BHANSILAL RAMNATH AGARWAL CHARITABLE TRUST vs. DEPUTY COMMISSIONER OF INCOME-TAX,,

5.1 The Ld.CIT(A) failed to appreciate that the Pure IT had rendered web multimedia training to the students of the assessee trust and the assessee had also furnished all the relevant evidences to demonstrate that Pure IT had rendered the relevant services and hence, the disallowance made was required to be deleted.

5.2 The Ld. CIT(A) erred in not appreciating that Pure IT had rendered services to the assessee trust and the payments made to it were not excessive and therefore, the said expenditure should have been allowed to the assessee while computing its income.

5.3 The Ld.CIT(A) erred in confirming the disallowance of expenditure of Rs.84,180/- in respect of the payment made to Emboss Technopreneurs Pvt. Ltd. (Emboss) on the ground that the assessee had failed to submit any evidence of receipt of services from the said party.

6.1 The Ld.CIT(A) failed to appreciate that Emboss had rendered soft skill training to the students of the assessee trust and the assessee had also furnished all the relevant evidences to demonstrate that Emboss had rendered the relevant services and hence, the disallowance made was required to be deleted.

6.2 The Ld.CIT(A) erred in not appreciating that Emboss had rendered services to the assessee trust and the payments made to it were not excessive and therefore, the said expenditure should have been allowed to the assessee while computing its income.

Summary of the Grounds : From the above grounds, the assessee asks

(a) for grant of exemption u/s.11 to 13 (Ground Nos. 1 & 2) fully or on

proportionate basis, (b) the grant of deduction u/s.36(1)(va) (Ground

Nos. 3 & 4) on account of the delayed payments towards the Provident

Fund of Employees by the Employer , (c) the allowability of payments

made to related concerns, i.e. Pure-IT and Emboss (Ground Nos. 5 to

6.2) towards the services, (d) the allowability of payments made to

Memane amounting to Rs.2,06,335/- (Ground No.7); and finally (e) the

allowability of expenditure of Rs.43,74,000/- held by AO of capital

nature (Ground Nos. 8 and 9).

Charitable organization (Bansilal Ramnath Agarwal Charitable Trust-in

short ‘BRACT’) located in Pune. It manages various Educational

institutions in Pune. Assessee was registered as a Charitable

organization on 16-06-1975 under Bombay Public Trust Act, 1950. The

main objects of the trust include imparting primary, secondary, higher,

university technical education and also to reconstruct

temples/hospitals/Dharmashalas etc. Assessee was granted

registration u/s.12AA of the Act vide order dated 02-08-1976. Assessee

has been consistently claiming exemption u/s.11 of the Act.

were already the subject matter of litigation between the Revenue and

the Assessee since A.Y.2000-01 onwards. The revenue took a view in

the past against the assessee in matters of allegation of the violation of

the provisions of section 13 of the Act and consequent withdrawal of the

benefits of section 11 and 12 of the Act. However, most of the said

allegations never fructified eventually and therefore, the allegation of

the provisions of section 13(1)(b) of the Act stands decided in favour of

the assessee. In this year, consistent with the past, AO invoked the

said provisions and at the end of the assessment proceedings, AO made

various additions to the income arrived at the in the ‘income and

expenditure’ statement (Rs.1,67,09,038/-). Eventually, while rejecting

the claim of exemption u/s.11 of the Act due to the said violation of the

provisions of section 13(1)(c) of the Act, the AO made the following

additions and determined the total income at Rs.2,76,11,529/- for this

assessment year. The details of the additions as summed up by the AO

in his order for A.Y. 2007-08 are extracted here as under :

( All figures in Rupees) Income as per the recasted 1,67,09,038 income & expenditure Add. 1 Annual value of the property 3,67,000 rented to m/s. Angels less the actual rent charged to m/s. Angels (refer para No. 6.2) 2 Expenses towards payment to 50,00,292 Pure Information Technologies Pvt. Ltd. disallowed. (Para 6.3) 3 Expenses towards payment to 84,180 Emboss Technopreneures disallowed. ( Para 6.3) 4 Vehicles registered in the 7,74,153 name of Chief Trustee disallowance of depreciation and incidental expenses. ( Para 6.6) 5 Interest bearing funds diverted for purposes other than business purposes without charging interest.

