THE ACIT, 3 (1), v. M/S VICHAR BHARTI EDUCATIO N SOCIETY,

ITA 317/IND/2006 | misc
Pronouncement Date: 13-07-2010 | Result: Dismissed

Appeal Details

RSA Number 31722714 RSA 2006
Assessee PAN AAAAV0976F
Bench Indore
Appeal Number ITA 317/IND/2006
Duration Of Justice 4 year(s) 2 month(s) 10 day(s)
Appellant THE ACIT, 3 (1),
Respondent M/S VICHAR BHARTI EDUCATIO N SOCIETY,
Appeal Type Income Tax Appeal
Pronouncement Date 13-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 13-07-2010
Assessment Year misc
Appeal Filed On 03-05-2006
Judgment Text
PAGE 1 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : AAAAV0976F I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/200 6 AND 256/IND/2007 A.YS. : 1999-2000 2000-01 2004-05 2001-02 2002- 03 AND 2003-04 ACIT VICHAR BHARTI EDUCATION SOCIETY 3(1) VS THAKARAL NAGAR OPP. PATEL NAGAR BHOPAL RAISEN ROAD BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI K.K.SINGH CIT DR RESPONDENT BY : S/SHRI H.P.VERMA AND GIRISH AGRAWAL ADVOCATES DATE OF HEARING : 02.07.2010 O R D E R PER BENCH. THESE APPEALS FILED BY THE REVENUE BELONG TO SAME ASSESSEE AND INVOLVE COMMON GROUNDS HENCE THESE WERE HEARD TOG ETHER AND DISPOSED BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. PAGE 2 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 3. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS A ND THE LD.CIT(A) HAS PASSED CONSOLIDATED ORDER FOR SOME YE ARS AND HE HAS FOLLOWED HIS APPELLATE ORDER OF ONE ASSESSMENT YEAR IN DECIDING THE SAME ISSUE RAISED IN OTHER YEAR(S) HENCE WE SHALL NARR ATE THE FACTS AND ISSUES RAISED IN THESE APPEALS FIRSTLY AND THEN DECIDE THE ISSUES IN A CONSOLIDATED MANNER. IN REVENUES APPEALS IN I.T.A.NOS. 540 TO 5 42/IND/2007 WHEREIN THE FOLLOWING COMMON GROUNDS HAVE BEEN RAIS ED EXCEPT DIFFERENCE IN QUANTUM :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE WA S ELIGIBLE FOR THE DEDUCTION PRESCRIBED U/S 11 THOUGH THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER AS THERE WERE V IOLATION OF SECTION 13 11(3) AND 11(5) OF THE INCOME-TAX AC T 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 40 26 264/- MADE ON ACCOUNT OF CLAIM OF THE ASSESSE E TOWARDS THE APPLICATION OF INCOME IN ACQUISITION OF FIXED ASSETS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13 10 639/- MADE ON ACCOUNT OF ADVANCE FEE RECEIVED . PAGE 3 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 9 49 039/- MADE ON ACCOUNT OF REFUNDABLE DEPOSITS VIZ. CAUTION MONEY TEACHERS DEPOSIT AND JOURNAL ADVERTISEMENTS TO AICT E. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 1 17 20 800/- MADE ON ACCOUNT OF BUILDING DEVELOPME NT FUND (CORPUS FUND). 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 18 10 894/- MADE ON ACCOUNT OF DEPRECIATION CLAIMED BY THE ASSESSEE. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 18 61 261/- MADE ON ACCOUNT OF DEDUCTION U/S 11(1)( A). 4. THE FACTS IN BRIEF ARE THAT AS A CONSEQUENCE OF S URVEY PROCEEDINGS IN SUBSEQUENT YEARS THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS REOPENED WHEREIN THE AO HAS EXAM INED THE APPLICABILITY OF SECTION 11 OF THE ACT. THE AO FOUN D THAT THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH COULD NOT BE ALLOWED AS THE COST OF ASSETS HAD ALREADY BEEN ALLOWED AS APPLICATION FOR THE PUR POSE OF CLAIMING PAGE 4 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL EXEMPTION U/S 11 READ WITH SECTIONS 12 & 13 OF THE ACT. THE AO ALSO HELD THAT ASSESSEES CLAIM FOR DEPRECIATION OF RS. 18 10 894/- AS THE APPLICATION OF INCOME FOR THE PURPOSE OF INCLUSION IN 75 % OF RECEIPT WAS NOT CORRECT AND HENCE COULD NOT BE TREATED AS APPLI CATION OF INCOME. 5. THE AO FURTHER HELD THAT THE ASSESSEE SOCIETY WAS N OT SHOWN ITS TWO RECEIPTS/INCOME AND EXPENDITURE ACCOUNT ON THE BASIS OF THE FACT THAT THE ADVANCE FEE RECEIVED TO THE TUNE OF RS. 137 LAC S WAS NOT SHOWN IN THE INCOME AND EXPENDITURE STATEMENT. THE AO ALSO EXCLU DED THE SAME FROM 75% LIMIT PRESCRIBED FOR APPLICATION. THE AO ALSO H ELD THAT THE ASSESSEE SOCIETY VIOLATED THE PROVISIONS OF SECTIONS 11 & 12 A AND ACCORDINGLY ADDED A SUM OF ADVANCE FEE AMOUNTING TO RS. 13 10 6 39/- AS INCOME OF THE YEAR UNDER CONSIDERATION. 6. THE AO THEREAFTER EXAMINED THE BALANCE SHEET AND FOUND THAT RECEIPTS ON ACCOUNT OF CAUTION MONEY DEPOSITS AND O THER DEPOSITS TO THE TUNE OF RS. 9 49 039/- HAD ALSO BEEN NOT SHOWN IN T HE PROFIT AND LOSS ACCOUNT WHICH HE ALSO ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7. THEREAFTER THE AO EXAMINED THE CONSTITUTION OF THE SOCIETY AND ITS SISTER CONCERNS AND THE TRANSACTIONS IN BETWEEN THEM AND HELD THAT CHAIRMAN AND THEIR FAMILY MEMBERS WERE CONTROLLING ENTIRE OPERATIONS INCLUDING UTILIZATION OF INCOME/SURPLUS BY USING T HE NAME OF SOCIETY AND THEREFORE THE NAME OF THE SOCIETY WAS MERELY USED FOR BY-PASSING THE PAGE 5 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL PROVISIONS OF THE INCOME-TAX ACT AND FOR CLAIMING I NCOME AS EXEMPT WHEREAS ACTUAL CONTROL AND MANAGEMENT OF AFFAIRS WA S VESTED WITH THE MEMBERS OF THE FAMILY WHO WERE THE ACTUAL BENEFICI ARIES. ACCORDINGLY THE AO HELD THAT THE SOCIETY HAD VIOLATED THE CONDI TIONS PRESCRIBED IN SECTION 13(1)(D)(I) READ WITH SECTION 11(5) OF THE ACT. 8. THE AO THEREAFTER HELD THAT THE ASSESSEE HAD NOT SUBMITTED EVIDENCE WHILE FILING THE ORIGINAL RETURN AS REGARD TO A SUM OF RS. 1 17 20 800/- BEING RECEIVED FOR SPECIFIC PURPOSE O F BUILDING DEVELOPMENT FUND AND ALSO HELD THAT IN THE COURSE O F RE-ASSESSMENT PROCEEDINGS ALSO NOTHING WAS SUBMITTED HENCE HE TREATED THE SAME AS TAXABLE. THE AO ACCORDINGLY RECASTED INCOME AND E XPENDITURE ACCOUNT AND COMPUTED THE EXCESS OF INCOME OVER EXPENDITURE AT RS. 1 98 68 003/- AND COMPLETED THE ASSESSMENT PROCEEDINGS. 9. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LD. CIT(A). 10. THE ASSESSEE MADE DETAILED SUBMISSIONS AND ASSAILE D THE ASSESSMENT ORDER. THE MAIN PLEA OF THE ASSESSEE WAS THAT THE ASSESSEE SOCIETY AND DEVI SHAKUNTALA THAKARAL AND CHARITABLE FOUNDATION WERE DISTINCT AS THAT FOUNDATION WAS A SEPARATE PERSON R EGISTERED UNDER THE SOCIETIES REGISTRATION ACT WHEREIN NONE OF THE PER SONS REFERRED TO IN CLAUSE (A)(B)(C)(CC) AND THE SECTION 13(3) WERE HAV ING SUBSTANTIAL INTEREST PAGE 6 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL AND THEREFORE THE FINDINGS OF THE AO AS REGARD TO VIOLATION OF PROVISIONS OF CLAUSE (H) OF SECTION 13(2) AND CLAUSE (A) OF SE CTION 13(2) WERE TOTALLY ERRONEOUS. THE ASSESSEE ALSO SUBMITTED THAT AS PER THE BYE LAWS OF THE SOCIETY OF IMMOVABLE AND MOVABLE PROPERTIES WERE IN THE NAME OF THE SOCIETY AND SUCH PROPERTIES COULD NOT BE DISPOSED O F WITHOUT THE PERMISSION OF THE REGISTRAR. IT WAS ALSO CONTENDED THAT ALL THE INVESTMENTS MADE WERE IN ACCORDANCE WITH THE PROVISIONS OF SECT ION 11(5). IT WAS ALSO SUBMITTED THAT LAND WAS REGISTERED IN THE NAME OF T HE SOCIETY HENCE THE AOS OBSERVATIONS THAT THE SAID LANDS WERE THE INDI VIDUAL PROPERTY OF SHRI K.L. THAKARAL WAS FACTUALLY INCORRECT. THE LD.CIT(A ) HELD THAT IDENTICAL ISSUE WAS RAISED IN ASSESSMENT YEAR 2003-04 WHICH HAD BEEN DECIDED BY HIM IN FAVOUR OF THE ASSESSEE VIDE HIS ORDER DATED 29 TH JANUARY 2007 HENCE FOLLOWING THE SAME THE LD.CIT(A) QUASHED TH E FINDINGS OF THE AO AND HELD THAT THERE WAS NO VIOLATION OF SECTION 13 11(3) OR 11(5) OF THE ACT AND THEREFORE THE ASSESSEE WAS ELIGIBLE FOR D EDUCTION U/S 11 OF THE ACT. THE LD.CIT(A) SIMILARLY FOLLOWING THIS APPEL LATE ORDER ALSO HELD THAT THE ASSESSEE WAS ELIGIBLE FOR ITS CLAIM OF APP LICATION OF INCOME IN THE FORM OF ACQUISITION OF FIXED ASSETS. AS REGARD TO T HE ISSUE OF ADVANCE FEE RECEIVED BY THE ASSESSEE IN VARIOUS YEARS I.E. ASSE SSMENT YEAR 1999-2000 2000-01 AND 2004-05 THE ASSESSEE MADE DETAILED SUB MISSIONS AND FOLLOWING THE APPELLATE ORDER FOR ASSESSMENT YEAR 2 003-04 DECIDED THIS PAGE 7 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL ISSUE ALSO IN FAVOUR OF THE ASSESSEE. AS REGARDS TO THE ADDITION MADE BY THE ASSESSING OFFICER FOR REFUNDABLE LIABILITIES I. E. CAUTION MONEY TEACHERS DEPOSIT AND GENERAL ADVERTISEMENT THE ASS ESSEE SUBMITTED THAT THESE WERE REFUNDABLE HENCE DID NOT FALL WITHIN T HE DEFINITION OF INCOME AS PRESCRIBED U/S 2(24) OF THE ACT. THE LD.CIT(A) F OLLOWING HIS APPELLATE ORDER FOR ASSESSMENT YEAR 2003-04 DECIDED THIS ISSU E IN FAVOUR OF THE ASSESSEE AND IN ASSESSMENT YEAR 1999-2000 2000-01 & 2004-05. THEREAFTER THE LD.CIT(A) EXAMINED THE ISSUE AS REG ARD TO ITS ELIGIBILITY FOR DEDUCTION U/S 11(1)(A). THE ASSESSEE SUBMITTED SPECIFIC DETAILS IN RESPECT OF ASSESSMENT YEARS 1999-2000 2000-01 AND 2004-05. THE ASSESSEE ALSO DREW THE ATTENTION OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF S.RM.M.CT.M. TIRUPPANI TRUST VS. CIT AS REPORTED IN 230 ITR 36 WHEREIN THE APEX COURT HELD THAT SECTIO N 11(2) DID NOT RESTRICT THE OPERATION OF SECTION 11(1) IN ANY MANN ER. HENCE THE ACCUMULATED INCOME WHICH WAS EXEMPT U/S 11(1)(A) W AS NOT TO BE INVESTED IN GOVERNMENT SECURITIES AND THE PROVISION S OF SECTION 11(2) WERE APPLICABLE ONLY IN CASE OF ADDITIONAL ACCUMULA TED INCOME BEYOND 25 % WHEREON THE ASSESSEE WANTED TO CLAIM EXEMPTION T HEN THE ASSESSEE HAD TO FOLLOW THE PROCEDURE AS PRESCRIBED IN SECTION 11 (2) OF THE ACT. ACCORDINGLY THE LD.CIT(A) DIRECTED THE AO TO GRANT THE DEDUCTION OF RS. 35 38 918/- IN ASSESSMENT YEAR 1999-2000 AS AN APPL ICATION OF INCOME U/S PAGE 8 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 11(1)(A) OF THE ACT IN RESPECT OF TWO OTHER ASSESSM ENT YEARS. THE LD.CIT(A) ALSO HELD SO SUBJECT TO THE CONDITION THA T IN CASE THERE WAS AN INCOME AFTER GIVING EFFECT TO THE OTHER CONDITION THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION U/S 11(1)(A) THEREON ALSO. 11. AS REGARD TO ADDITION MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEARS 1999-2000 AND 2000-01 IN RESPECT O F CORPUS DONATION RECEIVED TOWARDS BUILDING DONATION FUND THE ASSESS EE SUBMITTED THAT THE SAME WERE FULLY VERIFIABLE FROM THE AMOUNTS RECEIVE D FROM THE STUDENTS AND THE BOOKS OF ACCOUNT WERE ITSELF AN EVIDENCE AN D THE CORRECTNESS OF SUCH BOOKS OF ACCOUNT HAD NOT BEEN CHALLENGED BY TH E ASSESSING OFFICER. HENCE RECEIPT OF A DONATION FORMING PART OF CORPUS OF THE INSTITUTION WAS NOT LIABLE FOR INCLUSION IN THE TOTAL INCOME U/S 11 (1)(D) OF THE ACT. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF TH E TRIBUNAL IN THE CASE OF ITO VS. SHRI SATYA KABIR SAHABANI GADI AS REPORTED IN 50 TTJ 501. THE LD.CIT(A) HELD THAT THE IMPUGNED VOLUNTARY CONTRIBU TION WAS RECEIVED COLLEGE BUILDING WAS UNDER CONSTRUCTION AND HAD BEE N SEPARATELY REFLECTED IN THE BALANCE SHEET AND THEREFORE PROV ISIONS OF SECTION 11(1)(B) WHICH EXCLUDED CORPUS DONATION FROM THE T OTAL INCOME WERE APPLICABLE. ACCORDINGLY HE DELETED THE ADDITION. PAGE 9 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 317 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 12. THE LD.CIT(A) THEREAFTER FOLLOWING THE DECISION F OR ASSESSMENT YEAR 2003-04 ALSO ALLOWED THE CLAIM OF THE ASSESSEE AS REGARD TO DEPRECIATION IN ALL THESE THREE YEARS. 