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TMI Blog2023 (9) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... it is also involved in using the land for commercial purpose. Apart from investment of Rs. 1.5 crore in HITEX, the appellant society had also transferred 100 acres of land on lease out of 167.30 Acres of land which was allotted by the Government to the Appellant. The Assessing Officer had taken note of transfer of 100 acres by the appellant society to HITEX, however, in his wisdom, he did not further enquire into the terms and conditions of such transfer and as to whether lease rental or any amounts are being received by the appellant society. Thus, investment of Rs. 1.5 crore and transfer of 100 acres of land by the Appellant to HITEX squarely covered under Section 13(1)(d) of the Act, 1961 and, therefore, the appellant society made themselves disentitle to the benefit under Section 11 of the Act, 1961 in view of violation of section 11(5) of the Act, 1961. The High Court of Kerala in Agappa Child Centre [ 1996 (8) TMI 52 - KERALA HIGH COURT] dealt with a similar issue wherein Assessee a public charitable trust, purchased a refrigerator and kept it at the residence of its managing trustee. The Court held that the Managing Trustee was one of the prohibited persons as per Section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the amount to be taxed should have been confined to the amount invested by the appellants in HITEX . 7. The facts relevant for decision on the present appeal are that the appellants herein is a Society under the Andhra Pradesh (now Telangana area) Public Societies Registration Act. The same was registered under Section 12-A, and also had the exemption under Section 80G of the Income Tax Act. 8. The substantial object of the above Society was, (i) to establish and form a National Academy for Construction (N.A.C.); (ii) for the service and benefit of the construction and allied industries by creating awareness, imparting training for increasing its relevance to the national level and also ensuring quality to the international standards. The mission statement of the Society also was on similar terms which were primarily to develop the technological advancement in the competitive construction industry which serves India s economical needs. To ensure quality in work adherence, to ensure having long-lasting aesthetical construction. To modernize construction with methodologies, materials and technologies. To encourage their use to upgrade the knowledge and skills of construction engin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad made an investment of Rs. 1.5 crores into the joint stock company towards equity, the assessing officer found the same to be in violation of Section 11 (5) of the Act. 11. Consequently, the assessing officer taxed the entire surplus of Rs. 7.16 crores for the year under consideration. The exemption sought for under Section 11 by the appellant company stood rejected. It is this order which was subjected to challenge before the Commissioner of Income Tax (Appeals) unsuccessfully by the appellants-N.A.C. The appellants were further unsuccessful in their further attempt before the Tribunal while challenging the order passed by the Commissioner of Income Tax (Appeals) as well. 12. According to the appellant, the Tribunal in the course of confirming the order passed by the CIT Appeals as also the assessing officer s order, reached to a perverse finding which was otherwise not sustainable. According to the appellant, the finding of ITAT is also perverse for the reason that, all that was required to be ensured was whether the income of the society is utilised only for the objects for which the society stands established. As an alternative to the argument, it was also contended by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 A of the Act. It was the contention of the learned counsel for the Revenue that since there is already a concurrent finding of fact, no substantial question of law as such remains to be adjudicated upon through the present appeal. 16. According to the learned counsel for the Revenue, the very purpose of constituting the company M/s. HITEX was with an commercial intention. It was the contention of the department that the management of HITEX is earning huge amounts of revenue from the hundred acres of land which HITEX has received from the appellant company. It was further contention of the learned counsel for the Revenue that the appellant company have already parted hundred acres of their land, (which they had received from the Government) to M/s. HITEX, which itself establishes the fact that they have deviated from the object and mission of the society. 17. Further, in turn HITEX has gone commercial by collecting huge amounts of rents by way of regularly organizing exhibitions over the land of the appellant which stood allotted to M/s. HITEX by appellant. Learned counsel for the Revenue, further contended that since there was a deviation from the object and mission by the socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would not be acceptable for the reason that with the amount of investment already carried out by the appellant in M/s. HITEX, coupled with the fact that the appellant have parted hundred acres of land allotted to them to be used by the said joint venture M/s. HITEX for gaining rental and other income. The said joint venture has been earning huge amounts of income from the said land by giving it on rent for many other purposes, in addition to, holding of exhibitions, etc. The income of which, or the profit earned by the joint venture also being shared with the appellants to some extent also would lead to the contravention of the object, purpose and mission of the society with which, it was established. 21. The appellant contended that the amounts lying in the corpus was from the voluntary contributions made by the members. Therefore, the investment towards the equity of M/s. HITEX by the assessee should not be treated as an investment or a deposit within the meaning 13 (1) (d). It is only channelizing of its funds and that too from the corpus which has been received exclusively from the membership fees collected from its members. The said contention of the appellant cannot be acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view to mobilize funds for the NAC. A similar order, being G.O. Ms. No. 98, Irrigation CAD Department, dated 5.7.2000, was issued directing inclusion of such a clause from 1.6.2000. 25. G.O. Ms. No.92, dated 19.05.1998, issued by the R B Department and G.O.Ms.No.98, dated 05.07.2000 issued by Irrigation CAD Department, were challenged by filing Writ Petition No. 23750 of 2020 and batch and the learned single Judge of this Court, vide order dated 19.07.2005, set aside the two impugned Government Orders holding that the impugned deduction of 0.25% from gross bills as contribution to NAC, is not traceable to any law for the time being in force , and that the resolution of the Builders Association of India itself, does not take away rights of petitioners to challenge the impugned order more particularly when said G.O. is issued without any statutory authority . 26. Challenging the same, the State of Andhra Pradesh and others filed Writ Appeal Nos. 2117 of 2005 and batch and 760 of 2008 and the Division Bench of this Court dismissed the said Writ Appeals vide order dated 21.07.2010 with the observation that it is very clear that the Government itself contemplated the mandatory contribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has committed a violation of the provisions of Section 13 of the Income tax Act and therefore, the Trust was not eligible for the entire exemption under Section 11 of the IT Act. [ It may be noted that SLP filed before the Hon ble Apex Court by the Assessee has been admitted in this case ] 31. The High Court of Kerala in Agappa Child Centre v. CIT[(1997) 92 Taxman 327 (Kerala)] dealt with a similar issue. The Assessee a public charitable trust, purchased a refrigerator and kept it at the residence of its managing trustee. The Court held that the Managing Trustee was one of the prohibited persons as per Section 13(3). Therefore, the Court held that the entire exemption of the trust is to be denied. 32. In view of the facts explained above, the appellant failed to make out any case warranting interference of this Bench with the order passed by the Income Tax Appellate Tribunal. 33. For all the aforesaid reasons, we are of the firm view that the question of law framed by the Court while admitting the petition, so also the question of law stressed by the learned Senior Counsel for the appellant during the course of the arguments deserves to be decided in the negative. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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