MANOHAR LAL Vs. MANJIT KAUR
LAWS(DLH)-2007-5-91
HIGH COURT OF DELHI
Decided on May 17,2007

PT.KANAHYA LAL PUNJ CHARITABLE TRUST Appellant
VERSUS
DIRECTOR OF INCOME TAX EXEMPTION NEW DELHI Respondents

JUDGEMENT

V.B.GUPTA, J. - (1.) By way of present appeal filed under Section 260-A of the Income Tax Act, 1961(in short as 'Act') the Assessee has challenged the order dated 31st January, 2005 passed by the Income Tax Appellate Tribunal, 'F' Bench, New Delhi (in short as 'Tribunal') in ITA No.457/Del/1999 for the assessment year 1997-98.
(2.) The Assessee is a Society registered under the Societies Registration Act as well as under Section 12-A of the Act. The Assessee is having income mainly from the interest on fixed deposits and donations. During the course of assessment proceedings, it was noticed by the Assessing Officer that the Assessee has advanced huge amount to M/s Punj Lloyd Limited and as such he raised a query as to why Section 13(1)(c) read with Section 13(2)(a) of the Act be not invoked as no adequate interest has been charged on such amount, though that company was substantially interested in the trust. From the bank statements, the Assessing Officer found that as on 31st March, 1997 a sum of Rs.75 lacs was outstanding with M/s Punj Lloyd Ltd. In response to a query, it was stated that the Assessee paid this amount to M/s Punj Lloyd Ltd. as interest money for purchase of land for a school project to be set up at Ponta Sahib (near Dehradun), and that interest charged by the bank from the Trust was fully reimbursed by M/s Punj Lloyd Ltd. to the Trust and hence there was no loss to the Trust. It was also noticed by the Assessing Officer that the Trust has not taken adequate security to which the Assessee stated that security was provided in the form of equitable mortgage of commercial space owned by M/s Punj Lloyd Ltd. The Assessing Officer found that the story of payments being made for purchase of land for a school was nothing but an after thought, specially as there were no agreements with the vendors of land or corresponding bank transactions and no proof of the same was furnished. Since M/s Punj Lloyd Ltd. made contribution in excess of Rs.50,000/- to the trust, and was an interested party, the Assessing Officer denied exemption under Sections 11 and 12 of the Act.
(3.) The Assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who confirmed the denial of the exemption and dismissed the appeal filed by the Assessee.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.