Addl. CIT, Muzaffarnagar v. M/s Deen Dayal Memorial Educational Trust, Muzaffarnagar

ITA 526/DEL/2011 | 2007-2008
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 52620114 RSA 2011
Bench Delhi
Appeal Number ITA 526/DEL/2011
Duration Of Justice 5 month(s) 22 day(s)
Appellant Addl. CIT, Muzaffarnagar
Respondent M/s Deen Dayal Memorial Educational Trust, Muzaffarnagar
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 22-07-2011
Date Of Final Hearing 22-07-2011
Next Hearing Date 22-07-2011
Assessment Year 2007-2008
Appeal Filed On 31-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B DELHI) BEFORE SHRI A.D. JAIN AND SHRI SHAMIM YAHYA ITA NO. 526(DEL)2011 ASSESSMENT YEAR: 2007-08 ADDL.COMMISSIONER OF INCOME TAX M/S. DEEN D AYAL MEMORIAL RANGE 2 MUZAFFARNAGAR. V. EDUC ATIONAL TRUST GANDHI COLONY MUZAFFARNAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ROHIT GARG SR. DR RESPONDENT BY: SHRI VED JAIN MRS.RANO JAIN & SH.V.MOHAN CA ORDER PER A.D. JAIN J.M . THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2007-08 TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN LAW BY ALLOWING THE EXEMPTION UNDER SE CTIONS 11 AND 10(23C)(IIIAD) OF THE INCOME TAX ACT 1961 BY IGNOR ING THE FACT THAT THE ASSESSEE TRUST HAS CONSTRUCTED THE BUILDING ON THE LAND RENTED FROM THE SPOUSES OF THE TRUSTEES AND AS PER CLAUSE 15 O F THE TRUST DEED THE TRUSTEES HAVE BEEN GIVEN PERPETUAL RIGHT IN VIOLATI ON OF SECTION 13 OF THE INCOME TAX ACT 1961. ITA 526(DEL)2011 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN LAW BY HOLDING THAT THE DONATION RECEIVED BY THE ASSESSEE TRUST WAS TOWARDS CORPUS FUND WITH A SPECIFIC DIRE CTION BY IGNORING THE FACT THAT THE ASSESSEE TRUST FAILED TO PRODUCE THE COMPLETE ADDRESS OF THE DONORS AND THE SPECIFIC PURPOSE FOR WHICH TH E DONATION WAS MADE. THE LD. CIT(A) FAILED TO APPRECIATE THAT TH ERE WAS MANIPULATION IN DONATION RECEIPTS AS MENTIONED IN T HE ASSESSMENT ORDER. 2. THE ASSESSEE IS A TRUST REGISTERED U/S 12AA OF T HE INCOME TAX ACT WITH COMMISSIONER OF INCOME TAX MUZAFFARNAGAR WIT H EFFECT FROM 01.01.2001. IT FILED A RETURN OF INCOME DECLARING NIL INCOME ON 31.10.2007. INTEREST INCOME WAS SHOWN EXEMPT U/S 11 OF THE ACT AND SURPLUS OF INCOME OVER EXPENDITURE WAS SHOWN EXEMPT U/S 10(23C)(IIIAD ) OF THE I.T. ACT. 3. THE AO OBSERVED THAT THE APPLICATION OF FUND BY THE ASSESSEE TRUST WAS ONLY 81% OF THE RECEIPTS AS FOLLOWS:- ` TOTAL RECEIPTS 80 70 358/- TOTAL EXPENDITURE(AS PER INCOME & EXP.) 40 72 155/ - INVESTMENT IN FIXED ASSETS 25 36 