ACIT CENTRAL CIRCLE 2(3), CHENNAI vs. TAGORE EDUCATIONAL TRUST, CHENNAI

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ITA 1830/CHNY/2017Status: DisposedITAT Chennai20 February 2018AY 2008-094 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that advancing loans and advances, including corpus funds, to other registered charitable institutions with similar objects is permissible and not hit by the relevant provisions of the Act. The CIT(A)'s order was found to be correct.

What were the facts?

The Revenue appealed against the CIT(A)'s order which deleted the addition made by the AO. The AO had denied exemption under Section 11 to the assessee, a charitable trust, for giving loans and advances to two other educational trusts.

What were the issues?

Whether advances/loans given by a charitable trust to other registered trusts with similar objects are hit by Section 13(1)(d) of the Income Tax Act, thereby disentitling the trust to exemption under Section 11.

Which sections of the Income-tax Act were involved?

Section 11,Section 13(1)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN

PER GEORGE MATHAN, JUDICIAL MEMBER:

ITA No.1830/Chny/2017 is an appeal filed by the Revenue against

the Order of the Commissioner of Income Tax (Appeals)-17, Chennai, in ITA No.206/15-16/CIT(A)-17 dated 31.03.2017 for the AY 2008-09. 2. Ms.D.Kumutha, JCIT, represented on behalf of the Revenue and Mr.S.Sridhar, Adv., represented on behalf of the assessee. :- 2 -:

3.

It was submitted by the Ld.DR that the assessee is a Charitable

Trust. In the course of the assessment, it was noticed that the assessee

had given loans and advances to two other Trusts viz., M/s.Jerusalem

Educational Trust, to an extent of Rs.30,37,250/- and M/s.Sri Lakshmi

Ammal Educational Trust, to an extent of Rs.50,00,000/-. The AO held

that the Explanation to Sec.11(2) debars advances/loans/deposits out of the accumulated funds of the previous years and consequently, denied the exemption u/s.11 of the Act. It was a submission that on appeal, the Ld.CIT(A) held that the assessee Trust was entitled to advance money to other registered Trusts who had similar objects and consequently, deleted

the addition. It was a submission that the order of the Ld.CIT(A) was liable to be reversed.

4.

In reply, the Ld.AR vehemently supported the order of the Ld.CIT(A). It was a submission that the issue was squarely covered by the decision of the Hon’ble Delhi High Court in the case of ACME

Educational Society reported in [2010] 326 ITR 146 as also the decision of the Co-ordinate Bench of this Tribunal in the case of M/s.Society of Daughters of Mary Immaculate and Collaborators in ITA No.963/Mds/2012

wherein, relying upon the decision of the Hon’ble Delhi High Court in the case of ACME Educational Society, the Co-ordinate Bench of this Tribunal

had held that advancing of interest free loans to sister concerns, having

similar objects and registered u/s.12 of the Act was not hit by the provisions of Sec.1(5) r.w.s.13(1)(d) of the Act. :- 3 -:

5.

We have considered the rival submissions.

6.

A perusal of the order of the Ld.CIT(A) shows that in Para Nos.7.1.4

to 7.1.7, the Ld.CIT(A) has followed the judicial discipline in following the decision of the Hon’ble Delhi High Court in the case of ACME Educational

Society, referred to supra, as also the decision of the Co-ordinate Bench of this Tribunal in the case of M/s.Society of Daughters of Mary Immaculate

and Collaborators, to hold that the loans and advances including corpus

funds could be advanced to other Charitable Institutions registered

u/s.12A. M/s.Jerusalem Educational Trust and M/s.Sri Lakshmi Ammal

Educational Trust are registered u/s.12AA. This being so, we find no error

in the order of the Ld.CIT(A), which calls for any interference.

7.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the Open Court on February 20, 2018, at Chennai. (अ"ाहम पी. जॉज") (जॉज! माथन) (ABRAHAM P.GEORGE) (GEORGE MATHAN) "या$यक सद"य/JUDICIAL MEMBER लेखा सद"य/ACCOUNTANT MEMBER :- 4 -:

चे"नई/Chennai, 0दनांक/Dated: February 20, 2018. TLN

आदेश क+ ($त1ल2प अ3े2षत/Copy to: 1. अपीलाथ'/Appellant 4. आयकर आयु4त/CIT

2.

()यथ'/Respondent 5. 2वभागीय ($त$न"ध/DR 3. आयकर आयु4त (अपील)/CIT(A) 6. गाड! फाईल/GF

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