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TMI Blog2018 (6) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT(A) and direct the AO to allow exemption u/s 11/12 of the Act. Donation to PSESA - PSESA is not a registered society during the year under consideration u/s 12A - Held that:- ‘Charitable purpose’ has been defined u/s 2(15) of the Act and education is very much a charitable purpose. It is also an undisputed fact that PSESA was registered u/s 12A and 80G of the Act w.e.f. A.Y 2015-16. While granting registration u/s 12A of the Act revenue has to see objects of the trust and since PSESA has been registered u/s 12A of the Act, the revenue has accepted its objects. Merely because PSESA was not registered u/s 12A of the Act for the year under consideration that cannot be a reason for not allowing corpus donation of ₹ 8.02 crores to the assessee society, keeping in mind that the donee society is also a like minded society. We accordingly direct the AO to allow the corpus donation of ₹ 8.02 crores as application of income. - Decided in favour of assessee - ITA No. 1166/DEL/2018 - - - Dated:- 18-6-2018 - Shri N. K. Billaiya, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member Assessee by : Shri Niraj Jain, CA Shri P.K Misra, CA Revenue by : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land without getting ownership of the said piece of land and by giving equivalent amount of the cost as security deposit to NRPL the assessee has enured benefit to the related party. 6. It is the case of the Revenue that the assessee has incurred substantial capital expenses for the construction of the building on the land owned by NRPL which means that at the time of sale of the land, entire construction will go to NRPL and the assessee society will not get any benefit out of the same. This way, huge benefit has been passed on to specified person. 7. The AO was of the firm belief that the provisions of section 13(1)(c) of the Act have been violated for which no explanation has been submitted by the assessee. Drawing support from the decision of the Hon'ble Delhi High Court in the case of Chiranjiv Charitable Trust 267 CTR 305 [DEL], the AO has denied the benefits of section 11/12 of the Act and assessed the income under the normal provisions of the Act. Proceeding further, the AO found that the assessee has given donation of ₹ 8.02 crores to Pacific Society for Education and Social Activities, which was not registered u/s 12A of the Act during the year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en a different view for the same set of transaction in this year. We are told that A.Y 2013-14 was assessed u/s 143(3) of the Act and the exemption u/s 11/12 of the Act was granted to the assessee 13. Let us now understand the transaction with NRPL. It is true that the assessee did not purchase the said piece of land at Raj Nagar Extension, Ghaziabad. It is equally true that vide agreement dated 17.02.2012 with DPSS, the assessee agreed for setting up an English Medium School with DPSS for an educational joint venture. On finding difficulty in acquiring the ear-marked land at Ghaziabad, the assessee approached NRPL and agreed to take the land to be acquired by NRPL on a long term lease for 30 years which was renewable for another 30 years at the option of the assessee society against an interest free deposit which was equivalent to the cost of the land. The assessee further agreed to pay a notional lease rent of ₹ 2000/- p.m. from the year in which the academic session started. The NRPL purchased the said piece of land. The detail of land purchased is as under: SL. No. Khasra No. Khata No. Area (He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opinion that the assessee has not passed on any benefit directly or indirectly to the specified person NRPL. Firstly, by paying a meagre lease rent of ₹ 2000/- p.m., the assessee could get the possession of 7.88 acres of land. Interest free deposit of ₹ 5.53 crores paid during the year is nothing but akin to a security deposit. The Revenue s allegation that after the expiry of lease period, the building will go alongwith the piece of land thereby benefitting the specified person NRPL is a far- fetched thought in as much as we cannot presume happening or non- happening of an event, which would take place after 30/60 years. Moreover, the provisions of section 13 of the Act clearly show that the benefit should enure to the specified person during the year under consideration itself. 16. At this stage, let us consider the provisions of section 13(2) of the Act which read as under: (2) Without prejudice to the generality of the provisions of clause (c) 3 and clause (d)] of sub- section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. It is not the case of the Revenue that the assessee has not started operation of the school on the leasehold land. It is also not the case of the revenue that the assessee has not utilised the money in furtherance of its objects of the trust. No doubt, NRPL is a specified person but then the Act does not bar any normal transaction done with a specified person. All that is provided in the provisions of section 13 of the Act is that any transaction with specified person should not enure any benefit to that person directly or indirectly. If we consider the transaction with NRPL in its right perspective, the only logical conclusion comes is that no benefit has been passed on to NRPL by the assessee-society. 19. The decision relied upon by the Revenue in the case of Chiranjiv Charitable Trust [supra] is misplaced in as much as in that case the assessee paid 95% of the price of the land to its specified person and yet after a lapse of more than one year, sale could not be completed and no registered document was executed. In that case, real motive was to advance its surplus money to its specified person without charging any interest which was directly hit by section 13(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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