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TMI Blog2018 (9) TMI 1558X X X X Extracts X X X X X X X X Extracts X X X X ..... en alleged that the remuneration paid to four persons stated above were excessive or unreasonable. AO proceeded on the assumption that section 13(1)(d) of the Act is attracted merely on making of payment of remuneration to the trustees whereas the legal position is not such. In absence of any material brought before us by the revenue to show that the remuneration paid to the four persons in question were excessive or unreasonable having regard to the services rendered by them, the allegation of the Assessing Officer that there was violation of provisions of section 13(1)(d) is also unsustainable. We, therefore, set aside the orders of lower authorities and direct the Assessing Officer to allow exemption u/s.11 & 12 of the Act to the assessee as per law. - Decided in favour of assessee - ITA No.253 And 254 /CTK/2017 - - - Dated:- 24-9-2018 - SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER For The Assessee : Shri S.C.Bhadra, AR For The Revenue : Shri Subhendu Datta, DR ORDER Per N.S.Saini, AM These are appeal filed by the assessee against the order of the CIT(A)-3, Bhubaneswar dated 29.3.2017 for the assessment year 2010- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member Consultancy 24,500 6. S.K.Abdul Safique Member Education Charity 16,000 Therefore, he held that the assessee has violated the provisions of section 13(1)(d) of the Act. 4. Further, for the assessment year 2011-12, the Assessing Officer observed that the assessee has given interest free advance on various dates aggregating to ₹ 3,95,00,000/- to M/s. Adhikar Micro Finance (P) Ltd., and ₹ 7,48,851/- to M/s. Adhikar Grameen Products ltd. The Assessing Officer observed that Mr N. Amin is the President of the assessee society and also Shri Manmath Kumar Bhanjdeo is the trustee of the assessee society. Both have held shares in the company Adhikar Micro Finance Pvt Ltd. and M/s. Adhikar Grameen Products ltd, thereby violated the provisions of section 13(1(c) of the Act. The assessee has paid remuneration to the following persons: Sr. No. Name Designation Project Designation Purpose Amount (Rs.) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sub-s. (1) of s. 13, cl. (b) of sub-s. (2) of s. 13, cls. (a), (b), (c), (cc) (d), and (e) of sub-s. (3) of s. 13 cls. (i) (ii) of Expln. 3 to s. 13 of the Act are reproduced below : 13. (1) Nothing contained in s. 11 or s. 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 enure 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; ( c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- ( i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or ( ii) if any part of such income or any property of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution upto the end of the relevant previous year exceeds five thousand rupees; ( c) where such author, founder or person is an HUF, a member of the family; ( cc) any trustee of the trust or manager (by whatever name called) of the institution; ( d) any relative of any such author, founder, person, member, trustee or manager as aforesaid; ( e) any concern in which any of the persons referred to in cls. (a), (b), (c), (cc) and (d) has a substantial interest....... Explanation 3.-For the purposes of this section, a person shall be deemed to have a substantial interest in a concern,- ( i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than twenty per cent of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in sub-s. (3); ( ii) in the case of any other concern, if such person is entitled, or such person and one or more of the other persons referred to in sub-s. (3) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the instant case also no material has been brought on record before us by the department to show that according to the provisions referred to in section 13(1)(c) of the Act, the trustee has substantial interest either singly or jointly in M/s. Adhikar Micro Finance Pvt Ltd and M/s. Adhikar Grameen Products ltd. Therefore, respectfully following the above decision, the allegation of the department of violation of provisions of section 13(1)(c) is not sustainable . 11. Further, on a bare perusal of provisions of section 13(1)(d) of the Act show that to attract these provisions, it is not enough that remuneration has been paid to trustees but it has to be also shown that the remuneration paid is excessive or unreasonable as compared to the services rendered by those persons. 12. In the instant case, nowhere the Assessing Officer has even alleged that the remuneration paid to four persons stated above were excessive or unreasonable. The Assessing Officer proceeded on the assumption that section 13(1)(d) of the Act is attracted merely on making of payment of remuneration to the trustees whereas the legal position is not such. In absence of any material brought before us by the r ..... 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