Sai Shiva Educational Trust Vs ITO (ITAT Mumbai)
ITAT Mumbai held that denial of exemption under section 11 of the Income Tax Act not justified as advances given doesn’t violate provisions of section 13(1)(d) of the Income Tax Act. Accordingly, appeal allowed and exemption granted.
Facts- The assessee is engaged in charitable activities in field of education and has claimed exemption u/s 11 of the Act. AO was of the opinion that the investment made by the assessee by way of loan/deposit to another trust does not fulfill the requirements of the forms and modes of investment permitted by Section 11(5) of the Act. The AO accordingly denied the benefit of exemption u/s 11 of the Act in view of contravention of provisions of Section 11(5) r.w.s. 13(1)(d) of the Act and made the addition of Rs. 13,53,39,422/-. AO also proceeded by making addition of Rs. 69,75,000/- u/s 68 of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that since advances given for the use of property belonging to Tarapur Textile Park Ltd., for the purpose of carrying on the objects of the Trust, we do not find such advances violative of Section 11(5) r.w.s. 13(1)(d) of the Act. Further, advance given to Divina, is for furniture and that too not a related party. Therefore, provisions of Section 13(1)(d) of the Act are not applicable. Further, advance given to S.M.G Securities Ltd. is for arranging finance, again not a related party. Moreover, the payment made to S.M.G. Securities Ltd., was subject to TDS @ 10% applicable to professional consultant. In our considered opinion, such payment is not hit by the provisions of Section 13(1)(d) of the Act. Thus, considering the facts of the case in totality, we do not find any merit in denying the benefit of Section 11 of the Act.
