Income Tax Appellate Tribunal - Chennai
A.R.R. Trust vs Acit on 3 June, 2005
Equivalent citations: [2006]280ITR152(CHENNAI), (2005)98TTJ(CHENNAI)843
ORDER
T.R. Sood, Accountant Member
1. In all these appeals, assessee has taken the following effective grounds of appeal :-
"2. The learned CIT(Appeals) erred in holding that the appellant Trust is not entitled to exemption Under Section 10(22)/23(C) of the Act without appreciating :
a) The fact that, the appellant is running an educational institution since 1977 and is approved by Government of Tamil Nadu.
b) The fact that Trust is running the institution for education purpose only.
c) The various binding decisions of the Hon'ble Supreme Court that were relied upon by the appellant Trust in this regard.
d) The fact that the safe-parking of the funds were made for ultimate purpose of purchasing land for opening a new school under the same management and that the lands were purchased subsequently out of such funds.
e) The fact that the Trust had safely parked the funds is evident from the fact that none of this money had become irrecoverable. Funds so parked have actually yielded benefits commensurate with the purpose for which they were parked.
3. The learned CIT(Appeals) also erred
a) in not affording a further opportunity to the appellant to rebut his erroneous sequence of thoughts as appeared from the appellate order.
b) In relying upon certain decisions that are not relevant for the facts of the case, and
c) In not considering the numerous decisions relied upon by the appellant Trust.
2. The brief facts of the case are that assessee is a public trust founded by late A.R. Ramasami vide trust deed dated 10.3.1975. Originally trust was registered Under Section 12A on 17.6.1976 and it also obtained exemption Under Section 80-G upto 31.3.1981, after which no exemption Under Section 80G was sought. Returns were also not filed. As no returns were being filed, a survey Under Section 133A was conducted on 22.3.01, during which it was found that surplus income of the trust had been diverted for non-charitable purpose, viz., the funds have been utilized by various firm of family members in which the descendants and relatives of late A.R. Ramasamy, the founder, are partners. On the basis of this information, it was concluded that assessee was not eligible for exemption Under Section 10(22)10(23C) and thus cases were reopened by issuing notice Under Section 148. '
3. During assessment proceedings, the AO concluded that trust was not existing solely for education purposes as it had other objects also, viz., construction of running of choultries, community halls, provision of medical relief, construction or helping in construction in hospital, dispensaries, etc., provision of relief to the poor and needy and to provide relief to persons in distress due to flood, earth quake, fire, riots, etc. He further held that trust has voluntarily accepted some contributions and the income was to be assessed Under Section 11 and 12 of the Act and disbursement of such income is governed by Section 13 of the Act. Since the surplus generated from educational activities was not invested in the specified assets, the exemption granted Under Section 11 and 12 could not be allowed. It was also observed that though assessee is running an educational institution, but the surplus funds of the institution had been utilized by the firm in which the trustees and relatives of the founders are members. Thus exemption Under Section 10(22) is also lost. Thus, AO mainly denied exemption Under Section 10(22) because trust was also having other objects and for diversion of funds, and no exemption Under Section 11 was granted because conditions prescribed therein were not complied with.
4. The CIT(Appeals) vide para 15 observed that assessee was undoubtedly an educational institution and merely because it had other objects which were never pursued, it cannot be denied exemption Under Section 10(22).
5. However, he denied exemption Under Section 10(22) because the trust had given the advances to various concerns in which trustees were members/ partners/directors and thus directly interested in such organizations. He mainly made the following observations :-
"...the allegations regarding diversion of funds need to be examined even in the context of Section 10(22)/23C) if only to find A out if such diversions were actually there and, if so, whether such diversions could be seen as utilisation of the trust income for other than the purpose of education so as to hold that during the years in question the appellant's main object got vitiated and it did not exist solely and exclusively as on educational institution." (Page 19) " It is, therefore, clear that the various loans and advances given by the appellant trust to its sister concerns has nothing to do with its V (the trust) own objects but, on the contrary, were intended to facilitate and advance the business causes of the sister concerns." (Page 25).
"Firstly, it has not been clarified by the appellant if interest was charged by it on all the loans and advances without any exception. No explanations have been furnished in this regard." (Page 26) "Secondly, the accounts of the concerned parties show that interests were more often than not being credited to the appellant's accounts rather than actually paid." (Page 26) "Thirdly, when it comes to loans and advances involving huge amounts, mere charging of interest cannot be regarded as adequate consideration. It is difficult to conceive of securing such huge amounts as loans except by furnishing securities. Furnishing of security as a measure of adequacy of consideration is not only a common business/banking practice but is also something recognized in law. In the Income-tax Act, 1961, Section 13 refers to security along with interest." (page 26).
