Income Tax Appellate Tribunal - Chennai
Mac Public Charitable Trust, Chennai vs Department Of Income Tax on 21 August, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI V. DURGA RAO, JUDICIAL MEMBER
I.T.A. No. 1799/Mds/2012
(Assessment Year : 2008-09)
The Asst. Director of M/s MAC Public Charitable Trust,
Income Tax 'MAC/ICH Building',
(Exemptions -IV), v. V.H.S. Campus, TTTI Post,
Chennai - 600 034. Taramani, Chennai - 600 113.
PAN : AAATM 0484 C
(Appellant) (Respondent)
Appellant by : Sh.Guru Bashyam, JCIT
Respondent by : Sh.R. Vijayaraghavan, Advocate
Date of Hearing : 21.08.2013
Date of Pronouncement : 29.08.2013
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In this appeal filed by the Revenue, its grievance is that the CIT(Appeals) held assessee to be eligible for claiming the benefit of Section 11 of Income-tax Act, 1961 (in short 'the Act'). 2 I.T.A. No. 1799/Mds/12
2. Facts apropos are that assessee, a Trust registered under Section 12AA of the Act, had filed its return for the impugned assessment year declaring NIL income after claiming exemption under Section 11 of the Act. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had shown under the head "Deposits" a sum of ` 18,25,000/- in the name of M/s SPK MAC Charitable Trust. Assessing Officer was of the opinion that this was violation of the investment modes set out under Section 11(5) of the Act. Though the assessee argued that the money was not deposited, but only interest-free loan was given to the said Trust, this was not accepted by the Assessing Officer. As per the A.O., money was lent by the assessee continuously to a party who was not paying any interest. The said party had not given any security also. Therefore, according to her, assessee had made investments other than in the modes set out in Section 11(5) of the Act. She denied exemption claimed by the assessee under Section 11 of the Act and completed the assessment.
3. In its appeal before CIT(Appeals), argument of the assessee was that M/s SPK MAC Charitable Trust, to which loan was given, was also an organization having registration under Section 12AA of 3 I.T.A. No. 1799/Mds/12 the Act. According to assessee, objects of both the organizations were similar. Both the organizations were committed to the cause of education. Education was their predominant object. Assessee, relying on the Trust Deeds and also registration granted to M/s SPK MAC Charitable Trust, argued that loan given to the latter could not be considered as a violation of modes of investment specified under Section 11(5) of the Act. Reliance was also placed on the decision of Hon'ble Delhi High Court in the case of DIT (Exemption) v. Acme Educational Society (326 ITR 146).
4. CIT(Appeals) was appreciative of the contention of the assessee. According to him, interest-free loan given by the assessee-Trust to another Trust, which was also a registered one, would not be hit by Section 11(5) or Section 13(1)(d) or Section 13(1)(c) of the Act. Thus, he held that assessee was eligible for exemption claimed by it under Sections 11 and 12 of the Act.
5. Now before us, Shri Guru Bashyam, appearing for the Revenue, strongly assailing the order of CIT(Appeals), submitted that M/s SPK MAC Charitable Trust, though it was a Trust registered under Section 12AA of the Act, would still fall within the concept of a "concern". Relying on a decision of Hon'ble Bombay High Court in 4 I.T.A. No. 1799/Mds/12 the case of Champa Charitable Trust v. CIT (214 ITR 764), learned D.R. submitted that a Trust is also a person within the meaning of Section 13 of the Act. According to him, in the said case, one Trust had donated a sum of ` 1 lakh to another Trust. Thereafter the latter Trust donated certain sums back to the former Trust. Hon'ble Bombay High Court had held that the contributor-Trust would come within the meaning of Section 13(3)(b) of the Act and recipient-Trust having given donations given back to the contributor-Trust, Section 13(1)(c)(ii) stood attracted. According to him, therefore, contributions or loans or deposits, by whatever name called, given by the assessee to M/s SPK MAC Charitable Trust was hit by Section 13(1)(c) of the Act.
6. Per contra, Shri R. Vijayaraghavan, learned counsel for the assessee, strongly relied on the decision of Hon'ble Delhi High Court in the case of Acme Educational Society (supra). According to him, what was given by the assessee to M/s SPK MAC Charitable Trust was not a donation but a loan. Both the Trusts were registered under Section 12AA of the Act and both were having similar educational objectives. Therefore, ld. CIT(Appeals) was justified in directing the 5 I.T.A. No. 1799/Mds/12 A.O. to give exemption claimed by the assessee under Section 11 of the Act.
7. We have perused the orders and heard the rival submissions. No doubt, in the case of Champa Charitable Trust (supra), Hon'ble Bombay High Court has held that when a Trust receives donation from another Trust, and such donations were in turn given back again as donations, the transactions were hit by Section 13(1)(c) of the Act, where the original donor trust was a substantial contributor. However, facts here are entirely different. Facts here are similar to the case of Acme Educational Society (supra) decided by Hon'ble Delhi High Court. In the said case, assessee-society had given a loan of ` 90,50,000/- to another educational society, whose President was the brother of assessee-society's President. Assessing Officer had invoked provisions of Section 13(1)(d) read with Section 11(5) of the Act and denied the exemption under Section 11 of the Act. Hon'ble Delhi High Court held that interest-free loan given by the assessee-society to another society, having similar objects and registered under Section 12AA of the Act, did not violate Section 13(1)(d) read with Section 11(5) of the Act, since such loans were neither investments nor deposits. No doubt, the assessee here had 6 I.T.A. No. 1799/Mds/12 mentioned the amounts given to M/s SPK MAC Charitable Trust as "deposits" in its accounts. Submission of the assessee that it was nothing but a loan given to the said Trust, for the purpose of its educational objects, has not been rebutted by the Revenue. We are, therefore, of the opinion that the CIT(Appeals) was justified in directing the A.O. to exemption claimed by the assessee under Sections 11 and 12 of the Act. We do not find any need to interfere with the order of CIT(Appeals).
8. In the result, appeal filed by the Revenue is dismissed. Order was pronounced in the Court on Thursday, the 29th of August, 2013, at Chennai.
sd/- sd/-
(V.Durga Rao) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 29th August, 2013.
Kri.
Copy to: (1) Appellant
(2) Respondent
(3) CIT(A)-XII, Chennai-34
(4) DIT (Exemptions), Chennai
(5) D.R.
(6) Guard file