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TMI Blog2017 (10) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... not made any comment on the valuation report furnished by the assessee. In our view this documentary evidence furnished by assessee is not controverted by assessing officer by bringing any incriminating evidence on record. Thus in our view in absence of any incriminating evidence the payment of rent to the related party during the year under consideration is reasonable one. The assessee during the course of his submission filed a copy of the order lf ld CIT(A)-9 New Delhi dated 18.02.206, showing that the rent paid by the assessee was duly shown by Vidya Education Investment Pvt Ltd.(VEIPL) and was assessed by the revenue. The perusal of this order reveals that VEIPL has shown to have let out the land with superstructure to the assessee. VEIPL has offered the rent received from the assessee to tax. In our opinion in absence of any material the rent paid by the assessee to the related party during the year is reasonable one. With these observation the grounds of appeal raised by the assessee is allowed. - ITA No.4958/Mum/2015 - - - Dated:- 24-10-2017 - SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Shri Madhur Agarwal/Ronak G. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, the assessment was completed on 09.03.2014 under section 143(3) of the Act. The Assessing Officer (AO) while passing the assessment order denied the exemption under section 11 for ₹ 2,75,00,000/-, which was paid to a Company which is excluded under section 13(3). The AO also concluded that the fee structure is designed in a way to fund huge establishment expenses and the assessee is not entitled for exemption as the assessee are not doing any charity. The AO assessed total income of the assessee at ₹ 1,41,16,320/-. On appeal before the ld. CIT(A), the action of AO was confirmed. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us. 3. We have heard the ld. Authorized Representative (AR) and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee argued that assessee Trust has set up its International Residential School in the name of Cathedral Vidya School at Lonawala. The assessee is imparting education from Std. IV to Std. XII and Certain Diploma Courses. The assessee-Trust is duly registered under section 12AA vide Registration dated 31.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty vs. DDIT (351 ITR 184) (Bom.HC). iv. Green Acres Educational Trust vs. DCIT (70 taxmann.com 347) (Mum. Trib.) v. Gagan Education Society vs. ACIT (10 taxmann.com 156) (Agra Trib.) vi. ACIT vs. Mahima Shiksha Samiti (79 taxmann.com 38) (Jaipur Trib.). Thirdly, that the rent paid by assessee to the Company wherein the Trustee of the assessee are Director, is reasonable one. The assessee has duly substantiated their contention before the AO about reasonableness of the payment of rent. It was argued that the AO has not brought any material on the onus upon him to show that the rent paid by assessee is unreasonable. The assessee has placed on record the copy of Rental Valuation Report dated 10.01.2014. In support of his submission, the ld. AR of the assessee further relied upon the order of ld. CIT (A) in assessee s own case for AY 2010-11, copy of assessment order for AY 2010-11 passed under section 143(3) on 21.03.2013 and order of ld. CIT (A) in Vidya Education Investment Pvt. Ltd. for AY 2011-12 dated 18.02.2016. In support of his submission, the ld. AR of the assessee relied upon the following decision: i. Chirec Education Society vs. ADIT (354 ITR 605) (Andhra HC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.2008. The lease-deed is signed by Vineet Nayyar on behalf of lesser as well as lessee. During the AY, the assessee has paid rent of ₹ 2.75 Crore to lesser i.e. M/s Vidya Education Investment Pvt. Ltd. on account of Annual rent which is one of the subject matter of impugned assessment. 6. During the assessment proceeding, the AO issued show cause notice under section 142(1) seeking explanation from assessee with regard to (i) that assessee is running a Lavish International School, charging heavy fees from the students on commercial lines. The assessee is charging fee of ₹ 4,65,000/- p.a. from Class-IV to Class-VIII, ₹ 4,65,000/- for IGCSE* students and ₹ 5,65,000/- from I.B* ( * no details of abbreviations is available in record). (ii) No charitable benefit is available to poor and needy students as a fee waiver, or scholarship etc. The activities of institution are not charitable and commercial in nature. (iii) the assessee- Trust has made the payment of ₹ 2.75 Crore to M/s Vidya Education Pvt. Ltd. which is an excluded person under section 13(3) of the Act. The assessee was asked to justify the reasonableness of the said payment in term of provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 32.31 Lakhs per month. The assessee also contended that for preceding AY 2008-09, assessee-trust has not paid the lease rent which was waived by the lesser company because of financial difficulties faced by the assessee. The total cost of the land and school is ₹ 43,46,75917/- which is funded by Vidya Education Investment Pvt. Ltd. (VEIPL). The VEIPL has also provided furniture and fixture, computer, books, office equipment etc. required for school and further incurred a cost of ₹ 300 lakhs. Thus, in sum and substances the assessee claimed that the payment of lease rent is reasonable. The contention raised by assessee in its reply was not accepted by AO. The AO concluded that the assessee is charging huge fee for educational activity which cannot be considered and treated as charitable. There is no corelation of fee charged and the expenses incurred. The excessive fee is charged to generate huge surplus to fund the liability of rent of ₹ 2.75 Crore to a Private limited company owned and managed by excluded person. The assessee urged the similar contention before ld. Commissioner (Appeals). The ld CIT(A)confirmed the order of assessing officer holding that durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation report the monthly rental value is assessed as ₹ 32,31,367/-. The area of leased land is in this report is referred only 10 acre, however in the reply before assessing officer the area of land was claimed as 16.93 acre (page 8 para II of AO order). The assessing officer has not given any finding on this document. Similarly, the assessing officer has not brought any evidence on record about any valuation of comparable property. Similarly, the ld. Commissioner (Appeals) has not made any comment on the valuation report furnished by the assessee. In our view this documentary evidence furnished by assessee is not controverted by assessing officer by bringing any incriminating evidence on record. Thus in our view in absence of any incriminating evidence the payment of rent to the related party during the year under consideration is reasonable one. 9. The ld AR for the assessee during the course of his submission filed a copy of the order lf ld CIT(A)-9 New Delhi dated 18.02.206, showing that the rent paid by the assessee was duly shown by Vidya Education Investment Pvt Ltd.(VEIPL) and was assessed by the revenue. The perusal of this order reveals that VEIPL has shown to h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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