Dr. Kondabolu Basavapunaiah & Dr. Lakshmi Prasad Trust Vs ITO (Exemption) (ITAT Visakhapatnam)
ITAT Vizag Allows 11 Exemption – Sale to Trustee at Market Value Not Violation of Section 13- No Undue Benefit to Trustee – ITAT Strikes Down Denial of Exemption
Assessee, a charitable trust registered u/s 12A & 80G, had sold land admeasuring 1675 sq. yards at Koritipadu to one of its trustees, Dr. Kondabolu Vara Prasad. The original sale deed dated 12.05.2016 mentioned consideration of Rs. 1,00,50,000/- against stamp duty value of Rs. 1,67,50,000/-. Later, a rectification deed dated 31.01.2018 corrected the consideration to Rs. 1,50,50,000/- stating that one cheque of Rs. 50 lakh was omitted due to a clerical error. AO held that since consideration was below market value & the buyer was a trustee (specified person u/s 13(3)), provisions of s.13(1)(c) were violated. He denied exemption u/s 11, taxed the trust as an AOP at maximum marginal rate, & also added Rs. 17 lakh balance & Rs. 8.56 lakh as business income. CIT(A)confirmed the denial.
Before the Tribunal, Assessee explained that payments were made in tranches – Rs. 50 lakh in Aug 2013, Rs. 50 lakh in Oct 2014 & Rs. 50.50 lakh in May 2016 – totalling Rs. 1.50 crore before execution of deed, & later Rs. 17 lakh was paid on 29.03.2018. Thus, the entire consideration matched the stamp duty value. It was argued that the trust had enjoyed interest-free advances since 2013, which justified minor differences, & there was no undue benefit to the trustee.
