bars @ 30% addition in building from F.Y. 2005-06 to 2007-08 arrives to ₹ 1,35,60,813/- (30% of 4,52,02,710/-). Out of purchase of CTD Bars ₹ 1,35/60,813/-, the appellant had purchased ₹ 74,32,397/- from other parties, the purchases from whom have been allowed by the A.O. Thus, the remaining consumption of CTD Bars is left of ₹ 61,28,416/- (₹ 1,35,60,813/- less ₹ 74,32,397/-). Therefore, it may be presumed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecture and it was also wrongly observed by Ld. AO that the proprietors of the alleged two concerns namely M/s Prateek Enterprises and M/s Saluja Enterprises have admitted on affidavit to have provided bills to the assessee society on commission basis and Ld. AO also wrongly assumed that no material was actually supplied. 27. Ld. Sr. counsel for the assessee also submitted that no construction can be done without iron and steel which are one of the major components of the construction cost. Building has been constructed is not in dispute. Reliance placed on the judgment of Hon'ble Supreme Court decision in the case of Dhakeshwari Cotton Mills vs. CIT reported in (1954) 26 ITR 775 where it has been held that even though the strict rules or evidence Act did not apply to Income Tax Proceedings, it does not mean that assessments can be made only on the basis of guess works and imaginations . 28. We note that Ld. AO initiated the examination of this issue on the basis of independent inquiries carried out by the Investigation wing of the Income Tax Department in some other cases wherein it was alleged that two business enterprises namely M/s Prateek Enterprises and M/s Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng bogus bills to parties against some commission. The name of the assessee society is nowhere mentioned .in his statement. He has nowhere mentioned that he has provided bogus bills to the Assessee society. As is clear that the enquiries on Mrs Prateek Enterprises was held during F Y.200 F.Y. 2005-06 Since then the Department has not raised any question to the Assessee Society. If the matter was so grave, the Department would have enquired the Assessee Society u/s 133(6) of the IT Act then and there only. No information was sought during that period and now during the assessment proceedings of the Assessee Society, this matter has been raised. It seems as if the Department has unreasonably extended the issue to the Assessee Society. On the basis of vague statement of any person, the integrity and accountability of the Assessee Society cannot be challenged. The actual purchases made by someone cannot be treated as bogus just because some other person or parties are involved in such kind of illegal transactions. Moreover statement of any person who is neither' the proprietor not the partner in the firm stands illegal. We humbly request the honorable Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a in your presence so that we can also discuss specifically our matter with him because just on the basis of vague statement of any person, the integrity and accountability of the Assessee Society cannot be challenged. Moreover on the law point, justice can only be done when both the parties are given the chance to cross examine. The actual purchases made by someone cannot be treated as bogus just because some other person or parties are involved in such kind of illegal transactions. Moreover the name of the Assessee Society is nowhere mentioned in his statement. It has not been mentioned in the statement that Bogus bills were issued to the Assessee Society. As is clear that the enquiries on Mis Saluja Enterprises was held during F.Y.2005-06. Since then the Department has not raised any question to the Assessee Society. If the matter was so grave, the Department would have enquired the Assessee Society u/s 133(6) of the IT Act then and there only. No information was sought during that period and now during the assessment proceedings of the Assessee Society, this matter has been raised. It seems as if the Department has unreasonably extended the issue to the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. We also note that total 841910.76 kg CTD bars were used for the construction of building, out of which around 73% of the CTD bars were purchased from these two parties. Since the construction has been done is on record and has not been objected or adversely commented in any manner by both the lower authorities and it is an established fact that construction of the building cannot be done without iron and steel which is crucial and major components of construction cost, the alleged disallowance seems to be made merely on assumption basis as there is no direct evidence to show that any such disallowance was even called for. 32. Hon'ble Bombay High Court in the case of DCIT vs. Vaman International Pvt. Ltd. dated 29.01.2020 has held that: Thus, from the above, it is seen that Tribunal had returned a fnding of fact that the assessee had fled copies of purchase bills, copies of purchase/ sale invoices, challan cum tax invoices in respect of the purchases, extracts of stock ledger showing entry/exit of the materials purchased, copies of bank statements to show that payment for such purchases were made through regular banking channels, etc., to establish the genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e premises, additions made only on the basis of 