13. GROUNDS RAISED BY THE REVENUE IN I.T.A.NO. 256/IN D/2007 FOR ASSESSMENT YEAR 2003-04 IN THIS APPEAL READ AS UN DER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DIRECTING TO COMPUTE THE INC OME OF THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 11 & 12 OF INCOME-TAX ACT 1961. AND HOLDING THAT THE S OCIETY IS CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF T HE INCOME-TAX ACT WITHOUT APPRECIATING THE FACTS NARR ATED IN THE ASSESSMENT ORDER AND ACCORDINGLY ALLOWING DEDUC TION OF RS. 2 55 88 055/- AS APPLICABLE OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 13(2)(H) AND 13(2)(A) HAVE NO APPLICATION IN THE CA SE OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS NARRATED IN THE ASSESSMENT ORDER AND NOT TREATING THE FUNDS DIVERTE D TO ITS SISTER SOCIETY M/S. DEVI SHAKUNTALA CHARITABLE FOUN DATION AT RS. 2.55 CRORES AS VIOLATION OF SECTION 13(2)(H). PAGE 10 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN HOLDING THAT PROVISIONS OF S ECTION 13(1)(D)(1) ARE NOT APPLICABLE WITHOUT APPRECIATING THE FACT THAT ALL THE LAND OF THE SOCIETY IS REGISTERED IN T HE NAME OF SHRI K.L.THAKRAL IN INDIVIDUAL CAPACITY CONTRARY T O THE BYLAWS OF THE SOCIETY. LD.CIT(A) HAS ALSO NOT APPRE CIATED THE FACT THAT THE CHAIRMAN SHRI K.L. THAKRAL AND TH EIR FAMILY MEMBERS ARE CONTROLLING THE ENTIRE OPERATION INCLUD ING UTILIZATION OF INCOME/SURPLUS BY USING THE NAME OF THE SOCIETY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13 754 347/- ON ACCOUNT ADVANCE TUITION FEES WHICH WAS THE INCOME DURING THE ABOVE ASSESSMENT YEAR. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 11 69 000/- WHICH REPRESENTS THE DIFFERENCE BETWEEN THE OPENING AND CLOSING BALANCE OF DEPOSITS RECEIVED FR OM THE STUDENTS WITHOUT APPRECIATING THE FACTS NARRATED IN THE ASSESSMENT ORDER. PAGE 11 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN HOLDING THAT DEPRECIATION CL AIMED BY THE ASSESSEE ON ASSETS WHOSE COST HAS ALREADY BEEN ALLOWED AS APPLICATION FOR THE PURPOSE OF CLAIMING EXEMPTIO N U/S 11 OF THE INCOME-TAX ACT IS ALLOWABLE AND DELETED THE ADDITION OF RS. 46 18 591/- WITHOUT APPRECIATING THE FACTS N ARRATED IN THE ASSESSMENT ORDER. 14. THE FACTS AND REASONS FOR REJECTING THE CLAIM OF DE PRECIATION HAVE ALREADY BEEN NARRATED EARLIER HENCE NO REPEA TED. SIMILARLY FACTS RELATING TO TREATMENT OF ADVANCE FEE AS INCOME HAVE ALREADY BEEN NARRATED HENCE NOT REPEATED. THEREAFTER THE AOS FINDINGS RELATING TO CONSTITUTION OF SOCIETY AND ITS SISTER CONCERN AND LOAN TRANSACTION ARE MAINLY BASED ON THE FACT OF LOAN GIVEN TO DEVI SHAK UNTALA THAKARAL CHARITABLE FOUNDATION WHEREIN THE FAMILY MEMBERS O F SHRI K.L.THAKRAL AS PER THE VIEW OF THE AO HAD SUBSTANTIAL INTERES T HENCE NON CHARGING OF INTEREST ON SUCH LOAN RESULTED INTO VIOLATION OF PROVISIONS OF SECTION 13(2)(A) OF THE ACT. THEREAFTER THE AO HAS EXAMINE D THE ASPECT WHETHER THE SOCIETY EXISTED FOR THE PURPOSE OF PROFIT OR FO R CHARITY. IN THIS REGARD THE AO HAS TABULATED THE FINANCIAL RESULT FROM FINA NCIAL YEAR 1997-98 TO 2002-03 AT PAGE 15 OF THE ASSESSMENT ORDER AND HELD THAT THE ASSESSEE HAS CREATED SURPLUS/GENERAL RESERVE AT RS. 7.86 CRORES FROM A TOTAL RECEIPT OF PAGE 12 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL RS. 15.37 CRORES WHICH ITSELF DEPICTED THAT THERE WAS AN IN BUILT PROFIT MECHANISM THROUGH WHICH SYSTEMATIC AND REGULAR PROF ITS WERE GENERATED. THEREAFTER THE AO HELD THAT THE LAND WAS OWNED IN THE NAME OF THE FAMILY MEMBERS AND NOT OF THE SOCIETY AND ACTUALLY THE SOCIETY WAS MERELY A MODUS OPERANDI TO CLAIM EXEMPTION IN RESPE CT OF INCOME EARNED. THESE FACTS HAVE ALREADY BEEN NARRATED IN DETAIL WH ILE NARRATING IN EARLIER APPEALS HEREINBEFORE HENCE NOT REPEATED. 15. THE AO THEREAFTER RE-WORKED OUT THE INCOME DERIVED FROM PROPERTY HELD BY THE SOCIETY AND MADE ADJUSTMENTS F OR VARIOUS ADDITIONS/CLAIMS REJECTED BY HIM AND FOUND THAT THE ASSESSEE HAD APPLIED ONLY A SUM OF RS. 4.57 CRORES AS AGAINST REQUIRED A MOUNT OF RS. 7.85 CRORES HENCE NOT APPLIED 85 % OF ITS RECEIPT AND THEREFORE THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION U/S 11. THEREAFTER THE AO RE-CASTED THE INCOME AND EXPENDITURE ACCOUNT AND WORKED OUT THE T OTAL INCOME AT RS. 3 86 39 632/-. AGGRIEVED BY THIS THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE LD. CIT(A) WHEREIN IT WAS CONTENDED THAT THE S OCIETY WAS REGISTERED U/S 12A OF THE INCOME-TAX ACT 1961 AND WAS RUNNING ENGINEERING COLLEGE AT BHOPAL WHICH WAS REGISTERED WITH AICTE. THE LD. COUNSEL FURTHER SUBMITTED THAT IN ASSESSMENT YEAR 2001-02 A ND 2002-03 IT HAD BEEN HELD THAT THE AO WAS NOT JUSTIFIED IN DENYING BENEFIT OF SECTIONS 11 & 12 OF THE ACT AS THE ASSESSEE HAD NOT VIOLATED T HE PROVISIONS OF SECTION PAGE 13 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 11 OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT EVEN IF THE SURPLUS WAS GENERATED THE EXEMPTION COULD NOT BE DENIED IF TH E SURPLUS SO GENERATED WAS USED FOR ADVANCEMENT OF EDUCATION BEING THE PU RPOSE OF ASSESSEE SOCIETY. THE ASSESSEE IN THIS REGARD RELIED ON TH E FOLLOWING JUDICIAL DECISIONS :- (A) ARR TRUST VS. ACIT 97 ITD 203 (CHENNAI) (B) CIT VS. RAJATHAN TEXT BOOK BOARD 244 ITR 667 (RAJ) (C) ARYAN EDUCATIONAL SOCIETY VS. CIT (2006) 8 (11) (ITCL)454 (DEL) (D) DY. CIT VS. ST.PAUL SECONDARY SCHOOL 9 SOT 702 (DEL) (E) CIT VS. PULIKKAL MEDICAL FOUNDATION 210 ITR 299 (KER). 