".... there is no valid reason as to why surplus funds could not be deposited in specified assets or securities. No doubt, this is not a requirement insofar as Section 10(22)(23C) is concerned. It cannot, however, be denied that specified assets are much safer avenues than deposit with a business concern for utilisation in its day to day business activities." (page 27) "For the present, it would suffice to mention that the loans and advances given to the sister concerns, involving several transactions year after year, and much before the subsequent payments to M/s. A R R Nutcon Products were made, were unauthorized." (page 27) "Firstly, the appellant had started giving loans and advances to sister " concerns much before the idea of purchasing land from M/s. A R R Nutcon Products had even occurred. If the minutes-book is to be gone by, the very first resolution to buy land from M/s. A R R Nutcon Products was passed only on 20.8.1996, whereas the appellant had already given substantial advances to several sister concerns much earlier to this date. Hence such earlier advances can by no means be linked with purchase of land from M/s A R R Nutcon Products." (page 28) "Secondly, even if it is taken that the advances given to M/s A R R Nutcon Products were truly meant for purchase of land, the same cannot be said of the advances which continued to be given to the other sister concerns after 20.8.1996. If the purpose behind the giving of such advances was also to buy land from M/s A R R Nutcon Products there is no reason as to why these had to be given to other concerns and not to M/s. A R R Nutcon Products." (page 28) "Thirdly, it is worthwhile asking as to why the appellant had to give such huge advances to M/s A R R Nutcon Products even if the objective was to purchase land." (page 28) "In view of such close nexus between the firm and the trust it makes no sense whatsoever to say that advances had to be given to M/s A R R Nutcon Products for the purpose of purchasing land." (page 28) "It was also not as though the proposed deal with the sister-concern was imminent. Not only that advances were given to M/s A R R Nutcon Products, these were allowed to remain outstanding for years together. The first advances specifically in the name of land purchase were made during the year ended 31.3.1999. The amounts aggregated to a huge Rs. 72 lakhs. Further advances were given during the subsequent years in the name of land as well as site. But not a site or even a part of it was purchased from M/s A R R Nutcon Products till the year ended 31.3.2002..." (page 28-29) "These contradictions and incongruities can be resolved only if the transactions are seen as group affair, nay a family affair, where the main objective was to keep the business of the group going by using funds wherever available. The reference in the resolution and in the agreement to purchase of land at Melacauvery can only be seen as a mere cover for pursuit of the above objective. That it is so also gets credence from the fact that while the resolution on the subject had been passed as early as on 20.8.1996, the deal had not materialized even by 31.3.2002." (page 33) "The Trial Balance of M/s A R R Trust as on 28-2-2001 shows advances given to Shri S. Subramanian, trustee of the appellant trust (Rs. 6,00,000), S Suganthi (Rs. 8,32,627), M Latha (Rs. 8,32,627), R Makesh (Rs. 8,32627), S. Rengarajulu (Rs.4,97,400) and R. Swaminathan (Rs.4,97,400)." (Page 33) "The very fact that M/s A R R Nutcon Products was permitted to enjoy huge funds without payment of any interest would go to show that the so-called land purchase advance was meant to allow M/s A R R Nutcon Products to use the funds for its own business without having to bear any interest burden thereon. Thus, the advances given from time to time, both to M/s A R R Nutcon Products as well as the other sister concerns, indicate a conscious effort made by the appellant to unjustly enrich its sister concerns at unjustifiable cost to itself." (page 34) " While on the one hand it is unthinkable that the appellant would have permitted huge funds to lie in the hands of outsiders for years together, that too without actually receiving interests, it is equally unthinkable that the appellant would have lent even a part of such funds except on the strength of securities." (page 34)
6. Before we proceed to adjudicate various issues involved in this appeal, we shall decide the application moved by the assessee for admittance of additional evidence vide application dated 9.11.04. The ld. AR pointed out that these documents consisted of Unit-II School Opening Invitation and advertisement in newspapers, application to Government for waiver of stamp duty and rejection thereof, affidavit by the School Head Mistress and copies of the sale deeds. The ld. AR pointed out that these documents basically go to the root of the matter and they are in the form of Tamil Nadu Government letter and advertisement for opening the second unit of the school. These documents could not be produced before the lower authorities because of inadvertence and no harm would be caused to the other party if such documents are admitted.