3rd party information and opportunity of cross examination was not provided, we observe that this is an admitted fact that the Ld. AO doubted the genuineness of the purchase of CTD bars from M/s Prateek Enterprises M/s. Saluja Enterprises on the basis of the investigation carried out by the investigation wing independently and the information was forwarded to the Ld. AO. No incriminating material has been referred by the ld. AO during the assessment proceedings which was found during the course of search. Assessment year 2006-07 2007-08 are non-abated assessment since the time limit of issuance of notice u/s 143(2) of the Act expired before the date of conduct of search. For such non-abated assessment additions could be made only if incriminating material is found during search proceedings as held by Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla(Supra). Thus, in view of the judgment of Delhi High Court in the case of Kabul Chawla (supra) the addition for A.Y.2006-07 2007-08 deserves to be deleted. Further we find that the assessee was not provided any opportunity to cross examine these two parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd so also the closing stock. No adverse inferences have been drawn in these respect. The additions have been made purely on presumptions and surmises and the statement of third party i.e. M/s. Globe Pharma and others who may be providing accommodation bills but the trading account of the present assessee do not show anything which could suggest that the purchases are bogus as there is no adverse inferences in so far as sales are concerned. Without purchases there cannot be any sales. Considering all these facts in totality, we do not find any merit in respect of the additions made on account of alleged bogus purchases which are based merely on the statements backed by no cogent/demonstrative material evidences on record. We, therefore, set aside the findings of the Ld. CIT(A) and direct the AO to delete the additions made on account of bogus purchases/accommodation bills from all the assessment years under this appeal. 36. Therefore, in view of the judgment of Kabul Chawla (supra) and the decision of Coordinate Bench Mumbai referred hereinabove, on legality also the impugned addition made by the Ld. AO for alleged bogus purchases for A.Y. 2006-07 to 2008-09 deserves t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nees Khan and assessee society in entirety. We, are thus satisfied with the transactions between assessee society and Mr. Anees Khan contractor and are of the considered view that alleged sum of ₹ 17,00,000/- is part of the construction cost incurred during the year and has been rightly disclosed under the head of construction expenses in the audited books. The inference drawn by both lower authorities alleging that this sum of ₹ 17 lac is not incurred for the objects of the society has no merits. Thus, the finding of Ld. CIT(A) is set aside and ground no.1 (1.1 to 1.4) raised by the assessee for A.Y. 2009- 10 is allowed. 41. As regards ground no.2 raised by the assessee for A.Y. 2009-10 is concerned the same relates to addition of ₹ 36,08,666/- for the alleged benefit given to M/s. Siddharth Kapoor Infrastructure Pvt. Ltd. (in short SKIPL) in violation of section 13(1)(c) of the Act. Facts in brief relating to this issue are that SKIPL entered into transaction for purchase of land from various farmers which was intended to be leased out to M/s Ayushmati Education Social Society (in short AESS). The payments were required to be made to farmers. Out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety duly registered u/s 12AA of the Act and also holds to certificate u/s 10(23C)(vi) of the Act. He also mentioned that sum of ₹ 1,99,21,499/- paid by AESS to SKIPL was also added by the ld. AO in the hands of AESS which is under challenged in ITANo.75/2019. 44. Ld. Sr. counsel for the assessee also submitted that in assessee s own case and on identical facts i.e. amounts were given as loan to another charitable society, Hon'ble jurisdictional High Court in ITANO.236/2012 vide order dated 14.09.2015 dismissed the revenue s appeal by referring to the judgment of Hon'ble Delhi High Court in the case of Director of Income Tax (Exemption) v. Acme Education Society (2010) 326 ITR 146 (Delhi) and the judgment of division bench of jurisdictional High Court in the case of CIT vs. Maa Vaishnav Education Society, (2013) 218 Taxman 152 (MP). Placing reliance on the above sated judgment it was submitted that the alleged sum was a loan to AESS and Ld. CIT(A) was not justified in confirming the addition made by the Ld. AO without looking into the crucial fact that the appellant society AESS belongs to same group concerns. However, ld. DR supported the finding of both low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ₹ 36,08,666/- and allow ground no.2 (2.1 to 2.4) raised by the assessee. Thus, appeal of the assessee for A.Y. 2009-10 stands allowed. 47. Now we take up revenue s appeals in the case of RKDF Education Society vide IT(SS) No.126 to 128/Ind/2019 pertains to A.Ys. 2008-09 to 2010-11. 48. With regard to various grounds raised by the revenue Ld. DR vehemently argued supporting the orders of the Ld. AO. Whereas ld. Sr. Counsel for the assessee apart from relying the finding of Ld. CIT(A) also referred to the written submissions and paper book filed and contended that the ld. CIT(A) has rightly given relief , in view of the facts of the case and settled judicial precedents. 49. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions referred and relied by the ld. counsel for the assessee. 50. As regards ground No.1 raised by the revenue challenging the finding of Ld. CIT(A) allowing relief to the extent of 60% of the bogus purchases and not considering the fact that such bogus expenses are held to be for the benefit of the members of the society thereby violating provisions of section 13(1)(c) rw.s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to purchase 50 buses. The maturity proceeds of three FDRs of the society worth of ₹ 1,53,30,530/- is alleged to have been deposited in the term loan of HTPL. Ld. Assessing Officer alleged this transaction as violation of section 13 of the Act. 54. Before the ld. Assessing Officer when the assessee was confronted with their transaction it was submitted that the HTPL has not availed any loan on the FDRs of the society. The loan is obtained on hypothecation of buses which were used as school buses for assessee society and M/s. Ayushmati Education Social Society. Ld. Assessing Officer was not satisfied and disallowed the sum of ₹ 1,53,30,530/-. Ld. CIT(A) after examining the facts deleted this addition observing as follows: 20. This ground is against the addition of ₹ 1,53,30,530/- for the alleged benefit to Homebound Travels Pvt. Ltd. The A.O. has stated in the assessment order that HTPL obtained a term loan (TL A/c No. 537106390000012) for purchase of 50 buses from Union Bank of India, Bhopal and as lien for this account, the appellant had given certain FDRs worth ₹ 2,00,00,000/- for obtaining this term loan. The loan account was opened on 06.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,51,177/- in the ledger of HTPL for F.Y.2009-10, the closing debit balance is 3,48,74,333/-. In Audit report of the appellant and HTPL, it may be cross verified that the appellant has given loan/advance to HTPL of ₹ 3,48,74,333/-. It is therefore, clear that the pre-mature proceeds of two FDRs of ₹ 1,07,78,792/- and ₹ 22,51,177/- were included In the loan/advance amount of ₹ 3,48,74,333/- 20.3 In view of the discussion held above, the addition of ₹ 1,53,30,530/- is hereby deleted and consequently this ground of appeal is allowed. 55. We note that M/s HTPL provided the services by way of giving buses on hire to the school and colleges run by the assessee society. During the year the total buses and cars hire charges booked by the assessee society in the income and expenditure account is ₹ 77,10,342/- and advance to HTPL as on 31.03.2010 stood at ₹ 3,48,74,333/-, interest income of ₹ 43,59,500/- received from HTPL is shown by the assessee society as appearing in the interest received account placed at page 177 of the paper book. 56. Now out of the total sum of ₹ 1,53,30,530/- received from encashment of FDR of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08.2007 granted registration u/s 12AA w.e.f. 13.08.1999. The assessee society is running various education institutions in the field of science Technology, pharmacy, Management, Nursing and Dental College Homoeopathic Medical College Hospital, that assessee society is running to carry at charitable and educational purposes and its fulfilling the objects u/s 2(15) of the Act is not in dispute by the Revenue authorities at any stage. 59. During the course of assessment proceedings Ld. AO based on his observation made some additions and disallowances alleging that the assessee had made violation u/s 13 of the Act and therefore not eligible to claim the benefit of exemption u/s 11 of the Act. When this matter was carried before the ld. CIT(A), he though confirmed some of the additions and disallowances but was of the firm view based on the judicial precedents and circular issued by CBDT that only the disallowances/additions should be taxed to maximum marginal rate but for the remaining profits earned by the charitable society benefit u/s 11 of the Act should not be denied. 60. Now this finding of Ld. CIT(A) is in challenge before us by the Revenue authorities for the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in receipt thereof- (a) (b) . (c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub- section (3): Section 13(1) restricts the exemption to the assessee of the income which is used/applied in various forms described in clause (a) to clause (d), meaning thereof the assessee would not be entitled for exemption of it uses/applied income in violation of fundamental principles for which the assessee is registered u/s 11 or 12. The assessing officer in this case has foudnt hat appellant society misused/misapplied its income to the tune of ₹ 36,08,666/- for the benefit of individuals responsible to run the society. Chairman of socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2 (as in the case of appellant), tax shall be charged on so much of the relevant income as is not exempt u/s 11 or 12, as if the relevant income not so exempt were the income of assessee. It is very clear from the section 164(2), that in this case, tax on the relevant income of ₹ 36,08,666/- should be charged and not on the whole excess income over expenditure. However, the tax on such relevant income should be ,charged at the maximum marginal rate. 17.16 The appellant has also relied upon circular