Maharaja Agarsen Technical Education Society,, New Delhi v. Addll. DIT (E), New Delhi

ITA 4886/DEL/2009 | 2006-2007
Pronouncement Date: 12-03-2010 | Result: Allowed

Appeal Details

RSA Number 488620114 RSA 2009
Assessee PAN AAATM4150H
Bench Delhi
Appeal Number ITA 4886/DEL/2009
Duration Of Justice 2 month(s) 13 day(s)
Appellant Maharaja Agarsen Technical Education Society,, New Delhi
Respondent Addll. DIT (E), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 12-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 12-03-2010
Assessment Year 2006-2007
Appeal Filed On 30-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI K.D. RANJAN ACCOUNTANT MEMBER ITA NO. 4886/DEL/2009 ASSESSMENT YEAR : 2006-07 MAHARAJA AGARSEN TECHNICAL EDUCATION SOCIETY 10/4 EAST PUNJABI BAGH NEW DELHI VS. ADDL. DIRECTOR OF INCOME TAX (EXEMPTIONS) RANGE 1 NEW DELHI (APPELLANT) (RESPONDENT) PAN : AAATM 4150 H APPELLANT BY : SHRI R.S. SINGH AVI CA RESPONDENT BY : SHRI G.S. SAHOTA SR. DR O R D E R PER: C.L. SETHI J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE SOCIETY AGAINST THE ORDER DATED 26.11.2009 PASSED BY THE LD. CIT(A) IN THE MATTER OF AN ASSESSMENT MADE U/S. 143(3) OF THE INCOME TAX ACT 1961 (THE ACT) BY THE AO FOR THE A.Y. 2006-07. 2. THE GROUNDS OF APPEALS RAISED IN THIS APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN N OT ACCEPTING CLAIM OF APPLICATION OF INCOME TO THE EX TENT OF RS. 20 00 000/- EVEN THOUGH SUCH APPLICATION IS PERMISSIBLE AS APPELLANT TRUST IS DULY REGISTERED U /S. 12A OF THE INCOME TAX ACT 1961. 2. THAT THE FACT AND APPLICATION OF INCOME FOR THE PURCHASE OF PROPERTY IS NOT IN DISPUTE AND AS S UCH THE ABOVE SAID AMOUNT IS REQUIRED TO BE CONSIDERED AS ITA NO. 4886/DEL/2009 PAGE 2 OF 15 APPLICATION OF INCOME IN TERMS OF PROVISIONS OF SEC . 11 OF THE INCOME TAX ACT 1961. 3. THAT THE REFERENCE TO DECISIONS IN THE CASE OF CIT VS. VGP FOUNDATIONS 262 ITR 187 HAS NO RELEVANC E AND OF WHOLE BASIS OF DISALLOWANCE OF CLAIM IS ILLE GAL ARBITRARY AND MISCONCEIVED. 3. BRIEFLY STATED THE RELEVANT FACTS GIVING RISE T O THE AFORESAID ISSUES RAISED IN GROUNDS OF APPEAL MAY BE STATED AS UNDER: THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCI ETY REGISTRATION ACT. THE ASSESSEE HAS BEEN REGISTERED U/S. 12A OF THE INCOME TAX ACT VIDE ORDER DATED 04.08.1998. THE OBJECT OF THE ASS ESSEE ARE TO ARRANGE ESTABLISH RUN AND MANAGE NURSERY PRIMARY HIGHER SECONDARY AND HIGHER EDUCATION IN TECHNICAL AND NON-TECHNICAL EDUCATIONAL INSTITUTION ENGINEERING COLLEGE AND MEDICAL AND/OR COLLEGE FOR ALL TYPES OF HIGHER EDUCATION PREPARATION FOR VARIOUS COMPETITIVE EXAMINATIONS AND CIVIL SERVICES AND TO PROVIDE EDUC ATION TO GENERAL PUBLIC POOR AND NEEDY CHILDREN/SC/ST COMMUNITY WEA KER SECTIONS OF THE SOCIETY AND TO PROVIDE EDUCATION. THE ACTIVITIE S OF THE SOCIETIES ARE CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF T HE I.T. ACT. AS PER THE COMPUTATION SHEET AN AMOUNT OF RS. 20 L ACS HAS BEEN SHOWN AS INCOME APPLIED DURING THE YEAR UNDER THE H EAD PURCHASE OF LAND. AS PER THE SCHEDULE OF FIXED ASSETS THERE I S NO ADDITION TO LAND. IT WAS EXPLAINED DURING THE PROCEEDINGS THAT THIS A MOUNT HAS BEEN PAID ON ACCOUNT OF ADVANCE TOWARDS LAND. IN THIS R EGARD THE ASSESSEE ITA NO. 4886/DEL/2009 PAGE 3 OF 15 WAS ASKED TO FILED A COPY OF THE AGREEMENT ENTERED INTO FOR PURCHASE OF LAND. THE ASSESSEE WAS ALSO ASKED TO FILE THE DETAILS AS TO WHEN THE LAND WAS ACTUALLY TAKEN POSSESSION OF/PURCHASED. T HE ASSESSEE WAS ASKED TO EXPLAIN HOW ADVANCE GIVEN FOR PURCHASE OF LAND IS ALLOWABLE AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES DU RING THIS YEAR WHEN THE ACTUAL PURCHASE HAS BEEN MADE IN THE SUBSEQUENT YEARS. VIDE LETTER DATED 17.12.2008 THE ASSESSEE REPLIED AS UN DER:- DURING THE YEAR UNDER ASSESSMENT THE SOCIETY HAS PAID RS. 20 00 000/- AS ADVANCE TO MR. MANJEET SING H FOR PURCHASE OF LAND AT KIRARI VILLAGE LAKHI RAM PARK ROHINI. THE LAND WAS REGISTERED IN THE NAME OF SOC IETY IN THE YEAR 2007-08 FOR TOTAL SUM OF RS. 2 70 82 200/- THE SOCIETY HAS ACTUALLY UTILIZED ADVANCE FOR PURCHASE OF LAND AND OWNERSHIP OF ADVANCE WAS NOT W ITH THE SOCIETY BUT IT WAS WITH THE OWNER OF THE LAND F ROM WHOM LAND WAS PURCHASED. IN CASE OF CIT VS. VGP FOUNDATION (2003) 262 ITR 187 ADVANCE WAS GIVEN TO A COMPANY IN WHICH TRUSTE ES OF THE SOCIETY WERE DIRECTORS AND IT WAS INTERESTED PA RTY. IN THE SAID CASE APPLICATION FOR ADVANCE WAS DENIED DU E TO ADVANCE TO INTERESTED PARTY NOT ON ACCOUNT OF NORM AL ADVANCE. IN THE ASSESSEE SOCIETY CASE ADVANCE WAS GIVEN F OR PURCHASE OF LAND TO THIRD PARTY WHICH WAS NOT ASSOC IATED WITH THE SOCIETY IN ANY WAY. THUS KEEPING IN VIEW ABOVE FACTS ADVANCE FOR PURCHASE OF LAND SHOULD BE ALLOW ED AS APPLICATION OF FUNDS FOR CHARITABLE PURPOSES. THE AO THEN OBSERVED AND HELD THAT:- AS PER THE SALE DEED SUBMITTED BY THE ASSESSEE TH E DEED WAS EXECUTED ONLY ON 12 TH JULY 2007; IT WAS EXPLAINED BY THE ASSESSEE THAT NO AGREEMENT WAS SIGNED IN THE YEAR IN WHICH THE AD VANCE WAS GIVEN; ITA NO. 4886/DEL/2009 PAGE 4 OF 15 THE ADVANCE WAS GIVEN ON 10.01.2006; NO AGREEMENT W AS SIGNED WITH THE OWNER OF THE LAND AT THAT STAGE; THERE IS NOTHI NG TO ESTABLISH THAT THE ADVANCE WAS FOR PURCHASE OF LAND; FOR MORE THAN A Y EAR THE MONEY CONTINUED TO BE WITH THE PERSON TO WHOM THE ADVANCE WAS GIVEN WITHOUT ANY AGREEMENT OR SALE DEED; THE AGREEMENT W AS SIGNED ONLY ON 12 TH JULY 2007; IN THESE CIRCUMSTANCES THE MONEY ADVAN CED OR DISBURSED CANNOT BE TREATED AS APPLICATION OF FUNDS ; FOR BENEFITS U/S. 11 IT HAS TO BE SATISFIED THAT THE MONEY WAS APPLIED F OR CHARITABLE PURPOSES; IN OTHER WORDS NOT ONLY THE MONEY SHOULD APPLIED FOR CHARITABLE PURPOSES; IN CIT VS. VGP FOUNDATION (SUP RA) THE TRUST DISBURSED THE FUNDS AS ADVANCE FOR CONSTRUCTION OF HOSPITAL TO A CONTRACTOR BUT NO CONSTRUCTION WAS MADE; IT WAS HEL D THAT THE MONEY INSTEAD OF LYING WITH THE ASSESSEE WAS LAID WITH AN OTHER ORGANIZATION WHICH COULD NOT BE REGARDED AS APPLICATION OF INCOM E FOR CHARITABLE PURPOSES; THE ASSESSEE HAS NOT DIVESTED ITS OWNERSH IP IN THE MONEY CREDITED IN FAVOUR OF THE SELLER BUT RETAINED BENEF ICIAL INTEREST THEREIN; THE ADVANCE GIVEN IS THEREFORE NOT APPLICATION OF INCOME FOR CHARITABLE PURPOSES. 4. ON AN APPEAL THE CIT(A) HAD AGREED WITH THE AO AND DECIDED THE ISSUE AGAINST THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER:- 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS PERUSED THE ORDER OF THE AO. I FIND ITA NO. 4886/DEL/2009 PAGE 5 OF 15 FORCE IN THE ARGUMENTS OF THE AO THAT THE APPELLANT HAS NOT DIVESTED HIS OWNERSHIP IN THE MONEY CREDITED IN FAVOUR OF THE SELLER AND RETAINED BENEFICIAL INTERE ST THEREIN. THE APPELLANT ALSO DOES NOT DISPUTE THE F ACT THAT THE LAND WAS NOT REGISTERED IN HIS NAME DURING THE YEAR. ADVANCE GIVEN CANNOT BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES. THE AO HAS RIGHTLY RELIED IN THE RATIO LAID DOWN IN THE CASE OF CIT VS . VGP FOUNDATION (2003) 262 ITR 187 WHEREIN IT WAS HELD INTERALIA THAT IT CANNOT BE SAID ON THE FACTS OF T HIS CASE THAT THE MONEY HAD BEEN APPLIED BY THE ASSESSEE FOR CHARITABLE PURPOSE IN THIS YEAR. THE FACT THAT THE MONEY INSTEAD OF LYING WITH THE ASSESSEE HAD LAID WITH TH E SISTER COMPANY WOULD NOT RESULT IN THAT AMOUNT BEING REGAR DED AS APPLICATION OF FUNDS FOR A CHARITABLE PURPOSE. HAD THE MONEY REMAINED WITH THE ASSESSEE IT CERTAINLY COUL D NOT HAVE BEEN REGARDED AS HAVING BEEN UTILIZED FOR CHAR TABLE PURPOSES. BY GIVING IT TO A SISTER COMPANY WHICH M ERELY RETAINED THE MONEY WITH IT FOR THE WHOLE OF THE YEA R IT IS NOT POSSIBLE TO GIVE THE ASSESSEE THE BENEFIT REGAR DING THE AMOUNT AS HAVING BEEN APPLIED FOR A CHARITABLE PURP OSE. THUS THE ASSESSEE AND THE SPIRIT OF THE ABOVE MENT IONED JUDGMENT WOULD APPLY SQUARELY AND DIRECTLY TO THE APPELLANTS CASE IN AS MUCH AS IN THE CASE OF VGP FOUNDATION THE BENEFIT OF APPLICATION FOR CHARITAB LE PURPOSES WAS NOT GIVEN FOR YEAR UNDER CONSIDERATION SIMPLY BECAUSE DURING THE YEAR THE MONEY WAS LAID W ITH THE SISTER COMPANY. THE CASE IS IDENTICAL TO THAT OF THE APPELLANT AS IT ALSO HAD MADE AN ADVANCE AND THE SA ME CANNOT BE CONSTRUED AS APPLICATION. THUS THE ARGU MENTS OF THE APPELLANT THAT THE CASE OF VGP FOUNDATION WA S IN RESPECT OF THE TRANSACTION BETWEEN TWO SISTER CONCE RNS AND NOT WITH INDEPENDENT THIRD PARTY AS IN HIS CASE THAT HONBLE MADRAS HIGH COURT FRAMED THAT THE MONEY ADVANCED TO THE SISTER CONCERN WAS MERELY RETAINED WITH IT FOR WHOLE YEAR ARE IRRELEVANT. WHAT IS RELEVAN T IS THE PRINCIPLE/ESSENCE CONTAINED IN THE JUDGMENT. IN TH E LIGHT OF THE ABOVE DISCUSSION I UPHOLD THE DECISION OF T HE AO. 5. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFOR E US. ITA NO. 4886/DEL/2009 PAGE 6 OF 15 6. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT IT IS WELL SETTLED THAT EXPANSION OF EXISTING CHARITABLE ACTIVITIES BY ACQUISITION OF ADDITIONAL FIXED ASSETS FOR THAT PURPOSE IS A CHARITABLE ACTIV ITY WITHIN THE MEANING OF SECTION 2(15) READ WITH SECTION 11(1) OF THE ACT. HE FURTHER CONTENDED THAT THE ASSESSEE TRUST HAD ADVANCED THE SUM OF RS. 20 L ACS IN THE MONTH OF JANUARY 2006 TOWARDS PURCHASE OF PROPERTY WHICH WA S MEANT FOR THE OBJECT OF THE TRUST. HE FURTHER SUBMITTED THAT THE TRANSA CTION OF PURCHASE OF PROPERTY WAS AT ARMS LENGTH WITH AN INDEPENDENT PA RTY LEADING TO A CONCLUSION THAT THERE WERE NO DIVERSIONS OF ASSESSE ES FUND TO ANY PERSON OTHER THAN FOR THE PURPOSE OF ACQUIRING ASSET FOR A TTAINMENT OF THE OBJECT OF THE TRUST. HE FURTHER POINTED OUT THAT THE PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUE AND IN THE DOCUMENT ULTIMATELY EXECUT ED ON 12.07.2007 THE EXECUTOR HAS ADMITTED THAT THE ADVANCE WAS PAID TO HIM TOWARDS SALE CONSIDERATION OF THE PROPERTY SOLD BY HIM TO THE AS SESSEE TRUST. HE THEREFORE CONTENDED THAT IN THE LIGHT OF THE FACTS OF THE PRESENT CASE THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE O F CIT VS. VGP FOUNDATION (2003) 262 ITR 187 ON WHICH HEAVY RELIA NCE HAS BEEN PLACED BY THE AO AS WELL AS BY THE CIT(A) WOULD NOT APPLY TO THE PRESENT CASE. IN THE AFORESAID CASE OF CIT VS. VGP FOUNDATION (SUPRA ) THE MONEY WAS GIVEN TO THE SISTER CONCERN IN WHICH THE TRUSTEES OF THE ASSESSEE TRUST WERE DIRECTORS AND THE AMOUNT WAS LYING IDLE WITH THAT COMPANY AND THE OWNERSHIP OF THE ADVANCE SO GIVEN TO SISTER CONCERN WAS TREATED WITH THAT ITA NO. 4886/DEL/2009 PAGE 7 OF 15 ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THAT IN THE SUBSEQUENT ASSESSMENT YEARS THE ADVANCE PAYMENT OF RS. 9 LACS AND RS. 4 LACS PAID TO THE SAME PERSON SHRI MANJEET SINGH TOW ARDS PURCHASE OF THE SAME PROPERTY HAS BEEN ALLOWED BY THE AO HIMSELF TR EATED THE SAME AS APPLICATION OF MONEY TOWARDS OBJECTS OF THE TRUST WHILE COMPUTING THE ASSESSEES INCOME U/S. 11 TO 13 OF THE ACT. 7. THE LD. DR ON THE OTHER HAND REITERATED THE RE ASONS AND OBSERVATIONS MADE BY THE AO AS WELL AS BY THE CIT(A) IN NOT TREA TING THE ADVANCE GIVING BY THE ASSESSEE AS AN APPLICATION OF INCOME FOR OBJ ECT OF THE TRUST OR FOR CHARITABLE PURPOSES. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS OF BOTH THE PARTIES AND HAVE CAREFULLY GONE THROUGH ORDERS OF THE AUTHORITIES BE LOW. 9. SECTION 11 OF THE INCOME TAX ACT GRANTS EXEMPTIO NS FROM THE LEVY OF INCOME TAX IN RESPECT OF INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES. THE SECTION CONTEMPLATES THAT FOR COMPUTATION OF THE INCOME IT IS TO BE SEEN WHETHER THE INCOME HAS BEE N APPLIED FOR CHARITABLE PURPOSES TO THE REQUIRED EXTENT. THE SECTION REQUI RES CONSIDERATION OF THE OBJECT OF THE TRUST AND ALSO THE INCOME DERIVED FRO M THE PROPERTY HELD IN TRUST. THE INCOME FROM THE TRUST PROPERTY HAS TO B E APPLIED TO THE OBJECTS OF THE TRUST. IT IS ALSO WELL SETTLED THAT AS FAR AS THE OBJECT OF THE TRUST ARE ITA NO. 4886/DEL/2009 PAGE 8 OF 15 CONCERNED AN APPLICATION OF THE AMOUNT CAN BE FOR REVENUE OR CAPITAL PURPOSES. 10. IN S.RM.M.CT.M. TIRUPPANI TRUST VS. CIT (1998) 230 ITR 636 (SC) THE FACTS OF THE CASE WERE THAT THE OBJECT OF THE A SSESSEE WAS TO CARRY OUT THIRUPPANI OR REPAIRS TO OLD HINDU TEMPLES BUILDIN G NEW ONES GIVING AID TO OR ESTABLISHING HOSTELS EDUCATIONAL OR INDUSTRIAL INSTITUTIONS ETC. THE ASSESSEE PURCHASED A BUILDING IN INDIA WHICH WAS U TILIZED AS A HOSPITAL. THE QUESTION AROSE WHETHER THE PURCHASE OF THE BUILDING COULD BE REGARDED AS APPLICATION FOR CHARITABLE PURPOSES. THE HONBLE S UPREME COURT HAS HELD THAT THE ASSESSEE HAS APPLIED RS. 8 LACS FOR THE CH ARITABLE PURPOSES IN INDIA BY PURCHASING A BUILDING WHICH WAS UTILIZED FOR HO SPITAL. THEREFORE THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 11(1) OF TH E ACT. IN THE LIGHT OF THE VIEW OF THE HONBLE SUPREME COURT TAKEN IN THE ABOV E REFERRED CASE OF S.RM.M.CT.M. TIRUPPANI TRUST VS. CIT (SUPRA) IT IS THUS CLEAR THAT THE APPLICATION OF THE AMOUNT CAN BE FOR REVENUE OR CAP ITAL PURPOSE TOWARDS CHARITABLE OBJECT OF THE TRUST. THEREFORE IN THE PRESENT CASE THE APPLICATION OF INCOME TOWARDS PURCHASE OF PROPERTY TO BE USED F OR OBJECT OF THE TRUST IS ELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT. 11. HOWEVER THE CLAIM OF THE ASSESSEE HAS BEEN REJ ECTED BY THE REVENUE AUTHORITIES BELOW BY OBSERVING AND HOLDING THAT IN RESPECT OF THE ADVANCE AMOUNT OF RS. 20 LACS PAID TO MR. MANJEET SINGH TH E ASSESSEE HAS NOT ITA NO. 4886/DEL/2009 PAGE 9 OF 15 DIVESTED ITS OWNERSHIP IN THAT MONEY BY RETAINING B ENEFICIAL INTEREST THEREIN. THE AO HAD TAKEN A VIEW THAT THE ADVANCE GIVEN BY T HE ASSESSEE WAS THUS NOT AN APPLICATION OF INCOME FOR CHARITABLE PURPOSE S. IN THIS CONNECTION THE AO HAS PLACED RELIANCE UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VGP FOUNDATION (SUPRA). THE CI T(A) HAS ALSO TAKEN SIMILAR VIEW AS THAT OF THE AO BY APPLYING THE RATI O OF THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VG P FOUNDATION (SUPRA). 12. IN THE LIGHT OF THE REASONS GIVEN BY THE AO AS WELL AS BY THE CIT(A) IT IS CONSIDERED NECESSARY FOR US TO HAVE A LOOK TO TH E FACTS OF THE CASE OF CIT VS. VGP FOUNDATION (SUPRA) AND THE CONTEXT IN WHIC H THE HONBLE MADRAS HIGH COURT HAS RENDERED THE DECISION. IN THAT CASE THE ASSESSEE WAS A TRUST. IT HAD ADVANCED IN THE PREVIOUS YEAR RELEVANT TO T HE A.Y. 1986-87 A SUM OF RS. 53 950/- TO ITS SISTER CONCERN A PRIVATE LIMIT ED COMPANY IN WHICH THE TRUSTEES OF THE ASSESSEE WERE ALSO DIRECTORS. THE COMPANY WAS SHOWN AS SUNDRY DEBTORS OF THE ASSESSEE IN THE BOOKS OF ACCO UNTS FOR THAT YEAR. THE COMPANY IN TURN HAD SHOWN THE ASSESSEE AS ONE OF IT S SUNDRY CREDITORS. THE ASSESSEES CLAIM WAS THAT THE MONEY SO GIVEN WERE M EANT TO BE USED TO MEET THE COST OF CONSTRUCTION OF A HOSPITAL AND THEREFO RE SHOULD BE REGARDED AS HAVING BEEN APPLIED FOR CHARITABLE PURPOSES IN THAT YEAR. IN THE LIGHT OF THE AFORESAID FACTS THE HONBLE HIGH COURT HELD THAT H AD THE MONEY REMAINED WITH THE ASSESSEE IT CERTAINLY COULD NOT HAVE BEEN REGARDED AS HAVING BEEN ITA NO. 4886/DEL/2009 PAGE 10 OF 15 UTILIZED FOR CHARITABLE PURPOSES. BY GIVING IT TO SISTER CONCERN WHICH MERELY RETAINED THE MONEY WITH IT FOR WHOLE OF THE YEAR I T WAS NOT POSSIBLE TO GIVE THE ASSESSEE THE BENEFIT OF REGARDING THE AMOUNT AS HAVING BEEN APPLIED FOR A CHARITABLE PURPOSE. THERE HAD ALSO BEEN CONTRAVENT ION OF SECTION 13(1)(D) READ WITH SECTION 11(5) OF THE ACT IN AS MUCH AS T HE TRUSTEES WERE ALSO THE DIRECTORS OF THE COMPANY AND THAT COMPANY HAD HAD T HE BENEFIT OF THIS AMOUNT THROUGHOUT THE YEAR. THE ASSESSEE DID NOT RE ALIZE ANY INTEREST ON THAT AMOUNT NOR DID IT HAVE ANY SECURITY FOR THE AMOUNT SO MADE AVAILABLE TO THE SISTER COMPANY. IT WAS THUS HELD THAT THE ASSESS EE WAS NOT ENTITLED TO EXEMPTION IN RESPECT OF THE ADVANCE FOR THE A.Y. 19 87-88. FROM THIS DECISION IT IS THUS CLEAR THAT THE AMOUNT WAS GIV EN AS ADVANCE TO THE SISTER CONCERN TO MEET THE COST OF CONSTRUCTION OF A HOSPI TAL AND THE TRUSTEES WERE ALSO DIRECTORS OF THAT COMPANY. THE COMPANY HAD BE NEFIT OF THE AMOUNT GIVEN BY THE TRUST TO IT THROUGHOUT THE YEAR. THE ASSESSEE DID NOT REALIZE ANY INTEREST NOR HAD ANY SECURITIES WITH IT AGAINST THE SAID AMOUNT. THE SAID AMOUNT REMAINED WITH THE COMPANY FOR WHOLE OF THE Y EAR WITHOUT BEING SPENT. 13. NOW LET US LOOK TO THE FACTS OF THE PRESENT CA SE WHERE AN ADVANCE OF RS. 20 LACS WAS GIVEN TO ONE SHRI MANJEET SINGH AGA INST THE PURCHASE OF LAND. SHRI MANJEET SINGH EXECUTED AN IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE ASSESSEE VIDE REGISTERED DEED OF IRREVOCABLE ITA NO. 4886/DEL/2009 PAGE 11 OF 15 GENERAL POWER OF ATTORNEY EXECUTED AND REGISTERED O N 12.07.2007. IN THE IRREVOCABLE GENERAL POWER OF ATTORNEY SHRI MANJEET SINGH HAS CLEARLY STATED THAT HE RECEIVED UN-REFUNDABLE CONSIDERATION OF RS. 33 LACS IN ADVANCE AS UNDER:- (I) RS. 20 LACS VIDE CHEQUE NO. 401640 DATED 10.01. 2006 DRAWN ON ORIENTAL BANK OF COMMERCE BRANCH PASCHIM VIHAR NE W DELHI (II) RS. 9 LACS VIDE CHEQUE NO. 416009 DATED 16.05. 2006 DRAWN ON ORIENTAL BANK OF COMMERCE BRANCH PASCHIM VIHAR NE W DELHI (III) RS. 4 LACS VIDE CHEQUE NO. 416037 DATED 06.06 .2006 DRAWN ON ORIENTAL BANK OF COMMERCE BRANCH PASCHIM VIHAR NE W DELHI. 14. HE FURTHER STATED THAT THE AFORESAID ADVANCE WA S RECEIVED BY HIM AGAINST THE LANDED PROPERTY MEASURING 700 SQ. YARDS OWNED BY HIM. HE FURTHER STATED IN THE DEED OF IRREVOCABLE GENERAL P OWER OF ATTORNEY THAT HE HAD GIVEN ALL THE ORIGINAL DOCUMENTS RELATED TO THE PROPERTY TO THE ASSESSEE TRUST AND THE ASSESSEE TRUST WAS DULY VERIFIED THE SAME AND WAS WELL SATISFIED WITH THE PHYSICAL AND LEGAL STATUS OF THE PROPERTY. HE THEREFORE EXECUTED IRREVOCABLE GENERAL POWER OF ATTORNEY GIVING ALL TH E POWERS TO THE ASSESSEE TRUST TO EXERCISE ALL POWERS OR RIGHTS IN RESPECT O F THAT PROPERTY. IN THE POWER ITA NO. 4886/DEL/2009 PAGE 12 OF 15 OF ATTORNEY IT HAS BEEN CATEGORICALLY STATED THAT THE ASSESSEE HAS TAKEN THE POSSESSION OF THE LAND AND OCCUPIED THE SAME ON THE SPOT. FROM THIS AVERMENT MADE IN THE DEED OF IRREVOCABLE GENERAL PO WER OF ATTORNEY EXECUTED BY SHRI MANJEET SINGH IN FAVOUR OF THE ASS ESSEE IT IS CLEAR THAT ALL THE POWERS TO CONTROL MANAGE USE OCCUPY AND ENJO Y THE PROPERTY HAS BEEN GIVEN TO THE ASSESSEE. IT IS NOT IN DISPUTE THAT S HRI MANJEET SINGH IS NOT CONNECTED OR RELATED IN ANY MANNER TO TRUST OR ITS TRUSTEES. THERE IS NO ALLEGATION BY THE DEPARTMENT THAT THE ASSESSEE HAS DIVERTED THE MONEY TO RELATED OR INTERESTED PERSONS WITHIN THE MEANING OF SECTION 13(1)(D) READ WITH SECTION 11(15) OF THE ACT. IT IS WELL SETTLED THAT RIGHT TO OBTAIN CONVEYANCE OF A PROPERTY BY ENTERING INTO AN AGREEM ENT TO PURCHASE THE PROPERTY AND PARTICULARLY IN THE LIGHT OF THE FACT THAT THE POSSESSION OF THE PROPERTY HAS ALREADY BEEN GIVEN TO THE PURCHASER I S A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. IT IS ALSO WE LL SETTLED THAT TRANSFER IN RELATION OF A CAPITAL ASSET WOULD INCLUDE ANY TRANS ACTION INVOLVING ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE T AKEN OR RETAINING IN PART PERFORMANCE OF CONTRACT OF THE NATURE REFERRED TO I N SECTION 53 A OF THE TRANSFER OF PROPERTY ACT 1882 AS CONTEMPLATED U/S . 2(47) OF THE ACT. THEREFORE IN THE PRESENT CASE THE ASSESSEE HAS AC QUIRED CAPITAL ASSET IN THE FORM OF A LAND IN RESPECT OF WHICH THE ASSESSEE HA S PAID ADVANCE AMOUNT OF RS. 20 LACS IN THE YEAR UNDER CONSIDERATION AND BA LANCE CONSIDERATION OF RS. 13 LACS WERE PAID IN IMMEDIATE NEXT YEAR AND HAS OB TAINED THE POSSESSION OF ITA NO. 4886/DEL/2009 PAGE 13 OF 15 THE PROPERTY AND ALSO GOT IRREVOCABLE GENERAL POWER OF ATTORNEY EXECUTED IN HIS FAVOUR BY SELLER OF THE PROPERTY. BY MAKING TH E PAYMENT IN ADVANCE AND TAKING THE POSSESSION OF THE PROPERTY THE ASSESSEE HAS ACQUIRED RIGHT TO SECURE CONVEYANCE OF THE PROPERTY IN ITS FAVOUR AN D AS SUCH THE AMOUNT PAID BY THE ASSESSEE TO SHIR MANJEET SINGH CANNOT BE RE GARDED AS THE MONEY REMAINED WITH THE ASSESSEE AND NOT THE APPLICATION OF INCOME FOR ACQUIRING CAPITAL ASSET. THE MONEY WAS GIVEN TO SHRI MANJEET SINGH AND ON RECEIVING THE MONEY FROM THE ASSESSEE SHIR MANJEET SIGH HAD CREDITED A LEGAL OBLIGATION OR DUTY UPON HIM TO CONVEY THE PROPERTY IN FAVOUR OF THE ASSESSEE AND IN FURTHERANCE TO THAT AGREEMENT SHRI MANJEET SINGH HAS ALSO HANDED OVER THE PEACEFUL AND VACANT POSSESSION OF THE PROP ERTY TO THE ASSESSEE AND HAS ALSO EXECUTED AN IRREVOCABLE GENERAL POWER OF A TTORNEY IN ASSESSEES FAVOUR. THEREFORE THE FACTS OF THE PRESENT CASE A RE TOTALLY DIFFERENT TO THAT OF IN THE CASE OF VGP FOUNDATION (SUPRA). WE THEREFO RE HOLD THAT THE REVENUE AUTHORITIES BELOW HAVE MISAPPLIED THE DECISION OF H ONBLE MADRAS HIGH COURT IN THE CASE OF VGP FOUNDATION (SUPRA) TO THE FACTS OF THE PRESENT CASE AND CONSEQUENTLY THE AUTHORITIES BELOW HAVE FALLEN IN ERROR IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION U/S. 11 OF THE ACT IN SO FAR THE APPLICATION OF ADVANCE AMOUNT OF RS. 20 LACS PAID BY ASSESSEE TO S HRI MANJEET SINGH TOWARDS RIGHT TO PURCHASE THE PROPERTY IS CONCERNED . IT IS NOT THE CASE OF THE AO THAT APPLICATION OF MONEY TOWARDS ACQUISITION OF CAPITAL ASSET IS NOT ELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT. IT IS A LSO NOT THE CASE OF THE ITA NO. 4886/DEL/2009 PAGE 14 OF 15 REVENUE THAT THE LAND IN RESPECT OF WHICH ADVANCE W AS GIVEN BY THE ASSESSEE WAS NOT USED FOR THE PURPOSE OF CARRYING OUT THE OB JECT OF THE TRUST. EVEN OTHERWISE THE PROPOSITION THAT THE APPLICATION OF MONEY TOWARDS ACQUISITION OF CAPITAL ASSET FOR THE OBJECT OF THE TRUST IS ELI GIBLE FOR DEDUCTION U/S. 11 OF THE ACT AS SO HELD BY HONBLE SUPREME COURT IN THE CASE OF S.RM.M.CT.M. TIRUPPANI TRUST VS. CIT (SUPRA). AN IDENTICAL VIEW TO THAT THAT OF THE HONBLE SUPREME COURT IN THE CASE OF S.RM.M.CT.M. T IRUPPANI TRUST VS. CIT (SUPRA) HAS ALSO BEEN TAKEN IN THE FOLLOWING CA SES TO THE EFFECT THAT THE APPLICATION OF THE AMOUNT FOR CAPITAL PURPOSE ON TH E OBJECT OF THE TRUST IS ELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT:- (I) CIT VS. JANAM BHUMI PRESS TRUST (2000)242 ITR 4 57 (KARN.) WHICH HAS BEEN LATER FOLLOWED IN THE CASE OF THE CI T VS. JANAM BHUMI PRESS TRUST (2000) 242 ITR 703. (II) CIT VS. KANNIKA PARMESHWARI DEVASTHANAM AND CH ARITIES (1982) 133 ITR 779 (MAD.) 15. THE AFORESAID DECISIONS INCLUDING THE AFORESAID DECISION OF HONBLE SUPREME COURT IN THE CASE OF S.RM.M.CT.M. TIRUPPANI TRUST VS. CIT (SUPRA) HAS BEEN RELIED UPON BY THE HONBLE MADRAS HIGH COURT IN THE RECENT JUDGMENT IN THE CASE OF DIT (EXEMPTIONS) VS. GOVIND U NAICKER ESTATE (2009) 315 ITR 237 (MAD.) ITA NO. 4886/DEL/2009 PAGE 15 OF 15 16. FOR THE REASONS GIVEN AND IN THE LIGHT OF OUR D ISCUSSIONS MADE ABOVE WE THEREFORE HOLD THAT THE REVENUE AUTHORITIES BE LOW WERE UNJUSTIFIED IN HOLDING THAT THE ADVANCE OF RS. 8 LACS GIVEN TOWARD S PURCHASE CONSIDERATION OF THE PROPERTY WHICH WAS USED TO CARRY OUT THE OB JECT OF THE TRUST WAS NOT AN APPLICATION OF INCOME FOR CHARITABLE PURPOSES WI THIN THE MEANING OF SECTION 11 OF THE ACT. WE THEREFORE REVERSE THE ORDER OF THE AUTHORITIES BELOW AND DIRECT THE AO TO TREAT THE PAYMENT OF RS. 20 LACS PAID BY WAY OF ADVANCE TOWARDS PURCHASE OF PROPERTY AS AN APPLICAT ION OF INCOME FOR CHARITABLE PURPOSES AND TO ALLOW THE DEDUCTION ACCO RDINGLY. THUS THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 17. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 18. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 12 TH MARCH 2010. SD/- (K.D. RANJAN) ACCOUNTANT MEMBER SD/- (C.L. SETHI) JUDICIAL MEMBER DATED: 12 TH MARCH 2010 *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR