9911796707
TMI Blog2012 (12) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... encourage the people to donate eyes after death to blinds to remove blindness in India. (iv) Society will encourage the people for helping in forestation of barren land and help in making good environment balance in the country. 3. The assessee society is also registered u/s 12AA of the Income-tax Act, 1961, vide Regn. No. 59/2000-01 dated 02.0-5.2001 w.e.f. 1.4.2000 which was subsequently granted w.e.f. 13.08.1999 by the I.T.A.T., Indore, vide order no. I.T.A.No. 98/Ind/2007 dated 10.08.2007. The society is filing its regular return with the income tax department and for the year under consideration, the society has filed its regular return on 31.10.2006 by showing NIL income and by claiming exemption u/s 10(23C)(vi) as well as Section 11 and 12 of the Income-tax Act, 1961, The assessee has applied to CCIT, Bhopal, for approval u/s 10(23C)(vi) in 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment made to Shri Anees Khan, the ld. Authorized Representative placed on record order of I.T.A.T. in assessee's own case for the assessment year 2003-04 and 2004-05, wherein issue was decided in favour of the assessee. 9. With regard to amount given to M/s. Total Diagnosis Private Limited, it was submitted by the ld. Authorized Representative that this amount was not given as a loan but was advance in pursuance to the agreement for purchase of office space. Our attention was also invited to the account of total M/s. Total Diagnosis Private Limited, wherein amount of Rs. 1,50,00,000/- was paid on 24.11.20054. Total amount of Rs. 2,36,02,221/- was carried forwarded. Our attention was also drawn to the current account of Total Diagnosis Private Limited, wherein amount given was paid back by Total Diagnosis Private Limited in that year itself and 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Anees Khan, Contractor, the Assessing Officer disallowed a sum of Rs. 63,506/- u/s 13(2)(c). The Assessing Officer also found that the assessee has given loans to other societies without charging any interest, therefore, addition was made by estimating interest income on such advances. The Assessing Officer has also disallowed travelling expenditure of Rs. 13,283/-, on the plea that the same was for the benefit of persons mentioned in Section 13(3) of the Income-tax Act, 1961. On the plea that the assessee has contravened provisions of Section 13(2)(c), the entire excess of income over expenditure was declined benefit of Section 11 & 12. 12. By the impugned order, the ld. CIT(A) deleted the addition made on account of payment made to Shri Anees Khan by observing as under :- "It is noticed that the society has awarded contract for construction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to various societies having registration u/s 12A and also observed that the Ld. CIT while cancelling the registration u/s 12A, did not controvert this fact, which impliedly means that these advances have been found by the Tribunal to have been made in consonance with the object of the assessee society. Further, the Ld. CIT(A) has also given relief after considering various judicial decisions. The assessee has also relied on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Trustees of Jadi Trust, as reported in 133 ITR 494 and other judicial decisions which also support its claim. Accordingly, we hold that no disallowance is warranted out of interest paid nor any notional interest is to be charged as income. We further hold that the assessee's income is liable to exemption u/s 11 & 12 of the Act. Thus, these grounds of the Revenue'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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has passed benefit to the interested person by giving interest free loans, the CIT(A) held that benefit of Section 11 & 12 was not available to the assessee. 18. We have considered the rival submissions, gone through the orders of the authorities below and deliberated on the case laws relied on by the ld. Authorized Representative and ld. CIT DR in the context of factual matrix of instant case. From the record, we found that there is no dispute to the carrying of charitable activities by assessee so as to qualify for claim of exemption u/s 11 & 12 of the Income-tax Act, 1961. The registration so granted to assessee by Income Tax Authorities u/s 12AA was also in force during the year under consideration. The only reason for denial of claim was advancing of money to Total Diagnosis Private Limited. From the record, we found that the amount given by assessee 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 Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where payment made as advance by the assessee to Total Diagnosis Private Limited was kept lying idle but the fact that this amount was immediately utilized by Total Diagnosis Private Limited for payment of land dues to Bhopal Development Authority is also verifiable through documentary evidence and statement of account placed on record. From the record, we also found that permission for construction was given by Bhopal Municipal Corporation to M/s. Total Diagnosis Private Limited on 8.4.2008. However, this permission was only given for construction upto 3rd floor. Since the necessary permission for 4th and 5th floors was not sanctioned in favour of Total Diagnosis Private Limited, the amount of advance was returned to the assessee society with interest of Rs. 69 lakhs. However, the Assessing Officer has computed notional interest of Rs. 68,94,913/- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable to the facts of the present case. Other decision relied on by CIT DR in the case of Madras High Court's decision reported at 262 ITR 187, we find that money which was given to the sister concern remained with the company for the whole of the year without being spent. Under these circumstances, the Hon'ble High Court held that the assessee was not entitled for exemption u/s 11 & 12. However, in the present case, the assessee has advanced money to Total Diagnosis Private Limited and immediately it was used to buy the land for Bhopal Development Authorities on which construction was to be made. So far as argument of ld. CIT DR to the effect that CIT(A) was justified in not accepting the agreement on the plea of Rule 46A, we found that under similar circumstances, Hon'ble Kerala High Court in 265 ITR 217 had observed that "On a consideration of provisions 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, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en accepted by the Assessing Officer. Thus, 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. Furthermore, the amount is negligible and this cannot be treated as benefit to any persons, since these trips were wholly and exclusively for the purpose of society and not for personal purpose. Ground taken with regard to infringement of provisions of Section 13 by giving advance to other Societies are already covered by the order of I.T.A.T. in assessee's own case for the assessment years 2003-04 and 2004-05 as discussed hereinabove. Respectfully following the decision of Tribunal in assessee's own case for the assessment years 2003-04 and 2004-05, we do not find any merit in the action of CIT(A) in holding that assessee society has infringed provisions of Section 13 by giving advance to other societies. 23. Ground taken by the assessee with regard to charging of interest u/s 234D has no merit. However, this ground is consequential in nature, accordingly, the Assessing Officer is directed to recompute interest after giving appeal effect of this order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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