387/- ------------------- TOTAL : 66 08 582/- IT WAS OBSERVED THAT THE ASSESSEE TRUST HAD TAKEN LAND OF SPOUSES OF THE TRUSTEES ON RENT WITH THE RIGHT TO CONSTRUCTION OF BUILDING; THAT THE ASSESSEE TRUST HAD NOT FILED ANY EVIDENCE TO THE EFFECT THAT THE CONSTRUCTION WAS BEING DONE BY THE SPOUSES OF THE TRUSTEES; THAT THE TERMS OF THE AGREEMENT PROVIDED ITA 526(DEL)2011 3 INDIRECT BENEFIT TO THE SPOUSES OF THE TRUSTEES I. E. THE PERSONS SPECIFIED U/S 13 OF THE I.T. ACT IN VIEW OF THE FACT THAT THE OW NERS OF THE LAND WERE ALSO THE OWNERS OF THE STRUCTURE THEREON; THAT THE TRUST DEED PROVIDED THE TRUSTEES WITH A PERPETUAL RIGHT AND ALSO THE RIGHT TO RECEIV E HIS ASSETS/INVESTMENT ON DISSOLUTION OF THE TRUST; THAT IT SHOWED THAT THE T RUST WAS NOT WHOLLY AND EXCLUSIVELY FOR EDUCATION BUT FOR PROFIT ALSO; THA T AS SUCH EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT WAS ALSO NOT AVAILABLE TO THE ASSESSEE TRUST; AND THAT THE DONATION RECEIVED BY THE ASSESSEE TRUST WA S NOT FOR ANY SPECIFIC PURPOSE BUT WAS A GENERAL DONATION FORMING PART OF THE INCOME OF THE TRUST AND THE DONATION RECEIPTS WERE NOT IN PROPER ORDER. 4. AS SUCH THE AO DENIED THE EXEMPTION GRANTED TO THE ASSESSEE U/S 11 OF THE ACT BRINGING THE AMOUNT OF ` 39 98 203/- BEING EXCESSIVE INCOME OVER EXPENDITURE TO TAX. BESIDES THE DONATION O F ` 8 82 000/- SHOWN AS CORPUS WAS ALSO TREATED BY THE AO AS CONTRIBUTION WITH A SPECIFIC DIRECTION THEREBY FORMING THE INCOME OF THE TRUST. THE ASSE SSMENT WAS HENCE COMPLETED AT A TOTAL INCOME OF ` 48 80 200/-. 5. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) ALLOWED EXEMPTION AND HELD THAT THE DONATION WAS TOWARDS CORPUS FUND WITH A SPECIFIC DIRECTION. AGGRIEVED THE DEPARTMENT HAS COME UP IN APPEAL. ITA 526(DEL)2011 4 6. CHALLENGING THE IMPUGNED ORDER THE LD. DR HAS C ONTENDED THAT THE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING EXEMPTION UNDER SECTIONS 11 AND 10(23C)(IIIAD) OF THE ACT TO THE ASSESSEE TRUST WH ILE IGNORING THAT THE ASSESSEE TRUST HAD CONSTRUCTED A BUILDING ON THE LA ND RENTED FROM THE SPOUSES OF THE TRUSTEES AND AS PER CLAUSE 15 OF THE TRUST D EED THE TRUSTEES HAD GIVEN TO THE ASSESSEE A PERPETUAL RIGHT IN VIOLATION OF SECTION 13 OF THE I.T. ACT; THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE D ONATION RECEIVED BY THE ASSESSEE TRUST WAS TOWARDS CORPUS FUND WITH A SPECI FIC DIRECTION; THAT WHILE DOING SO THE LD. CIT(A) HAS ERRED IN FAILING TO TA KE INTO CONSIDERATION THAT THE ASSESSEE TRUST HAD FAILED TO PRODUCE THE COMPLE TE ADDRESSES OF THE DONORS AND THE SPECIFIC PURPOSE FOR WHICH THE DONATION WAS MADE; AND THAT THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE THAT THERE WAS A MANIPULATION IN THE DONATION RECEIPTS AS OBSERVED BY THE AO. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS STRONGLY RELIED ON THE IMPUGNED ORDER. IT HAS BEEN CONTEND ED THAT THE ASSESSEE TRUST STANDS DULY REGISTERED U/S 12AA OF THE ACT; THAT IT IS RUNNING AN EDUCATIONAL INSTITUTION BY WAY OF CHARITABLE ACTIVITY; THAT THE ASSESSEE TRUST IS CARRYING OUT ONLY EDUCATIONAL ACTIVITY AND NO OTHER WORK IS BEING DONE; THAT THE AO WRONGLY DENIED TO THE ASSESSEE THE CALCULATION OF UTILIZATION OF FUNDS OF MORE THAN 85%; THAT BY WAY OF INCOME THE ASSESSEE HAD RECEIVED FEES OF ` ITA 526(DEL)2011 5 80 15 700/- INTEREST OF ` 54 858/- AND DONATION FOR CORPUS OF ` 8 82 000/- TOTAL AMOUNTING TO ` 89 52 558/-; THAT SOFAR AS REGARDS THE APPLICATION OF INCOME/FUND THE ASSESSEE HAD APPLIED ` 40 72 155/- TOWARDS EXPENSES ` 25 36 387/- WERE INVESTED IN FIXED ASSETS AND ` 20 50 000/- WERE INVESTED IN FIXED DEPOSIT FOR UNIVERSITY. THUS THE TOTAL APP LICATION AMOUNTED TO ` 86 58 542/- AND THE INCOME APPLIED FOR CHARITABLE P URPOSES CAME TO 96.71%; THAT THE AO HAD NOT CONSIDERED THE AMOUNT INVESTED IN FIXED DEPOSITS AS APPLICATION OF INCOME; THAT THE AO HAD IGNORED THE FACT THAT THE ASSESSEE TRUST WAS REGISTERED U/S 12AA OF THE ACT AND HAD UT ILIZED ALL ITS FUNDS AS PER ITS BYE-LAWS FOR EDUCATIONAL ACTIVITY ONLY AND NO F UNDS HAD BEEN UTILIZED IN ANY ACTIVITY BY WAY OF INFRINGEMENT OF THE PROVISIO NS OF SECTION 11(5) OF THE ACT; THAT ALL THE MINUTE BOOKS HAD BEEN PRESENTED B EFORE THE AO AT THE TIME OF ASSESSMENT; THAT EVEN PHOTO COPIES OF THE MINUTE BOOKS WERE SUBMITTED; THAT THE LAND MEASURING 332.31 SQ.M. HAD BEEN GIVEN ON RENT TO THE TRUST WITH A RIGHT TO CONSTRUCT A BUILDING THERE ON ON A MON THLY RENT OF ` 150/-; THAT THE RENT WAS NOT RECEIVED BY THE SPOUSES OF THE TRUSTEE S DURING THE YEAR AND SO THERE HAD BEEN NO VIOLATION OF ANY PROVISION OF THE ACT; THAT THE BUILDING ON THE LEASE LAND HAD BEEN CONSTRUCTED BY SMT. BHAWNA ARORA AND SMT. GEETA ANEJA SPOUSES OF THE TRUSTEES OUT OF THEIR FUNDS; THAT THERE WAS NO VIOLATION ITA 526(DEL)2011 6 OF THE ACT AND THERE WAS NO INDIRECT BENEFIT TO THE RELATIVES AS SPECIFIED U/S 13 OF THE ACT; THAT THE INVESTMENT OF ` 20 50 000/- HAD BEEN MADE IN FIXED DEPOSIT FOR OBTAINING THE RECOGNITION/AFFILIATION F ROM CCS UNIVERSITY AND NCTE JAIPUR; THAT WITHOUT SUCH INVESTMENT THE REC OGNITION/AFFILIATION WOULD NOT HAVE