16. IT WAS ALSO CONTENDED THAT EXPENDITURE INCURRED ON ACQUISITION OF FIXED ASSETS WAS ALSO A CASE OF APPLICATION OF I NCOME AND THEREFORE AMOUNT SPENT ON ACQUISITION OF FIXED ASSETS WAS LIA BLE TO BE CONSIDERED AS APPLICATION OF INCOME. IN THIS REGARD THE ASSESSEE RELIED ON FOLLOWING JUDICIAL DECISIONS :- PAGE 14 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL (A) GUJARAT HIGH COURT IN THE CASE OF SATYA VIJAY PATEL HINDU DHARAMSALA TRUST VS. CIT 86 ITR 683 (GUJ). (B) S.RM. M. CT.M.TIRUPPANI TRUST VS. CIT 230 ITR 636 (S. C.) (C) CIT VS. JANMABHUMI PRESS TRUST 242 ITR 703. (D) CIT VS. INSTITUTE OF BANKING 264 ITR 110 (MUM) 17. IT WAS ALSO SUBMITTED THAT IN THIS YEAR THERE WAS A DEFICIT. HENCE NO INCOME WAS ACCUMULATED AND SET APART AND THEREF ORE THERE WAS NO QUESTION OF VIOLATION OF PROVISO TO SUB SECTION (2) OF SECTION 11 OF THE ACT. IT WAS ALSO CONTENDED THAT IN SUCH A CASE THE RE WAS NO REQUIREMENT OF ACCUMULATION AND SETTING APART OF INCOME OF 15 % U/S 11(1)(A) OF THE INCOME-TAX ACT 1961. FOR THIS PROPOSITION THE ASSE SSEE RELIED ON THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF JAIPUR STOCK EXCHANGE VS. ITO AS REPORTED IN 6 SOT 11. THE LD.C IT(A) HELD THAT THE APPELLANT WAS REGISTERED U/S 12A AND THE LD.CIT(A)- I BHOPAL IN ASSESSMENT YEAR 2001-01 AND 2002-03 HAD ALSO HELD T HAT OBJECT OF THE ASSESSEE INSTITUTION WERE CHARITABLE WITHIN THE MEA NING OF PROVISIONS OF SECTION 2(15) OF THE ACT AND THE LD.CIT(A) CONCURRE D WITH THIS FINDING OF THE LD.CIT(A)-I. THUS AFTER CONSIDERING THIS POSIT ION AS WELL AS JUDICIAL PAGE 15 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL DECISIONS CITED BY THE ASSESSEE DIRECTED THE AO TO COMPUTE THE APPELLANTS INCOME IN ACCORDANCE WITH THE PROVISION S OF SECTION 11 & 12 OF THE ACT AND ALSO TO TREAT THE INVESTMENT IN FIXE D ASSETS AS APPLICATION OF THE INCOME. 18. AS REGARD TO ALLEGED VIOLATION OF SECTION 13(2)(H) AND SECTION 13(2)(A) THE ASSESSEE SUBMITTED THAT DEVI SHAKUNTA LA CHARITABLE FOUNDATION WAS ALSO EDUCATIONAL INSTITUTION DULY RE GISTERED U/S 12 OF THE ACT AND THE FUNDS WERE ADVANCED TO SUCH FOUNDATION TO MEET THE REQUIREMENT TO CONSTRUCT THE BUILDING AND SINCE THI S INSTITUTION WAS ALSO ENGAGED IN CHARITABLE CAUSE NO INTEREST WAS CHARGE D. IT WAS ALSO CONTENDED THAT NONE OF THE PERSONS OF THE ASSESSEE SOCIETY WERE HAVING SUBSTANTIAL INTEREST IN DEVI SHAKUNTALA CHARITABLE FOUNDATION NOR SUCH INSTITUTION WAS A PERSON FALLING UNDER SUB SECTION (3) OF SECTION 13. IT WAS ALSO SUBMITTED THAT BOTH CHARITABLE INSTITUTIONS WE RE DISTINCT AND SEPARATE AND THEY HAD SEPARATE SET OF MEMBERS AND OFFICE BEA RERS AND THEREFORE THE FINDINGS OF THE AO WITH REGARD TO APPLICABILITY OF SECTION 13(2)(H) AND 13(2)(A) WERE WHOLLY INCORRECT. THE ASSESSEE AL SO SUBMITTED DOCUMENTARY EVIDENCE TO SUPPORT SUCH CLAIMS. THE LD .CIT(A) ACCEPTED THESE CLAIMS OF THE ASSESSEE AND THE RELEVANT FINDI NGS OF THE LD.CIT(A) ARE AS UNDER :- PAGE 16 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNSEL A ND THE CASE LAWS RELIED UPON BY HIM. THE REASONING OF THE AO IS ALSO SEEN. EXPLANATION (3) TO SUB-SECTION (13) DEFI NES THE SUBSTANTIAL INTEREST IN A CONCERN. THE AO HAS NOT P ROVED AS TO HOW DEVI SHAKUNTALA CHARITABLE FOUNDATION FALLS WITHIN THE TWO SUB-CLAUSES BECAUSE SUB-CLAUSE (I) APPLIES TO COMPANIES WHICH HAVE SHARE CAPITAL. THE SUB-CLAUSE BECOMES APPLICABLE IN A SITUATION WHERE THE PERSONS REFERRED TO IN CLAUSES (A) (B) (C) (CC) AND (D) HAVE SHARE -HOLDING OF 20 % AND ABOVE IN THE SAID COMPANY WHICH IS NOT A CASE HERE. SUB-CLAUSE (II) IS ALSO NOT APPLICABLE BECAU SE IT APPLIES TO CONCERN IN WHICH THE PERSONS REFERRED TO IN CLAUSES (A) (B) (C) (CC) AND (D) HAVING INTEREST OF 20 % OR MORE IN THE PROFITS OF SUCH CONCERN WHICH IS ALSO NOT A CASE HERE. FURTHER THE APPELLANT INSTITUTION HAS ALSO N OT LENT THE INCOME OR THE PROPERTY OF THE INSTITUTION TO ANY PE RSON REFERRED TO IN SUB-SECTION (3). THEREFORE I AM OF THE VIEW THAT THE PROVISIONS OF SECTION 13(2)(H) AND 13(2)(A ) HAVE NO APPLICATION IN THE CASE OF THE APPELLANT. I THEREFO RE DECIDE THE GROUND NOS. 9 & 10 IN FAVOUR OF THE ASSESSEE. PAGE 17 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 19. AS REGARD TO THE AOS VIEW THAT THE ASSESSEE HAD VI OLATED PROVISIONS OF SECTION 13(1)(D)(I) READ WITH SECTION 11(5) OF THE INCOME- TAX ACT 1961 THE ASSESSEE SUBMITTED THAT INVESTMEN TS MADE WERE NOT IN VIOLATION OF SECTION 11(5) OF THE ACT. IT WAS ALSO SUBMITTED THAT THE OWNER OF THE LAND WAS ASSESSEE SOCIETY WHICH WAS DULY RE FLECTED IN THE BALANCE SHEET OF THE SOCIETY AND THE NAME OF THE SOCIETY AS OWNER OF THE LAND WAS ALSO MENTIONED IN GOVERNMENT RECORDS. THUS MERELY BECAUSE THE NAME OF SHRI K.L. THAKRAL WAS MENTIONED IN THE REGISTRAT ION DOCUMENTS WHICH WAS ALSO IN THE CAPACITY AS THE PRESIDENT OF THE SO CIETY THE AO WRONGLY INFERRED THAT THE SAID LANDS WERE THE PROPERTY OF S HRI K.L. THAKRAL IN HIS INDIVIDUAL CAPACITY. THE LD.CIT(A) ACCEPTED THIS CL AIM OF THE ASSESSEE BY HOLDING AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. I FIND THAT THE DETAILS OF SUCH LAND-HOLDINGS ARE GIVEN BY THE ASSESSING OFFICER IN PARA 9 OF HIS ORDER. THE LANDS IN QUESTION WERE NOT PURCHASED IN THIS YEAR BUT THEY WERE PURCHASED IN THE YEAR 1993 & 1998. IN THE SAID PARA THE NAME OF THE VENDEE HAS ALSO BEEN MENTIONED AND FRO M READING OF SUCH NAME IT IS CLEAR THAT K.L.THAKRAL I N THE CAPACITY OF PRESIDENT HAS ACTED AS THE SIGNATORY TO THE DOCUMENT. THE AO HAS NOT DISPUTED THE FACT THAT ALL THE LANDS PAGE 18 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL ARE IN THE POSSESSION OF THE SOCIETY. THE BUILDING HAS ALSO BEEN CONSTRUCTED ON THE LAND AT BHOPAL AND THE COLL EGE IS BEING RUN FROM THE SAID BUILDING. THE DOCUMENT PLAC ED BEFORE ME IN THE PAPER BOOK ALSO SHOWS THAT THE OWN ERSHIP OF THE LANDS IS WITH THE APPELLANT INSTITUTION. THU S I HOLD THAT THE PROVISIONS OF SECTION 13(1)(D)(I) READ WITH SEC TION 11(5) HAVE NO APPLICATION IN THIS CASE. THEREFORE I DECI DE THE GROUND NO.11 IN FAVOUR OF THE ASSESSEE. 20. AS REGARDS TO ADVANCE RECEIVED BY THE ASSESSEE FROM STUDENTS THE ASSESSEE SUBMITTED THAT THE IMPUGNED AMOUNT WAS ASSESSABLE AS INCOME OF THE ASSESSEE AS THE SAME PERTAINED TO THE PERIOD APRIL 2003 TO JUNE 2003 AND HAD BEEN OFFERED BY THE ASSESSEE AS ITS INCOME IN ASSESSMENT YEAR 2004-05 AS CONSISTENTLY DONE AND DU LY ACCEPTED BY THE DEPARTMENT IN EARLIER ASSESSMENT YEARS. THE LD.CIT( A) AGREEING WITH THESE SUBMISSIONS DELETED THE ADDITION OF RS. 1 37 54 347/- MADE BY THE ASSESSING OFFICER. 21. THE LD.CIT(A) SIMILARLY FOUND THAT SECURITY DEPOS IT RECEIVED BY THE ASSESSEE SOCIETY WERE REFUNDABLE HENCE IN THE NATURE OF INCOME RATHER THESE WERE IN THE NATURE OF LIABILITY. ACCOR DINGLY HE DELETED THE ADDITION OF RS. 11 69 000/- MADE BY THE ASSESSING O FFICER. PAGE 19 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 22. AS REGARD TO ALLOWABILITY OF DEPRECIATION THE ASSE SSEE PLACED RELIANCE ON FOLLOWING JUDICIAL DECISIONS :- (I) RAIPUR POLLOTINE SOCIETY VS. CIT 180 ITR 579 (MP) (II) CIT VS. SETH MANILAL RANCHODDAS VISHRAM BHAWAN TRUST 198 ITR 598 (GUJ) (III) CIT VS. SOCIETY OF THE SISTERS OF ST. ANNE 146 IT R 28 (KAR) (IV) CIT VS. BHERUKA PUBLIC WELFARE TRUST 240 ITR 513 (CAL). (V) CIT VS. RAO BAHADUR CALAVALA CUNNAL CHETTY CHARITIES 135 ITR 485 (MAD). ON THIS ISSUE THE AO HAD OBSERVED THAT IN EARLIER YEARS AS WELL AS IN CURRENT YEAR THE DEDUCTION FOR THE COST OF ASSET H AS BEEN ALLOWED THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR DEPRECIA TION. THE ASSESSEE ALSO SUBMITTED THAT THE VIEW OF THE AO WAS ERRONEOUS IN VIEW OF THE FOLLOWING DECISIONS :- (VI) CIT VS. INSTITUTE OF BANKING 264 ITR 110 (BOM) (VII) CIT VS. MUNISUVARAT JAIN [1994] TAX LR 1084 (BOM) (VIII) DIRECTOR OF INCOME TAX (EXEMPTION) VS. FRAMJEE CAWASJEE INSTITUTE [1993] 109 CTR 463 (BOM) PAGE 20 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 23. THE LD.CIT(A) HELD THAT DEPRECIATION WAS AN APPLICA TION OF THE INCOME IN THE CASE OF CHARITABLE INSTITUTION AND TH E COST OF ACQUISITION THOUGH TREATED AS AN APPLICATION OF INCOME. HOWEVER THE ASSESSEE WAS ENTITLED FOR DEPRECIATION THEREON. ACCORDINGLY HE HELD THAT THE ASSESSEE WAS ENTITLED FOR ALLOWANCE OF DEPRECIATION TO THE T UNE OF RS. 46 18 591/-. 24. THE LD. CIT DR APPEARING ON BEHALF OF THE REVENUE PLACED STRONG RELIANCE ON THE ORDER OF AO WHEREAS THE LD. COUNSEL FOR THE ASSESSEE NARRATED THE FACTS REITERATED THE SUBMISS IONS MADE BEFORE THE REVENUE AUTHORITIES AND PLACED STRONG RELIANCE ON T HE ORDER OF THE LD.CIT(A). 25. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 26. IT IS NOTED THAT IN MOST OF THE ISSUES THE LD.CIT( A) HAS FOLLOWED THE FINDINGS GIVEN IN ASSESSMENT YEAR 2003-04 WHIC H HAVE BEEN REPRODUCED HEREINABOVE. NOW COMING TO SPECIFIC ISSU ES WE FIND THAT GROUND NO.1 OF I.T.A.NOS. 540 TO 542/IND/2007 IS GENERAL AND IS CONNECTED WITH THE SPECIFIC ISSUES RAISED IN THESE APPEALS AND ONCE THE DECISION OF THESE SPECIFIC GROUNDS IS TAKEN THEN I T STAND AUTOMATICALLY DISPOSED OF. 27. AS REGARD TO ISSUE OF APPLICATION OF INCOME IN RESP ECT OF ACQUISITION OF FIXED ASSETS WE FIND THAT IT IS NOT IN DISPUTE THAT SUCH ASSETS PAGE 21 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL HAVE BEEN ACQUIRED FOR THE PURPOSE OF ADVANCEMENT O F THE OBJECTS OF THE SOCIETY AND THEREFORE SUCH INVESTMENT SHOULD BE T REATED AS AN APPLICATION OF INCOME IN TERMS OF THE PROVISIONS OF SECTION 11 OF THE ACT. THUS THESE GROUNDS OF THE REVENUE ARE WITHOUT ANY MERIT HENC E DISMISSED IN ALL THE YEARS. 28. FURTHER THE ADVANCE FEE HAS BEEN BIFURCATED IN THE YEARS TO WHICH IT PERTAINED AND THE RESPECTIVE PORTION THERE OF HAS BEEN SHOWN AS INCOME. HENCE WE DO NOT FIND ANY MERIT IN THIS GRO UND AS WELL. 29. AS REGARD TO THE ISSUE OF TREATMENT OF REFUNDABLE D EPOSITS AS INCOME WE FIND THAT THE FACT THAT SUCH AMOUNT REPR ESENTS REFUNDABLE DEPOSIT IS NOT IN DISPUTE AND IT HAS BEEN REFUNDED ALSO. HENCE IT CANNOT BE TREATED AS INCOME OF THE SOCIETY. THUS THE RELEVAN T GROUND OF THE REVENUES APPEAL IS ALSO DISMISSED. 30. AS REGARD TO THE ADDITION OF RS. 1 17 20 800/- MADE ON ACCOUNT OF BUILDING DEVELOPMENT FUND WE FIND THAT THE SAME HAS BEEN RECEIVED AS A PART OF CORPUS FUND HENCE IT CANNOT BE TAXED AS INCOME AS PER THE PROVISIONS OF SECTION 11 OF THE ACT. THUS WE DO NO T FIND ANY MERIT IN THIS GROUND OF THE REVENUE ALSO HENCE THE SAME IS DIS MISSED. 31. AS REGARD TO ALLOWABILITY OF DEPRECIATION ON ASSETS WHOSE COST HAS BEEN TREATED AS AN APPLICATION OF INCOME WE FI ND THAT NOW IT HAS BECOME SETTLED POSITION THAT BOTH THESE ASPECTS ARE DIFFERENT AND THE ASSETS PAGE 22 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL UTILIZED FOR THE ATTAINMENT OF OBJECTS OF THE ASSES SEE SOCIETY THEN THE ASSESSEE CAN CLAIM DEPRECIATION THEREON. THIS VIEW IS DULLY SUPPORTED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAIPUR PALLOTINE SOCIETY AS REPORTED IN 50 TAXMAN 2 33 ( M.P.). THUS THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 32. AS REGARD TO ISSUE RAISED IN GROUND NO. 7 RELATING TO INCOME DERIVED FROM PROPERTY IT IS NOTED THAT THE ASSESSE E CLAIMED THAT ACTUAL AMOUNT WHICH COULD BE CLAIMED WAS RS. 35 38 918/- AS AGAINST RS. 18 61 261/- CLAIMED BY THE ASSESSEE AS PER THE PROV ISIONS OF SECTION 11(1)(A). THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF S. R. KOS HTI VS. CIT AS REPORTED IN 276 ITR 164. IT IS FURTHER NOTED THAT T HE LD.CIT(A) HAS ACCEPTED THESE CLAIMS OF THE ASSESSEE IN ASSESSMENT YEAR 1999-2000 AND IN ASSESSMENT YEAR 2000-01 AND 2004-05 THE LD.CIT( A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION TO THE TUNE OF RS. 48 67 521/- AND RS. 80 37 434/- SUBJECT TO THE EFFECT OF APPELLATE ORDE R ON OTHER ADDITIONS. IN THIS PROCESS THE LD.CIT(A) HAS RELIED ON THE ABOVE CITED DECISION OF THE HON'BLE GUJARAT HIGH COURT AND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF S.RM.M.CT.M.TIRUPPANI TRUST VS . CIT AS REPORTED (SUPRA) WHEREIN IT WAS HELD THAT SECTION 11(2) DID NOT IN ANY MANNER RESTRICT THE OPERATION OF SECTION 11. PAGE 23 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 33. WE FURTHER FIND THAT THESE FINDINGS OF THE LD.CIT(A ) HAVE REMAINED UNCONTROVERTED BEFORE US AND IN OUR OPINI ON SUCH FINDINGS ARE IN ACCORDANCE WITH THE PROVISIONS OF LAW. HENCE WE DISMISS THIS GROUND OF THE REVENUE ALSO. 34. AS REGARD TO ISSUES RAISED IN GROUND NOS. 2 & 3 WE FIND THAT NONE OF THE PERSONS OF THE ASSESSEE SOCIETY ARE HAV ING SUBSTANTIAL INTEREST IN M/S. DEVI SHAKUNTALA THAKARAL AND CHARITABLE FOU NDATION AND THE LAND IS ALSO REGISTERED IN THE NAME OF THE ASSESSEE SOCI ETY. HENCE IN OUR OPINION THE PROVISIONS OF SECTION 13(2)(H) READ WI TH SECTION 13(2)(A) AND 13(1)(D)(1) ARE ALSO NOT APPLICABLE. THIS VIEW IS B ASED UPON THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD BY THE ASSE SSEE IN REGARD TO THESE ISSUES. THUS BOTH THESE GROUNDS ARE ALSO DIS MISSED. 