no. 387 dt. 06.07.1984 issued by CBDT titled as 'Levy of income-tax at maximum marginal rate in the case of charitable and religious trusts which forfeit tax exemption'. The relevant portion of this circular is appended below: 28.6 It may be noted that new sub-section (lA) inserted in section 161 of the IT Act, which provides for taxation of the entire income received by trusts at the maximum marginal rates is applicable only in the case of private trusts having profits and gains of business. So far as public charitable and religious trusts are concerned, their business profits are not exempt from tax, except in the cases falling under clause (a) or clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of that part of the income but cannot be taken to be a synonym }o the genuineness of the activities of the trust or the institution. 17.18 I have considered the submission of the appellant and in view of the decisions cited by the appellant on subjected matter and circular of CBDT (supra), the additions of ₹ 1,13,11,931/- in A.Y. 2008-09, ₹ 12,18,18,138/- in A.Y, 2009-10 ₹ 12,61,18,145/- in A.Y. 2010-11 for bringing whole excess of income over expenditure to tax net are hereby deleted. Consequently, these grounds of appeal are allowed. 62. Hon ble Karnataka High Court in the case of Commissioner of Income-tax vs Fr. Mullers Charitable Institutions [2014] 363 ITR 230 (KARN) has held that, perusal of section 13(1)(d) of the Act, makes it clear that it is only the income from such investment or deposit, which has been made in violation of section 11(5) of the Act, that is liable to be taxed and violation of section 13(1)(d) does not result in denial of exemption under section 11 to the total income of the assessee trust . 63. Further In the present context, the provisions of section 164, particularly section 164(2) and proviso thereto, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 security or adequate interest or both; (b) if any land, building or other property of the trust or institution is, or continues to be, made available for the use of any person referred to in sub- section (3), for any period during the previous year without charging adequate rent or other compensation; (c) if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services; (d) if the services of the trust or institution are made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of persons : Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained 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. From the aforesaid provisions of section 164(2), it may be seen that in the case of relevant income referred to therein, tax shall be charged on so much of the relevant income, as is not exempt under section 11 or 12, as if the relevant income not so exempt were the income of an association of persons (AOP). It clearly implies that only that part of the relevant income which is not exempt under section 11 or section 12 is brought to tax, as the income of an AOP and the balance of income of the charitable trust / institution, will remain exempt. Further, as per the proviso to section 164(2), where the whole or any part of the relevant income is not exempt under section 11 or section 12, by virtue of the provisions of section 13(1)(c) or section 13(1)(d), tax shall be charged on the relevant income or part of relevant income, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act . Accordingly this common issue raised by the Revenue for A.Y. 2009-10 2010-11 against the benefit of exemption u/s 11 of the Act allowed by the ld. CIT(A) is dismissed. Relevant grounds raised pertaining to this issue in the three assessment years stands dismissed. 68. Next common issue raised by the Revenue in Ground no.4, ground no.3 ground no.5 of A.Y. 2008-09 to 2010-11 respectively are against the finding of Ld. CIT(A) allowing deduction of capital expenditure of ₹ 2,43,75,990/- for A.Y. 2008-09 to 2010-11 as application of income. 69. Brief fact relates to this issue are that the assessee society claimed deduction of various amounts for the year under appeal as application of income for the capital expenditure incurred during the year. However, Ld. Assessing Officer while concluding the assessment and determining the total income has not deducted the said amount. Ld. CIT(A) after appreciating this fact that the Ld. Assessing Officer has not discussed anything in the assessment order about the capital expenditure claimed as an application of income by the assessee directed the Ld. Assessing Officer to allow the said claim. The revenue has challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he capital expenditure incurred by appellant. 22.2 Certain grounds raised by appellant during appellate proceedings have been allowed in the preceding paras which have the effect of allowing exemption u/ s 11 of the Act to the appellant and accordingly additions made by the A.O. bringing whole excess of income over expenditure have been deleted. Therefore, appellant is also entitled for deduction in respect of application of income for capital expenditure. Hence, these grounds of appeal are allowed. 73. We further observe that in the preceding paras, after examining the facts and circumstances of the case and the settled judicial precedents we have deleted the disallowance and additions made by the ld. Assessing Officer. Thus, since the very basis for denying the benefit u/s 11 of the Act has been removed/deleted and there is nothing contrary on record brought by the revenue to show that the assessee is not carrying on the activities for charitable and educational activities as per the objects for which it is established, there remains no hurdle for the assessee society to claim benefit of exemption u/s 11 of the Act. Therefore in the given facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. The dates of original return filed for A.Y. 2004-05 to 2010-11 and the return filed u/s 153A of the Act are mentioned below: S.No. A.Y. Date of filing of original return u/s 139(1) Dated of filing of return u/s 153A Returned income/loss (In Rs.) 1 2004-05 23.12.04 17.10.11 NIL 2 2005-06 28.10.05 17.10.11 NIL 3 2006-07 27.10.06 17.10.11 NIL 4 2007-08 29.10.07 17.10.11 NIL 5 2008-09 30.09.08 17.10.11 NIL 6 2009-10 31.03.10 17.10.11 NIL 7 2010-11 14.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the registered sale deed but the on money was paid through Shri Anees Khan by way of issuing bearer cheque which were encased by the power of attorney holder name of Shri Shyam Lal Patidar and Tulsiram Patidar on behalf of Shri Gyan Chand Jain Shri Amar Chand Jain. The assessee however contended that Mr. Anees Khan is a contractor and had carried out construction activities round the year. Payments were made against bills issued and tax at source was deducted. Ld. AO was not satisfied with this reply and disallowed a sum of ₹ 15,00,000/- as unexplained expenditure. 79. Ld. AO also raised doubt on the transaction with HTPL observing that the assessee had given interest free loan to this company which is run by Smt. Sakhana Kapoor who is member and also relative of other members of society. Ld. AO calculated notional interest of ₹ 25,83030/- and ₹ 9,39,890/- for A.Y. 2009-10 2010-11 and made the addition in the hands of assessee. 80. Ld. AO also observed that there was a bogus claim of asset in the case of Vedica Education Society for A.Y. 2004-05 to 2007-08 and the depreciation was claimed on Straight line Method (SLM) on such bogus claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99,21,499/- 25,83,030/- 7,71,416/- Total income assessed Rs. 36,40,01,604/- A.Y. 2010-11 Income shown in the return Add: Excess of income over expenditure Add: Benefit of interest passed on to Home Bound Travels Private Limited as discussed in para 10.4 Add. On account depreciation on bogus Asset as discussed in para 10.5 Rs. NIL 20,35,53,275/- 9,39,890/- 7,71,416/- Total income assessed Rs. 20,52,64,581/- 83. Aggrieved assessee preferred an appeal before Ld. CIT(A) and partly succeeded and now the assessee is in appeal before this Tribunal for A.Y. 2008-09 to 2010-11 by the assessee and cross appeals for A.Y. 2009-10 2010-11 by the revenue. First we take up assessee s appeal 84. The first common issue raised in ground No.1 for A.Y. 2008-09, ground no.3 for A.Y. 2009-10 and ground No.2 for A.Y. 2010-11 for disallowance of depreciation expenses at ₹ 7,71,146/-. 85. Ld. AO disallowed the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety. 91. We, therefore, in the given facts and circumstances of the case absence of any finding for the alleged bogus assets found during A.Y. 2004-05 to 2001-08 and respectfully following the judgment of Hon'ble Delhi High Court in the case of Kabul Chawla(supra) are of the considered view that Ld. AO erred in making disallowance for depreciation at ₹ 7,71,416/- for each year from A.Y. 2008-09 to 2010-11. The finding of Ld. CIT(A) is set aside and this common issue is decided in favour of the assessee. Thus ground no1, Ground no.3 and Ground no.2 of assessee s appeal for A.Y. 2008-09 to 2010-11 are allowed. 92. Now we take up ground No.1 2 for A.Y.2009-10 wherein the assessee has raised two fold contentions, firstly that Ld. CIT(A) erred in confirming the action of the Ld. AO by making addition at ₹ 1,99,21,499/- on account of land purchased by SKIPL for the amount given by the assessee society. Secondly it is contend that the assessee society was granted the approval u/s 10(23C)(vi) of the Act and ld. AO denied the benefit exemption without following the procedure provided in Proviso to section 143(3)(e) of the Act. 93. We will first deal with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(23C)(vi) of the Act it was submitted that Ld. AO failed to comply to the procedure laid down in proviso to section 143(3) of the Act and denied the benefit of exemption u/s 10(23C)(vi) of the Act without intimating Central Government or the prescribed authority about the contravention if any of u/s 10(23C)(vi) of the Act. It is only after such intimation that exemption u/s 10(23C)(vi) of the Act can be withdrawn. No such contravention of this provision has been stated by Ld. AO or Ld. CIT(A). Activities of the assessee society running primarily for educational activities have not been doubted. Only on the basis of some disallowances benefit of section 11 of the Act has been denied. However, Ld. AO has not given any reason as why the assessee is not entitled to the benefit of exemption u/s 10(23C)(vi) of the Act. It was also submitted that prior to Finance Act 2020, the appellant can claim the exemption both u/s 10(23C)(vi) and section 11 of the Act simultaneously. This amendment is prospective in nature. Reliance was placed on the following decisions: 1. Peoples Education Society [2014] 42 taxmann.com 353 (Karnataka) 2. Commissioner of Income-tax v. Jeevan Deep Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also u/s 153A after obtaining approval u/s 1 0(23C) (vi) as appellant submitted before A.O. during the assessment proceedings that returns filed by it uls 139(1) may be treated as returns filed in response to notice u/ s 153A. 12.1 In view of the aforesaid points mentioned in the preceding para, I am of the view that appellate proceedings should also be concluded on the basis of exemption claim u/s 11 by the appellant for all assessment year 2004-05 to 2010-11, in respect of which a composite assessment order has been passed by the AO. However, benefit u/s 11 and u/s 10(23C)(vi) of the Act cannot be claimed simultaneously. Hence, these grounds of appeal are hereby dismissed. 98. We have heard rival contentions and perused the records placed before us and carefully gone through the decision referred by Ld. counsel for the assessee and the finding of Ld. CIT referred by Ld. DR. 99. As regards the quantum addition of ₹ 1,99,21,499/- confirmed by Ld. CIT(A) on account of land purchase by SKIPL measuring 10.17 hectare located at village- Gondarmau, registered on 20.03.2009, we note that this property is purchased by SKIPL. A sum of ₹ 1,99,21,499/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of ₹ 1,99,21,499/- given to some persons during F.Y. 2008-09. We also note that a lease agreement was entered between the assessee and SKIPL on 28.02.2009 and assessee society agreed that in lieu of advance given to farmers at ₹ 1,99,21,499/- and developing the said land for sports related activities under CSR, making construction, landscaping land leveling and other land development work, NIL rent will be paid for 20 years commencing from 20th April 2009. 101. Though it is alleged by the revenue authorities that the lease deed is unregistered and not admissible as evidence, we however, observe that definition of expression transfer provided in section 2(47) is more wider than in the general law. The expression transfer employed in section 2(47) includes any transaction entered into in any manner which has the effect of transferring, or enabling the enjoyment of, any immovable property . In these two eventualities, profits on account of capital gains would be taxable in the year in which such transactions are entered into, even if a transfer of immovable property is not effective or completed under the general law. In the present case, there is a fine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he failure to register such a contract would only deprive the person in possession of any benefit conferred by section 53A of the 1882 Act. The proviso to section 49 of the Indian Registration Act clearly postulates that non-registration of such a contract would not prohibit the filing of a suit for specific performance based upon such an agreement or the leading of such an unregistered agreement into evidence. 12. A suit for specific performance based upon an unregistered agreement to sell accompanied by delivery of possession or executed in favour of a person who is already in possession, cannot, therefore, be said to be barred by section 17(1A) of the Registration Act, 1908. 13. Section 17(1A) merely declares that such an unregistered contract shall not be pressed into service for the purpose of section 53A of the Transfer of Property Act, 1882. Section 17(1A) of the Registration Act, 1908, does not, whether in specific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreement to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities is necessary for the overall development of the students, service for healthy mind good health is necessary. It is not in dispute that the said land is being used for such sports related activities. The alleged sum is duly recorded in the books of account. Even during the course of search the books made on computer were also impounded and the alleged amount was duly reflected in these books. 106. We also note that there is a violation of principles of nature justice as the assesse was denied the opportunity of cross examining those persons whose statements were used against the assessee. Ld. CIT(A) has himself mentioned in the impugned order at page 19 that because of time barring issue, I am of the opinion that AO was not in position to afford opportunity of cross examination proceedings to appellant before limitation. Ld. CIT(A) also held that only fact that appellant did not have cross examination opportunity does not affect other facts/circumstances of the case . This shows that the assessee s request on 12.05.2014 demanding cross examination of the said farmers was denied by the Ld. AO and this action in itself leave no room for the Ld. AO to make addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (23C)(vi) there can't be any income of the appellant trust which is liable to tax. However the LD AO without appreciating the submission of Appellant and without adjudicating this issue denied the benefits of the aforesaid exemption on the ground that Appellant is not eligible for benefits of Section 11 or Section 10 (23c) (vi) at the same time and simultaneously benefits cannot be granted under both section 11 and u/s 10 (23c) and further the object of society can t be held as solely for education purpose for the A.Y 2009-10 2011-12. The extract of relevant finding of LD Assessing office in Assessment order is re-produced as under :----- B) the CCIT, Bhopal accorded approval for exemption u/s 10 (23C) (vi) for A.Y 2009-10 and for subsequent years. However as per discussion made in this assessment order revels that Applicant society exists for the purposes of profit fund of the society was grossly misutilized for family concerns of the office bearer. Therefore, the object of society can t be held as solely for education purpose for the A.Y 2009-10 and for subsequent year. 112. When the matter came up before LD CIT (A) he also confirmed the action of Ld. AO stati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (4C) of section 139, no order making an assessment of the total income or loss of such research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, shall be made by the Assessing Officer, without giving effect to the provisions of section 10, unless- (i) the Assessing Officer has intimated the Central Government or the prescribed authority the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, by such research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, where in his view such contravention has taken place; and (ii) the approval granted to such research association or other association or fund or trust or institution or university or other educational institution or hospital or other medical institution has been withdrawn or notification issued in respect of such news agenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or medical institution referred to in sub-clause (vii) of clause (23C) of Section10, which is required to furnish the return of income under sub-section 4(C) of section 139, no order making an assessment of the total income or loss of such scientific research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or any other medical institution, shall be made by the Assessing Officer, without giving effect to the provisions of Section10 unless - (i) the Assessing Officer has intimated the Central Government or the prescribed authority the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub- clause (v) or sub-clause (vi) or sub-clause (via) or clause (23C) of section10 as the case may be, by such scientific research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered opinion that the Tribunal had rightly restored the registration on the ground that in the Assessment Years 2004-05 and 2006-07 benefit of exemption/deduction under Section11 of the Act was allowed to the respondent-assessee. 119. Further Section 10(23C) does not prescribe any stipulation which makes registration u/s 12AA a mandatory condition. The provisions of section 11 and 10(23C) are two parallel regimes and operate independently in their respective realms. Thus For claiming exemption under section 11, it is not necessary that the conditions u/s 10(23)(vi) must be fulfilled. Our view is supported by following: a) In Commissioner Of Income tax Vs. Mahasabha Gurukul Vidyapeeth Haryana (2010) 326 ITR 25 (Pun), it was held that Exemption under s. 11 was allowable to the assessee society running an educational institution which was registered under s. 12A, once it is held that all requisite conditions for exemption under s. 11 have been met, even if conditions under s. 10(23C)(vi) have not been complied with, there will be no bar to seek exemption under s. 11. a) Conversely, while claiming the exemption u/s 10(23)(vi), it is not required to fulfill th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10 or is notified under clause (46) of the said section, as the case may be, or the date on which this proviso has come into force, whichever is later: Provided further that the trust or institution, whose registration has become inoperative under the first proviso, may apply to get its registration operative 65 [under section 12AA] 66 [or section 12AB] subject to the condition that on doing so, the approval under clause (23C) of section 10 or notification under clause (46) of the said section, as the case may be, to such trust or institution shall cease to have any effect from the date on which the said registration becomes operative and thereafter, it shall not be entitled to exemption under the respective clauses.] 122. In light of above amendment that only from finance Act, 2020 simultaneous Registration For Exemption under Section 11 etc and Approval For Section 10(23C) Exemption is Not Permissible and prior to this the Assessee can claim exemption under both section as there was no bar from claiming exemption under both provision and further there was no condition prior to amendment introduced by finance Act 2020 to claim exemption under either of the two. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society. Ld. AO was of the view that since HTPL is sister concern of the assessee society. Benefit has been given by giving interest free loan, thus, falls under the provision of section 13, Ld. AO accordingly made the addition for notional interest at ₹ 25,83,030/- ₹ 9,39,890/- for A.Y. 2009-10 2010-11 respectively. 