Delhi H.C : Whether, on the facts and in the circumstances of the case and in law, the Tribunal was correct in allowing the benefit under s. 11 of the IT Act, 1961, without appreciating that the assessee had violated the provisions of s. 13(1)(c) and 13(1)(d) of the Act ?

High Court Of Delhi

Director Of Income Tax vs. Pariwar Sewa Sansthan

Section 260A

Asst. Year 1995-96, 1996-97

Arijit Pasayat, C.J. & D.K. Jain, J.

IT Appeal No. 39 of 2000

29th May, 2001

Counsel Appeared

R.D. Jolly & Ms. Prem Lata Bansal, for the Applicant : C.S. Aggarwal, Anil Sharma & Prakash Kumar, for the Respondent

JUDGMENT

BY THE COURT :

Heard. This is an appeal under s. 260A of the IT Act, 1961 (‘the Act’). The appeal relates to the asst. yrs. 1995-96 and 1996-97. The following question has been posed : “Whether, on the facts and in the circumstances of the case and in law, the Tribunal was correct in allowing the benefit under s. 11 of the IT Act, 1961, without appreciating that the assessee had violated the provisions of s. 13(1)(c) and 13(1)(d) of the Act ?”

2. We find that the CIT(A) decided in favour of the assessee on all aspects in the revenue’s appeal for the asst. yr. 1995-96. The Tribunal affirmed conclusion of the CIT(A) with the following observations : “We have considered the rival submissions and the materials on the file. We are of the view that on the facts and in the circumstances of the case and for the detailed reasons given in the impugned appellate order, the learned CIT(A) was justified in holding that the assessee was entitled to exemption under s. 11 of the Act for the asst. yr. 1995-96. As noted above, the assessee is a registered society under s. 12A(a) of the Act. It is providing services in the field of family planning, family welfare, birth control, etc. It was in existence since 1981 and it was allowed exemption under s. 11 of the Act in earlier years. The reasons given for refusing exemption under s. 11 by the AO for the assessment year in question have been given hereinbefore. These reasons were payment of salary, rent, etc., to Mrs. Sudha Tewari, Chief Executive Officer and Project Coordinator, rent of the house to Mr. G.K. Tewari, husband of Mrs. Sudha Tewari, loan to Tyagi Foundation and expenditure incurred on conferences and clinics. The learned CIT(A) has discussed all the items in his impugned appellate order at length and held that salary, rent etc. paid to Mrs. Sudha Tewari was reasonable and for valuable services rendered by her as Chief Executive Officer and Project Co-ordinator and that the rent of the house paid to Mr. G.K. Twari was also reasonable considering the location of the house of Green Park, New Delhi. No material has been brought before us to rebut the factual findings of the learned CIT(A). On consideration of the materials on the file, the past record of the society, the year to year services rendered by Mrs. Sudha Tewari from its inception, we are satisfied that the salary, rent, etc. paid to her was reasonable and was not excessive and the learned CIT(A) was justified in rejecting these as not valid grounds for rejecting the claim of exemption under s. 11 of the Act. Again, we have carefully gone through the orders of the AO and the ld. CIT(A) for the asst. yrs. 1995-96 and 1996-97 on the issue of loan to Tyagi Foundation and considered the submissions and contentions made by the ld. Authorised Representative of both sides. We are of the view that the ld. CIT(A) was justified in holding that there was no violation of provisions of s. 13(5) in giving the loan to Tyagi Foundation. The ld. CIT(A) found that Tyagi Foundation was a separate registered society engaged in similar charitable activities and the allegation of the AO of this society being controlled by Mrs. Sudha Tewari and others was wrong and irrelevant. No material was brought to show that Tyagi Foundation was not a genuine registered society engaged in similar charitable activities. The loan given by the assessee to Tyagi Foundation was out of the object of the assessee-society to promote its charitable activities. It was not a case that Tyagi Foundation had misused the amount of loan and utilised it for non-charitable purposes. No material was placed to show that the purchase of the property and utilisation of the property by Tyagi Foundation was for purposes other then its charitable purposes. Moreover, the loan given was fully secured by mortgage deed and in fact, in the subsequent year on non-payment of the loan the property was reverted to the assessee-society. No material was placed to show that there were any non-charitable activities connected with the property in question. On the facts and in the circumstances of the case, therefore, we hold that the ld. CIT(A) was justified in rejecting this ground as well as for the rejection of the claim of exemption under s. 11 of the Act by the AO. As regards the expenses on conferences and clinics, we are of the view that the ld. CIT(A) had correctly appreciated the facts and circumstances of the case and had rightly held that the expenditure incurred on the same was part of the charitable activities and the AO was wrong in his view that the expenditure was incurred on non-charitable activities. The claim of depreciation allowed by the ld. CIT(A) for the reasons given in his impugned appellate order was also proper and justified.”

3. For the asst. yr. 1996-97, the assessee primarily challenged the question as to the reasonableness of salary. That plea was accepted in view of the conclusions for 1995-96. The extracted portion of the order passed by the Tribunal goes to show that the conclusions are essentially factual giving rise to no question of law. Accordingly, we do not entertain this appeal Dismissed.

[Citation : 254 ITR 268]

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