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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri Mahavir Singh & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XIV, Kolkata in appeal No.283/CIT(A)-XIV/Kol./09-10 dated 12.03.2014. Assessment was framed by ITO (Exemp)-I, Kolkata u/s 143(3)/13(1)(d)/13(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 24.12.2009 for assessment year 2007-08.
Mr. K.M. Roy, FCA appearing on behalf of assessee and Mr. Arindam Bhattacharjee, Addl. CIT-DR appearing on behalf of Revenue. A.Y. 2007-08 GIJCT v. ITO-E(I) Kol. Page 2 2. Issue raised by assessee in its appeal is that Ld. CIT(A) has erred in confirming the order of Assessing Officer on account of disallowance of Rs.3.75 lakh u/s 13(1)(c)/(d) of the Act.
Briefly stated facts are that assessee is a Charitable Trust and having registration u/s 12 of the Act. The Ld AO found that the assessee-trust has paid an advance of Rs.3.75 lakh for purchase of a flat to M/s Mithua Developers Pvt. Ltd. The assessee during the course of assessment proceedings could not produce the relevant documents regarding the advance for the purchase of flat. The Assessing Officer also noted that the trustee of the assessee-trust Mr. Amitabh Jalan is also a Director of the said company - M/s Mithua Developers Pvt. Ltd. In the absence of any supporting evidence for the advance of flat, the Ld. AO has disallowed the money (Rs.3.75 lakh) paid to the M/s Mithua Developers Pvt. Ltd. for the reason of violating the provisions of sec. 13(1)©/(d) of the Act. Hence, The Ld. AO has added the income of assessee. Aggrieved, assessee preferred appeal before Ld. CIT(A). Before Ld. CIT(A) assessee demonstrated that Rs.3.75 lakh was paid to M/s Mithua Developers Pvt. Ltd. for purchase of said flat and it was not a deposit made by it in violation of the restrictions laid in section 11(5) of the Act. The assessee also submitted that Mr. Amitabh Jalan, trustee of the assessee-trust is a director in the said company but does not have significant stake in the company as per stipulation laid down in Sec. 13(1)(d) of the Act. However, Ld. CIT(A) has disregarded the claim of assessee and upheld the order of AO. Aggrieved, assessee is in second appeal before us.
We have heard rival contentions of the parties and perused the materials available on record. We find in assessment order that AO has disallowed the claimed of the assessee for the advance paid of Rs. 3.75 lakh, for the purchase of flat. The AO treated this advance as deposit which is violating the conditions laid down under section 11(5) of the Act. So the A.Y. 2007-08 GIJCT v. ITO-E(I) Kol. Page 3 disallowance has taken place. However assessee demonstrated before Ld. CIT(A) that said transaction is out of the purview of Sec. 13(1)(d) of the Act as the stake of the trustee in the company is not significant. However, we noticed that the order of Ld. CIT(A) is silent on the contention of assessee that Mr. Amitabh Jalan is not holding the significant interest in the said company as required under section 13(1)(c) of the Act. A plain reading of section 13(1)(c) goes as under : Section 13.(1) 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- (a) (b) (bb) [***] © … … (i) (ii) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3):
(2) ….. (3) The persons referred to in clause © of sub-section (1) and sub-section (2) are the following, namely:- (a) the author of the trust or the founder of the institution;
(b) any person who has made a substantial contribution to the trust or institution, [that is to say, any person whose total contribution up to the end of the relevant previous year exceeds [fifty] thousand rupees]
© where such author, founder or person is a Hindu undivided family, a member of the family; [(cc) any trustee of the trust or manager (by whatever name called) of the institution;] (d) any relative of any such author, founder, person, [member, trustee or manager] as aforesaid; (e) any concern in which any of the persons referred to in clauses (a), (b) (c) [,(cc)] and (d) has a substantial interest."
From the aforesaid section, it is clear the interest of the trustee in the aforesaid said company needs to be established. But the order of the Ld. CIT(A) is silent on this point. Therefore, we are of the view that this fact needs A.Y. 2007-08 GIJCT v. ITO-E(I) Kol. Page 4 to be examined by Ld. CIT(A). Therefore, we set aside the order of Ld. CIT(A) with a direction to examine the contention of assessee that Mr. Amitabh Jalan is not holding the significant shareholding in the above stated company where the money was deposited for purchase of said flat. Hence, this ground of assessee’s appeal is allowed for statistical purpose.