| The Tax Publishers2020 TaxPub(DT) 3819 (Del-Trib) INCOME TAX ACT, 1961
Section 11 Section 13
Where the assessee-trust let out certain property to another trust and rent was higher than annual lease value fixed by Municipal Corporation of Delhi for the purpose of house tax and HLI to whom property had been let out was also a charitable institution and enjoying the exemption under section 10(23C)(iv)/11 and even if benefit was assumed, the same was not derived by any individual but by another charitable institution then denial to exemption only on ground that rent was not reasonable, was not maintainable.
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Charitable trust - Exemption under section 11 - Letting of properties to another trust -
Hamdard National foundation (India) ('HNF') ('the assessee') was set up as a charitable trust with main object of running educational and medical institutions/providing medical relief, namely, as a special purpose vehicle to effectuate charitable activities of HLI in the areas of relief to the poor, education and medical relief. Hamdard Dawakhana (Wakf) as a charitable institution had been enjoying benefits of sections 11 and 12 but in the concerned assessment years, AO rejected claim for exemption on the ground that there had been a violation of section 13(2)(b) read with section 13(3)(b) vis-a-vis letting of properties at Asif Ali Road and Rajdoot Marg, New Delhi owned by assessee to another trust, namely, Hamdard Dawakhanna (Wakf) at the rents alleged to be lower than the prevailing market rates. Held: Right from 1981-82 for about a period of 26 years, on the same set of facts, rents received by assessee in respect of property at Asaf Ali Road, New Delhi had been accepted by Revenue. Rent between the parties had been increased from time to time, beginning from Rs. 20,000 per month from 1981-82 and going up to Rs. 2 Lacs per 6 month in the period under consideration. Rent received was higher than annual lease value fixed by Municipal Corporation of Delhi for the purpose of house tax and HLI to whom property had been let out was also a charitable institution and enjoying the exemption under section 10(23C)(iv) /11 and even if benefit was assumed, the same was not derived by any individual but by another charitable institution. Department had accepted all these years, the agreement between HNF and HLI without drawing any adverse view in all the assessments under section 143(3); and ' market rent' had to be determined with reference to the period of tenancy, terms of lease, area, etc. and not by referring to websites which might reflect the current position, de hors facts of case and without any guarantee as to its accuracy.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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