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TMI Blog2017 (1) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... in rightful possession of the shares so as to enable it to comply with the provisions of section 11 (5) of the Act. The assessee was not in a position to dispose of these shares due to lis pendence before Hon’ble Delhi High Court though the shares were bequeathed to assessee by way of a Will in the F. Y. 2004-05. - Decided against revenue Payment made for non charitable activities - Held that:- As for conversion of property from lease hold to free hold, the appellant trust being a shareholder, has contributed towards share of such charges. It is further noticed that Executor of estate Dr. Bhai Mohan Singh granted temporary loan of ₹ 3,33,57,000/- to the appellant trust, which was paid by the appellant trust towards conversion charges which cannot be said as payment has been made for non-charitable activities and for commercial consideration. - Decided in favour of assessee - I.T.A. No. 2803/Del/2013 - - - Dated:- 11-1-2017 - Shri L. P. Sahu, Accountant Member And Smt. Beena A. Pillai, Judicial Member Appellant by : Ms.Rachna Singh, CIT (DR) Respondent by : Sh. Ajay Vohra, Sr. Adv. Sh. Gaurav Jain, Adv. Ms. Bhavita Kumar, Adv ORDER Per Beena A. Pilla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before the Ld. CIT (A) who allowed the contentions of the assessee and deleted the additions made by the assessing officer. Ld. CIT (A) also held that there was no case of denying exemption under section 11 and 12 as the assessee was able to demonstrate that that there was no violation committed by it. 4. Aggrieved by the order of Ld. CIT (A) the revenue is in appeal before us now. As all the grounds are interlinked with each other they are taken up together for the sake of convenience. Ground No. 1 and 2 5. Ld. DR submitted that assessee has shown investments of shares in the Delhi Guesthouse Private Limited at ₹ 14,99,800/- in balance sheet as on 31.03.2007. She submitted that investment of trust funds in shares of private limited companies are not an approved mode or form of investment or depositing money as per section 11(5) of the Act. Ld. DR took us through the facts of the case and submitted that trust deed was registered on 28.07.2004, by virtue of which assessee had acquired 1,33,880/- equity shares of ₹ 10/- each comprising about 53.36% of the total paid up share capital of Delhi Guesthouse Pvt. Ltd. She further submitted that besides this Mr. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Delhi Guesthouse Pvt. Ltd., within the stipulated time, as there arose a dispute regarding partition of assets amongst the family members of Dr. Bhai Mohan Singh which included the shareholding in Delhi Guesthouse Pvt. Ltd., and a suit for declaration and permanent injunction was filed by one of the family members against the rest of the family members and assessee. Ld. Counsel for assessee submitted that Hon ble Delhi High Court passed an interim order on 29.09.2004 wherein it was noted that 53.56% of the shares of Delhi Guesthouse Pvt. Ltd., held by Dr. Bhai Mohan Singh had already been transferred to the assessee on 29th of July 2004. The court restrained assessee from any further alley nation of such shares until the next date of hearing. Ld. Counsel for assessee drew our attention to the order passed the Hon ble Delhi High Court which is placed at pages 39 to 41 of the paper book. Further, Ld. Counsel for assessee submitted that another suit was filed on 31.08.2006 by Bhai Manjit Singh against other legal hairs as well as Delhi Guesthouse Private Limited wherein Hon ble Delhi High Court wide order dated 4th December 2009, directed parties thereto to maintain status quo, rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd could not be disposed off immediately due to the conflict that arose amongst the legal hairs of the settler in respect of the partition of the assets which included the impugned shares of Delhi Guesthouse Private Limited. The legal heirs approached Hon ble Delhi High Court by way of a civil suit in which Hon ble court had passed an order restraining the parties from de-alienating from any of the assets held by them. In our considered opinion, under such circumstances assessee could not be considered to be a legal owner of the shares during the period F.Y 2000-04 As the word used in the section 13(1)(d)(iii) is held , it implies ownership of the assessee to the exclusion of all others which is not the case here. Ld. CIT (A) has considered the issue at length and has held as under: 5.1 I am in full agreement with the contention of the Ld. AR of the appellant as mentioned above. Besides this, the appellant has demonstrated that there is no violation of the provisions of the section because by virtue of interim order of Hon'ble Delhi High Court dated 29.9.2004 which is available at page No. 41 to page No. 43 of the Paper Book, as per which Hon'ble Delhi High Court has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more, there is no case of denying exemption u/s. 11 and 12 of the IT Act because appellant has been able to demonstrate that there is no violation committed by it. 13. In a considered view, the assessee was not physically in rightful possession of the shares so as to enable it to comply with the provisions of section 11 (5) of the Act. The assessee was not in a position to dispose of these shares due to lis pendence before Hon ble Delhi High Court though the shares were bequeathed to assessee by way of a Will in the F. Y. 2004-05. Under such circumstances we do not find any necessity to interfere with the findings of the Ld. CIT (A) and the same is upheld. 14. In the result ground No. 1 and 2 raised by the revenue stands dismissed. 15. In respect of Ground Nos. 3, Ld. Counsel for the assessee brought to our notice the correspondences between Delhi guesthouse Pvt. Ltd., and executor of the estate of Dr Bhai Mohan Singh which is placed at pages 97 to 103 of the paper book. It has been submitted by the Ld. Counsel assessee that the payment has been made for the purposes of conversion from leasehold to freehold of the property, which has been made by way of account payee che ..... X X X X Extracts X X X X X X X X Extracts X X X X
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