i. R.B Memane ( Para 5.1) 2,06,335 (1,30,135/-+76,200) ii. Ravindra Rathi ( Para 6.1) 6,293 iii. Rajesh Rathi ( Para 6.2) 1,69,860

iv. Shivseva Trust ( Para 6.3) 1,15,746 6 Donation as per para 8 55,000 7 Prior period expenses as per 4,207 para 10 8 Employees contribution 1,64,980 towards P.F. as per Para 7 9 Employer contribution towards 17,445 P.F. as per Para 7

10 Capital Expenditure as per 43,74,000 1,13,39,491 Para 9 Total 2,80,48,529

Less Depreciation allowed as per 4,37,400 4,37,400 para 9 on a/c of addition of capital expenditure Total Income 2,76,11,529 OR Rounded to 2,76,11,530

12 of the Act. For this decision, AO examined the issues relating to the

violation of the objects of the Trust as well as the provisions of section

13 of the Act. AO also suspected the siphoning of funds by the trustees

and eventually, held that trust funds are diverted for the benefits of the

principal trustee. AO referred to the addition of item No.5 (page 4 N-

ante) and mentioned that securing of loans without providing the

guarantee and without charging of interest, constitutes the case of

diversion of Trust funds.

the decision of rejection of exemption u/s.11 of the Act, the assessee

filed an appeal before the CIT(A) with nine grounds. At the end of the

First Appellate proceedings, the claims of the assessee are partly

allowed. The summary of the same from the order of the CIT(A) are

extracted here as under :

Ground 1 to 4 The appellant’s grounds of appeal against validity of the assessment order are dismissed. Ground 5.1 The disallowance made by the AO regarding rent charged to M/s. Angels of Rs.3,67,000 is deleted

Ground 5.2 The addition made by the AO on account of the donation of Rs.55,000 is deleted Ground 5.3 The disallowance made by the AO u/s.36(1)(va) of Rs.1,64,980 is directed to be allowed after carrying our verifications as directed Ground 5.4 The disallowance made by the AO u/s.36(1)(va) of Rs.17,445/- is directed to be allowed after carrying out verification as directed Ground 5.5 The disallowance made by the AO on account of the payment of Rs.50,00,292 made to Pure Information Technologies Private Limited is confirmed Ground 5.6 The disallowance made by the AO on account of the payment of Rs.82,180 made to Emboss Technopreneurs Private Limited is confirmed Ground 5.7 The disallowance made by the AO on account of the depreciation and incidental expenses amounting to Rs.7,74,153 is deleted Ground 5.8 Grounds of appeal on the disallowance of the interest of Shri R.B.Memane amounting to Rs.2,06,335/- is partly allowed.

Disallowance of interest made by the AO in the cases of Shri Ravindra Rathi amounting to Rs.6,293, Shri Rajesh Rathi amounting to Rs.1,69,860 and Shivseva Trust amounting to Rs.1,15,746 are deleted. Ground 5.9 The disallowance of Rs.43,74,000 made on being treated the same as capital expenditure is confirmed Ground 6 The AO is directed to grant the deduction u/s.80L in case of the exemption available to the Appellant u/s.11 and u/s.12 is denied to it Ground 7 There is no error on part of the AO on levying interest u/s.234A, 234B and 234C Ground 8 This Ground of Appeal on admission of additional evidence is dismissed Ground 9 The Appellant’s Ground of Appeal against initiation of the penalty proceedings u/s.271(1)(c) and 271B are pre-mature, hence are dismissed.

the case of the assessee that there are certain issues where the CIT(A)

went astray in reading into the orders of the CIT(A) for earlier

assessment years with reference to the claim of exemption u/s.11 of the

Act. There is another issue relating to granting proportionate deduction

by the Tribunal in the earlier assessment years.

From the above, it is evident that the CIT(A) granted full relief on

account of (1) purchase of vehicles in the name of trustees (2) payment

to Shri R.B. Memane, (3) rent paid to M/s. Angels – the payments

towards the Provident Fund. However, CIT(A) confirmed the (a)

disallowance made on account of payments made to (i) Pure IT; and (ii)

Emboss (b) capital nature of certain expenditure amounting to Rs.43.74

lakhs. Aggrieved with the same, the assessee filed the present appeal

with the grounds of appeal already extracted above. Of course, on the

issue of claim of exemption u/s.11 of the Act, the CIT(A) is not

categorical in denying the exemption. However, there is no issue

relating to claim of exemption u/s.11 to 13 on proportionate basis.