35. AS REGARD TO ISSUE RAISED IN GROUND NOS. 4 5 & 6 THESE ISSUES HAVE ALREADY BEEN DISPOSED OF IN I.T.A.NOS. 540 TO 542/IND/2007 HENCE FOR THE REASONS MENTIONED THEREIN WE DISMISS THESE GROUNDS OF THE REVENUE IN THIS YEAR ALSO. 36. AS REGARD TO ISSUE RAISED IN GROUND NO.1 WE HOLD THAT THIS GROUND IS ALSO LIABLE TO BE DISMISSED FOR THE REAS ON THAT SPECIFIC ADDITIONS/DISALLOWANCES MADE BY THE ASSESSING OFFIC ER RESULTING INTO SUCH VIEW HAVE CANCELLED AND THE ISSUE OF GENERATIO N OF SURPLUS IS PAGE 24 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS IN PARA NO.15 AT PAGE 13 HEREINBEFORE. FURTHER A SIMILAR VIEW HAS BEEN E XPRESSED BY THE TRIBUNAL IN THE CASE OF ACIT VS. VATSALAYA SENIOR S ECONDARY SCHOOL I.T.A.NO. 353/IND/2009 ORDER DATED 31.3.2010 TO WHI CH BOTH OF US ARE THE PARTIES WHEREIN IT HAS BEEN HELD THAT MERE FAC T THAT THE ASSESSEE HAS EARNED PROFIT IN THE COURSE OF CHARITABLE ACTIVITIE S WOULD NOT MAKE IT NON- CHARITABLE ORGANIZATION. 37. IN THE RESULT THE APPEALS IN I.T.A.NOS. 540 TO 542 /IND/2007 AND APPEAL IN I.T.A.NO. 256/IND/2007 ARE DISMISSED. 38. NOW WE SHALL TAKE UP REVENUES APPEAL IN I.T.A.NO. 317/IND/2006 FOR ASSESSMENT YEAR 2001-02 :- 39. GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2 94 000/- RIGHTLY MADE BY THE ASSESSING OFFICER BEING EXCESS PAYMENT OF RENT TO SHRI K.L.THAKRAL IN THE CAPACITY AS PROP . M/S. ALKA INDUSTRIES EVEN WHEN SHRI K.L.THAKRAL IS A PE RSON COVERED U/S 13(2) OF THE INCOME-TAX ACT 1961 TO WH OM BENEFIT WAS PASSED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1 75 000/- PAGE 25 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REMUNERATION PAID TO THE PERSONS COVERED U/S 13(2) OF THE INCOME-TAX ACT 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 16 732/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT OF TELEPHONE & MOBILE BILL WHICH ARE FOR PE RSONAL USE OF SHRI K.L.THAKRAL A PERSON COVERED U/S 13(2) OF THE INCOME-TAX ACT 1961. 40. AS REGARD TO GROUND NO.1 THE AO FOUND THAT THE ASS ESSEE WAS PAYING RENT OF RS. 50 000/- PER MONTH FROM M/S. ALK A INDUSTRIES IF A PROPRIETORY CONCERN OF SHRI K.L.THAKRAL CHAIRMAN O F THE ASSESSEE SOCIETY. THE AO WHILE EXAMINING THE GENUINENESS OF THE CLAIM OF THE ASSESSEE AND FOUND THAT AS AGAINST THE CLAIM OF THE ASSESSEE THAT M/S. ALKA INDUSTRIES AT 1 LAKH SQUARE FEET AREA IN ITS POSSES SION. THE ACTUAL AREA WAS MERELY 40 000 SQ. FT. THE AO ALSO EXAMINED THE BALA NCE SHEET OF M/S. ALKA INDUSTRIES FOUND THAT THERE WAS NO BUILDING OR CONSTRUCTED AREA ON SUCH LAND. THE AO ALSO CALLED FOR THE PERSONAL APPE ARANCE OF SHRI K.L.THAKRAL WHO COULD NOT GIVE SATISFACTORY REPLY TO QUERIES MADE BY THE ASSESSING OFFICER. THE AO ACCORDINGLY HELD THAT T HE PAYMENT MADE BY THE SOCIETY TO M/S. ALKA INDUSTRIES ON ACCOUNT OF LEASE RENT FOR SIX PAGE 26 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL MONTHS WAS UNREASONABLE AND EXCESSIVE AND WORKED OU T THE SAME AT RS.1 000/- PER MONTH. ACCORDINGLY HE CONSIDERED A SUM OF RS. 2 94 000/- AS EXCESSIVE AND HELD THAT THE PROVISIONS OF SECTIO N 13(2) READ WITH SECTION 13(3) WERE APPLICABLE. THEREAFTER THE AO E XAMINED THE REMUNERATION PAID TO SHRI K.L. THAKRAL SHRI PRAVEE N THAKRAL AND SHRI ARUN SACHDEVA. THE AO CALLED THE DETAILS AS REGARD TO THEIR TECHNICAL COMPETENCE. THE AO ALSO OBSERVED THAT THE ASSESSEE HAD PAID A SUM OF RS. 2 49 206/- TO A MUCH QUALIFIED PERSON SHRI R.P. CHOPRA AND HAD PAID RS. 88 000/- TO DR. S.P. SHARMA PRINCIPAL OF THE I NSTITUTE WHEREAS THESE PERSONS WERE NOT SO QUALIFIED AND ACCORDINGLY HE HELD THAT FAIR MARKET VALUE OF THE SERVICES RENDERED BY THESE PERSONS COU LD BE AS UNDER :- SHRI K.L. THAKRAL RS. 1 80 000/- SHRI PRAVEEN THAKRAL RS. 1 20 000/- SHRI ARUN SACHDEVA RS. 1 00 000/- 41. THE AO THEREFORE OBSERVED THAT EXCESS REMUNERATIO N TO ALL THESE PERSONS AMOUNTED TO RS. 1 75 000/-. THE AO T HEREAFTER EXAMINED THE PAYMENT OF BILLS OF PERSONAL TELEPHONE OF SHRI K.L. THAKRAL BY THE SOCIETY AND FOUND THAT NO PHONE OF THE SOCIETY HAD BEEN PROVIDED THE TELEPHONES AT THE RESIDENCE OF PERSONS OTHER THAN H IM NOR CALL REGISTER HAD BEEN MADE. ACCORDINGLY HE HELD THAT THE RESOLUTION AUTHORIZING PAYMENT PAGE 27 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL OF TELEPHONE BILLS SHRI K.L. THAKRAL AND SHRI PRAVE EN THAKRAL COULD NOT BE CONSIDERED AS FILED AND HELD THAT EXPENSES OF RS . 16 732/- WAS PERSONAL EXPENSES OF SHRI K.L. THAKRAL AND HIS FAMILY MEMBER S. ACCORDINGLY THE AO HELD THAT PROVISIONS OF SECTION 13(2) READ WITH 13(3) WERE APPLICABLE AND THEREFORE THE PROVISIONS OF SECTION 13(1) (C) (II) WERE ALSO APPLICABLE. THE LD.CIT(A) ACCORDINGLY HELD THAT TH E ASSESSEE FOR THESE REASONS WAS NOT ENTITLED FOR EXEMPTION U/S 11 & 12 OF THE ACT. THE AO ALSO HELD THAT THE ASSESSEE SOCIETY WAS ALSO NOT EN TITLED FOR EXEMPTION U/S 10(23C) OF THE ACT. ACCORDINGLY HE WORKED OUT THE TAXABLE INCOME AT RS. 1 91 57 700/-. AGGRIEVED BY THIS THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE LD. CIT(A) WHEREIN THE DETAILED SUBMISSIONS WE RE MADE. THE ASSESSEE GAVE POINT-WISE REPLY TO THE FINDINGS OF T HE AO. SUCH DETAILS ARE REPRODUCED BY THE CIT(A) AT PAGES 3 TO 16 OF THE AP PELLATE ORDER. SINCE THE ASSESSEE HAD ALSO SUBMITTED CERTAIN ADDITIONAL EVIDENCE BEFORE THE CIT(A) THE LD.CIT(A) SENT THE SAME FOR THE REPORT OF THE AO WHEREIN THE AO MERELY REITERATED THAT SUCH ADDITIONAL EVIDENCES WERE NOT LIABLE TO BE ADMITTED. THE LD.CIT(A) DELETED ALL THE THREE DISAL LOWANCES MADE BY THE ASSESSING OFFICER AND ALSO HELD THAT THE ASSESSEE W AS ENTITLED FOR EXEMPTION U/S 11 & 12 OF THE ACT AS THE ASSESSEE H AD NOT VIOLATED ANY PROVISIONS OF SECTION 13. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER :- PAGE 28 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL I HAVE CAREFULLY CONSIDERED THE DETAILED SUBMISSION GIVEN BY THE LD. COUNSEL OF THE APPELLANT IN SUPPORT OF HIS ARGUMENT THAT APPELLANT HAD NOT VIOLATED THE PROVIS ION OF SECTION 13(2C) OF INCOME-TAX ACT 1961 AND APPELLAN T HAD GIVEN REASONABLE RENT FOR USE OF PLOT OF LAND OF M/ S. ALKA INDUSTRIES AT THE RATE OF 50 000/- P.M. TO SHRI K.L . THAKRAL AND HAD PAID REASONABLE AMOUNT OF SALARY TO SHRI K. L. THAKRAL SHRI PRAVEEN THAKRAL AND SHRI ARUN SACHDEV AND SUCH REMUNERATION WERE NOT EXCESSIVE IN VIEW OF THE SERVICES RENDERED BY THEM TO THE APPELLANT AND TELEPHONE INS TALLED AT THE RESIDENCE OF SHRI K.L. THAKRAL WAS USED FOR THE OBJECTS OF THE SOCIETY. I HAVE ALSO VERY CAREFULLY GONE THROUG H THE DETAILED REASONING GIVEN BY THE ASSESSING OFFICER I N THE ASSESSMENT ORDER THAT APPELLANT HAD PASSED CERTAIN BENEFITS AS SPECIFIED U/S 13(2C) TO PERSONS AS SPECIFIED IN SUB-SECTION 3 OF SECTION 13 AND THUS APPELLANT HAD VIOLATED THE PROVISION OF SECTION 13(2)(C ) AND FURTHER CONCLUSION THAT SI NCE APPELLANT HAD VIOLATED PROVISION OF SECTION 13 OF T HE INCOME- TAX ACT 1961 APPELLANT IS NOT ENTITLED TO EXEMPTIO N OF INCOME U/S 11 AND 12 OF THE INCOME-TAX ACT 1961. AF TER DUE CONSIDERATION IN THE MATTER I HOLD THAT AO WAS NOT JUSTIFIED PAGE 29 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL IN HOLDING THAT APPELLANT HAD PASSED ON BENEFITS U/ S 13(2)(C) TO PERSONS SPECIFIED U/S 13(3)BECAUSE IN MY CONSIDE RED VIEW APPELLANT SOCIETY HAD PAID REASONABLE AMOUNT OF REN T FOR USE OF PLOTS OF LAND BELONGING TO M/S. ALKA INDUSTRIES. THE USE OF PLOTS OF M/S. ALKA INDUSTRIES FOR RUNNING OF COLLEG E BY THE APPELLANT SOCIETY HAS NOT BEEN DENIED BY THE ASSESS ING OFFICER. THE AO HAD STATED ONLY THAT IN VIEW OF THE YEARLY LEASE OF RS. 100/- PAYABLE TO INDUSTRIES DEPARTMENT THE REASONABLE RENT IS ONLY RS. 1000/- PER MONTH IN RES PECT OF USE OF SUCH PLOTS OF LAND.APPEL HAD USED 1 LAKH SQ. FT. OF LAND COMPRISING OF 5 PLOTS BEARING NOS. 64 65 66 67 A ND68 ORIGINALLY ALLOTTED TO M/S. ALKA INDUSTRIES BY INDU STRIES DEPARTMENT AND THERE AFTER THERE WAS REALLOCATION O F ALLOTMENT OF THESE PLOTS BUT THE FACT REMAIN THAT A LL SUCH PLOTS REMAIN WITHIN THE FAMILY MEMBERS OF APPELLANT AND S UCH PLOTS WERE USED FOR RUNNING OF COLLEGE AS INDUSTRIE S FOR WHICH SUCH PLOTS WERE ALLOTTED BY THE INDUSTRIES D EPARTMENT WERE SICK. IN MY CONSIDERED VIEW A RENT OF RS. 50 0 00/- P.M. LOOKING TO THE SIZE OF THE TOTAL LAND IN USE BY THE APPELLANT SOCIETY IS NOT UNREASONABLE. SIMILARLY AO HAD NOT HELD THAT SHRI K.L. THAKRAL SHRI PRAVEENTHAKRAL AND SHRI ARU N PAGE 30 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL SACHDEVA HAD NOT AT ALL RENDERED ANY SERVICES TO TH E APPELLANT SOCIETY. HE ONLY HELD THAT APPELLANT HAD PAID EXCESSIVE REMUNERATION TO THESE PERSONS LOOKING TO THE SERVICES RENDERED BY SUCH PERSONS AND ALSO THE REMUNERATION PAID TO OTHER FUNCTIONARIES. IN MY CON SIDERED VIEW APPELLANT HAD PAID REASONABLE AMOUNT OF REMUNE RATION TO THESE PERSONS HAVING DUE REGARD TO THE SERVICES RENDERED BY THESE PERSONS TO THE APPELLANT. SHRI K.L. THAKRA L SHRI PRAVEEN THAKRAL AND SHRI ARUN SACHDEVA ARE TOTALLY DEVOTED TO THE WORK OF THE APPELLANT SOCIETY. THEY ARE NOT EMPLOYED ANYWHERE AND ALL THE THREE THUS REMAIN ENGAGED ONLY FOR THE WORK OF THE SOCIETY. THE COMPARISON OF SALARY PAID BY THE APPELLANT SOCIETY TO THESE PERSONS WITH WHAT HAS BE EN PAID TO OTHER FUNCTIONARIES AND EMPLOYEES IS NOT A FAIR. SI MILARLY THERE IS NO EVIDENCE ON RECORD THAT APPELLANT HAD P ASSED ON ANY BENEFIT BY WAY OF PERSONAL USE OF TELEPHONE TO SHRI K.L. THAKRAL AND OTHER FAMILY MEMBERS. IT IS ONLY PRESUM PTION ON THE PART OF THE AO THAT SINCE TELEPHONE WAS INSTALLED AT THE RESIDENCE OF SHRI K.L. THAKRAL THE SAME MIGHT BE USED FOR THE PERSONAL BENEFITS OF SHRI K.L. THAKRAL AND OTHE R FAMILY MEMBERS. ACCORDINGLY I HOLD THAT APPELLANT HAD NOT VIOLATED PAGE 31 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL THE PROVISIONS OF SECTION 13 SO AS TO DISENTITLE TH E APPELLANT OF THE BENEFIT AS AVAILABLE TO IT U/S 11 AND 12 OF THE INCOME- TAX ACT 1961. ACCORDINGLY GROUNDS NO. 2 5 AND 6 A RE DECIDED IN FAVOUR OF THE APPELLANT AND I HOLD THAT SINCE APPELLANT HAD NOT VIOLATED THE PROVISION OF SECTION 13 APPELLANT IS ENTITLED TO THE BENEFIT FOR EXEMPTION OF ITS INCOME U/S 11 AND 12 OF THE INCOME-TAX ACT 1961. AO IS DIRECTED TO ALLOW THE BENEFIT TO APPELLANT AS AVAIL ABLE IN SECTION 11. 42. NOW WE SHALL TAKE UP THE REVENUES APPEAL IN I.T. A.NO. 318/IND/2006 FOR THE ASSESSMENT YEAR 2002-03. 43. THE ISSUES RAISED IN GROUND NOS. 2 & 3 ARE IDENTIC AL TO ISSUE RAISED IN GROUND NOS. 2 & 3 OF I.T.A.NO. 317/IND/2 006. SIMILARLY THE ISSUE RAISED IN GROUND NO.1 IS MORE OR LESS SAME T O THE ISSUE RAISED IN GROUND NO.1 OF THE REVENUES APPEAL IN I.T.A.NO. 3 17/IND/2006. HENCE FACTS IN DETAIL ARE NOT REPEATED. AS REGARD TO PAYM ENT IN RESPECT OF GUEST HOUSE IS CONCERNED THE AO FOUND THAT THE RENT OF R S. 7000/- PAID BY THE ASSESSEE IN RESPECT OF BUILDING WHICH WAS USED AS RESIDENCE BY SHRI K.L. THAKRAL AS NO SPECIFIC ACCOMMODATION AND PREMISES W AS FIXED FOR THE GUEST HOUSE. THE AO ALSO HELD THAT THE RESOLUTION P ASSED IN 1996 WAS PAGE 32 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL VERY OLD AND NO FRESH RESOLUTION IN THIS REGARD HAD BEEN PASSED. ACCORDINGLY THE AO HELD THAT THE ASSESSEE SOCIETY HAD PASSED BENEFIT OF RS. 84 000/- AS SPECIFIED IN SECTION 13(2) TO ITS M EMBERS AND OTHER PERSONS SPECIFIED IN SECTION 13(3) OF THE ACT. THE LD.CIT(A) DELETED ALL THE THREE ADDITIONS AND ALSO HELD THAT THE ASSESSEE WAS ELIGIBLE FOR BENEFIT U/S 11/12 OF THE INCOME-TAX ACT 1961. THE RELEVANT FINDINGS ARE AS UNDER :- I HAVE CONSIDERED THE DETAILED SUBMISSIONS OF THE L D. COUNSEL OF THE APPELLANT IN SUPPORT OF HIS ARGUMENT THAT APPELLANT HAD NOT VIOLATED THE PROVISION OF SECTION 13(2C) OF THE INCOME-TAX ACT 1961. AND THAT APPELLANT HAD GIV EN REASONABLE AMOUNT OF SALARY TO SHRI K.L. THAKRAL S HRI PRAVEEN THAKRAL AND SHRI ARUN SACHDEVA AND THAT IT HAD NOT VIOLATED THE PROVISIONS OF SECTION 13(2) EVEN AFTER ALLOWING THE USE OF GUEST HOUSE PARTLY FOR THE RESIDENCE OF THE CHAIRMAN AND PRESIDENT OF THE SOCIETY. I HAVE ALSO DULY CONSIDERED THE REASONS GIVEN BY THE ASSESSING OFFIC ER IN SUPPORT OF HIS FINDINGS THAT APPELLANT IS NOT ENTIT LED TO THE BENEFITS OF SECTION 11 AND 12 AS IT HAD VIOLATED T HE PROVISIONS OF SECTION 13 OF INCOME-TAX ACT 1961. AF TER DUE CONSIDERATION IN THE MATTER I HOLD THAT APPELLANT H AD PAID PAGE 33 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL REASONABLE AMOUNT OF SALARY TO SHRI K.L. THAKRAL S HRI PRAVEEN THAKRAL AND SHRI ARUN SACHDEVA KEEPING IN V IEW THE SERVICES RENDERED BY THEM TO THE APPELLANT SOCI ETY. ALL THE THREE PERSONS ARE LOOKING AFTER THE WORK OF THE APPELLANT SOCIETY ON WHOLE TIME BASIS. THEY ARE TOTALLY DEVOT ED TO THE WORK OF THE APPELLANT SOCIETY AND THEY ARE NOT EMPL OYED ANYWHERE AND ALL THE THREE PERSONS ARE LOOKING AFTE R THE WORK OF THE APPELLANT SOCIETY ON WHOLE TIME BASIS. THEY ARE TOTALLY DEVOTED TO THE WORK OF THE APPELLANT SOCIET Y AND THEY ARE NOT EMPLOYED ANYWHERE AND ALL THE THREE PERSONS REMAIN ENGAGED ONLY FOR THE WORK OF THE SOCIETY. AS REGARD S OTHER SOCIETY THEY ONLY ATTEND THE MEETINGS. THE COMPARI SON OF PAYMENT OF SALARY TO THESE PERSONS WHO ARE THE OFFI CE BEARERS OF THE SOCIETY WITH WHAT HAS BEEN PAID TO O THER FUNCTIONARIES AND EMPLOYEES OF THE INSTITUTION DOES NOT APPEAR TO BE FAIR. SHRI K.L. THAKRAL HAS INCLUDED I N HIS INCOME TAX RETURN THE PERQUISITE VALUE FOR USE OF G UEST HOUSE FOR HIS FAMILY RESIDENCE. LOOKING TO THE STATUS OF THE OFFICE BEARERS AND SERVICES RENDERED BY THEM TO THE APPELL ANT SOCIETY IN MY VIEW THESE PERSONS HAVE BEEN ALLOWED REASONABLE AMOUNT OF SALARY. THERE IS NO EVIDENCE O N RECORD PAGE 34 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL THAT APPELLANT HAD PASSED ON ANY BENEFIT BY WAY OF PERSONAL USE OF TELEPHONE TO THE CHAIRMAN OF THE SOCIETY AND OTHER FAMILY MEMBERS. IT APPEARS TO BE ONLY THE PRESUMPTI ON ON THE PART OF THE AO THAT TELEPHONE INSTALLED AT THE RESIDENCE OF SHRI K.L. THAKRAL WAS USED BY SHRI K.L. THAKRAL AND OTHER FAMILY MEMBERS. THE GUEST HOUSE BESIDES BEING USED BY THE CHAIRMAN AND HIS FAMILY MEMBERS IS PARTLY USED BY T HE VISITING FACULTIES. ACCORDINGLY I HOLD THAT APPELL ANT HAD NOT VIOLATED THE PROVISION OF SECTION 13 AS TO DISENTIT LE IT TO THE BENEFIT OF SECTION 11 AND 12 OF INCOME-TAX ACT 1961 . THE AO IS HEREBY DIRECTED TO ALLOW THE APPELLANT THE BENEF IT AS AVAILABLE U/S 11 AND 12 OF THE INCOME-TAX ACT 1961. THUS GROUNDS NO. 3 TO7 ARE DECIDED IN FAVOUR OF THE APP ELLANT. 44. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 45. THE LD. CIT DR PLACED STRONG RELIANCE ON THE ORDER OF AO WHEREAS THE LD.COUNSEL FOR THE ASSESSEE NARRATED TH E FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE LD.CIT(A). 46. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. PAGE 35 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 47. AS REGARD TO ISSUE RAISED IN GROUND NO.1 OF I.T.A. NO. 317/IND/2006 WE FIND THAT THE USE OF PLOT OF LAND BELONGING TO M/S. ALKA INDUSTRIES BY THE ASSESSEE SOCIETY IS NOT IN DISPU TE. WE ALSO FIND THAT THE AREA OF PLOT OF LAND HAS ALSO BEEN CLARIFIED. IN OU R VIEW THE RENT OF RS. 50 000/- LOOKING TO THE SIZE OF TOTAL LAND USED BY THE ASSESSEE SOCIETY IS NOT UNREASONABLE. THE LD.CIT(A) HAS ALSO EXAMINED T HIS ISSUE IN DETAIL AND FINDINGS OF THE LD.CIT(A) HAVE REMAINED UNCONTR OVERTED. ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE. 48. AS REGARD REASONABILITY OF REMUNERATION PAID TO THE PERSONS WE FIND THAT THE AO HAS COMPARED PERSONS OF DIFFERENT CAPACITY AND HAVING DIFFERENT OBJECTS AND INTEREST HENCE THE SAME CAN NOT BOOKS OF ACCOUNT PROPER COMPARISON TO ARRIVE AT THE REASONABILITY OF THE AMOUNT OF REMUNERATION PAID TO SHRI K.L. THAKRAL SHRI PRAVEE N THAKRAL AND SHRI ARUN SACHDEV. HENCE IN THIS VIEW OF THE MATTER WE DISMISS THIS GROUND OF THE REVENUE ALSO. 49. AS REGARD TO THE ASPECT OF PERSONAL USE OF TELEPHON E BY SHRI K.L. THAKRAL WE FIND THAT THE VIEW OF THE AO IS IN THE REALM OF PRESUMPTION/SUSPICION ONLY AND THEREFORE WE DISMI SS THIS GROUND OF THE REVENUE ALSO. PAGE 36 OF 36 - I.T.A.NOS. 540 TO 542/IND/2007 31 7 AND 318/IND/2006 AND 256/IND/2007 VICHAR BHARTI EDUCATION SOCIETY BHOPAL 50. THE ISSUES RAISED IN APPEAL IN I.T.A.NO. 318/IND/20 06 ARE IDENTICAL HENCE THESE ARE ALSO DISMISSED FOR THE REASONS MENTIONED ABOVE. 51. IN THE RESULT BOTH THESE APPEALS OF THE REVENUE AR E ALSO DISMISSED. 52. TO SUM UP ALL THE APPEALS OF THE REVENUE ARE DISMI SSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 13 TH JULY 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH JULY 2010. CPU* 7.7