7. On the other hand, the ld. DR opposed the admittance of these additional documents.
8. After considering the submissions of the parties and after perusing the documents, we find that they go to the root of the matter and no harm will be caused to the other party, 11 same arc admitted at this stage to render justice. As we shall see later on that these documents will only clarify some of the situation and are thus important for deciding this appeal. In view of these circumstances, we admit the additional documents submitted by the ld. AR.
9. Before us, the ld. All mainly contended that assessee has all through maintained that it was entitled to deduction Under Section 10(22)/(23C). He contended that lower authorities have unnecessarily examined the provisions of Section 11, 12 & 13, which have nothing to do with the case before us. He pointed out that both AO as well as CIT(Appeals) have admitted that assessee was running educational institution. The trust was formed on 10.3.1975 and right from the beginning it has been running educational institution in the form of schools. It started with students strength of 40 which has over a period of time increased to 2200. The trust is basically running two schools known as ARR Matriculation High Secondary School known as Unit-I, and ARR Matriculation School known as Unit-II from 1998. The trust is also engaging students from its own institution as well as other institutions by awarding financial aid, scholarship, etc. He further submitted that main objects of the trust were for education, awards, scholarships, etc. He submitted that trust had other objects also like construction and running of choultries, community halls, provision of medical relief by construction or helping in construction of hospitals, dispensaries etc. and provision of medical relief to the poor and needy and relief to person in distress due to flood earth quake fire etc Though AO denied exemption Under Section 10(22) because of this reason that assessee had other objects, but since CIT(Appeals) has held that assessee is an educational institution and simply because other objects are unrelated to education, it cannot become the sole ground for denying the benefit Under Section 10(22). He also held that unrelated objects had merely remained on paper. In any case, the Department has not challenged this finding of the CIT(Appeals) and therefore this issue stands decided in favour of assessee.
10. He vehemently argued that the main thrust of CIT(Appeals) is on diversion and investment of surplus funds of the trust in various business concerns, where trustees are having substantial interest. He referred to provision of Section 10(22) and Circular No. 712 dated 25.7.95 issued by the CBDT. He submitted that this Circular while clarifying the condition laid down Under Section 10(22) of the Act has clarified, "that since Section 10(22) does not impose any restriction regarding mode of investment of funds, such institutions are not required to invest the funds in the mode specified Under Section 11(5) of the Income-tax Act." Thus it is clear that educational institutions are not required to make investments in any specified assets prescribed by any authority, which means, they can park their surplus funds anywhere, where trust deems it fit. Then, he referred to page 49 & 50 of the paperbook and pointed out that it was explained before the lower authorities that though surplus funds were invested in the various business cooncerns, where trustees were interested, but the same were invested on interest @ 18% from all these business concerns wherever there was a debit balance. Interest was not charged in cases only where there was no debit balance or rather there was a credit balance standing in the names of such business organizations. He submitted that no interest has been charged w.e.f. assessment year 2001-02 because assessee had agreed to purchase the lands from such organizations and the amount was treated as advances on account of land purchase. Thus, advances to sister concerns were mainly given on consideration i.e. interest and interest rate was also the market rate which was @ 18% p.a. He contended that CIT(Appeals) has unnecessarily made the observations that these interest amounts were not paid to the assessee, but only credited to the assessee's account by the concerned business organizations. There is nothing wrong in this system because assessee as well as business organizations were following accrual system of accounting and credit to account is as good as payment under this method of accounting. He further submitted that there is no substance in the observation of the CIT(Appeals) that such loans were given without adequate security because firstly, there is no requirement for parking the funds in any particular manner and in any case there is no requirement for taking security. Assessee trust had invested the monies in business organizations where trustees were having substantial interest thus assessee trust was folly secured. He also submitted that there is no substance in the observation of the CIT (Appeals) that assessee had given advances to sister concern before the idea of purchasing land from M/s. A.R.R. Nutcon Products had even occurred. He submitted that the land in question was taken possession much before the actual purchase of land and same was being used for the purpose of playground. In this regard, he referred to the affidavit of Smt. Beullah Sundar Eingh, being Head Mistress of the School (page 129) and also map of the school (page 130 of the paperbook), where the relevant vacant land is shown as playground. He contended that there is no force in the observations of the CIT(Appeals) that there was no need to give advances for the purchase of land to sister concern in view of the close nexus between the business organization and the trust. It was pointed out by him that advances to M/s. A.R.R. Nutcon Products bore interest @ 18% p.a. till A.Y. 1998-99 and the amount was transferred to land advances account in 1999-2000 and only after such conversion of loan into land advances, interest was not charged. He submitted that assessee trust basically wanted to start another school and wanted to buy land being approx. 30,000 sqft. belonging to A.R.R. Nutcon Products. School was ultimately started from 1.7.1998 and in this regard, he referred to the invitation cards, copies of which is placed at pages 63 to 66 of the paperbook. He also referred to page 64, which is a copy of the advertisement invitation of second primary division of A.R.R. Matriculation Higher Secondary School. He submitted that land was already taken possession of and there was nothing wrong in treating the amounts already given as land advance. He further explained that registered sale deeds in respect of such lands could not be entered into immediately because trust was seeking exemption from stamp duty charges on transfer of such lands and had made application to Govt. of Tamil Nadu and in this regard he pointed out to the copy of the letter written to the Government which is placed at page 67 of the paperbook, English translation of which is available in the new paperbook page 1/67-71. The Government of Tamil Nadu rejected the trust's request vide communication dated 8.3.01, copy of which is placed at page 72 paperbook and English translation is available at page 73 of the paperbook Immediately thereafter on 19.3.01, the trust made another petition to the Government for review of its decision and after waiting till December, 2002, trust ultimately went ahead with the execution of sale deeds. Thus the gap between the registration of sale deeds for purchase of land and advances by the assessee was basically because of intervening factors i.e. permission from the Government for waiver of stamp duty charges was availed. He further pointed out that CIT(Appeals) has referred to certain resolutions and pointed out certain irregularities therein. It is a known fact that in case of trust, the secretarial staff is not highly educated and some lapses may be there, but the important question for deciding this issue is whether other party was legal owner of such land and whether same was taken possession by the trust or not is not disputed at any stage. He submitted that resolutions, which have been referred to by CIT(Appeals) were avallable at the time of survey, which clearly shows no manipulation has been made later on. The fact that trust started the 2nd unit of school in July, 1998 would prove that transaction regarding purchase of land was genuine. As far as advances to other concerns is concerned, again lands were already taken possession of and relevant deeds have also been executed. Registration in such cases was also delayed because of the pendency of application for waiver of stamp duty. In these circumstances, there is no diversion of funds as alleged by the , lower authorities and assessee is entitled to exemption Under Section 10(22)10(23C).
11. At this juncture, Bench specifically directed the ld. counsel of the assessee to file copies of sale deeds for purchase of land by original owners i.e. parties who have ultimately sold the lands to the trust.
12. On the other hand, the ld. DR while supporting the order of the lower authorities pointed out that trust was registered with the CIT, Tamil Nadu-II Under Section 12A on 17.6.1976 and even exemption Under Section 80G was granted upto A.Y. 31.3.1981, which clearly shows that provisions of Section 11 to 13 were applicable to the trust. He then referred to the decision of the Hon'ble Supreme Court in case of Aditanar Educational Institution v. Addl. CIT, 224 ITR 310(SC), where it was held that the issue regarding exemption Under Section 10(22) has to be examined in each year. Therefore, the ld. CIT(Appeals) has correctly examined the balance sheet etc. for each year and only then he has rightly reached the conclusion that assessee has diverted the funds. He then referred to page 15 of the paperbook, which is a copy of the Income and Expenditure account for year ending 31.3.1996, where assessee had collected tuition fee amounting to Rs. 41,28,990 on which surplus amount was Rs. 11,87110, which clearly shows that trust was existing for the purpose of profit because same cannot be called as normal surplus. Similarly, for year ending 31.3.97, as per Income and Expenditure account, copy of which is placed at page 20 of the paperbook, there was a surplus of Rs. 19,48,710. He took us through the contents of the CIT(Appeals) order and submitted that diversion of funds was clearly proved by the CIT(Appeals). He then relied on the decision of ACIT v. Bal Bharti Nursery School, 82 ITD 71, where in case of diversion of funds, society was held not to be eligible for deduction Under Section 10(22). He also relied on the decision of Maharishi Creative Intelligence v. ACIT, 62 ITD 169(All).
13. We have considered the rival submissions carefully and have gone through the relevant material on record as well as judgments cited by the parties. We find that all through assessee has been claiming exemption Under Section 10(22)/23(c) because assessee was running an educational institution. AO denied exemption mainly on the basis that assessee was having other objects also and therefore it cannot be said that assessee trust was existing mainly for educational purposes secondly, there was clear-cut diversion of funds.
