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TMI Blog2013 (7) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2004-05. 3. The appeal has been preferred by the department on following substantial questions of law:- "1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in confirming the order of the CIT (A) directing the A.O to allow exemption u/s 11 and u/s 10 (23-c) (vi) of the Act, which had been rightly disallowed by the A.O after appreciation of material on record? 2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the addition made by the AO by holding that the assessee society has not violated the conditions of Section 10 (23-c) (vi)/11 of the Act? 3. Whether there was violation of the condition imposed by the CCIT while granting the ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avoid payment of tax, though the fruits of profits were enjoyed by the director, family members and office bearers of the society. He also found that it was a fit case for withdrawing exemption under Section 11 or under Section 10 (23c) (vi). 7. In the appeal filed by the assessee Society the CIT (A) found that the assessee admittedly runs a school and is an educational institution to which the provisions of Section 10 (23c) (vi) are applicable. The society was granted approval under Section 10 (23c) (a) subject to certain conditions. One of the conditions was to maintain the accounts of the investment of the properties. A vague allegation was made of inflation of expenses and diversion of funds but no instance was brought on record. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the society. The society runs school in the said building and no part of the building is utilized for any personal purpose of the directors or any person related through them. When the society wanted to purchase the property for construction of a building for school, the matter for preparation of documents was entrusted to legal consultants. Since the registration law required personal attendance and photographs of the person representing transferee on behalf of the society, Smt. Bharti Madhok, one of the directors, was present for registration and her photograph was affixed to the documents and the document was prepared in the name of Smt. Bharti Madhok, director, Sunbeam English School. The fact that she is representing the society and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legation that the property was purchased through Shri Madhok. It was further submitted that the vehicles are owned by the assessee society and the directions were only representing the society and that vehicles are used for the purpose of the society and in any case to avoid misunderstanding the names have since been changed. It was further submitted that salary to the directors and other employees are reasonably paid for which entire record is maintained. It was further submitted that the assessee never violated any condition laid down by the CCIT. Therefore, there is no reason to withdraw the exemption granted to the assessee. 10. The learned Commissioner of Income tax (Appeals) considering the submissions of the assessee and the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent itself before the Registrar for the purpose of registration of the sale deed. Somebody has to represent the assessee society in the sale deed for getting it registered. The director of the assessee society is a competent person to represent the assessee society for getting the sale deed registered. Originally the sale deed was registered in the name of Smt. Bharti Madhok, director of the assessee school. Even in such narration, there should not have been any objection of the revenue department because only the director represents the assessee society. However, in order to avoid any controversy, the assessee moved before the civil court for direction in the matter and the Director of the assessee made statement before the Civil Court tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society, in whose name the property was purchased, was a mistake, which was corrected by obtaining an order from the Civil Court, which examined the entire matter and found that the property was purchased from the funds of the Society, and is recorded in the name of the Society. A correction was directed to be made to avoid any complication which may arise in mentioning the name of Smt. Bharti Madhok as the purchaser of the property. 11. The ITAT also observed that the property was also mortgaged with the Bank after taking permission of the Court. Such permission is granted by the Court after scrutinizing the bonafides and genuineness of the transaction. The Bank also does not ordinarily create a charge over the property unless due dilige ..... X X X X Extracts X X X X X X X X Extracts X X X X
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