BEEN GRANTED TO THE TRUST; THAT THE FDRS WERE THUS A PRE- CONDITION TO GET AFFILIATION WITH THE UNIVERSITY AN D NCTE JAIPUR AND TO START THE COURSES; THAT THEREFORE IT WAS APPLICATI ON OF FUNDS/INCOME FOR THE ATTAINMENT OF THE MAIN OBJECT OF THE TRUST WHICH W AS EDUCATION; THAT THE FDRS HAD BEEN PLEDGED TO CCS UNIVERSITY/NCTE JAIP UR TILL THE CONTINUATION OF THE AFFILIATION; THAT SO THE INVES TMENT WAS OF A LONG DURATION; THAT IN CASE IT WAS TO BE TREATED AS REVE NUE EXPENDITURE IT WOULD BE APPLICATION OF INCOME; THAT THE TRUST HAD NOT GIVEN ANY BENEFIT TO THE TRUSTEES OR THEIR RELATIVES AND THERE HAD BEEN NO VIOLATION OF SECTION 11 OF THE ACT; THAT THE FACTUM OF THE MINUTE BOOKS HAVING BEEN PRO DUCED BEFORE THE AO AND THE SAME HAVING BEEN CHECKED BY THE AO IS EVIDE NT FROM PARA 4 OF THE ASSESSMENT ORDER; THAT THE AO DID NOT BRING ON RECO RD ANYTHING TO PROVE AS TO HOW THE SPOUSES OF THE TRUSTEES HAD BENEFITED FR OM THE CONSTRUCTION OF THE BUILDING BY THE SPOUSES OF THE TRUSTEES AND NOT BY THE ASSESSEE TRUST; THAT NO PERPETUAL RIGHT HAD BEEN GIVEN TO THE TRUSTEES AS ALSO HAS BEEN ACCEPTED BY THE AO HIMSELF; THAT AS PER THE PROVISIONS OF SECTI ON 10 (23C) (IIIAD) OF THE ITA 526(DEL)2011 7 ACT IF THE INCOME OF ANY EDUCATIONAL INSTITUTION E XISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PRO FIT DOES NOT EXCEED ` 1 00 00 000/- BY WAY OF ANNUAL RECEIPT THE SAME WO ULD BE EXEMPT FROM TAX; THAT THUS EVEN GOING BY THE AOS CALCULATION THE ASSESSEE WOULD BE ENTITLED TO GET EXEMPTION; THAT APROPOS THE DONATION FOR COR PUS FUND ALL THE RECEIPTS WERE DULY SHOWN TO THE AO DURING THE ASSESSMENT PRO CEEDINGS AND WERE CHECKED BY THE AO; THAT THIS IS ALSO EVIDENT FROM P ARA 3 OF THE ASSESSMENT ORDER; THAT THE ASSESSEE TRUST STARTED TO CONSTRUCT ITS OWN BUILDING DURING F.Y. 2005-06 AS AVAILABLE FROM THE BALANCE SHEET OF THE TRUST AS ON 31.3.06; THAT NO CONSTRUCTION WAS MADE BY THE TRUST ON THE RENTED LAND IN THE EARLIER YEARS; THAT FURTHER THE CONSTRUCTION OF THE BUILDING WAS MADE IN THE EARLIER YEARS AS AVAILABLE FROM THE I.T. RETURN/BALANCE SHEET OF THE SPOUSES OF THE TRUSTEES; THAT THE TRUST HAD BEEN RUNNING ITS COURSES IN A RE NTED BUILDING TILL THE CONSTRUCTION OF ITS OWN BUILDING AND NO RENT AGREEM ENT HAD BEEN EXECUTED AFTER THE EXPIRY OF THE RENT DEED; THAT THE TRUST H AD STARTED CONSTRUCTION OF ITS OWN BUILDING IN ASSESSMENT YEAR 2005-06 AS PER THE DIRECTIONS OF NCTE JAIPUR WHICH FACT IS ALSO EVIDENT FROM THE BALANCE SHEET OF THE ASSESSEE TRUST AS ON 31.3.2006; THAT ALL THESE FACTS