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TMI Blog2018 (4) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... rust as disclosed in the accounts, copies of which are available in the paper-book, the CIT(Appeals) is not justified in disallowing the claim of the assessee. Loan taken for Lease of the computers - repayment of loan taken - Held that:- Admittedly, the loan was taken from M/s Hewlett Packard Financial Services (India) Pvt. Ltd. The funds were used by the assessee for the purpose of carrying on the activities of the trust. The repayment of loan either in the name of payment of rental or otherwise, has to be construed as application of income under Section 11 of the Act. The availability of computers in the premises of the assessee-trust or its institutions is not in dispute. No question of any disallowance for repayment of loan taken by the assessee-trust - the exemption claimed by the assessee is allowed. - Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... k where copies of the accounts are available, the Ld. representative submitted that there was no violation of Section 13 of the Act since the amounts were transferred and credited to the accounts of the trust on the same day. Referring to Circular issued by the CBDT in circular No.387 dated 06.07.1984, a copy of which is available at page 30, the Ld. representative submitted that if at all there was violation of Section 13 of the Act, the maximum marginal rate has to be applied only to that extent of income which is not eligible for exemption in view of violation of Section 13 of the Act. In this case, according to the Ld. representative, there was no violation of Section 13 of the Act, therefore, there was no question of denial of Section 11 of the Act at all. Even for assuming that there was violation, according to the Ld. representative, the Assessing Officer is not justified in disallowing the entire claim of exemption under Section 11 of the Act. The Ld. representative has also placed his reliance on the judgment of Andhra Pradesh High Court in CIT v. Polisetty Somasundaram Charities (19900 183 ITR 377 and also judgment of Madras High Court in CIT v. Nachimuthu Industrial Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. Therefore, according to the Ld. D.R., the Assessing Officer has rightly disallowed the claim of the assessee. Hence, the CIT(Appeals) confirmed the order of the Assessing Officer. 7. We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the provisions of Section 13 of the Act which reads as follows:- "Section 13(1) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) any part of the income from the property held under a trust for private religious purposes which does not ensure for the benefit of the public ; (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste ; (bb) Omitted by the Finance Act, 1983, w.e.f. 1-4-1984. (c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i) if such tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trust or institution after the 30th day of November, 1983 : Provided that nothing in this clause shall apply in relation to- (i) any assets held by the trust or institution where such assets form part of the corpus of the trust or institution as on the 1st day of June, 1973, ; (ia) any accretion to the shares, forming part of the corpus mentioned in clause (i), by way of bonus shares allotted to the trust or institution ; (ii) any assets (being debentures issued by, or on behalf of, any company or corporation) acquired by the trust or institution before the 1st day of March, 1983 ; (iia) any asset, not being an investment or deposit in any of the forms or modes specified in sub-section (5) of section 11, where such asset is not held by the trust or institution, otherwise than in any of the forms or modes specified in sub- section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 19932, whichever is later ; (iii) any funds representing the profits and gains of business, being profits and gains of any previous year relevant to the assessment year commencing on the 1st day of Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year for consideration which is more than adequate ; (f) if any share, security or other property is sold by or on behalf of the trust or institution to any person referred to in sub-section (3) during the previous year for consideration which is less than adequate ; (g) if any income or property of the trust or institution is diverted during the previous year in favour of any person referred to in sub-section (3) : Provided that this clause shall not apply where the income, or the value of the property or, as the case may be, the aggregate of the income and the value of the property so diverted does not exceed one thousand rupees ; (h) if any funds of the trust or institution are, or continue to remain, invested for any period during the previous year (not being a period before the 1st day of January, 1971) in any concern in which any person referred to in sub-section (3) has a substantial interest. (3) The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, namely :- (a) the author of the trust or the founder of the institution ; (b) any person who has made a substantial contribution to the trust or institution, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or medical facilities to persons referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3).''. (7) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof, any anonymous donation referred to in section 115BBC on which tax is payable in accordance with the provisions of that section. Explanation 1.- For the purposes of sections 11, 12, 12A and this section, "trust" includes any other legal obligation and for the purposes of this section "relative", in relation to an individual, means- (i) spouse of the individual ; (ii) brother or sister of the individual ; (iii) brother or sister of the spouse of the individual ; (iv) any lineal ascendant or descendant of the individual ; (v) any lineal ascendant or descendant of the spouse of the individual ; (vi) spouse of a person referred to in sub-clause (ii), sub-clause (iii), sub-clause (iv) or sub-clause (v) ; (vii) any lineal descendant of a brother or sister of either the individual or of the spouse of the individual. Explanation 2.- A trust or insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value, even though the contractor was a related person to trustee or founder, this Tribunal is of the considered opinion that there cannot be any violation of Section 13(1) of the Act. In this case, it is not the case of the Revenue that the payment made to contractor was excessive and above market rate. Ms. Savitha and Ms. Swatika appear to be the daughters of the trustees. There was a payment said to be made to them. From the material available on record, it appears that the amounts were transferred to Ms. Savitha and Ms. Swatika and retransferred to the assessee-trust / educational institution on the same day. Therefore, it is obvious that the funds of the trust were not applied or used for the benefit of the above said Ms. Savitha and Ms. Swatika. Hence, it cannot be said that the funds of the trust were applied for the benefit of the close relatives of the trustee or founder of the trust. This Tribunal is of the considered opinion that there is no violation of Section 13 of the Act as contended by the Revenue. Since the amounts were transferred to the trust as disclosed in the accounts, copies of which are available in the paper-book, the CIT(Appeals) is not justified in disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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