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2022 (9) TMI 788 - AT - Income TaxExemption u/s 11 - advances given by Assessee as violation of the provisions of section 11(5) - whether gold purchased and contract expenses claimed are furtherance of objects of trust and cannot be treated as investment? - HELD THAT - After verification of the correspondence by the assessee Trust with Kapila Infratech Pvt. Ltd and Kapila Infratech Pvt. Ltd vide its reply letter that they were facing problem in construction without supportive construction supervisor, disputes with management for construction work and non-availability of labour force. This is not disputed by the Ld. D.R., therefore the finding recorded by the Ld. CIT(A) does not require interference. Purchase of gold, the assessee filed list of thirty name of the students with each engineering division and with their percentage of mark who were been awarded with gold medals which is available at page no. 41 of the Paper Book. Therefore the factual finding recorded by the Ld. CIT(A) is not being contravented by the ld. D.R. with appropriate records. Therefore the findings of the Ld. CIT(A) on this ground does not require any interference. Payment made to Chandansingh CIT(A) has observed that the payment is made for construction work on which TDS has been deducted and a fresh confirmation with signature of the contractor and his PAN No. etc. have been submitted and the amount is incurred for the furtherance of the projects of the trust only. Similarly the donation made to various NGO s trust institutions for which the assessee has proved the genuineness of the payment namely Rs. 1 lakh paid to the Sabarkantha Relief Committee vide Receipt No. 183 dated 09.07.2013, This donation was given at the request of the District Collector for an Govt. Organization, which is as per Clause No. 3 of the Objects of the Trust. Similarly Rs. 25,000/- donation paid to SahyogKushtha Yagna Trust vide Receipt No. 80922 dated 13.08.2013, this donation is given for the purpose for leprosy patients which is as per Clause No. 2 of the Trust Deed. Similarly other donations for education purpose and for providing food to the needy students which are donations, as per Clause No. 1 of the Trust Deed. Therefore it cannot be said the same amount was not applied for the objects of the trust and the same cannot be incurred in violation of Section 11 of the Act. Therefore the grounds raised by the Revenue are devoid of merits.
Issues:
1. Appeal against order dated 13.02.2019 under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15. 2. Disallowance of advance payment and gold purchase by the Assessee trust. 3. Disallowance of expenses incurred for charitable objects. 4. Appeal filed by the Revenue against the order of the Ld. CIT(A). Issue 1: The appeal was filed by the Revenue against the order dated 13.02.2019 under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15. The case involved a charitable trust engaged in educational activities. The Assessing Officer found discrepancies in the balance sheet related to an advance payment to a company and the purchase of gold, leading to a show cause notice being issued to the Assessee trust. Issue 2: Regarding the disallowance of the advance payment and gold purchase, the Assessee trust explained that the advance was for construction work and the gold was purchased for awarding medals to students, aligning with the trust's educational objectives. The Ld. CIT(A) held that these expenses were not investments but were for the trust's objectives, hence not in violation of Section 11(5) of the Act. The Revenue challenged this decision, but the Tribunal upheld the Ld. CIT(A)'s findings, dismissing the appeal. Issue 3: Concerning the disallowance of expenses incurred for charitable objects, the Assessee trust provided evidence of payments made to contractors and donations to various institutions, all in line with the trust's objectives. The Ld. CIT(A) accepted these explanations, stating that the expenses were for the trust's projects and charitable purposes, eligible for deduction under Section 11 of the Act. The Tribunal found no merit in the Revenue's arguments and dismissed the appeal. Issue 4: The Revenue's appeal against the Ld. CIT(A)'s order was based on various grounds, including alleged violations of Section 11(5) and objections to the allowance of exemptions. However, the Tribunal reviewed the facts, supporting documents, and responses from both sides. It concluded that the Ld. CIT(A)'s findings were based on factual evidence and did not require interference. The Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s order. This detailed analysis of the legal judgment highlights the key issues, arguments presented, decisions made by the authorities, and the final outcome of the appeal before the Tribunal.
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