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TMI Blog2015 (3) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Assessing Officer was filed. We further find that in its submission before the Assessing Officer it was claimed by the assessee-trust that Sri Ashish J. Desai was not having substantial interest in M/s. Niche Realty Pvt. Ltd. but even in these submissions of the assessee which have been reproduced by the Assessing Officer in his order there is any mention about the copy of annual report with the Registrar of Companies being filed, though in the submission before the learned Commissioner of Income-tax (Appeals), it was mentioned by the assessee-trust that copy of annual report with Registrar of Companies was being filed. In view of these undisputed facts of this case, we are inclined to agree with the contention of the learned Departmental representative that the learned Commissioner of Income-tax (Appeals) has given relief to the assessee by admitting and relying on the additional evidence which was not before the Assessing Officer, therefore in the interest of natural justice and fair play we are of the considered opinion that matter be restored back to the file of the Assessing Officer for fresh adjudication as per law. - Decided in favour of revenue for statistical purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adventured into the field of education. (ii) Shri Narendra Koringa, a retired teacher of Government school who is based at Rajkot. 5. During the assessment proceedings, the Assessing Officer found that the assessee-trust has made payment of ₹ 3,28,51,483 to M/s. Niche Realty Pvt. Ltd. In Niche Realty Pvt. Ltd, there are two directors, namely Sri Ashish J. Desai and Sri Ashish Bhavsar. Sri Desai who was the managing trustee of the assessee was also one of the directors of M/s. Niche Realty to whom the construction of the school building was given. The Assessing Officer further observed that as per provisions of section 13(2)(g) of the Income-tax Act if any income or property of the trust is diverted during the previous year in favour of any person referred to in sub-section (3) or section 13 then the assessee is not eligible for deduction under section 11 of the Act. As per the provisions of the Act, the assessee was required to fill Form 10B with the audit report under section 12A(b) of the Act and disclose whether there was any application or use of income or property for the benefits of persons referred to in section 13(3) of the Act. However it was found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot constitute diversion of income or property to Niche Reality. (8) Again you will observe that the said firm has also given interest free deposit for 10 years where by our trust has gained a large benefit. 5.1. The assessee was further asked to furnish copy of the resolution passed by the board for awarding the contract for construction of school building. The same was furnished which reads as under : Resolved that labour contract for the construction of the school building be awarded M/s. Niche Realty Pvt. Ltd. on such terms and conditions which may be decided by the trustees and directors of the company within the framework of some of the main conditions listed hereunder- The rate for the labour contract should be verified from the market rates and a reasonable rate on cost plus basis not exceeding ₹ 100 per sq.ft should be fixed : The rates and suppliers for the construction material shall be finalised by the trust. Though the purchases of the construction material shall be finalised by the trust. Though the purchases of the construction material could be done by the contractor also for which the contract shall be reimbursed the cost by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trustees and directors of the company. The trust is having only two trustees and company too is having only two directors which are as under- Trust Niche Realty P. Ltd. Ashish J. Desai Ashish J. Desai Narendra Koringa Ashish Bhavsar Shri Ashish J. Desai the managing trustee of the trust is also the director of the company. There is only one trustee other than Shri Ashish J. Desai in the assessee-trust and only one director other than Shri Ashish J. Desai in the company. By awarding the contract to Niche Reality Pvt. Ltd. the managing trustee of the trust has benefited at the cost of the trust. It is very dear that there is diversion of income from the trust to the Niche Reality Pvt. Ltd. in which Shri Ashish J. Desai is interested. This fact was not disclosed in Form 10B filed along with the audit report in the return of income. In view of the clear violation of the provisions of section 13(2)(g) read with section 13(3) of the Act the assessee is not eligible to claim deduction under section 11 of the Income-tax Act. 3. The trust has obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and expenditure account is brought to tax. In view of the above facts the total income is computed as under : (Rs.) Total income as per return : (-) 9,16,53,996 Add : Disallowance of deduction under section 11 of the Act as discussed above 10,19,39,409 Assessed income 1,02,85,413 7. In appeal the learned Commissioner of Income-tax (Appeals) after taking into consideration the submission of the assessee which has been reproduced by him in his order directed the Assessing Officer to delete the addition by observing as under : 9. After taking into consideration reasons for disallowance given in assessment order by the learned Assessing Officer and after going through submissions given by the learned authorised representative, it can be concluded that the disallowance of claim under section 11 for ₹ 10,19,39,409 of the assessee-trust is not in consonance with provisions of law since the learned Assessing Officer concluded that the assessee-trust is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified and considered while passing this order. 10. In view of the above observations and taking into consideration the submissions made by the authorised representative of the assessee- trust, the addition made by the learned Assessing Officer by way of disallowance of claim of deduction under section 11 for ₹ 10,19,39,409 is deleted. 8. Aggrieved by this order of the learned Commissioner of Income-tax (Appeals) now the Revenue is in appeal before us. 9. At the time of hearing the learned Departmental representative vehemently argued that the learned Commissioner of Income-tax (Appeals) has given relief to the assessee by placing reliance on the additional evidence in the form of photocopy of annual report filed with Registrar of Companies according to which Ashish J. Desai held only 4 per cent. of the equity shares and hence it was argued that it cannot be said that he was holding a substantial interest in M/s. Niche Realty Pvt. Ltd to whom contract for construction of school building was given by the assessee-trust. This additional evidence was admitted and relied upon by the learned Commissioner of Income-tax (Appeals) without confronting the same to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual report with Registrar of Companies was being filed. In view of these undisputed facts of this case, we are inclined to agree with the contention of the learned Departmental representative that the learned Commissioner of Income-tax (Appeals) has given relief to the assessee by admitting and relying on the additional evidence which was not before the Assessing Officer, therefore in the interest of natural justice and fair play we are of the considered opinion that matter be restored back to the file of the Assessing Officer for fresh adjudication as per law. We hold accordingly. 11. In the result, the Revenue's appeal is allowed for statistical purpose. I. T. A. No. 1190/Ahd/2011 assessment year 2009-10 12. This is the assessee's appeal against the order of the learned Director of Income-tax (Exemption) cancelling the registration granted under section 12AA of the Income-tax Act. The registration of the assessee granted under section 12AA of the Act was cancelled by the Director of Income-tax (Exemption) on the basis of the Assessing Officer's order for the assessment year 2008-09, wherein the Assessing Officer by observing that contract for construction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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