Case Law Details
DDIT Vs M/s. Paramasiva Naidu Muthuvel Raj Education Trust (ITAT Chennai)
It is also an undisputed fact that during relevant assessment year, the land had been made available to M/s. PMR Bangaru Subbammal Educational Trust, which is a Trust that does not have registration u/s.12AA of the Act. It is also an undisputed fact that the assessee trust has given loans, which are interest free to M/s.PMR Bangaru Subbammal Educational Trust, that the objects of the assessee-trust and that of M/s.PMR Bangaru Subbammal Educational Trust are identical, would not make M/s.PMR Bangaru Subbammal Educational Trust as having registration u/s.12AA of the Act.
M/s.PMR Bangaru Subbammal Educational Trust must on its own independent status claim and have the registration u/s.12AA of the Act. In the absence of such registration, dealing with such an unregistered trust would affect the exemption available to the assessee.
A perusal of provisions of the section 13(2) of the Act shows that without prejudice to the provisions in clause (c) & (d) of sub-section (1) of Section 13, the income of the property of the trust is deemed to have been used for the benefit of a person referred to in sub-section (3), in clause (g), if any income or the property of the Trust or institution is diverted during the previous year in favour of any person referred to in sub-section (3) (regarding electricity bill payment) and in clause (h), if any funds of the trust or institution are, or continue to remain, invested for any period during the previous year —– in which a person referred to sub-section(3) has substantial interest (the loan given to M/s.PMR Bangaru Subbammal Educational Trust where the Managing Trustee is an interested person with substantial interest) and clause (b), if any land — of the Trust or institution —- for any period during the previous year without adequate rent or other compensation (regarding gifting of the land, which has subsequently been cancelled, to M/s. PMR Bangaru Subbammal Educational Trust where the Managing trustee of the Trust is an interested person with substantial interest) In such cases, where violation of sub-section (2) of section 13 takes place the benefit, directly or indirectly, to any person referred to sub-section(3) of Section 13, then the First provisions of section 13(1) clearly states that nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof, which clearly shows that provisions of the section-11 and section-12 are no more available in such cases.
This being so, we are of the view that the ld. Assessing Officer was right in denying the benefit of section-11 in respect of the income of assessee as there has been violation of the provisions of the sections 13(1)(c) and 13(1)(d) read with section 13(2) of the Act. In the circumstances, the order of the CIT(Appeals) on this issue stands reversed and the order of the ld. Assessing Officer is restored.
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