Case Law Details
ITO Vs Laxminarayan Mandir Trust (ITAT Mumbai)
ITAT Mumbai held that provisions of section 13(2)(a) of the Income Tax Act does not authorise the Revenue to compute the notional interest. Accordingly, addition of notional interest deleted.
Facts- The assessee is a religious and charity trust and maintains Laxminarayan Mandir at Vile Parle, Mumbai. The assessee is registered u/s. 12A of the Income Tax Act. The return filed by the assessee was selected for scrutiny and statutory notices u/s. 143(2) as well as Section 142(1) of the Act were issued and served on the assessee.
During the assessment proceedings, it was observed that the assessee has undertaken the redevelopment of the property of the trust, i.e. Mandir and adjustment chawls. The assessee has given Rs. 15,88,36,661 to M/s Ramgopal Ganpatrai & Co. Pvt. Ltd. On verification, it was found that the trustees of the assessee are directors of M/s Ramgopal Ganpatrai & Co. Pvt. Ltd. having shareholding of 12.92% and 12.97% (conjointly more than 20%) in the said company. in which the trustees of the assessee were directors.
Accordingly, AO passed u/s. 143(3) of the Act came to the conclusion that the assessee has given loan to M/s Ramgopal Ganpatrai & Co. Pvt. Ltd. in the year 2011, which is related party u/s. 13(3) of the Act and the assessee has also violated section 11(5) of the Act. AO came to the conclusion that the trustees have taken benefit of the trust property and it is a clear-cut violation of the provisions of section 13(3) read with section 13(1)(c) and section 13(2)(a) of the Act and hence, the assessee is not eligible for exemption under section 11 of the Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
