The Tax Publishers2020 TaxPub(DT) 4856 (Chd-Trib)

INCOME TAX ACT, 1961

Section 11 Section 13(1)(c) Section 13(3)

Since rent paid by assessee-trust to the Secretary was reasonable as compared to market rent for similar type of property and was being paid regularly for the last more than 12 years, accordingly, no undue benefit had been given to Secretary by virtue of said payment so as to invoke provisions of section 13(1)(c) read with section 13(3) for denial of exemption under section 11.

Charitable trust - Exemption under section 11 - Payment of rent to Secretary at below the market rate -

Assessee a charitable society made payment of rent to its Secretary amounting to Rs. 69 lakhs. AO held that assessee had provided benefit to secretary/trustee and, therefore, invoking section 13(1)(c) read with section 13(3) AO denied exemption under section 11 to the extent of rent so paid. Held: Assessee duly demonstrated to AO that rent paid was reasonable as compared to market rent for similar type of property and was being paid regularly for the last more than 12 years same was accepted without any adverse inference. Accordingly, no undue benefit had been given to Secretary by virtue of said payment so as to invoke provisions of section 13(1)(c) read with section 13(3) for denial of exemption under section 11.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16



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