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TMI Blog2012 (12) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... ce due to sanction being not given by Bhopal Municipal Corporation for construction of 4th and 5th Floor, the amount was paid back to the assessee with interest of Rs. 69 lakhs, thus, the transaction was a commercial transaction, where an interest was charged. Thus, there was no loss of any revenue in the hands of assessee society, even when the building could not be handed over to the assessee. Thus no violation of provisions of Section 13 for the advance given to the Total Diagnosis Private Limited for purchase of office space as it is not an amount lent but was in the nature of advance given for purchase of office space and hence exemption u/s 11 & 12 cannot be denied. The excess of income over expenditure is exempt u/s 11 & 12 - in favour of assessee. Disallowance of travelling expenses - Held that:- Trustees’ husband and wife both travelled to Delhi for necessary approval of ‘AICTE’. Minor daughter of Trustee aged 10 years had to be taken alongwith, because she could not be left alone only because the girl being the minor, she had to be taken along and could not be left alone, the expenditure incurred on travelling pertaining to such minor daughter cannot be declined. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Form No. 56D which was pending at the time of filing of return. 4. As per Assessing Officer, exemption u/s 10(23C(vi) was not available to the assessee as the approval was denied by the Hon'ble CCIT. Further, exemption u/s 11 12 has to be examined in view of the Section 13 of the Income-tax Act, 1961. For claiming exemption u/s 11 12, the trust must be registered u/s 12AA of the Income-tax Act, 1961, for the year under consideration. The charitable activities are not sufficient for claiming exemption without any registration under the particular section of the Income-tax Act, 1961. 5. Assessment u/s 143(3) of Income-tax Act, 1961, was made by the Assessing Officer on 17.12.2008 and the entire excess of income over expenditure was taxed by observing that exemption u/s 10(23C(vi) was not available to the society as the same was denied by the competent authority. Further, exemption u/s 11 12 was also denied by the Assessing Officer by applying provisions of Section 13 of the Income-tax Act, 1961. The Assessing Officer also estimated interest on the advance given to other societies and to Total Diagnosis Private Limited and added the same in assessee s income. Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the end of the year, no amount was outstanding. Our attention was also invited by ld. Authorized Representative to the fact that amount paid by assessee society to Total Diagnosis Private Limited was utilized immediately by Total Diagnosis Private Limited for purchase of land on which building was to be constructed. 10. On the other hand, the ld. CIT DR argued that amount was given by the assessee to Total Diagnosis Private Limited without interest and without security, therefore, there was infringement of provisions of Section 13(1)(c) read with Section 13(3) and 13(2)(e), hence, exemption u/s 11 12 was not available to the assessee. He placed reliance on the decision of Hon'ble Delhi High Court in the case reported at 297 ITR 66, according to which once the assessee is found to have violated Section 13(3), exemption u/s 11 12 is not available to the assessee in respect of receipts either by voluntary contribution or income derived for its property. He further argued that since the assessee has failed to produce the agreement before the Assessing Officer, the ld. CIT(A) was justified in declining to accept the additional evidence in the course of appellate proceedings be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of some building to Mr. Anees Khan for which a valid agreement was also executed. The society has also given such contracts for construction works to other parties and the rate of contract charges to Mr. Anees Khan is found to be lower as compared to other contract. The payments are apparently for services rendered and the facts and circumstances discussed above indicate that such payments were neither excessive nor unreasonable. The Hon'ble I.T.A.T., Indore Bench in similar facts and circumstances in the case of appellant society itself in I.T.A.No. 235/Ind/2007 dated 19.01.2007 and in I.T.A.Nos. 426 439/Ind/2007 dated 26.11.2009 has held that by awarding such contract for construction at lower rate no unusual benefit was given by the society to Mr. Anees Khan. 13. We found that exactly similar issue was examined by the Tribunal in assessee s own case in assessment years 2004- 05 and 2004-05 vide order dated 26th November, 2009, and it was held that Shri Anees Khan never got any un-usual benefit from the assessee society after analyzing the computation chart of other party providing the same services to the assessee. In the instant assessment year under consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal is also dismissed. 