BEFORE THE TRIBUNAL

assessee submitted that all the additions made by the AO stand deleted

eventually except the issue relating to the payment made to ‘Pure IT’

and ‘Emboss’. Mentioning, without conceding that these payments fall

within the mischief of provisions of section 13 of the Act, Ld. Counsel

for the assessee submitted that, for grant of benefits of section 11 and

12 of the Act to the assessee, the genuineness of the activities and the

objects of the trust are relevant. So long as the activities of the trust

are genuine and they are being carried out in accordance with the

objects of the trust, the benefit of exemption u/s.11 of the Act to the

income of trust cannot be denied. Further, referring to the slight

violation if any to the provisions of section 13(1)(c) of the Act, Ld

Counsel submitted that the claim of exemption is allowed on the

proportionate basis. In this case, income needs to be proportionate qua

the payments made to ‘Pure IT’ and ‘Emboss’. To support the same, Ld.

Counsel relied on catena of decisions on this issue. Further, Ld.

Counsel mentioned that the CIT(A) was wrong in presuming that the

issues relating to section 11 and 12 were dismissed against the

assessee while dealing with Ground Nos. 1 and 2 of the appeal. Ld.

Counsel mentioned that the CIT(A) rightly relied on the order of CIT(A)

for the A.Y. 2000-01 and understood the final conclusion wrongly. Ld.

Counsel referred to Para No.2.1.16 in this regard. According to Ld.

Counsel, the CIT(A) for that assessment year, never gave such a

decision of dismissal. We shall deal with this issue more in the

subsequent paragraphs. In this regard, Ld. Counsel for the assessee

filed written submissions clarifying the same as well as asking for grant

of exemption u/s.11 on proportionate basis.

exemption u/s.11 of the Act, Ld. DR for the Revenue relied heavily on

the orders of the AO and the CIT(A). Before us, Ld.CIT-DR submitted

that the CIT(A), in denying the benefits of section 11 and 12 of the Act,

relied on the order of his predecessor for the A.Y. 2000-01. In this

regard, Ld. CIT-DR read out the relevant lines from the order of CIT(A).

Thus, to sum up the arguments, it is the case of Ld. Counsel for

the assessee that, in principle, the claim of exemption u/s.11 of the Act

should be allowed to the assessee as the same stood allowed in the past

too. Further, Ld. Counsel submits that the allegation of the AO with

reference to the rental payments, car use details, stands allowed in

favour of the assessee and therefore, on many counts, there is no

violation of the provisions of section 13(1)(c) of the Act. Further also, in

connection with the payments to the said sister concerns, i.e. Pure IT

and Emboss. The alternate claim of the Ld. Counsel before us relates to

grant of the benefit of exemption u/s.11 of the Act proportionately.

FINDING OF THE TRIBUNAL

exemption u/s.11 and 12 of the Act, and (2) restricting the claim of

exemption if any, to the extent of payments made to the sister concerns

‘Pure IT’ and ‘Emboss’ in violation of the provisions of section 13(1)(b).

We also perused the relevant decisions in support of the grant of

proportionate exemption. We have also examined the written

submission of the Ld. Counsel for the assessee. From the above, it is

evident that the AO denied the benefit of section 11 of the Act in view of

the alleged violation to the provisions of section 13 of the Act. AO

treated the assessee as an AOP and assessed the income accordingly.

In support of this violation to the provisions of section 13(1)(c) of the

Act, the income-tax authorities concluded that the transactions relating

to purchase of vehicles in the name of the trustees, payments made to

Shri R.B. Memane, rent paid to M/s. Angels etc. are allowed in favour of

the assessee in the First Appellate proceedings.

barring the payments to Emboss and Pure IT, assessee got relief on all

other accounts. Further, he submitted that the assessee will not press

this issue so long as proportionate exemption of income is granted by

the Tribunal. For this proposition, on the allowing of proportionate

exemption, Ld. Counsel relied on catena of decisions mentioned in Para

5 of his written note. The contents of written submissions and the

decisions are given as under :

