TMI Blog2024 (11) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... he company AECPL showing that after deducting operating expenses and agreed amount of Rs. 40.00 Lakhs to the assessee Trust as vehicle lease charges, the net income of the Company from transportation fees was very nominal i.e. Rs. 2.46 Lakhs for the whole year. There is no evidence that the assessee conferred an undue benefit to AECPL. AO s conclusion that the lease arrangement was disadvantageous is based purely on a comparison of gross receipts, without considering the associated costs. Hence, the denial of exemption under Section 11 on this ground is not justified. There is no violation of section 13(1)(c) of the Act, by the assessee, we direct the AO to allow the exemption u/s.11 of the Act and direct the AO to delete the addition made on account of the Corpus donation received. Further, according to the submission of the Ld.AR section 40(a)(ia) is not applicable for the A.Y. 2015-16 to the institutions / funds eligible for exemption U/s.11 of the Act. On perusal of the provisions of section 40(a)(ia), the claim of the assessee is found correct and the disallowance of Rs. 24,95,469/- i.e. 30% of the Rent of Rs. 83,18,230/- is hereby deleted by allowing the grounds of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by invoking section 40(a)(ia) of the Income Tax Act. 5. The NFAC ought to have seen that the appellant was not treated as assessee in default in term of section 201(1) and in accordance to the first proviso of the aforesaid section. The learned Commissioner ought to have seen that as per the second proviso to section 40(a)(ia) the appellant is deemed to have deducted and paid the tax on such sum and therefore disallowance under section 40(a)(ia) is not warranted. 6. The National Faceless Appeal Centre (NFAC) erred in disallowing the appellants claim of depreciation. The said disallowance is wrong both on law and on facts. For these and other grounds that may be rendered at the time of hearing it is most humbly prayed that the Hon'ble Tribunal may be pleased to allow the appellants appeal and thus render justice. 4. The brief facts of the case are that, the assessee is a society registered under Tamil Nadu Societies Registration Act, 1975 on 05.08.1991 with principal object of Education and other allied charitable objects. The assessee society is also registered under section 12AA of the Income Tax Act 1961, vide order of Director of Income Tax (Exemptions), Chennai - 600034, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Transportation fees received by M/s. Ashram Educational and Consultancy Pvt Ltd (AECPL). During the year under consideration the assessee society borrowed a sum of Rs. 1,29,21,224/- from M/s.Cholamandalam Finance Ltd. for purchase of vehicles for transportation of its school children. On oral agreement made between the assessee and Ashram Educational and Consultancy Private Ltd (AECPL) the vehicles were leased out to AECPL for transportation of school children. The understanding between the assessee and AECPL is that, AECPL was to collect the transportation fees separately from the school children from which operational expenses are to be met and that AECPL would also pay a sum of Rs. 40.00 Lakhs towards lease of vehicle to the assessee society. During the course of scrutiny proceedings the assessee produced the details regarding the transport fee collected by AECPL and also produced the financials of AECPL. 7. The case of the AO is that while the total revenue from operations for AECPL during the year is Rs. 2,11,96,466/-, the assessee society receives only Rs. 40.00 lakhs for vehicles lease. Thus, the AO was of the opinion, being a related party transaction, the society has v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years without any security or interest and the same is outstanding for over a period of 8 years. The case of the assessee is that it is not the case of the AO that the alleged loan amounts were advanced during the impugned assessment year for the purpose of invoking section 13(1)(c) r.w.s. 13(2)(b) of the Act. b) The assessee submits that the source of the loans mentioned aforesaid is out of the advance received by the assessee in the past year for sale of its Guindy land. The case of the assessee is that the advance received by the assessee trust from property is not the income of the trust and is only a liability of the assessee s trust. The assessee submits that benefit under section 11 can be denied to the assessee society only if the income of the trust is used to confer undue benefit either directly or indirectly to the persons referred to in sub-section (3) of section 13 of the Income Tax Act. In the instant case, even in the past, no income of the assessee trust is used to confer undue benefit to the interested persons referred to in sub-section (3) of section 13 of the Income Tax Act and that only the advance received by the assessee society was used in the past to advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee drew our attention to the audited financial statements as on 31/03/2015 of the company AECPL showing that after deducting operating expenses and agreed amount of Rs. 40.00 Lakhs to the assessee Trust as vehicle lease charges, the net income of the Company from transportation fees was very nominal i.e. Rs. 2.46 Lakhs for the whole year. There is no evidence that the assessee conferred an undue benefit to AECPL. The AO s conclusion that the lease arrangement was disadvantageous is based purely on a comparison of gross receipts, without considering the associated costs. Hence, the denial of exemption under Section 11 on this ground is not justified. 15. In the present facts and circumstances, in our considered view, there is no violation of section 13(1)(c) of the Act, by the assessee, we direct the AO to allow the exemption u/s.11 of the Act and direct the AO to delete the addition made on account of the Corpus donation received during the year to the tune of Rs. 1,97,32,100/-. Further, according to the submission of the Ld.AR section 40(a)(ia) is not applicable for the A.Y. 2015-16 to the institutions / funds eligible for exemption U/s.11 of the Act. On perusal of the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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