15. As the facts and circumstances, during the year under consideration are in pari materia, respectfully following the decision of Tribunal in assessee s case, we hold that assessee s income is liable to exemption u/s 11 12 of the Act. From the record, we found that both the societies to whom the loan was given are registered u/s 12-A, registration certificate of society was also placed on record, accordingly, there was no violation of Section 13 of the Income-tax Act, 1961. 16. In the result, the appeal of the Revenue is dismissed. 17. The assessee has also given advance to M/s. Total Diagnosis Private Limited for purchase of office space. The Assessing Officer observed that amount was given by the assessee as a loan without any interest, therefore, there was violation of Section 13(2)(a). The Assessing Officer computed notional interest on the amount given as advance and added the same in assessee s income and also declined claim of exemption u/s 11 12. By the impugned order, the CIT(A) deleted the addition made on account of notional interest by observing that assessee society was not in receipt of any actual interest and the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to M/s. Total Diagnosis Private Limited was not a loan but was advance in pursuance to agreement to purchase the office space. The amount was paid by the assessee on 24.11.2005 and 29.11.2005. Thus, a total of Rs. 2,36,02,221/- was carried forward. There was one more current account with M/s. Total Diagnosis Private Limited, wherein Rs. 60,72,000/- was given and on 24.11.2005 Rs. 3,96,70,012/- was given. We found that as per the ledger account placed on record, these two amounts were paid back by the Total Diagnosis Private Limited in that year itself on 16.3.2005 and 20.3.2005. Thus, no amount was outstanding at the end of the year in this current account. Furthermore, the current account was not in the nature of loan account. From the record, we also found that the amount paid by the assessee society to M/s. Total Diagnosis Private Limited was immediately used by Total Diagnosis Private Limited for purchase of land on which building was to be constructed. We had verified relevant plot account in the books of Total Diagnosis Private Limited as placed on record, according to which the payment received from assessee society was utilized immediately for payment to Bhopal Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the amount advanced by the assessee to Total Diagnosis Private Limited against which the assessee has actually received interest of Rs. 69 lakhs from Total Diagnosis. Not only interest was paid to the assessee but TDS was also deducted on the payments so made amounting to Rs. 6.90 lakhs. On the entire amount of interest, Total Diagnosis Private Limited have deducted and deposited income tax of Rs. 6,90,000/- on 30.9.2010. Thus, the genuineness of agreement vis- -vis implementation of its terms and conditions are beyond doubt. The assessee society has also offered interest income of Rs. 69 lakhs in the year of receipt i.e. 2009-10 and the Total Diagnosis Private Limited has capitalized the interest expenditure in its books of accounts, which are evident from the documents placed on record. 19. Thus, on the basis of material placed on record, it is clear that the amount given by the assessee was not in the nature of loan but was an advance for purchase of office space and when ultimately the Total Diagnosis Private Limited could not give office space due to sanction being not given by Bhopal Municipal Corporation for construction of 4th and 5th Floor, the amount was paid back t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Rule 46A, particularly sub rule (4) thereof, and the provisions of Section 250(1), conferred power on the First Appellate Authority, it can be laid down that inspite of the provisions of Rule 46A, the provisions of Section 250 enable the First Appellate Authority to accept additional evidence in appropriate cases, which power has been preserved by sub rule (4) of Rule 46A also. It was also observed that for the substantial cause of justice, the additional evidence should not be refused to be admitted on technicalities. In the instant case, we also found that there is nothing on record to show that conduct of the assessee was contumacious. The agreement so placed on record before CIT(A) goes to the root of issue, therefore, for the substantial cause of justice, he should not have refused the same merely on technicalities. In the instant case, since the CIT(A) has doubted the genuineness of agreement filed before him and did not accept the same, the Bench in order to verify the genuineness of agreement during the course of hearing vide order sheet dated 19.4.2012 has directed the assessee to produce the original agreement. The agreement in original was filed by the assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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