“1. The assessee is a charitable trust and is registered u/s.12A of the Income Tax Act. For this year, the assessee filed its return of income declaring exemption u/s.11. The learned A.O. completed the asst. wherein he has denied exemption u/s.11. According to the A.O., the assessee had violated the provisions of section 13 and therefore, was not entitled for claiming exemption u/s.11. The learned A.O. after denying exemption u/s.11, has treated the assessee trust as an AOP and has assessed the income accordingly. 2. The learned A.O. in this year had held that the assessee had violated the provisions of section 13(1)(c) on the following grounds – a. Purchase of vehicles in the name of the trustees.

b. Payment made to Shri R.B. Memane. c. Rent paid to M/s. Angels. d. Payment made to Emboss Technopreneurs Pvt. Ltd. e. Payment made to Pure Information Technologies Pvt. Ltd.

a. Sinhgad Technical Education Society Vs. ACIT vide ITA No.320/PUN/2010 order dated 14-12-2016

b. Maharashtra Academy of Engineering and Educational Research v. DCIT [ITA Nos. 915 – 920/PN/12]

c. Shri Mukund Bhavan Trust v. DCIT [ITA No. 223/PN/14]

d. CIT Vs. Kamataka Industrial Area Development Board - ITA No.557/2008 order dated 17-06-2014 (Kar. HC)

e. Sheth Mafatlal Gagalbhai Foundation Trust reported in 249 ITR 533 (Bom.)

f. CIT Vs. Fr. Mullers Charitable Institutions - ITA No.589/2007 order dated 10-02-2014 (Kar. HC)

g. CIT Vs. Fr. Mullers Charitable Institutions reported in (2014) 227 Taxmann 369 (SC)

h. Jamshetji Tata Trust Vs. JCIT (Exemption) reported in (2014) 148 ITD 388 (Mum)

i. Maharashtra Academy of Engineering and Educational Research v. DCIT [ITA Nos. 921 – 923/PN/12]

of the Act either fully or on pro-rata basis, Ld. Counsel brought our

attention to Para No.2.1.16 and read the same as following :

“2.1.16 Accordingly, I dismiss the Appellant’s these Grounds of Appeal (sic) ”

CIT(A) held so against the assessee in the context of the ground for

grant of exemption u/s.11 of the Act. While deciding against the

assessee, the CIT(A) extracted Para No. 8.1 & 8.2 from his predecessors

order for A.Y. 2000-01 (Para No.2.1.15 of order of CIT(A) is relevant).

In this regard, Ld. Counsel for the assessee brought our attention

to the contents of Para No.8.2 and submitted that the then CIT(A) for

A.Y. 2000-01 never denied the claim of exemption u/s.11 of the Act.

The fact that the CIT(A) in A.Y. 2000-01 merely held that the said issue

discussed and disposed of under Ground No.7, was demonstrated

before us. The benefit of exemption u/s.11 of the Act was granted to

the assessee.

2 of the present appeal and unnecessary confusion created by the

CIT(A), we find it relevant to extract the Para No.8.1 and 8.2 of the order

of CIT(A) for A.Y. 2000-01 and the same reads as under :

“8. Grounds No.4 & 6 : Under these grounds of appeal, denial of exemption under section 11 to the appellant trust and invoking of the provisions of section 13 by holding that the nature of the appellant trust was not charitable, that the activities were not genuine, and that the trustees had siphoned off funds of the trust, have been challenged. It is contended that the burden of proof in this regard was squarely upon the AO.

8.1 The various findings which led the Ld. AO to conclude that of the appellant trust was ineligible for exemption under section 11 and was hit by the provisions of section 13 have been discussed in great detail under paragraphs of 6 and 7 appearing on pages 5 to 49 of the impugned assessment order. These include the transaction with Shri Rohidas Baban Memane, rent paid by the appellant trust to the firm M/s. Angels, payment made to Emboss Technopreneurs Pvt. Ltd., payment to Pune Information Technologies Pvt. Ltd. advance given to Trimit Builders, vehicles purchased in the name of trustee, loan given to Bansilal Cloth Market, advance to Shikshan Prasarani Sabha, advance to Siddheshwar Mandir Trust, advance to Dhanraj Mulchand Rathi, advance to Ravindra Dhanraj Rathi, advance to Rajesh Dhanraj Rathi, advance to Shiv Seva Trust and acceptance of capitation fee.

8.2 Upon closer perusal of the appellant’s grounds of appeal, it is seen that the above issues which were cited by the Ld. AO while denying the appellant the benefit of exemption under section 11, have been separately challenged under the various sub-grounds of Ground No.7. Accordingly, the issues raised under these grounds are discussed and disposed of under Ground No.7. Accordingly, these two grounds of appeal are not being separately adjudicated upon.”

From the above, there is an error on part of the CIT(A) for A.Y.

2007-08 in reading of the order of CIT(A) for the A.Y. 2000-01. The

disposal of said Ground No.7 was never resulted in denial of exemption

u/s.11 of the Act for that year. Therefore, we are of the view that CIT(A)

erroneously came to the wrong conclusion in effect to conclude that the

objects of the present trust are not charitable and therefore, the claim of

exemption u/s.11 of the Act are to be decided against the assessee.

Considering the same, we are of the opinion that the order of the CIT(A)

on this issue requires correction to that extent on the activities of trust

or carrying out of the same in accordance with objects of the Trust are

concerned, we find, the Revenue did not make out any case for denying

the said exemption, in principle. In effect, there is no damage to the

objects and activities of the trust. Therefore, in principle, the assessee

is entitled to the claim of exemption u/s.11 of the Act. Accordingly, in

principle, the ground Nos. 1 and 2 of this appeal are allowable.

of section 13(1)(c) of the Act, it is undisputed fact that the assessee got

relief on many accounted mentioned above (Para 2 of the written note)

only exceptions are (1) payments to the sister concerns, i.e. Pure IT and

the Emboss (2) contribution to the Provident Fund (3) the issue relating

to the capitalization of certain expenses. Before us, it is the claim of Ld.

Counsel that the item Nos. (2) and (3) are already allowed in the past

leaving only the item No.(1).

‘Emboss’, it is the submission of the Ld. Counsel for the assessee that

said payments are actually allowable on merits and the provisions of

section 13(1)(c) of the Act have no application. Alternatively, even if the

said provisions apply, Ld. Counsel submitted that the proportionate

exemption may be granted in respect of the rest of the income of the

assessee excluding the said disallowance of Rs.50,00,292/- (Pure IT)

and Rs.82,180/- (Emboss).

exemption and find that it is a settled legal proposition in favour of the

assessee in view of binding decision of the Tribunal (supra). For the

sake of completeness of this order, we proceed to extract relevant para

of an order of Tribunal in the case of Sinhgad Technical Education

Society (ITA No.320/PN/2010, dated 14-12-2016) and the same reads

as under :

“128. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the assessee in the instant case is holding 220 shares ranging from 1 to 15 in different limited blue-chip companies. Although the Assessing Officer has not discussed the issue in the body of the assessment order, however, on the basis of the information provided by the Assessing Officer in the remand report for

the preceding assessment years the CIT(A) observed that the assessee has violated the provisions of section 13(1)(d) of the I.T. Act by investing in shares in the listed blue chip companies. Therefore, the assessee is not entitled to the benefit of provisions of section 11. It is the submission of the Ld. Counsel for the assessee that the assessee trust is conducting courses on business management namely, MBA, MCA, DBM etc. for which the audited accounts of different companies are required for the benefit of the students and therefore considering the miniscule amount invested in the shares of these companies for Rs.1,50,000/- it can be considered as application of income and not an investment. It is also his alternate submission that there cannot be wholesale denial of exemption u/s.11 and at the most the dividend earned on these shares should lose the benefit of exemption.

“7.9 I have considered the above submissions of the appellant. In view of the facts mentioned in para 7.8 above, I do not find the contention of the appellant acceptable on this issue. However, the alternate contention of the appellant that denial of exemption has to be restricted to the relatable income only has to be accepted in view of the categorical observation of the jurisdictional Bench of the Tribunal in para 28 of ITA No.113/PN/2010 in the appellant’s own case for 1999-2000.

7.10 The AO is directed accordingly. In view of the above decision with regard to investment in shares of co-operative society and shares of public limited companies, this ground of appeal may be treated as partly allowed.”

