9911796707
TMI Blog2006 (4) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... see will apply its income or accumulate for application, wholly and exclusively to the objects for which it is established. (2.2) The assessee will not invest or deposit its funds (other than voluntary contributions received and maintained in the form of jewellery, furniture etc.) for any period during the previous year relevant to the assessment years mentioned above otherwise than in any one or more of the forms or modus specified in sub-section (5) of section 11. (2.3) Since the assessee-trust has not satisfied the above conditions, the learned Commissioner of Income-tax (Appeals) decision to exempt the entire income under section 10(23C)(vi) of I.T. Act is opposed to the facts of the case and provisions of law." 3. Before the Assessing Officer, the assessee claimed that its income is exempt under section 10(23C)(vi) of the Income-tax Act. The Assessing Officer mentioned in his order that the matter of issuing notification under section 10(23C)(vi) has not been decided by the Board, therefore, the Assessing Officer has made computation of income under sections 11 and 12 of the Income-tax Act. 4. During the course of assessment proceedings, the Assessing Officer noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilized by him for his personal purposes, investment and clearing the liability. From these facts, the learned Assessing Officer inferred that the assessee has helped Shri Dayananda Pai in his business activity for investment in his personal capacity. An excuse of green land notification was made so that lands required for the assessee may be obtained at lesser value. The learned Assessing Officer agreed that Shri Dayananda Pai made another agreement for sale of 70 acres of land vide agreement dated 20th October, 2002 to the assessee. The learned Commissioner of the Income-tax (Appeals) after considering the submissions of the assessee and Assessing Officer held that there has been infringement of the provisions contained under section 11(5) of the Income-tax Act. 7. Before the learned Commissioner of Income-tax (Appeals), the assessee filed a notification from the Central Board of Direct Taxes in which the Board approved the assessee-trust for the purpose of section 10(23C)(vi). In view of such notification and fulfilment of condition laid down therein, the learned Commissioner of Income-tax (Appeals) held that assessee-trust would qualify for exemption under section 10(23C)(vi). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits. It was, therefore, argued that the assessee has violated sub-section (5) of section 11 and the Assessing Officer has rightly disallowed Rs. 37 crores. The learned DR also relied on the following case laws in support of his contention that the amount of Rs. 37 crores is liable to be included in income. "(1) 258 ITR 395 : Trust should qualify for exemption under section 11 - Investment of Trust funds and violation of section 13 - Trust non-entitled to registration under section 80G. (2) 262 ITR 187 (Mad.) : CIT v. VGP Foundation : amount advanced by trust to company in which trustees were directors - advance for construction of Hospital but amount not utilized during relevant accounting year - amount not entitled to exemption." 10. During the course of proceedings before us, the learned Authorised Representative drew our attention to the fact mentioned by the Assessing Officer in his order. The Assessing Officer has mentioned that the amount of Rs. 37 crores was advanced to Shri Dayananda Pai for the purchase of property. Such advance was given to Shri Dayananda Pai as per the agreement dated 8th May, 2000. In the agreement, it has been mentioned that Shri Dayananda Pai is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rised Representative stated that it is an undisputed fact that Shri Dayananda Pai is not related to any of the trustees. The revenue has not established that the funds given to Shri Dayananda Pai have been utilised for the benefits of the trustees. It is also undisputed that Shri Dayananda Pai is a person dealing in real estate. Subsequently, the lands have been acquired through Shri Dayananda Pai. This fact is also not disputed by the revenue. The remaining balance of advance after second agreement was returned to the assessee by Shri Dayananda Pai. 13. The learned Authorised Representative further stated that the Assessing Officer made the assessment under sections 11 and 12, as at the relevant time notification from the Board for approving the institution under section 10(23C)(vi) was not received. Once, this notification has been made, then, the assessee is entitled for exemption of Income-tax Act under section 10(23C)(vi). 14. In the counter reply, the learned DR stated that lands at Yelahanka has been purchased after the end of the accounting period. 15. The learned DR submitted that we have to consider the transaction done during the previous year relevant to the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has infringed provision of section 11(5) is unnecessary as the power to hold that such infringement has taken place is with the Board. Hence, such finding is vacated on the ground that it was not required by the Commissioner of Income-tax (Appeals) to have given such a finding. 19. We have also gone through the agreement vide which the sum of Rs. 37 crores was advanced. As per this agreement, 15 acres of land facing the main Airport, White Filed road on the road side was to be made available to the cost of 12.37 crores. This cost was calculated as under : 1. Land price for agricultural land - 20 lakhs per acre 2.Conversion charges from agricultural to non-agricultural - 2.5 lakhs per acre 3.Levelling of lands and constructing boundary wall - 10 lakhs per acre 4.Settling with the villagers and tenants and clearing litigations out of courts and freezing from the encroachers - 40 lakhs per acre 5.Obtaining various clearances from local authorities like legal, Municipality, BDA/BCC and from State Govt - 10 lakhs per acre Total 82.5 lakhs per acre 20. Similar costing has been done for another chunks of land consisting of 30 crore, and 25 crore. Total cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraining ourselves for giving finding regarding infringement of section 11(5) as the exclusive jurisdiction to decide such infringement is with the Board. It is felt that CBDT after considering the report of the lower authorities might have been given the approval under section 10(23C)( vi). It is, therefore, held that institution is exempt under section 10(23C)( vi) is approved by the Board and as not liable to tax. 23. The cross objection filed by the assessee is as under : "(i )The learned Commissioner of Income-tax (Appeals) ought to have appreciated that, the advance payment of Rs. 37 crores made to Shri P. Dayananda Pai was for the purchase of property for the activities of the respondent and thus it was not infringement of the provisions of section 11(5) of the Act. (ii)The learned Commissioner of Income-tax (Appeals) ought to have appreciated that, even though the property as agreed to be obtained by Shri P. Dayananda Pai was not obtained still an property that met the requirements of the respondent had been obtained through Shri P. Dayananda Pai and thus the advance of Rs. 37 crores given by the respondent to Shri Dayananda Pai at no point of time infringed the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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