2014 (2) TMI 474 - AT - Income Tax

Violation u/s 13(1)(C) of the Act - Nil return filed Denial of Exemption u/s 11 and 12 Whether payments made were for the personal benefit of Dr.C.Gopalan - Held that - The assessee paid security charges and rent for the year in respect of the premises in New Delhi - Relying upon CIT vs. Foundation for Social Care 2013 (9) TMI 869 - ALLAHABAD HIGH COURT - Dr.C.Gopalan is an internationally renowned Nutritional Scientist who held the position of Director in the National Institute of Nutrition and was Director General of Indian Council of Medical Research - the First Appellate Authority was right in holding that the assessee has not violated provisions of S.13(1)(c) of the Act - The expenses incurred are reasonable - This is not a case whether the Founder Trustee has been remunerated - It is a case where reasonable expenses were incurred for a furtherance of objectives of the Trust thus, the order of the First Appellate Authority is upheld Decided against Revenue.

Summary

Issues:
1. Appeal against order of Ld.Commissioner of Income Tax (Appeals) dated 10.3.2011 for A.Y. 2006-07.
2. Whether assessee is rendering professional services and received remuneration.
3. Whether President of the Society derives benefits from Society's funds violating S.13(1)(c).

Analysis:
1. The appeal was filed by Revenue against the order of Ld.Commissioner of Income Tax (Appeals) for A.Y. 2006-07. The assessee, a society registered under sections 12A(a) and 80G of the Act, faced issues regarding research work and violation of S.13(1)(c) as per the assessment order.
2. The First Appellate Authority admitted additional evidence under rule 46'A' and held that the assessee was entitled to exemption u/s 11, as Dr. C. Gopalan, a scientist, conducted research work from his office cum residence. The finding of no research work by the AO was overturned.
3. On the violation of S.13(1)(c), it was held that Dr. C. Gopalan's activities were for the Trust's purpose, not personal benefit, leading to the allowance of the appeal.
4. The Revenue contended violation of S.13(1)(c) due to rent paid for the President's residence, lacking evidence of research work. They sought restoration to the AO for fresh adjudication, citing a High Court decision.
5. The assessee's counsel argued that Dr. C. Gopalan's services benefited the society, not vice versa, emphasizing the charitable nature of the organization. Various legal precedents were cited in support.
6. The Tribunal analyzed the expenses incurred for Dr. C. Gopalan's residence and activities, concluding they were reasonable and not for personal benefit. The order of the First Appellate Authority was upheld, and the Revenue's appeal was dismissed.

This detailed analysis covers the issues raised in the legal judgment comprehensively, outlining the arguments presented by both parties and the Tribunal's decision based on the facts and legal precedents cited during the proceedings.