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TMI Blog2018 (7) TMI 1908X X X X Extracts X X X X X X X X Extracts X X X X ..... vances were made in earlier years, the provisions of section 13(1)(c)/(d) could in any case not have been invoked in the impugned year. We therefore uphold the order of the Ld. CIT(appeals) and dismiss the appeal filed by the Revenue. - ITA No. 1228/Chd/2016 And 1230/Chd/2016, 1229 /Chd/2016 And 1311/Chd/2017, ITA No. 1314/Chd/2017 (Assessment Years: 2013-14 &2014-15) - - - Dated:- 26-7-2018 - Shri Sanjay Garg And Ms. Annapurna Gupta, JJ. Appellant by: S/Shri Jagjeevan Kumar Garg, CIT DR Gulshan Raj, CIT DR Department by: Shri P.N. Arora, Adv. ORDER Annapurna Gupta, The captioned appeals relate to different assessees and has been filed by the revenue against separate orders passed by the Commissioner of Income Tax (Appeals)-4, Ludhiana. Since the issue involved in the appeals was common, they were all heard together and are being disposed off by way of this common consolidated order for the sake of convenience. 2. The sole issue involved in all the appeals relates to denial of exemption under section 11 of the Income Tax Act, 1961, (hereinafter referred to as ACT ) on account of violation by the assessee of the provisions of section 13 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough its Ld.AR vide letter dated 23.06.2016 on the issue under reference. 1 have further considered various judicial pronouncements relied upon by the appellant society as well as other material placed on record. On careful consideration of the assessment order, it has been noticed that the Assessing Officer has denied exemption to the appellant society claimed by it under section 11 of the Act on excess of income over expenditure declared b| the appellant society in income and expenditure account as in his opinion the appellant society has given loan to a group society without any consideration or adequate security as the group society is a specified person under the provisions of section 13(3) of the Act in which some of the members of the appellant society are also members and as such the provisions of sections 13(l)(c) and 13(l)(d) read with sections 13(3) and 11(5) of the Act are attracted in the case of the appellant society, While denying impugned exemption, the Assessing Officer has also observed that the fund transferred by the appellant society to its group concern by way of loan is in fact an investment made by the appellant society in another group society as the fund g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that there is a lot of force in the arguments of the appellant society. I am also of the opinion that the group society to whom loan has been given is not covered under the provisions of section 13(3) of the Act and as such provisions of sections 13(l)(c) and 13(l)(d) read with sections 13(3) and 11(5) of the Act are not attracted in the case of the appellant society. It has also been noticed that under identical circumstances no such disallowance was made in earlier years although the assessments in earlier years were also completed under section 143(3) of the Act. Under such circumstances, the action of the Assessing Officer in denying exemption of Rs.l,97,39,9527- in this case claimed by the appellant society under section 11(1) of the Act cannot be said to be justified, The judicial pronouncements relied upon by the appellant society also support its case whereas the facts of the judicial pronouncement relied upon by the Assessing Officer are distinguishable as the loan in that case was given to a company and not to a charitable institution . 6. Aggrieved by the same the revenue has come up in appeal before us challenging the aforesaid order of the CIT(appeal) and raisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 13(3) of the Act with whom such transactions were prohibited by section 13(1)(c) of the Act, for the purpose of claiming exemption, The AO also denied the exemption since he found that the said advance was in violation of the prescribed modes of investments of funds of trusts claiming exemption u/s 10(230) of the Act, as prescribed u/s 13(l)(d) rws 11(5) of the Act. The Assessing Officer also held that the assessee was ineligible for exemption since he found that the main object of the assessee was not education but giving loan and advance and building capital. The surplus earned by the assessee amounting to ₹ 3,64,60,383/- therefore was subjected to tax. 8. Thereafter it was pointed out that in the said case also the CIT( appeal) had decided the issue in favour of the assessee and the ITAT had upheld the order of the CIT( appeal).Ld. counsel for the assessee drew our attention to the relevant findings of the ITAT at para 16 to 24 of the order which stated as under: 16. We have heard both the parties gone through the orders of the authority below and also the documents referred to before us. We find no infirmity in the order of the Ld.CIT(Appeals). Clearly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered u/s 12A of the Act, for the purpose of imparting education and loan was advanced to it to assist in carrying out its objectives which was identical to that for which the assessee society was also set up. These facts have not been controverted by the Revenue. The said loan/advance therefore qualified as application of Income by the assessee and was not an investment or deposit covered u/s 11(5) of the Act. The assessee, we hold therefore cannot be said to have violated the provisions of section 13(l)(d) r.w.s 11(5) of the Act. The reliance placed by Ld. counsel for the assessee on the decision of the Hon'ble Delhi High Court in the case of Director of Income Tax (Exemption) vs ACME Educational Society 326 ITR 146 is apt, wherein after discussing the issue at length it was held that interest free loan given by one charitable society to another charitable society having similar objects was neither a deposit or investment in violation of section 13(l)(d) r.w.s. 11(5) of the Act. The relevant findings of the Hon'ble High Court at para 15 of its order are as under: 15. Keeping in view the aforesaid exposition of law, we are of the opinion that interest-free loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t nothing has been brought on record by the Revenue to prove that the main object of the assessee actually was giving loans and not providing education. Except for the fact of giving loan of ₹ 30 lacs to Baba Amarnath Educational Trust no other loan given by the assessee has been shown to us. The said loan has already been held by us as application of its income for the purpose of advancing its object of providing education, above. therefore, there is no merit in the contention of the Ld. DR vis- -vis the entire group we find remains unproved since the table relied upon by the Ld. DR in support of its contention reflects only the loan given by the assessee and two other trusts of the group to M/s Baba Amarnath Trust. The same has already been explained by the Ld. Counsel for the assessee having given to lend financial support to the said Trust in the initial years of its setting up, which fact has not been controverted by the Revenue. Even otherwise it fails to bring to light how the entire group was involved in creating capital only. Even the reference to the transaction between Shiva Educational Trust and Sachdeve Building Contractors Pvt. Ltd. has no relevance to the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the different assessees was produced before us in tabular form as under: CHART SHOWING DETAILS OF APPEALS FIXED FOR HEARING BEFORE ITAT. CHANDIGARH BENCH. CHANDIGARH ON 05/02/2018 Sl. No. Name of Assessee/ Respondent ITA No. Details of interest free loans given to other Educational Societies Details of A.Y. in which the amount was given as Interest free loan 1. Shiva Educational Trust 1229/Chd/16 35,00,000/- (Baba Amarnath Educational Society) 2011-12 2. Shiva Educational Trust 1314/Chd/17 35,00,000/- (Baba Amarnath Educational Society) 2011-12 3. ACE Educational Charitable Society 1228/Chd/16 90,00,000/- (Davinder Kumar Educational Society) 2012-13 4. ACE Educational Charitable Society 1311/Chd/17 90,00,000/- (Davinder Kumar Educational Society) 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be an investment or deposit made by the assessee and was therefore not in violation of the provisions of section 11 (5) of the Act so as to attract the provisions of section 13 (1) (d) of the Act. Ld. Counsel for the assessee stated that other than the impugned interest-free advance given by the assessees no other transactions were brought to light of similar nature by the assessee so as to hold that the assessee was indulging in transactions of giving only loans and advances and not in the activity of imparting education. Ld counsel for the assessee therefore stated that the finding of the ITAT in the case of Amritsar International(supra) that the assessee in such facts and circumstances could not be said to be indulging in the activities of giving loans and advances, squarely applies to the facts of the present case also. Ld. counsel for the assessee thereafter stated that since the facts in the present cases are identical to that in the case of Amritsar International (supra) the decision rendered by the ITAT in the said case would squarely apply to the present cases also. 12. Learned DR fairly admitted that the facts in the present appeals was identical to that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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