ITAT Patna Judgments — July 2023

The Tribunal held that the appeal of the Revenue is dismissed. Regarding the first issue concerning the addition of Rs. 99,15,000/- as capital gains, the Tribunal noted the assessee's submission that prior to the insertion of Section 11(6) w.e.f. 01.04.2015, such institutions could claim depreciation and also claim the cost as application of income. The Tribunal found that the CIT(Appeals) had deleted this addition, and the Revenue's appeal on this point was not found to have merit. Regarding the second issue concerning the addition of Rs. 20,13,54,800/- under Section 13(3) read with Section 13(2), the Tribunal observed that these sections are invoked when property of the trust is made available for use to a person referred to in Section 13(3) without charging adequate rent or compensation. The AO had merely expressed an apprehension that the properties would be used by specified persons without paying rent, but did not record any finding demonstrating that these properties had factually been used by specified persons. The Tribunal referred to CBDT Circular dated 21.07.1966, which clarifies that the value of benefit conferred would be determinable with reference to the fair rental value. The AO made the addition without fulfilling the prerequisites of invoking Section 13(2) read with Section 13(3). Therefore, the CIT(Appeals) rightly deleted this addition. The Tribunal found no merit in the appeal and dismissed it.

The Tribunal upheld the deletion of the disallowance made by the CIT(A). It found that the Assessing Officer's observations were contradictory, as he accepted that daily payments did not exceed the limit but still disallowed the expenditure.

The CIT(A) found that only Rs. 1,50,000/- was paid in contravention of Section 40A(3), disallowing that amount and deleting the rest. The Tribunal upheld the CIT(A)'s factual finding.

The Tribunal upheld the disallowance of Rs. 1,00,000/- for freight and transportation expenses, finding no infirmity in the authorities' findings. It also confirmed the disallowance of Rs. 16,55,900/- under Section 40A(3) as the assessee failed to demonstrate exceptional or unavoidable circumstances for cash payments to other traders/agents.

The Tribunal confirmed the addition of Rs. 25,00,000/- on account of unexplained investment in loan given to Shri Rajeev Ranjan Prasad, as the assessee did not retract or rebut his admission. However, the addition on account of estimated interest income was deleted due to lack of evidence.