DCIT (Exemption) Vs Aditya Birla Foundation (ITAT Mumbai)
Exemption u/s 11 Allowed – Lease to Group Concern not hit by s.13(3); Notional Rent & Denial of Exemption Unsustainable
The ITAT Mumbai dismissed Revenue’s appeals for AY 2016-17 & 2017-18 and confirmed the CIT(A)’s order granting exemption u/s 11 to Aditya Birla Foundation. The AO had denied exemption alleging violation of s.13(1)(c) r.w.s.13(2)(a)/(b) on the basis that the trust leased its hospital building and staff quarters to Aditya Birla Health Services Ltd., allegedly a related concern, at inadequate rent. Relying on DVO valuation, the AO substituted actual rent with higher notional rent and taxed income at maximum marginal rate, also questioning genuineness of activities.
The Tribunal noted that identical issue had arisen in earlier years and coordinate bench had already held that the lessee company was not a specified person u/s 13(3) since trustees collectively held only a negligible shareholding, far below statutory limits. Following binding precedent and absence of any new facts, ITAT held that provisions of s.13 were not attracted; hence denial of exemption u/s 11 and adoption of notional rent based on DVO report were legally unsustainable.
Regarding interest income of ₹29.33 lakh, ITAT reiterated earlier directions that interest is taxable on accrual basis; however, suitable adjustment must be granted to avoid double taxation where income was already offered on receipt basis in the transition year. The issue was restored to AO only for verification and recomputation. Consequential grounds relating to accumulation u/s 11(1)(a)/(2) and allowance of expenditure were held in favour of the assessee once exemption was allowed. Accordingly, Revenue’s appeals were dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
