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TMI Blog2024 (3) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration before us. Further, the decision in Raj Kumar Arora is not valid after subsequent decision of Hon ble Supreme Court in PCIT Vs. Abhishar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] . Therefore, the grounds raised by revenue are meritless and liable to be dismissed. Exemption u/s 11 - violation of section 13 - assessee-society has given its office premise on rent to concerns wherein the members of society were directors/shareholders/partners/substantially interested less than prevalent rates of rent - HELD THAT:- The submission of Ld. DR for revenue that the assessee s submission in letter dated 24.03.2014 was self-serving is not convincing because of the reason that when the assessee made such a categorical submission, it was the minimum duty of AO to discuss the assessee s submission in assessment-order and to rebut or contradict the same. But the AO has kept silence on assessee s submission and went ahead to make adjudication against assessee. In the situation, we are inclined to accept CIT(A) s order which takes into account assessee s categorical submission and thereby hold that the rent charged by assessee was fair, rather higher than prevailing rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als and the assessee has filed captioned two cross- objections. Since all these matters emanate from common orders of lower- authorities and involve identical issues, they were heard together at the request of both sides and are being disposed of by this consolidated order. 2. Heard the learned Representatives of both sides at length and case- records perused. 3. The background facts leading to filing of these matters are such that the assessee is a society registered u/s 12A of Income-tax Act, 1961 engaged in educational activity. It is claiming exemption u/s 11/12 of Income-tax Act, 1961. A search u/s 132 was conducted upon assessee on 01.06.2011 in pursuance of which the assessments of assessee for 7 years from AY 2006- 07 to 2012-13 were framed u/s 153A/143(3). Presently, we are concerned with AY 2011-12 and 2012-13 in these matters wherein the AO, while finalising assessments, made certain additions. Aggrieved, the assessee carried matters in first-appeal and got substantial relief. Now, the revenue as well as assessee have come in next appeals before us on their respective grievances emanating from order of first-appeal. 4. The grounds taken by parties are as under: Revenue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case by deleting the addition of Rs. 9,70,52,488/- for A.Y. 2012-13 made by the AO as society has income over expenditure. 4. Ld. CIT(A) has erred in facts and circumstances of the case by deleting the addition of Rs. 2,35,474/- for A.Y. 2012-13 made by the AO on account of unexplained cash found u/s 69A of the Income-tax Act, 1961. 5. Ld. CIT(A) has erred in facts and circumstances of the case by deleting the addition of Rs. 3,94,27,706/- and Rs. 1,85,49,777/- made by the AO on account of difference in the value of investment made in college buildings at Indore and college building at Bhopal respectively, as declared by the assessee and estimated by the District Valuation Officer, being it an undisclosed investment u/s 69B of the Income-tax Act, 1961. Assessee s C.O. No. 29/Ind/2017 for AY 2011-12: 1. That the Ld. CIT(A) erred in not adjudicating grounds no. 3 and Grounds no. 13 to 19 of appeal memo on merit. 2. That the Ld. CIT(A) ought to have adjudicated all the grounds of appeal even when other grounds were decided in favour of appellant. Assessee s C.O. No. 30/Ind/2017 for AY 2012-13: 1. That the Ld. CIT(A) erred in not adjudicating grounds no. 3 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. Basically, the AO has observed that the assessee-society has given its office premise on rent to three concerns, namely (i) M/s Bansal Construction Works, (ii) M/s S.D. Bansal Construction Pvt. Ltd., and (iii) M/s Bansal Extraction Export Pvt. Ltd., wherein the members of society were directors/shareholders/partners/substantially interested. The AO further noted that the assessee charged rent of Rs. 5,40,000/- and Rs. 7,20,000/- in AY 2011-12 and 2012-13 respectively yielding Rs. 7.50 and Rs. 10/- per square feet of rent in those respective years which was less than prevalent rates of rent. The AO also got an enquiry report from departmental inspector informing that the prevailing rent was minimum Rs. 10/- and Rs. 12/- in those respective years. Accordingly, the AO computed fair rent of Rs. 7,20,000/- and Rs. 8,64,000/- in those years on the basis of Rs. 10/- and Rs. 12/- per square feet for 6,000 square feet area of the premise. On that basis, the AO made addition of differential of Rs. 1,28,000/- (the AO has incorrectly added Rs. 1,28,000/- though differential comes Rs. 1,80,000/-) and Rs. 1,44,000/-. Further, the AO held this as a violation of section 13 of the Act. Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reply filed by assessee cannot be disputed. In the said reply, as demonstrated by Ld. AR, the assessee has categorically mentioned that only 400 square feet of area was used by each of three concerns, which means total area used by them was 1,200 squre feet. The assessee submitted that rest of the area was used by assessee- society itself. The AO has, however, not re-produced this submission of assessee in his order and went on making comments of lesser rent being charged by assessee as if the assessee had let out entire 6,000 area. Since there is no discussion by AO rebutting the assessee s submission of 1,200 square area provided to three concerns, we find that the CIT(A) has passed an apt order in this regard. The order passed by CIT(A) is being re-produced here for an immediate reference: 19. From the facts on records it can be gathered that the AO has completely misunderstood the relevant facts in spite of those having been specifically pointed out by the appellant at the time of assessment proceedings vide explanation dated 24.03.2014, that the area which was given on rent was 1200 sq.ft. @ 50/- per sq.ft. per month, out of the total available area with the appellant comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the order of CIT(A); the same is hereby upheld. These grounds are therefore dismissed. Ground No. 3 for both years: 14. In these grounds, the revenue claims that the CIT(A) has erred in deleting addition of Rs. 9,28,06,233/- and Rs. 9,70,52,488/- for AY 2011-12 and AY 2012-13 respectively. 15. This issue has been dealt by AO in Para 11.7-11.8 of assessment- order. Basically, due to alleged violation of section 13 on account of charging of lesser rent from three concerns as discussed in foregoing paras, the AO came to a further conclusion that the assessee was not entitled to the benefit of exemption u/s 11/12 of the Act. Accordingly, the AO denied exemption u/s 11/12 fully to assessee and considered the net surplus of Rs. 9,28,06,233/- and Rs. 9,70,52,488/- for AY 2011-12 and AY 2012-13 respectively shown by assessee as taxable income. 16. This issue is consequential to the issue of violation of section 13 dealt in foregoing paras. Since we have already agreed with CIT(A) s order that there was no violation of section 13, this issue automatically comes to an end. Consequently, the grounds raised by revenue do not have any worth and are being dismissed. Ground No. 4 of AY 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained cash u/s 69A. 22. Ld. AR carried us to Para 12 of assessment-order where the AO has made this addition. Referring to same, he submitted that during search- proceeding, physical cash was found with different colleges of assessee as under: 1 Shriniwas Education Society, Anand Nagar, Bhopal 32,279/- 2 Sushila Devi College, Indore 1,09,800/- 3. Bansal Engineering College, Bhopal 93,395/- Total 2,35,474/- During assessment-proceeding, when the AO asked assessee to explain sources of such cash found, the assessee submitted in reply letter dated 18.03.2014 that the cash found with various colleges was normal petty cash balance maintained at each college to run day to day activities and the same was duly reflected in normal books. However, the AO rejected assessee s reply by stating that at the time of search, the assessee has not explained such cash with books of account. Ld. AR submitted that the AO has made full addition of cash physical found as if there was Nil cash balance in books of assessee; this approach of AO itself shows that the addition has been made in utter disregard to assessee s factual submission. Ld. AR went on submitting that during first-appeal, the CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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