WERE D ULY EXPLAINED TO THE AO BY THE ASSESSEE VIDE ITS REPLY DATED 7.12.09; THAT TH E LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER DULY TOOK ALL THESE FACTS INTO CONSIDERATION CORRECTLY AND ITA 526(DEL)2011 8 IT WAS ONLY THEREAFTER THAT THE EXEMPTION WAS ALLOW ED TO THE ASSESSEE TRUST; AND THAT AS SUCH THERE BEING NO FORCE IN THE APPEA L FILED BY THE DEPARTMENT THE SAME BE DISMISSED. 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. IT IS SEEN THAT SOFAR AS REGARDS THE APPLICATION OF IN COME OF THE ASSESSEE TRUST THE TOTAL RECEIPTS OF THE ASSESSEE WERE TO THE TUNE OF ` 80 73 358/-. THE PROFIT AND LOSS ACCOUNT SHOWED THE EXPENDITURE TO B E OF ` 40 72 155/-. ` 25 36 387/- WERE INVESTED IN FIXED ASSETS. DURING THE YEAR ` 20 50 000/- WERE INVESTED IN FDRS. THOUGH THE AO DID NOT CON SIDER THIS INVESTMENT AS APPLICATION OF INCOME SUCH INVESTMENT WAS MADE SO AS TO ENABLE THE ASSESSEE TRUST TO OBTAIN RECOGNITION/AFFILIATION FR OM CCS UNIVERSITY AND NCTE JAIPUR. SANS THE INVESTMENT IN FDRS THE AS SESSEE TRUST WOULD NOT HAVE BEEN GRANTED SUCH RECOGNITION/AFFILIATION. AS SUCH THE INVESTMENT IN FDRS WAS A PRE-CONDITION TO GET THE RECOGNITION/AFF ILIATION WITH CCS UNIVERSITY AND NCTE JAIPUR. ELSE THE ASSESSEE WOULD NOT HAVE BEEN ABLE TO START THE EDUCATIONAL COURSES. THE MAIN OBJECT OF THE TRUST IS UNDISPUTEDLY EDUCATION WHICH IS A CHARITABLE OBJECT AS PER SEC TION 2(15) OF THE I.T. ACT. IT HAS NOT BEEN SHOWN TO BE OTHERWISE. THE INVESTM ENT HAVING BEEN MADE IN FURTHERANCE OF SUCH MAIN OBJECT OF THE TRUST WHICH WAS DEFINITELY APPLICATION OF FUNDS. FURTHER THE FDRS HAD BEEN PLEDGED TO CCS ITA 526(DEL)2011 9 UNIVERSITY AND NCTE JAIPUR TILL THE CONTINUATION O F AFFILIATION. THAT BEING SO THE INVESTMENT WAS MADE OVER A LONG DURAT ION. AS RIGHTLY NOTED BY THE LD. CIT(A) FURTHER THE INVESTMENT IN FDR W AS COVERED BY THE PROVISIONS OF SECTION 11(5) READ WITH THOSE OF SECT ION 11(2)(B) OF THE ACT. SECTION 11(2)(B) OF THE ACT AS APPLICABLE PROVIDE S THAT WHERE 85% OF THE INCOME IS NOT APPLIED OR IS NOT DEEMED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA DURING THE PREVIOUS YEA R BUT IS ACCUMULATED OR SET APART EITHER IN WHOLE OR IN PART FOR APPLICA TION TO SUCH PURPOSES IN INDIA SUCH INCOME SO ACCUMULATED OR SET APART SHAL L NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RESPECT OF THE INCOME PROVIDED THAT THE MONEY SO ACCUMULATED OR SET APART IS INVESTED OR DEPOSITED IN THE FORMS OR MODES SPECIFIED IN SECTION 11(5). SECTION 11(5)(I) PROVIDES INVESTMENT IN SAVINGS CERTIFICATE AS DEFINED IN SEC TION 2(C) OF THE GOVERNMENT SAVINGS CERTIFICATES ACT 1959 AS ONE OF THE FORMS OR MODES OF INVESTING OR DEPOSITING THE MONEY REFERRED TO IN SE CTION 11(2)(B) OF THE ACT. IT IS NOT THE AOS CASE THAT INVESTMENT IN FDRS DOE S NOT FALL UNDER THESE PROVISIONS OF THE ACT. IN CIT V. RADHA SWAMY SATS ANG SABHA 25 ITR 472(ALL) RENDERED BY THE HONBLE JURISDICTIONAL HI GH COURT SO FAR AS CONCERNS THE ASSESSEE AS RIGHTLY OBSERVED BY THE C IT(A) IT HAS BEEN HELD THAT APPLIED DOES NOT NECESSARILY MEAN SPENT AN D EVEN IF THE AMOUNT HAS ITA 526(DEL)2011 10 BEEN EARMARKED FOR THE PURPOSES OF THE INSTITUTION IT IS DEEMED TO HAVE BEEN APPLIED FOR ITS PURPOSE. 9. IN THESE FACTS THE LD. CIT(A) CANNOT AT ALL BE SAID TO HAVE ERRED IN HOLDING THAT THE INVESTMENT IN FDRS HAD BEEN MADE B Y THE ASSESSEE TRUST FOR THE ATTAINMENT OF ITS MAIN OBJECT OF EDUCATION AND THAT WITHOUT MAKING SUCH INVESTMENT THE ASSESSEE TRUST WOULD NOT HAVE BEEN IN A POSITION TO GET RECOGNITION/AFFILIATION FROM CCS UNIVERSITY AND NCT E JAIPUR. THE LD. CIT(A) THEREFORE CORRECTLY TREATED THIS INVESTMEN T AS APPLICATION OF INCOME BY THE ASSESSEE TRUST FOR THE ATTAINMENT OF ITS MAI N OBJECT AND HAS RIGHTLY HELD THAT THE INVESTMENT IN THE FDRS OUGHT TO BE TREATED AS APPLICATION OF INCOME AND THAT ON THIS THE APPLICATION OF INCOME OF THE ASSESSEE TRUST WAS MORE THAN 85% WHICH WAS THE REQUIREMENT FOR GETTING EXE MPTION U/S 11 OF THE ACT. 10. APROPOS THE ISSUE REGARDING BENEFITS TO THE SPO USES OF THE TRUSTEES AS PER THE RENT AGREEMENT THE TRUST HAD BEEN GIVEN LA ND MEASURING 332.31 SQ.M. BY THE SPOUSE OF THE TRUSTEE ON A RENT OF ` 150/- PER MENSUM . THE ASSESSEE TRUST HAD ALSO BEEN GIVEN THE RIGHT TO CON STRUCT A BUILDING THEREAT AND TO USE THE SAME FOR THE ATTAINMENT OF ITS MAIN OBJECT OF EDUCATION. PERTINENTLY DURING THE YEAR NO RENT WAS PAID BY T HE TRUST. SO FAR AS REGARDS THE BUILDING ON THE LEASE LAND THE SAME WAS CONSTR UCTED BY SMT. BHAWNA ITA 526(DEL)2011 11 ARORA AND SMT. GEETA ANEJA NO DOUBT SPOUSES OF T HE TRUSTEES. HOWEVER THIS CONSTRUCTION WAS GOT DONE BY THEM OUT OF THEIR OWN FUNDS. WATER/HOUSE TAX WAS PROPOSED TO BE CHARGED IN THEIR NAMES WITH EFFECT FROM APRIL 2002. BEFORE THE CONSTRUCTION OF THE BUILDING OF THE TRUS T THE TRUST HAD BEEN RUNNING ITS REGULAR CLASSES IN A RENTED BUILDING. THE CONSTRUCTION OF THE BUILDING PER SE WAS MADE DURING F.Y. 2005-06. THI S CONSTRUCTION WAS ON THE LAND OF THE ASSESSEE TRUST ITSELF AS SEEN FROM THE BALANCE SHEET OF THE ASSESSEE TRUST AS ON 31.3.06. IN THE