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TMI Blog2021 (12) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... o the evidence/material available on record & facts of the case and duly considered by the Assessing Officer. 2. That the Ld. CIT(A)-2, Jalandhar has erred in law while allowing the benefit under section 11 of the Act without appreciating that there was a clear violation of section 13 of the Income Tax Act, 1961. 3. That the Ld. GT(A)-2 Jalandhar has erred in law in treating income of Rs. 37,31,000/- as exempt under section 11 of the Income Tax Act, 1961 despite the assessee trust having contravened the provisions of section 13(2)(c) of the Income Tax Act, 1961. 4. That the Ld. CIT(A)-2 Jalandhar has erred in law in while deleting the addition of Rs. 1,98,48,600/- made on account of interest @12% p.a. on advances paid to members of the society without appreciating that these advances are not covered u/s 13(l)(c) & 13(l)(d) r.w. 13(3). 5. That the Ld. CIT(A)-2 Jalandhar has erred in law in appreciating the fact that salary paid to the persons covered u/s 13 is a mere 2.5% of the total quantum is flawed in light of the 29% increase shown in these case and directly intended to benefit these persons and additionally corroborated by the objects and the increase thereof are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid land. The ld. CIT(A) considering the submissions of the assessee deleted the additions so made by the AO, observing as under : 4.4 I have gone through the assessment order passed by the AO as well as detailed submissions made by the appellant including judicial citations given therein and find that an addition of Rs. 1,98,48,600 has been made by the AO on the ground that interest free advances amounting to Rs. 16,54,05,000 have been made by the society to the persons, who are members of the society. It is stated by the AO that interest at the rate of 12% per annum has to be charged on these advances based on the market rate of interest. 4.5 It is further held by the AO that amount paid to the members of the society as advances are covered under section 13(l)(c) and 13(l)(d) r.w.s. 13(3) of the IT Act and therefore, cannot be treated as an application of income. It is also stated that these advances paid are not as per the modes specified in the provisions of sub section 5 of section 11 of the IT Act. Therefore, interest at the rate of 12% P. A. on the total amount of interest free advances amounting to Rs. 16,54,05,000, which comes to Rs. 1,98,48,600 has been added to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso been paid by these persons on the gains earned on sale of land to the society and a copy of the ITRs filed by these persons has also been placed on record to support its contentions. 4.9 I have carefully considered the detailed submissions made in this regard and find that it is an accepted fact that in the initial phase of the society, land has been contributed as free of cost by these members to the society. Further, it is not disputed that these transactions for purchase of land has been executed by the society at arms length i.e. at the prices fixed by the Stamp Valuation Authority. However, as regards the payment of purchase consideration is concerned the only issue is that payment of this consideration has been made in a phased manner spread over a period of 3-4 years. Now, the issue for consideration is whether it amounts to giving un-due benefit to the members of the society? 4.10 In this case, the payment has been made by the society over a period of 3-4 years based on the availability of funds in their hands. The other alternative before the society could have been to make the payment in year 1 itself- by contributing the amount which has been given as advance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property is less than fifty lakh rupees. (3) The provisions of section 203A shall not apply to a person required to dedut in accordance with the provisions of this section. Explanation.- For the purposes of this section,- (a) "agricultural land" means agricultural land in India, not being a land situate i area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2; (b) "immovable property" means any land (other than agricultural land) building or part of a building.] 4.14 Thus, it may be seen from the above that this section has been inserted the Finance Act 2013, w.e.f. 01.06.2013 and it applies to any person who responsible for making a payment to a transferor any sum by way consideration for transfer of any immoveable property shall at the time of credit of such sum to the account of the transferor or payment of such sum i cash or cheque or draft, whichever is earlier, deduct an amount equal to 1°/ such sum as income tax thereon. Therefore, I find that appellant has failed to comply with the provisions of section 194-IA of the IT Act and is therefore liable for penal provisions under the provisions of IT Act- person liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble High Courts : 1. CIT Vs Sadhu Singh Hamdard Trust (2014) 49 taxmann.com 317 (P&H) 2. Kanahya Lal Punj Charitable Trust V DIT (Exemption) (2008) 171 taxman 134 (Delhi) 3. CIT Vs V.G.P. Foundation (2004) 134 Taxman 663 (Madras) 11. We have gone through the aforesaid decisions relied upon by the ld. DR. We find that the aforesaid case laws are not applicable to the facts and circumstances of the present case. In the case of CIT Vs V.G.P. Foundation (2004) 134 Taxman 663 (Madras), the assessee Trust had advanced certain amount to its sister concern, a Private Limited Company of which the Trustees of the assessee Society were also Directors and the money had remained lying with the company for the whole of the year without having spent. In these circumstances, the Hon'ble High Court held that it cannot be said that the money had been applied by the assessee for charitable purposes in the relevant assessment year. 12. In the case of Kanahya Lal Punj Charitable Trust Vs DIT (Exemption) (supra), the assessee Trust had advanced huge amounts to a company which had substantial interest in Trust without any security and adequate interest. In the case of CIT Vs Sadhu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the case. 5.5 The appellant has stated that AO has failed to appreciate that these persons have been providing their services to the society and payments have been made to them in the preceding few years which were accepted by the department even in the orders passed under section 143(3) of the IT Act. It is submitted that payments made to these persons are in accordance with the norms laid down by the UGC and other persons working in the society have been paid much higher amounts than these persons. The appellant has also submitted that salaries paid to specified persons constitute 0.90% of the total expenditure and therefore cannot be stated as under reasonable. It is stated that principle of consistency has to be applied by the AO. 5.6 The appellant has also stated that interest has been paid to a specified person, which is a company and under the provisions of the Companies Act loans and advances cannot be given interest-free to the related parties. It is stated that interest has been paid to this party in the preceding two years as well, which was accepted by the department. 5.7 I have gone through the detailed submissions made in this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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