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TMI Blog2015 (11) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. representative for the assessee. We find that there was sufficient cause for not filing the appeals before the stipulated time. Therefore, we condone the delay and admit the appeals. 3. Shri S. Bharath, the Ld. Departmental Representative, submitted that both the assessees are registered as charitable institutions under Section 12AA of the Income-tax Act, 1961 (in short 'the Act'). During the assessment years under consideration, both the assessees claimed to have received corpus donation. However, the corpus donation claimed to have been received by both the assessees found to have been added to the Capital Fund. The Ld. D.R. further submitted that the assets created out of the accumulated Capital Fund were not reflected in the books of account of both the assessees. The Ld. D.R. further submitted that the assessees have not furnished the complete details of the donors from whom the corpus donation was claimed to have been received. Therefore, the Assessing Officer treated the entire so-called corpus donation said to be received by the assessees as income of the assessees. According to the Ld. D.R., the assessees have also not filed any evidence for application o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. Krishna and his wife Smt. K. Preethi are holding the entire shares of the company, namely, M/s Golden Shelters Pvt. Ltd. and Shri Vijaykumar, father of Shri N.K.V. Krishna, is a founder trustee of the assessees. Similarly, the said Shri N.K.V. Krishna and his wife Smt. K. Preethi are the major shareholders of M/s Prajit Foundation Pvt. Ltd. 5. The Ld. D.R. further pointed out that M/s Anirjita Properties was the owner of the land on which the meditation hall was constructed. There was an agreement between Anirjita Properties and M/s Golden Shelters Pvt. Ltd. However, the company claimed in the later stage that there was a lease agreement for a period of 30 years. The Ld. D.R. further pointed out that both the assesseetrusts own vast stretch of land at Kunnawalkam Village in Andhra Pradesh. Therefore, it is not known why the massive construction was put up in a land belonging to other person. According to the Ld. D.R., since the construction was made in the land belonging to Anirjita Properties, and building stands in the name of two companies, which are owned by close relatives of Shri Vijaykumar, one of the trustees, the Assessing Officer rightly found that there was a violat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Referring to the orders of the CIT(Appeals), the Ld. representative submitted that the CIT(Appeals), after considering the fact that Shri V. Vijaykumar relinquished his trusteeship on and from 08.06.1991, found that there was no violation of Section 13(1)(d) of the Act. Hence, the exemption claimed by the assessees under Section 11 of the Act cannot be denied. 8. Now coming to construction of meditation hall, the Ld. representative submitted that the construction was made by the two companies on the funds advanced by the two assessee-trusts. After completion of construction, the companies admittedly handed over the building to the trusts. The property tax assessment stands in the name of assessee-trusts. Therefore, according to the Ld. representative, the property belongs to the trusts and not to the companies. The moment the construction was completed, the physical possession of the property was handed over to the assessees. Therefore, at any stretch of imagination, the Revenue cannot claim that the property belongs to two companies. The Ld. representative further submitted that the property tax was also assessed in the hands of the two assessee-trusts by the respective local b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is wife Smt. K. Preethi own the entire shares in M/s Prajit Foundation Pvt. Ltd. and M/s Golden Shelters Pvt. Ltd. Shri N.K.V. Krishna is none other than the son of Shri V. Vijaykumar, who was the trustee of both the trusts. However, the said Shri V. Vijaykumar relinquished his strusteeship on and from 08.06.1991. Therefore, for the assessment years under consideration, the said Shri V. Vijaykumar has no relationship with the trusts. The question arises for consideration is when Shri V.Vijaykumar is no longer a trustee of the assessee-trusts, can the funds be advanced to the companies in which the son of Shri V. Vijaykumar and his daughter-in-law are holding shares would amount to diversion of funds to interested person? This Tribunal is of the considered opinion that the moment Shri V. Vijaykumar relinquished his trusteeship, it cannot be said that Shri V. Vijaykumar's son and daughter-in-law are interested persons in the trusts. Therefore, this Tribunal is of the considered opinion that there is no violation of Section 13(1)(d) of the Act. 11. Now coming to corpus donation, the assessees claim that all the details were furnished before the lower authorities. From the material av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal possession of the building is handed over to the assessee-trusts and allowed the assessee-trusts to enjoy the same, this Tribunal is of the considered opinion that the assessee-trusts became the owners of the meditation hall. Therefore, for all practical purpose, the assesseetrusts become the owner of the meditation hall constructed by the two companies on the funds advanced by the assessee-trusts. The treatment of the assessee in the accounts of the companies or trusts cannot override the provisions of Income-tax Act. In other words, the provisions of Income-tax Act would prevail over the treatment of the assessee in the accounts. Therefore, this Tribunal is of the considered opinion that there is no violation of any of the provisions of Sections 11, 12 & 13 of the Act. This Tribunal is of the considered opinion that since the assessee-trusts applied their funds for establishing an infrastructure in furtherance of their object, namely, construction of meditation hall, and the meditation hall in fact was completed and the possession was handed over to the assessee-trusts, the CIT(Appeals) has rightly allowed the claim of the assessees under Section 11 of the Act. This Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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