127. Ld. DR relied on the submissions made before Ld.AO and Ld. Sr. counsel for the assessee relied on the finding of Ld. CIT(A) and also submitted that the interest was duly charged and recorded in the books of account on the amount advanced to Homebound Travel Pvt. Ltd. 128. We have heard rival contentions and perused the records placed before us and carefully gone through the submission. Deletion of notional interest by Ld. CIT(A) calculated by the Ld. AO on the amount advance to HTPL is in challenge before us. On perusal of the ledger account of HTPL in the books of assessee society we observe that interest has been charged at ₹ 26,90,656/- and ₹ 9,50,000/- for A.Y. 2009-10 2010-11 respectively on the amount advanced to HTPL. This fact remains un-rebutted by the Ld. DR. Therefore, in our considered view Ld. AO failed to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 2009-10. According' to these ledgers, the indirect incomes of appellant society is ₹ 2,14,19,349.73/- in F.Y. 2008-09 which includes interest on loan which has ₹ 26,90,656/- from HTPL. During F.Y. 2009-10 indirect incomes ofthe appellant is amounted to ₹ 4,34,65,056.49/- which includes interest on loan ₹ 9,50,000/- from HTPL. The figures of indirect incomes in the ledgers produced by the appellant society are matched with the figures of income shown in the P L account in audit reports of appellant for the relevant years. Appellant has also produced copies of ledgers of HTPL in its books of account; the relevant figures of charging of interest may also be cross verified with these documents. 16.2 On perusal of all the copies of ledgers produced by appellant and the audit reports of appellant HTPL, it is clear that the term loan provided by appellant to HTPL in F.Y. 2008-09 2009-10 was not interest free and -appellant has charged interest on these term loan given to HTPL. The AO charged notional interest @ 12% and added ₹ 25,83,030/- in A.Y. 2009- 10 and ₹ 9,39,890/- in A.Y. 2010-11 respectively whereas the appellant has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 134. We note that this very issue came up before us in the case of RKDF Education Society which has been dealt by us in the preceding paras and the finding of Ld. CIT(A) was confirmed. In the instant case also the facts and issue remains the same. We note that some addition and disallowance were made by the Ld. AO showing that the assessee has utilized funds of the society for the benefit of its member and was thus hit by section 13 of the Act. After dealing with these issues in the preceding paras the impugned addition have already been deleted and one of the remaining addition of ₹ 15,00,000/- made for A.Y. 2008-09 for the payment made to Mr. Anees Khan, though Ld. CIT(A) has deleted the addition for the year in which the addition was made but had confirmed the same for A.Y. 2007-08. We, however, note that similar type of payment to Shri Anees Khan was also made in the case of RKDF Education Society wherein we have given a finding that Shri Anees Khan is a contractor and does construction work on behalf of society. Regular transaction have taken place round the year and invoices were regularly raised for which payments are made through banking channel and tax deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2009-10 2010-11. 137. Now we take up ground no.2 of revenue appeal wherein allowing of deduction u/s 11(1)(a) (15 % of the gross receipts) by Ld. CIT(A) is in challenge. We note that Ld. AO while denying the benefit of section 11 of the Act did not allow this claim of deduction of 15% of gross receipts. Since we have already decided that assessee is eligible to claim exemption u/s 11 section 10(23C)(vi) of the Act and have also deleted the addition/disallowance made by the Ld. AO, this issue raised by the revenue becomes infructuous and therefore, following the finding of Ld. CIT(A) needs to be confirmed. 17. These grounds are raised against not allowing the deduction of ₹ 8,27,57,688/- in A.Y. 2009-10 and ₹ 7,83,19,820/- in A.Y. 2010-11 as application of income u/s 11(I)(a) of the Act (15% of the gross receipts in the relevant financial year). 17.1 Appellant in the return of income/ computation of income claimed the deduction of similar amounts as application of income @ 15% of gross receipts u/s 11(I)(a) of the Act. In the assessment order, the A. o. has stated: nothing about this deduction. On perusal of the tables prepared in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal expenditure. In the assessment order, the A. O. has, stated nothing about this deduction. On perusal of the tables prepared in the assessment order while concluding the assessment order for determination of the total income, the A. O. has not deducted the said amounts. For A.Y. 2009-10 A.Y. 2010-11, the AO denied the exemption u/s 11 of the Act to the appellant and therefore, added the excess of income over expenditure (gross receipts less revenue expenses) i.e. ₹ 34,07,25,659/- (₹ 55,17,17,918/- less ₹ 21,09,92,259/-) in A.Y. 2009-10 and ₹ 20,35,53,275/- (₹ 52,21,32,132/- less ₹ 31,85,78,857/-) in A.Y. 2010-11. It is, therefore clear, that while ascertaining the amount of excess of income over expenditure, AO'did not consider the capital expenditure incurred by appellant. 18.2 Certain grounds raised by appellant during appellate proceedings have been allowed in the preceding paras which have effect of allowing exemption vi] s 11 of the Act to the appellant and accordingly additions made by AO bringing whole excess of income over expenditure have been deleted. Therefore, appellant is also entitled for deduction in respect of appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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