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TMI Blog2011 (2) TMI 1568X X X X Extracts X X X X X X X X Extracts X X X X ..... for the sake of convenience. 2. First we will take up the appeal filed by the Revenue. The Revenue raised the following grounds of appeal: 1. The learned CIT(A) ignored the crucial fact that the society adopted double standards by showing one value to the municipal authorities and another value to the I.T. Dept. Quite against the settled law that such sub-standard conduct should not be taken judicial notice of. 2. The learned CIT(A) failed to appreciate the fact that the assessee grossly acted against one of the certificates given by itself at the time of registration before the Registrar of the Societies that no payment should be made from the funds of the society to any office bearer regardles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,14,000 which is more than the tolerance limit of ₹ 1,000 stipulated in section 13(2)(g). Accordingly the Assessing Officer issued a notice dated 24.12.2008 to the assessee to show cause as to why the claim u/s. 11 should not be rejected. 5. In response a detailed reply dated 29.12.2008 was filed before the Assessing Officer. It was contended by the assessee that the payment of rent by the society is very nominal amounting to only 12% of the market value saving 88% to the society and the property was let out on nominal rent basis and not on commercial basis. It was contended that the payment of rent was considered reasonable by the society and it does not amount to diversion of income in favour of any interested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted person. The Assessing Officer also relied on the decision of ITAT in Society for Integrated Development in Urban and Rural Areas (SIDDUR) vs. DCIT (90 ITD 493) and the decision of jurisdictional High Court in AWARE (263 ITR 43). The Assessing Officer felt that the payment of rent of ₹ 1.14 lakhs constituted benefit to the interested person. He observed that the Board circular as referred by the assessee is not relevant while considering the strict applications of fiscal provisions contained in the tax statutes. Accordingly, the claim of the assessee for exemption u/s. 11 of the Act was denied. 7. Before the CIT(A) the assessee reiterated the same arguments as argued before the Assessing Officer. The CIT(A) aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence to show the correct rental value as on date or to refute the value as shown by the Government valuer. The argument of the assessee that the rent collected is very nominal cannot be disputed even as per the information obtained from the municipal authorities and anything over and above the adequate consideration/market rent/standard rent was passed to the specified person in the garb of a commercial transaction of taking property on rent from the president is not established. The CIT(A) observed that in view of the decision of the Madras High Court in the case of CIT vs. 21st Society of Immaculate Conception (241 ITR 193) such sacrifice cannot be held against the president who, in addition to the substantial donation made by her hus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial on record. The purpose of section 13(1)(c) is to deprive a religious or charitable trust from exemption if it is found that its income is used or applied, directly or indirectly, for the benefit of the specified persons. Section 13(1)(c) carves out a general exception wherein the provisions of sections 11 and 12 will not operate on account of user or application of any income of the trust for any direct or indirect benefit of the any specified persons. It is an undisputed fact that the rent paid of ₹ 9,500 is not excessive even as per the old provisions of municipal. The assessee paid the rent as per the old municipal taxes. The present rental value would be much more than the rent paid by the assessee for the property having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the learned DR, and allowed the case of the assessee. 13. The CIT(A) has passed a detailed and speaking order on this issue. In the absence of any evidence in support of the contention of the Assessing Officer, We do not find any infirmity in the order the CIT(A) and the same is confirmed. In view of the detailed order of the CIT(A) and the Tribunal order in the case of Vasavi Academy (supra), the grounds raised by the Revenue do not find any merit. Accordingly the grounds raised by the Revenue are dismissed. 14. Now coming to the CO filed by the assessee. The assessee raised the grounds of CO against the appeal filed by the Revenue on the same issue. Since we uphold the order of the CIT(A) that favours as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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