Case Law Details
Shaheed Kartar Singh Saraba Charitable Trust (Redg.) Vs DCIT (ITAT Chandigarh)
It is an admitted fact that the assessee has derived interest on its fixed deposits maintained with bank(s) @ 7.5% to 7.75% and in turn paid interest to its trustee Shri Grewal in question @ 10% and @ 14.75% to State Bank of Patiala in their relevant previous year (supra). All this same sufficiency indicates that the Assessing Officer had erred during the course of assessment in comparing the assessee’s fixed deposits interest derived from banks against that paid forming subject matter on the instant lis.
The Revenue at this stage sought to draw support from CIT(A)’s action adding the trust’s total income to the extent of Rs. 11,98,68,227/- on the ground that there was no justification to avail the interest bearing funds at such an unreasonable rate without any requirement since it had itself been maintaining FDRs with the banks. We find no reason to sustain either of the twin limbs of excessive as well as unjustified interest on aspects in favour of the Revenue. Paper Books pages 28 to 29 suggest that the assessee had 17 fixed deposit accounts with the bank(s) out of which the first one was in the nature of margin money security in favour of the Dental Council of India whereas accounts 2 to 14 thereof are fund security(ies) of Nursing College(s) in favour of the Baba Farid University of Health Sciences. Meaning thereby that the said fixed deposit accounts are deposits are in the name(s) of affiliating/regulatory bodies than fixed deposit investment per se. We observe that these facts that it was very much justifiable on assessee’s part to maintain all the said fixed deposits for the purpose of carrying out the trust’s medical education activities.
We next advert to alleged excessive interest payments @ 10% to its trustee Shri Grewal. It has come on record that the department has itself accepted interest paid to the lender banks @ 14.75% in case of secured loans are against unsecured loans availed from Shri Grewal. That itself suggests that the impugned interest rate @ 10% is not excessive so as to attract the impugned disallowance/addition.
ITAT held that the assessing authority had erred in disallowing assessee’s interest payment of Rs. 1,13,41,361/- followed by the CIT(A)’s enhancement action under challenge which is also not sustainable.
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