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TMI Blog2021 (7) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... rustee nor has made substantial contribution to the trust he cannot be treated as a specified person. Hon ble Calcutta High Court in case of CIT vs. Rai Bahadur Biseswarlal Motilal Halwasiya Trust [ 2001 (6 ) TMI 31 - CALCUTTA HIGH COURT] held that, when trusts and institutions are two different entities clause (cc) of sub-section (3) of section 13 refers to the Manager of the Institution and not Manager of the Trust. When charitable nature of the trust is not in dispute and Dr. N.K. Arora has been working as per directions issued by the Board of Trustees to carry out various research projects as an Executive Director and being paid remuneration by the trustee stated to be commensurate to his functional profile, there is no questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2013-14 had shown him as specified person and reported the transaction with him. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee, M/s. Inclen Trust International, being a trust registered under section 12A of the Income-tax Act, 1961 (for short the Act ) having charitable aims and objective filed return of income declaring nil income. During scrutiny proceedings, Assessing Officer (AO) found the activities of the assessee trust covered u/s 2 (15) of the Act pertaining to the charitable purpose otherwise having been complied with the provisions contained u/s 11/12 of the Act. AO sought justification of salary of ₹ 90,00,000/- paid by the assessee trust to Dr. N.K. Arora, Execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- as remuneration has been paid to Dr. N.K. Arora, Executive Director for the services rendered by him during the year and as such, he is a specified person u/s 13(3) of the Act. Ld. DR also filed written submissions which are made part of the judicial record. 6. On the other hand, ld. AR for the assessee to repel the arguments addressed by the ld. DR for the Revenue relied upon the order passed by the ld. CIT (A) which is based upon the decisions rendered by Hon ble Apex Court in case of ACIT vs. Thanti Trust (2001) 247 ITR 785 (SC) and Hon ble Calcutta High Court in case of CIT vs. Rai Bhadur Biseswarlal Motilal Halwasiya Trust 252 ITR 84 and contended that there is no category of de facto trustee under section 13(3) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted. 4.1.5 This finding has also been given by the Hon'ble Calcutta High Court in the case of CIT vs. Rai Bahadur Biseswarlal Motilal Halwasiya Trust (supra), also relied upon by the appellant, in which case the Hon'ble Calcutta High Court have followed the decision of the Hon'ble Supreme Court in the case of Thanthi Trust and have held as under: When the trust and institution referred to in section 13 are not one and the same thing and they are different entities clause (cc) of sub-section (3) of section 13 refers to the manager of the institution and not the manager of the trust and in the case in hand the advance has been given to the manager of the trust and not the manager of the institution. In view of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y paid to him is in excess of the normal salary paid to his juniors is not factually and legally sustainable. Further, it is only in the context of section 13 that the Assessing Officer has held that the salary paid is not reasonable and as discussed above, section 13 has no applicability in the case since Dr. Arora is not a specified person. 4.1.8 Since exemption was denied by invoking the provisions of section 13(l)(c)(ii) which has been held to be not applicable in the case of the appellant, exemption under section 11 is allowed to the assessee with all consequential benefits. Grounds of appeal nos. 1 to 6 are allowed. 8. To examine the issue as to who is a specified person, we would like to extract the provisions contained u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Again, Dr. N.K. Arora is neither a trustee nor in the Governing Body nor in the Managing Committee of the assessee trust, rather he has been performing duties as per directions of the Trustees and Board of Trustees of the trust. Merely from the designation, we cannot reach to the conclusion that assessee trust is operating only through Dr. N.K. Arora who has been rendering services as per duties assigned to him on the basis of remuneration decided by the assessee trust. 11. AO made an addition of ₹ 37,19,000/- being the excessive remuneration paid to Dr. N.K. Arora. On the one hand, he is being considered a specified person as a de facto trustee and on the other hand, he is being admitted as working under the trust and his re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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