From the above, it is evident that the concept of grant of

exemption on proportionate basis is the settled legal proposition. With

regard to the additions at Ground No. 3 and 4, we find the claims were

found allowed after due verification by the AO. Further, on the

disallowance listed at ground Nos. 7 to 9, they are debatable

issues/additions. Such disallowance, in principle, do not amount to

carrying out the activities of the trust against the objects of the trust.

Therefore, such disallowances must not come on the way of

computation of allowable exemption u/s.11 of the Act. We order the AO

accordingly. Thus, we order the AO to grant the exemption u/s.11 of

the Act to the assessee and also direct the AO to deny the exemption

made on account of payment to Pure IT and Emboss; and any other

disallowances are finally confirmed by us. Accordingly, the grounds

raised by the assessee at Ground Nos. 1 and 2 are partly allowed;

Ground Nos. 3 and 4 are dismissed as academic, Ground Nos. 5 to 6.2

are dismissed’ and Ground Nos. 7 to 9 are dismissed as academic; and

Ground No.10 is dismissed as general.

ITA No.1133/PUN/2016 A.Y. 2008-09

read as under :

“On facts and in law, 1. The Ld.CIT(A) erred in not specifically directing the Ld. AO to grant exemption u/s.11 to the assessee trust particularly since he himself held that the assessee had not violated any provisions of section 11 to 13. 2. The assessee submits that it has complied with all the conditions laid down in section 11 to 13 and hence, the Ld.CIT(A) should have directed the Ld. AO to grant the exemption u/s.11 to the assessee trust.

From the above, the common issue raised in the appeals of the

assessee in Ground Nos. 1 and 2 relates to granting of exemption

u/s.11 of the Act. This issue is dependent on the outcome of Ground

Nos. 1 and 2 of the appeal for A.Y. 2007-08. In principle, the claim of

exemption u/s.11 is allowed for A.Y. 2007-08.

assessment year, there is no violation whatsoever to the provisions of

section 13(1)(c) of the Act. Assessee got relief on all the items of

additions, i.e. (1) purchase of vehicles in the name of the trustees, (2)

Advance given to Mr. Rajesh Dhanraj Rathi and (3) Advance given to Mr.

Siva Seva Trust. He also submitted that the disallowance by way of

capitalization of certain expenses of Rs.23.73 lakhs, being a legal issue

and debatable one, it does not have the effect of violation of the

provisions of section 13(1)(c) of the Act. Further, Ld. Counsel argued

vehemently stating that so far as the trust carries on the activities in

accordance with the objects of the trust, the claim of exemption u/s.11

of the Act cannot be denied. Ld. Counsel also filed written submissions

before us. Further, he submitted that there is no transaction of

payment to Pure IT & Emboss (supra) in this year.

written submissions filed before us. For the sake of completeness of

this order, the written submissions are extracted as follows :

“1] The assessee is a charitable trust and is registered u/s 12A of the Income Tax Act. For this year the assessee filed its return of income claiming exemption u/s 11. The learned A.O. completed the asst. wherein he has denied exemption u/s 11. According to the A.O., the assessee had violated the provisions of section 13 and therefore, was not entitled for claiming exemption u/s 11. The learned A.O. has discussed the issue regarding violation of provision section 13 in paras 4 to 6.2 of the order. According to the A.O., the assessee has violated provision of section 13 on the following grounds –

a. Vehicles purchased in the names of trustees (para 5 of the asst. order).

b. Advance given to Rajesh Dhanraj Rathi (para 6.1 of the asst. order) c. Advance given to Shiv Seva Trust (para 6.2 of the asst. order)

2] The assessee agitated the above issues before the learned CIT(A). In his order, the learned CITCA) has held that there is no violation of section 13 on the part of the assessee trust in respect of the above referred three issues. The CITCA) has discussed the issue regarding purchase from vehicles in the name of trustees in para 5.4.1 and 5.4.2, page 109, of the order. Similarly, the issue regarding Shri Rajesh Rathi is discussed in para 5.5.1.1 and 5.5.1.2 and the issue regarding Shiv Seva Trust is discussed in para 5.5.2.1 and 5.5.2.2 of the order.

