INCOME TAX ACT, 1961

Section 11

Charitable trusts - Exemption under section 11 - Deposit made by assessee-trust in term of lease agreement alleged by revenue to be 'diversion of funds' amongst interested parties -

Revenue challenged order of Tribunal relying on lease agreement between assessee and the lessor ignoring that transaction was not at arm's length and was between interested parties. Case of revenue was that Tribunal failed to consider advance paid by assessee of Rs. 6.68 crores claimed to be 'deposit for leased assets' and payment of Rs. 5 Lakhs as monthly rental against a property of Rs. 31 Crores, which in itself proved that lease deed was for diverting the funds of assessee to its interested concern. Held: First appellate authority came to conclude that assessee had proved that premises and assets envisaged in lease agreement were actually used by assessee for its educational activities/charitable purposes. In such circumstances, first appellate authority held that there was no case of any benefit given/derived by specified person. Holding that denial of exemption was unjustified being not based on facts, first appellate authority directed AO to delete additions and to allow exemption. Tribunal reiterated as a finding of fact that deposit of Rs. 6,68,00,000.00 was in pursuant of a valid lease agreement for user of premises and various other facilities. Assessee had used premises and other leased assets for carrying out educational activities/charitable purposes. Tribunal further held that departmental representative of the revenue could not controvert findings of fact returned by appellate authority.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

SUBSCRIBE FOR FULL CONTENT