14. The ld. CIT(Appeals) after detailed analysis held that other objects were not being pursued by the assessee trust and they remained only on the paper. Therefore, exemption Under Section 10(22)/(23C) cannot be denied on this account. In this regard, the issue has been adjudicated by him vide para 15 of his order, which is reproduced as under :-
"15. The appellant is undoubtedly an educational institution. It has been accepted by the Assessing Officer that the appellant has been running educational institutions for years together. But, admittedly, the appellant trust had a few other objects too. It can not be disputed that these other objects viz. construction and running of choultries, community halls, etc.; providing medical relief by constructing or contributing to the construction of hospitals; providing relief to the poor and needy; and arranging for relief to persons in distress due to flood, earthquake, riots, etc., are not incidental to the object of advancing and promoting education. Therefore, the question that arises is whether the existence of these objects could disentitle the appellant from availing the benefit contemplated in Section 22. The Assessing Officer has argued that it would. The appellant has argued to the contrary. In my opinion, in view of the judicial decisions already discussed, the appellant's argument can not be dismissed in a routine manner. For, even while it is a fact that the trust deed had listed out a few objects unrelated to pursuit of education, it can not also be denied that all such unrelated objects were primarily charitable in nature and did not also involve any profit-making. Therefore, merely because the other objects are unrelated to education, the same ought not to be cited as the sole ground for denying to the appellant the benefit Under Section 10(22). It also appears that the other objects in the object-clause were never actually carried out. There is nothing on records, nor any material or evidence brought forth by the Assessing Officer, to show that the appellant had pursued such other objects at any point of time. The nature of the other objects being what they are, their pursuit would have resulted in some tangible forms such as hospital building, choultries etc. which could not have possible escaped notice. Therefore, it can be said with a fair amount of certainity that the unrelated objects had merely remained on paper. It will be a travesty of justice, indeed, to over-emphasize the objects which never appear to have been pursued and to say that their very presence in the object clause would go to undermine the appellant's claim to be an educational institution. Existence of an educational institution solely for educational purposes has to be seen in the light of actual facts. If the actual facts denote that an institution has exclusively pursued the object of education, the mere presence of a few other objects in the object clause can not by itself cannot to the contrary. Therefore, viewed from a macro angle, the appellants claim that 1t is an educational institution, and, therefore, is eligible for exemption Under Section 10(22) can not be brushed aside on reference to the object clause alone."
15. In view of the above noted para, we would not examine this issue because the same has not been challenged before us by the Department by way of cross appeal. Therefore, we think we are required to examine only the short question, whether on the facts and circumstances of the case, assessee can be denied exemption Under Section 10(22) in view of the so-called diversion of funds to the business organizations, in which various trustees and/or their relatives have substantial interest. In addition to this, - we would also like to go through the issue raised before us by the ld. DR, ; whether when surplus is also generated, it can be said that the trust is existing solely for the purpose of education or not. Let us take the second issue first and in this connection, we would like to refer to the decision of the Hon'ble Supreme Court in the case of Aditanar Educational Institution v. Addl. CIT (supra) referred to by the ld. DR, where it was held as under :-
"The language of Section 10(22) of the Act is plain and clear and the availability of the exemption should be evaluated each year to find out whether the institution existed during the relevant year solely for educational purposes and not for purpose of profit. After meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes since the object is not one to make profit. The decisive or acid test is whether, on an overall view of the matter, the objective is to make profit. In evaluating or appraising the above, one should also bear in mind the distinction/difference between the corpus, the objects and the powers of the concerned entity."
16. Similarly, in CIT v. Rajasthan State Text Book Board, 244 ITR 667(Raj), it was held that even if some surplus is generated and same is used for the purpose of education, then exemption Under Section 10(22) cannot be denied.
17. We find that none of the object of the assessee trust shows that: profit making was one of the object of the trust. Surplus has been generated only incidentally and the same is part of the surplus because of interest received by the assessee on so-called diversion of funds. E.g., in case of year ending 31.3.96, there is a surplus of Rs. 11,87,110 out of which, interest amounting to Rs. 4,67,961 was received during the year. In year ending 31.3.97, out of the surplus of Rs. l9,48,710, interest received was Rs. 7,20,073. It is also seen by us that this surplus was being accumulated for the purpose of purchasing more land to start 2nd unit of the school. Hence it cannot be aid that trust was existing for the purpose of earning profit.
18. The decision of ACIT v. Bal Bharti Nursery School (supra) rests on an altogether different facts. In that case, it was shown that Secretary of the society had absolute power to refuse admission to any person. The school was existing on the residential property, which belonged to one of the trustee and his mother and huge amounts had been spent towards repairs of the building owned by the Secretary and his mother. Huge amounts taken by the Secretary and his mother were not repaid back, Two residental properties were purchased in the personal name of Secretary. Personal legal expenses of Secretary and his mother were borne by the Society and Secretary was paid hefty yearly salary. In these circumstances only, it was held that Society was not entitled to exemption Under Section 10(22). It was never shown before us that any amount was either spent towards persona! benefit of the trustees or trustees had any absolute right to deny admission to any particular student.
19. The decision of Maharishi Creative Intelligence v. ACIT (supra) is rather in favour of assessee, where even if the Society had some non- educational purposes and propagated techniques of Maharishi, still it was held to be eligible for deduction Under Section 10(22).
20. Coming to the subject of diversion of funds, it is not denied before us that funds were lent out to various business organizations in which trustees or their relatives were having substantial business interest. But from the statement showing details of advances placed at pages 49-51, we find that interest has been charged on such advances @ 18% p.a. wherever there is a debit balance in the account and such interest has been charged even upto A.Y. 1999-2000. Interest is not charged because later on such advances have been treated as land advances.
21. As far as observation of CIT(Appeals) is concerned that interest was never paid and no security etc. was taken has no force. In this regard, first of all, we would like to point out that there is no requirement Under Section 10(22) that fund should be invested in specified asset as contemplated Under Section 11(5) or in any other particular manner, in this regard, Circular No. 712 dated 25.7.95 of the Board is very relevant which reads as under:-
"It is hereby clarified that since Section 10(22) does not impose any restriction regarding mode of investment of funds, such institutions are not required to invest their funds in the modes specified under Section 11(5) of the Income-tax Act. This clarification will not apply to the institutions seeking exemption under Section 11 of the Act."
22. The above Circular makes it clear that there is no mandate in the Act to invest the funds in any particular fashion. In the absence of such mandate, we think it was proper for assessee to park the surplus funds with the business organizations where trustees and/or their relatives had their complete hold because then trustees could exercise some kind of control on such investments and have mental satisfaction that such investments were safe. In any case, it is settled position of law that even in case of charitable organizations or other such organizations, for calculating profits and other things, commercial principles of business are applicable. Considering this aspect from that angle, we find nothing wrong if trustees park the funds where they had business interest. Perhaps in such organizations they had more faith. The observation of the CIT(Appeals) that interest has not been paid but only credited is of no substance because accounts in business organizations are made on accrual basis where credit entry is as good as payment, because when credit entry is passed, that party becomes liable for that amount..
23. We also find that assesse has ultimatately purchased the lands somewhere in the year 2002 and agreement to sell such lands were entered somewhere in the year 2002 and agreement to sell such lands were entered somewhere in April, 1999 as is clear from the agreement dated 1st April, 1999 between A.R.R. Nutcon Products and assessee trust. The sale deed could not be executed, but for that also, assessee has shown us sufficient reason. Vide their letter No. 76/Trust/2000-01 dated 6.9.2000, the Government of Tamil Nadu was requested to waive the stamp duty as assessee was engaged in providing quality educational assistance to middle class families. But such request was refused vide Government letter dated 13.3.01 (copy of this letter is placed at page 72 of 2nd paperbook). In any case, we had directed the ld. counsel of assessee to produce the sale deeds of various land deals by the original buyers, which 0 have been filed before us. From these details, we find that various lands were purchased by these parties between the year 1983 and 1988 i.e. much before the advances were given. There can always be understanding that such land was purchased by the trust for expansion of the school. It is also clear that the 2nd unit of the school was also started in July, 1998 and advertisement for admission was also inserted in the local newspaper, which becomes clear from the copies of such advertisement, which is placed at pages 65 & 65 of the paperbook. In these circumstances, we think advances were made either on interest basis or later on converted into, for purchase of land and such land was actually purchased in the year 2002 and it cannot be held that the assessee trust has diverted its funds. We also find force in the contention that when assessee has made a case only Under Section 10(22)(23c) there was no need to examine the provisions of Sections 11 to 13, because same are not mandated for the purpose of claiming exemption Under Section 10(22)/(23C). In these circumstances, we set aside the orders of the ld. CIT(Appeals) and direct the AO to allow the assessee-trust exemption Under Section 10(22)/(23C).
24. In the result, the appeals are allowed.