3] Accordingly, the assessee submits that all the three issues raised by the learned A.O. for holding that the assessee trust had violated the provisions of section 13 has been deleted by the learned CIT(A). Now, once, the provisions of section 13 are not violated, there is no reason to deny the exemption u/s 11 to the assessee trust. The grounds of appeal for this year raised before learned CITCA) are reproduced by him on pages 10 - 11 of the order. In ground Nos. 2 - 4, the assessee had specifically raised the issue regarding denial of exemption u/s section 11.

Now, once, the CIT(A) has held that there is no violation of section 13, he ought to have allowed these grounds and the exemption u/s 11 should have been granted. However, the learned CIT(A) has dismissed these grounds. On page 108 of his order, he has dismissed the said grounds. Further, on page 127 of his order he has given a chart wherein in nutshell, his decision on various grounds of appeal of the assessee is summarised. Even in the said chart, he has dismissed grounds 2 to 4 which were raised by the assessee for allowing exemption u/s 11. 4] The assessee submits that while dismissing the grounds regarding claim of exemption u/s 11, the CIT(A) has basically followed the order passed by his predecessor for A.Y. 2000 - 2001. This is evident from para 2.1.15, page 25 - 26 of the order. He has reproduced paras 8.1 and 8.2 of the order passed by his predecessor for A. Y. 2000 - 01. The assessee has submitted the copy of the order for A. Y. 2000 - 01 in the course of hearing. In the paras 8.1 and 8.2 reproduced by the CIT(A), his predecessor has not dismissed the grounds regarding exemption u/s 11. Accordingly, the learned CIT(A) has inadvertently dismissed these

grounds for A.Y. 2008 - 09 on the basis of the said paras which is not correct. In fact for A.Y. 2000 - 01, the learned CIT(A) has clearly noted in paras 10 to 10.2 that exemption u/s 11 is allowable to the assessee Trust. 5] The assessee submits that the learned A.O. had specifically denied exemption u/s l I on the ground of violation of section 13 on three issues mentioned in para 1 supra. The learned CIT(A) has deleted the additions made on the three issues and has held that there is no violation of section 13. Accordingly, it is submitted that he ought to have allowed the exemption u/s 11 to the assessee and the grounds relating to the allowability of exemption u/s 11 should not have been dismissed. Thus, the assessee prays for a specific finding for allowing exemption u/s 11.”

Considering the above, it is now concluded that the allegation

made by the AO u/s.13(1)(c) of the Act on the additions did not fructify

and the CIT(A) deleted the same and the Revenue is not in appeal

against the said decision of the CIT(A). Further, we find no damage to

the objects of the trust in any form by the activities of the trust. Hence,

we are of the opinion, the ground Nos. 1 and 2 are allowed. Ground

Nos. 3 and 4 are dismissed as academic. Ground No.5 is dismissed as

general.

ITA Nos.1134 & 1136/PUN/2016 A.Yrs. 2009-10 & 2011-12

and the same were homologous to the grounds for the A.Y. 2008-09. In

these appeals also, assessee raised the issue relating to denial of claim

of exemption u/s.11 of the Act in view of violations by the assessee to

the provisions of section 13(1)(c) of the Act. In the assessments, the AO

alleged that purchasing of the vehicles in the names of the trustees and

advances given to Siva Seva Trust are the two common issues which

were already adjudicated by us in favour of the assessee for the A.Yrs.

2007-08 & 2008-09. Considering the commonality of the issues,

arguments of the counsels, we are of the opinion that the grounds

raised by the assessee in both the appeals are required to be allowed in

favour of the assessee for these two assessment years too. At this point

of time, the additions made by the AO claiming to be violation to the

provisions of section 13(1)(c) of the Act are not sustained. Therefore,

the assessee is entitled to claim exemption u/s.11 of the Act.

Accordingly, the grounds 1 and 2 raised by the assessee in both the

appeals are allowed. Grounds 3 to 5 are dismissed as academic.

Order pronounced in the open court on this 01st day of June,

2018.

Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक सद�य �याियक सद�य /JUDICIAL MEMBER लेखा लेखा सद�य सद�य / ACCOUNTANT MEMBER �याियक �याियक सद�य सद�य लेखा लेखा सद�य सद�य

पुणे Pune; �दनांक Dated : 01st June, 2018 सतीश आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत

अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. The CIT(A)-13, Pune 4. The Pr.CIT Central, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B Bench” Pune; 5. गाड� फाईल / Guard file. 6.

आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार

स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune