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TMI Blog2023 (5) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not made any efforts in modifying the lease deed as the case may be. As rightly pointed by the ld. DR if the registration u/s. 80G(5)(vi) of the Act is granted, the assessee is entitled to receive certain donations which are tax free being utilized for construction, development and the achievement of its objects etc. which goes to the hands of the lessors after the expiry of lease period of 30 years. We find there is no guarantee or protection given to the said tax free asset in the lease deed and will benefit the persons i.e. trustees covered u/s. 13(3) of the Act. Thus, we find no infirmity in the order of CIT(Exemption) and it is justified. Thus, the grounds raised by the assessee are dismissed. - ITA No. 225/PUN/2021 - - - Dated:- 17-5-2023 - Shri S.S. Viswanethra Ravi, Judicial Member And Shri G.D. Padmahshali, Accountant Member For the Assessee : Shri Kishor B. Phadke For the Revenue : Shri B. Koteswara Rao ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 30-03-2021 passed by the Commissioner of Income Tax (Exemption), Pune [ CIT(Exemption) ]. 2. We find that this appeal was filed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Heard both the parties and perused the material available on record. As noted above the facts remains admitted that there was no land belonging the assessee s trust in the Balance sheet, but however, the assessee utilized its funds in constructing a building on land belonging to the trustees. The CIT(Exemption) discussed certain clauses at page No. 2 of the impugned order. On perusal of the same, we note that the lease period is for 30 years which clearly establishes that the assessee is not the owner and the ownership with the trustees. According to the CIT(Exemption) that the deed is not irrevocable which means that can be terminated at any time. It is pertinent to note the respondent-revenue filed written submissions vehemently opposing the registration u/s. 80G(5)(vi) of the Act. The relevant portion of the said written submissions is reproduced hereunder: 2. Since the overall activity of construction of building as per the terms of the lease agreement having-direct benefit of the persons covered u/s1313) of the-income-tax Act, the same violates the conditions mentioned u/s 80G(5)(vi) of the Income-tax Act. For better understanding of the case, relevant provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be disconnected, any liabilities relating to the property shall be paid off by the lessee. The bills relating to expenditures incurred by the lessee in relation to any connections established, shall be made available to the lessors for inspection after an interval of every 6 months. 10. The agreed property shall be restored in its original form after due cleaning, etc. on the expiry of the said lease agreement or in case of termination of the agreement before the expiry. In case there is no violation of the terms and conditions of the agreement by the lessee during the subsistence of the lease agreement, the same may be renewed on the discretion of the lessors. 11. An actual possession of the said property has been given to the lessee by the lessors an today's date. 12. The lessee will use the agreed property for the purpose of establishment of educational institution and any other educational purposes. 13. After the expiry of the lease agreement, the lessee wilt, without any prejudice, hand over the possession of the property to the lessors. Accordingly, the lessee will not set up any adverse title to the property of the lessors. 14. In case of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ild not only the constructed property but along with Brand Value of the educational institution after deriving the benefit of donations and freely hand over, a tax free asset having a Brand Value with the property constructed, to the trustees at the end of lease period of 30 years. As per the terms of the lease agreement, the assessee will have no Right over the constructed building, property and the assessee is bound to vacate the land of the trustees without claiming any adverse title to the property of the lessors. The agreement is completely silent on the fate of the constructed property which is nothing but an arrangement wherein no charitable purpose is plausible as entire activity of the trust get devised for the benefit of the persons/trustees/lessors in violations of section 13(3) of the Income-tax Act. It is also a matter of clarification as to whether the assessee trust, who has incurred capital expenses towards the construction of building is on the agricultural land with due NA permission of the competent authority and that too in whose name the approval for NA has been obtained. 3. Further from the memorandum of association (Annexure-A) it can be seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended that overall activity of construction of building as per the terms of the lease agreement direct benefit of the persons covered u/s. 13(3) of the Act which clearly violates the conditions mentioned u/s. 80G(5)(vi) of the Act. Further, the said lease agreement is not containing automatic renewal clause and the trustees can dispossess the assessee from the building constructed by the assessee from its funds. The ld. DR argued that the assessee s trust after deriving the benefit of donations and constructing buildings on the land belonging to the trustees is a tax free asset, will hand over the said tax free asset to the trustees at the end of lease period of 30 years. We find force in the arguments of the ld. DR the assessee will have no right whatsoever over the construction of building and its development, utilizing from the assessee s trust fund. The assessee is also bound to vacate the said premises after the lease period. Further, it is brought to our notice that the CIT(Exemption) rejected the assessee s application on two earlier occasions and this is the third application wherein the assessee has not made any efforts in modifying the lease deed as the case may be. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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