Income Tax Appellate Tribunal - Jaipur
Income Tax Officer (Exemption), Ajmer vs M/S. A.S. Shanti Educational Society, ... on 6 April, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM
vk;dj vihy la-@ITA No. 207/JP/2018
fu/kZkj.k o"kZ@Assessment Years : 2014-15.
The Income Tax Officer cuke M/s. A.S.Shanti Educational Society,
(Exemption) Vs. B-229, V.S. Pathik Nagar,
Ajmer. Bhilwara.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AABTA 4900 G
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri J.C. Kulhari (JCIT)
fu/kZkfjrh dh vksj ls@Assessee by : Shri P.C. Parwal (CA)
lquokbZ dh rkjh[k@ Date of Hearing : 05.04.2018
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 06/04/2018.
vkns'k@ ORDER
PER SHRI VIJAY PAL RAO, J.M.
This appeal by the revenue is directed against the order dated 15.11.2017 of ld. CIT (A), Ajmer for the assessment year 2014-15. The revenue has raised the following grounds of appeal :-
" 1. On the facts and circumstances of the case and in law the CIT (A) has failed to understand that the provisions of law that undue benefit provided to the trustees causes denial of exemption u/s 11 of the I.T. Act.
2. On the facts and circumstances of the case and in law the CIT (A) has failed to understand the theme of the charitable institution direct/indirect undue benefit should not be provided to the person's specified u/s 13(3) of the Act.2 ITA No. 207/JP/2018
M/s. A.S. Shanti Educational Society, Bhilwara.
3. On the facts and circumstances of the case and in law the CIT (A) has failed to understand that there is no protection of the fund in the event of dissolution as the building will remain attached with the land and will go to the trustees.
4. On the facts and circumstances of the case and in law the CIT (A) has erred in deleting the disallowance of interest amounting to Rs. 21,41,586/- paid by the appellant society in spite of the fact that the fund are not used for the objects of the trust as the building is not owned by the society.
5. On the facts and circumstances of the case and in law the CIT (A) has erred in deleting the disallowance of interest in spite of the facts that assessee society investing its own fund for the benefit of the lessor who are trustees or their relatives.
6. Any other question of law as deemed fit in the facts and circumstances of the case may also be framed before the Hon'ble Tribunal in the interest of justice."
2. In this appeal of the revenue the only issue arises is denial of exemption under section 11 of the IT Act due to the alleged violation of provisions of section 13(3) of the Act which was allowed by the ld. CIT (A) by following the earlier order of this Tribunal in assessee's own case. At the outset, we note that an identical issue has been considered by this Tribunal in assessee's own case for the assessment year 2012-13 vide order dated 19.9.2017 in ITA No. 251/Jodh/2017 in para 3.2 as under :-
" 3.2. We have heard rival contentions, perused the material on record and gone through the orders of the authorities below. The ld. CIT (A) has allowed the exemption by holding as under :-
" After going through all the documents (registered lease deed dated 16.05.2008, addendum dated 16.05.2008 and the registered lease deed dated 22.07.2015), I am of the considered 3 ITA No. 207/JP/2018 M/s. A.S. Shanti Educational Society, Bhilwara.
view that the observation of the AO that the expended construction shall be transferred by the appellant society to the trustees at nil cost at the end of the lease period, is incorrect and the claim of appellant for exemption u/s 11 and 12 can not be denied on the basis of such observation.
The AO has also mentioned in the assessment order that the appellant society has given advance of Rs. 9 lac to Shri Amit Tak and Smt. Shanti Devi Tak (trustees) without charging any interest. The appellant has explained that looking to the property leased out by the trustees to the appellant society, the amount of Rs. 9 lac given by the appellant society to the trustees as security deposits is very minimal. The contention of the appellant is found to be correct because the appellant has paid rent of Rs. 80,000/- per month for the total constructed area of 20,000 Sq. feet and open area with garden of 1,20,000 Sq. feet. If the amount of rent and security deposits paid by the appellant is seen with the land and building given by the trustees to the appellant society, the amount of security deposit and rent paid by the appellant society to the trustees is found to be absolutely fair and reasonable.
Regarding the observation of the AO that the appellant society has given interest free advance of Rs. 3,04,228/- to Smt. Shanti Devi Tak, the appellant has explained that the amount of Rs. 3,04,228/- was paid by the appellant society to Smt. Shanti Devi Tak against the rent payable of Rs. 5,09,628/- and there was net payable of Rs. 2,05,400/- at the end of the financial year by the appellant society to Smt. Shanti Devi Tak. The appellant has filed copy of ledger of Smt. Shanti Devi Tak in the books of the appellant in support of the explanation. Thus, the observation of the AO that the appellant society had given 4 ITA No. 207/JP/2018 M/s. A.S. Shanti Educational Society, Bhilwara.
advance of Rs. 3,04,228/- to Smt. Shanti Devi Tak, is found to be incorrect.
In view of the discussion made above, I am of the view that the AO was not justified in disallowing the claim of the appellant for exemption u/s 11& 12. Hence, the appellant is allowed exemption u/s 11 as claimed by it. Accordingly, this ground of appeal is allowed."
The above finding of fact is not controverted by the revenue, therefore, we do not see any reason to interfere into the finding of ld. CIT (A), same is hereby affirmed. Grounds No. 1 to 5 of the appeal are dismissed."
3. As regards ground nos. 4 & 5 regarding disallowance of interest paid by the assessee society, the Tribunal has considered an identical issue in para 4.3 as under
:-
"4.3. We have heard rival contentions, perused the material on record and gone through the orders of the authorities below. The ld. CIT (A) while deleting the disallowance has observed as under :-
" I have gone through the assessment order, statement of facts, grounds of appeal and written submission carefully. It is seen that the AO himself has accepted that the funds borrowed from the bank were utilized for the construction of the building which is being used by the trust to achieve its objects. Therefore, I am of the considered view that even if the building is not owned by the appellant, the interest paid on the funds borrowed for construction of the building is admissible as deduction. Hence the disallowance of Rs. 24,89,043/- made by the AO is hereby deleted. The ground of appeal is allowed."5 ITA No. 207/JP/2018
M/s. A.S. Shanti Educational Society, Bhilwara.
In view of the above finding, which is not controverted by ld. D/R, we find no reason to interfere into the order of ld. CIT (A), same is hereby affirmed. The ground of the revenue is dismissed."
In view of the findings of this Tribunal in assessee's own case for the assessment year 2012-13, we do not find any error or illegality in the order of ld. CIT (A).
4. In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 06/04/2018.
Sd/- Sd/-
¼ HkkxpUn½ ¼ fot; iky jkWo ½
(BHAGCHAND) ( VIJAY PAL RAO )
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 06/04/2018.
das/
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant-The ITO (Exemption), Ajmer.
2. izR;FkhZ@ The Respondent-M/s. A.S. Shanti Educational Society, Bhilwara.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File {ITA No.207/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 6 ITA No. 207/JP/2018 M/s. A.S. Shanti Educational Society, Bhilwara.