TMI Blog2023 (2) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the assessee and the assessee has no objection where the same is directed to be followed for the impugned assessment year.DR has also not raised any objection where the said findings are followed in the instant case. Therefore, AO is directed to tax the excess rent so computed and bring the same to tax as per provisions of section 13(1)(c) r/w 13(3) of the Act and the remaining addition is hereby directed to be deleted. Appeal of the assessee is partly allowed. - ITA No. 72/Chd/ 2020 - - - Dated:- 24-1-2023 - SHRI. AAKASH DEEP JAIN , VP And SHRI. VIKRAM SINGH YADAV , AM For the Assessee : Shri P.N. Arora , Advocate For the Revenue : Smt. Amanpreet Kaur , Sr. D. R ORDER PER VIKRAM SINGH YADAV , A. M. This is an appeal filed by the Assessee against the order of Learned Commissioner of Income Tax(Appeals)-1, Ludhiana [in short the 'Ld. CIT(A)'] passed u/s. 250 of the Income Tax Act, 1961 (in short 'the Act') dated 06/11/2019 pertaining to assessment year 2013-14, wherein the Assessee has taken the following grounds of appeal: 1. That the order of the Ld. CIT(A) as well as the order of the Ld. DCIT, Circle-1 (Exemption), are both a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trustee for using land and building in case of excessive payment, the exemption u/s. 11 cannot be denied by invoking the provisions of section 13(1)(c). It is prayed that the addition of Rs. 1,84,88,454/- may be excluded from the income as the rent paid was reasonable and consistent with the past history of the case. 8. That the authorities below did not appreciate that the society is enjoying exemption u/s. 11 and as such the surplus should not have been taxed and the registration should not have been refused. Alternatively at the most, the excess rent, if any paid, should have been disallowed and the Ld. CIT(A) was not justified in assessing the surplus of income over expenditure amounting to Rs. 1,84,88,454/-. In subsequent year the surplus has not been taxed under the same and similar circumstances though this point is under appeal. As such the surplus taxed by the DCIT(E) and confirmed by the Ld. CIT(A) may kindly be deleted. 9. That any other grounds of appeal which may be urged at the time of hearing of the appeal. 2. During the course of hearing, the Ld. AR submitted that the Assessing Officer in this case has not allowed the exemption u/s. 11 and has taxed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,000/- 44,00,000/- 2.1. It was further submitted that the assessee has proved before the authorities below that the market value of 52.16 Kanal of land which was leased to the assessee society commanded its market value at Rs. 18,48,60,000/- and in this connection, a certificate from the registered valuer was duly provided which is available on Page No. 8 of the paper-book. It has been wrongly mentioned by the AO that the market value of the land is Rs. 15,36,480/-. The facts mentioned by the AO are inconsistent and incorrect with the facts of this case as this was never a market rate at Rs. 15,36,480/-. Rather this is the purchase value of the land shown by Lala Dasundi Ram Family Trust in their Balance Sheet [Refer Page No. 14 of the paper-book]. In this connection, reference was drawn to page No. 3 of the assessment order where the AO has wrongly mentioned the market value of the said land at Rs. 15,36,480/-. Thus there is no denial of truth that the property is situated in the prime place in Jammu which is approachable from all sides of Jammu. Thus, it is crystal clear that the payment of rent was made less than hug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r educational purpose and the rental payments were consistent with the past history of the assessee has also remained uncontroverted before us. He has also stated that the rental payment, in his view, was reasonable payment for such a huge chunk of land in a capital city like Jammu. The assessee had justified the same by stating the market value of the land as assessed by the Revenue Authorities was Rs. 5,74,55,000/- and, therefore, the rent paid of Rs. 12,35,434/- was much less considering its huge market value. The Revenue has been unable to controvert this factual finding of the Ld. CIT(A). 14.1 In view of the above, we see no reason to disagree with the Ld. CIT(A) whose order we find is based on appreciate of facts, which the Revenue has been unable to controvert before us. 2.4. In view of these circumstances, it was submitted that facts and circumstances of our case are similar to the facts in the case of Om Parkash Bansal Charitable Trust. Under the same and similar circumstances, it was held by the ITAT, Chandigarh Bench, that the rent paid is reasonable and does not fall within the mischief of section 13(1)(c) r.w.s. 13(3) of the IT Act, 1961 and the total additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -13 N.A. 49,896/- 10,47,816/- - 2013-14 14,57,280/- 52,390/- 11,00,206/- 3,57,074/- 2014-15 16,47,360/- 55,010/- 11,05,707/- 5,41,653/- In the above facts, reply of assessee that this transaction is covered u/s. 13(1)(c) r.w.s. 13(3) of IT. Act, 1961, assessee has paid excess rent of Rs. 5,41,653/- compared to market rate. Assessee has failed to justify the excess payment of rent. So amount of Rs. 5,41,653/- is not allowed and taxed the same u/s. 13(1)(c) r.w.s. 13(3) of I T. Act, 1961. Thus, only excess so-called excess payment of rent was disallowed. Again, attention is invited to Assessment Order relating to AY 2015-16 which is available on Page No. 199 to 213 of the paper-book and the relevant Para 8 on Page No. 212 is reproduced hereunder:- 8. Disallowance of excess rent: On Perusal of the same it is also found that assessee is paying huge rent to M/s. Lata Daswandi Ram Family Trust against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the filing of the returned income, the amendment in Section 12A has been made with effect from 01/04/2018 and will apply in relation to A.Y. 2018-19 onwards and as such the assessee is entitled to exemption under section 11 and 12 as the return so filed by the assessee was not a belated return but the same was filed within time. 3. Per contra, the Ld. DR has relied on the order of the lower authorities. 4. We have heard the rival contentions and perused the material available on record. In A.Y. 2014-15 and A.Y. 2015-16, we find that under identical facts and circumstances of the case, the AO has determined the impugned transaction of payment of rent to M/s. Lala Daswandi Ram Family Trust as covered under section 13(1)(c) r/w 13(3) of the Act and has worked out excess rent and the same has only been brought to tax. During the course of hearing, as we have noted above, the Ld. AR has also raised alternate contention that the aforesaid findings of the AO for A.Y. 2014-15 and A.Y. 2015-16, which are not under challenge by either of the parties, may be followed for the impugned assessment year and only excess rent may be brought to tax in the hands of the assessee and whole of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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