LIST OF FIXED ASSETS IN THE SAID BALANCE SHEET NO OPENING BALANCE OF BUILDING WAS FOUND. DURING THE YEAR ADDITION MADE ON THAT ACCOUNT WAS OF ` 6 92 383/-/ THE CONDITION IN THE RENT NOTE ENABLING THE TRUST TO CONSTRUCT A BUILDING ON THE L EASED PROPERTY HAVING BEEN FOUND UNUSUAL SPOT ENQUIRIES WERE CONDUCTED AND NO FUNDS OF THE ASSESSEE TRUST WERE FOUND TO HAVE BEEN UTILIZED IN THE CONST RUCTION. THE CIT(A) CALLED FOR A REMAND REPORT IN WHICH NOTHING NEW W AS BROUGHT BY THE AO AND ONLY THE CONTENTS OF THE ASSESSMENT ORDER WERE REITERATED. IT REMAINED THE AOS BARE ALLEGATION THAT NO EVIDENCE TO SUPPOR T THE FACTUM OF THE CONSTRUCTION OF THE PROPERTY HAD BEEN PRODUCED BY T HE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 11. THE LD. CIT(A) ALSO TOOK INTO CONSIDERATION THE DETAILS OF INVESTMENT MADE BY SMT. GEETA ANEJA AS SHOWN IN HER RETURN OF INCOME FOR ASSTT.YEAR ITA 526(DEL)2011 12 2005-06. THEREIN AN AMOUNT OF ` 1 00 000/- HAD BEEN SHOWN UNDER THE HEAD OF INVESTMENT IN CONSTRUCTION OF BUILDING DURI NG F.Y. 2001-02. THE BALANCE SHEET ACCOMPANYING THE RETURN OF INCOME FOR ASSTT.YEAR 2009-10 PERTAINING TO SMT. BHAWNA ARORA SHOWED SHARE IN P LOT AT DWARAKAPURI AS ON 9.4.2001 AT ` 2 45 000/- AND CONSTRUCTION AT ` 3 80 000/-. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT NO RETURN OF INCOME APPE ARED TO HAVE BEEN FILED BY BOTH THESE LADIES FOR ASSTT.YEAR 2002-03 WHICH WAS THE PERIOD DURING WHICH THE CONSTRUCTION IN QUESTION TOOK PLACE. IN THE AB SENCE OF THE AO HAVING TAKEN ANY ACTION IN THE HANDS OF THESE LADIES OBVI OUSLY THE AO HAD NOT NOTED ANY ABNORMALITY QUA THE ISSUE OF INVESTMENT I N THE CONSTRUCTION OF THE BUILDING. THE CONCLUSION THAT IT WAS THE FUND OF T HE ASSESSEE TRUST WHICH WAS UTILIZED IN THE CONSTRUCTION OF THE BUILDING FOUND ITS BASIS IN A MERE CLAUSE IN THE RENT DEED WHICH IS NOT TENABLE IN LAW AS SUCH A CONCLUSION WAS ONLY PRESUMPTIVE. MOREOVER THE ASSESSEE DID SHOW THAT SUCH A CLAUSE WAS INSERTED IN THE RENT DEED SO AS TO COMPLY WITH THE REQUIREMENT OF CCS UNIVERSITY AND NCTE JAIPUR SO AS TO ENABLE THE ASS ESSEE TRUST TO GET THE AFFILIATION WITH THEM AND APPROVAL FOR RUNNING THE EDUCATIONAL CLASSES. THE LD. CIT(A) HAS RIGHTLY HELD IN SUCH FACTS THAT TH ERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 13 OF THE ACT AT THE HANDS OF THE ASSESSEE TRUST AND THAT NO UNDUE BENEFIT HAVING BEEN GRANTED TO THE SPOUSES OF THE TRUSTEES. THE ITA 526(DEL)2011 13 AO WAS NOT FOUND TO HAVE BROUGHT ON FILE ANY MATERI AL ADVERSE TO THE ASSESSEE IN THIS REGARD. 12. NOTHING ACTED AGAINST THE ASSESSEE SO FAR AS RE GARDS THE ISSUE OF PERPETUAL RIGHTS HAVING BEEN GRANTED TO THE ASSESSE E TOO. AS PER CLAUSE 21 OF THE TRUST DEED TRUSTEES CAN BE APPOINTED FROM OUTSIDE ALSO. TOO IN THE REMAND REPORT DATED 10.3.2010 THE AO ACCEPTED THIS HIMSELF. 13. FURTHER NOTHING WAS BROUGHT ON RECORD BY THE A O TO BUTTRESS HIS ASSERTION THAT THE ASSESSEE TRUST WAS MEANT FOR PRO FIT AND NOT FOR CHARITABLE PURPOSES. THE ASSERTION OF THE AO IN THIS REGARD THEREFORE WAS MERELY A BALD AND BLEND AVERMENT SANS SUBSTRATUM. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE ASSESSEE TRUST STOOD RECOGNIZED AS A CHARITABLE INSTITUTION AND WAS DULY REGISTERED UNDER SECTIONS 12A/12AA OF THE ACT BY THE CIT MUZAFFARNAGAR AND SUCH REGISTRATION CONTINUED DURI NG THE YEAR UNDER CONSIDERATION. IT WAS AS SUCH THAT THE ASSESSEE T RUST WAS HELD QUALIFIED FOR EXEMPTION U/S 11 AND SECTION 10(23C)(IIIAD) OF THE ACT. 14. NOT ONLY THIS THE DONATION RECEIPTS OF ` 8 82 000/- WERE FOUND TO HAVE BEEN SPECIFICALLY MADE FOR THE CORPUS FUND OF THE A SSESSEE TRUST. WHEN THE MATTER WAS PUT TO THE AO BY THE LD. CIT(A) THE REM AND REPORT SUBMITTED IN RESPONSE DID NOT SPEAK ANYTHING CONCERNING THE ALLE GED NON-GENUINENESS OF THE CLAIM OF THE ASSESSEE TRUST THOUGH IT WAS CONT ENDED THEREIN THAT THE ITA 526(DEL)2011 14 ORIGINAL RECEIPTS HAD NOT BEEN PRODUCED BEFORE THE AO BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE LD. CIT(A) ON THIS SPECIFICALLY OBSERVED THAT THE ASSESSMENT RECORD SHOWED THE COMP LETE DETAILS OF THE DONATION RECEIPTS SUFFICIENTLY PROVING THAT THE DO NATIONS HAD BEEN FOR SPECIFIC PURPOSES AND WERE NOT TO BE INCLUDED IN TH E INCOME OF THE ASSESSEE TRUST. NOTHING TO THE CONTRARY HAS BEEN PLACED BEF ORE US. 15. IT IS THUS SEEN THAT THE LD. CIT(A) AFTER CONS IDERING ALL THE DETAILS AS BROUGHT ON RECORD AND AS AVAILABLE FROM THE ASSESSM ENT RECORD AND AFTER CALLING FOR AND CONSIDERING TWO REMAND REPORTS FROM THE AO HAS PASSED A DETAILED SPEAKING ORDER RIGHTLY INVALIDATING THE A SSESSMENT ORDER AND HOLDING THE ASSESSEE TRUST TO BE QUALIFIED FOR EXEM PTION U/S 11 OF THE ACT. AS SUCH THERE REMAINS NO FORCE IN THE GRIEVANCE SO UGHT TO BE RAISED BY THE DEPARTMENT BY WAY OF THE GROUNDS OF APPEAL TAKEN. THESE GROUNDS ARE HENCE REJECTED. 16. IN THE RESULT THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.07.2011. SD/- SD/- (SHAMIM YAHYA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.07.2011 *RM ITA 526(DEL)2011 15 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR