Director Of Income-Tax ... vs Pariwar Sewa Sansthan
2001 Latest Caselaw 796 Del

JUDGMENT

1. Heard. This is an appeal under Section 260A of the Income-tax Act, 1961 (in short "the Act"). The appeal relates to the assessment years 1995-96 and 1996-97. The following question has been posed :

"Whether, on the facts and in the circumstances of the case and in law, the Tribunal was correct in allowing the benefit under Section 11 of the Income-tax Act, 1961, without appreciating that the assessed had violated the provisions of Section 13(1)(c) and 13(1)(d) of the Act ?"

2. We find that the Commissioner of Income-tax (Appeals) (in short "the CIT(A)"), decided in favor of the assessed on all aspects in the Revenue's appeal for the assessment year 1995-96. The Tribunal affirmed the conclusions of the Commissioner of Income-tax (Appeals) with the following observations:

"We have considered the rival submissions and the materials on the file. We are of the view that on the facts and in the circumstances of the case and for the detailed reasons given in the impugned appellate order, the learned Commissioner of Income-tax (Appeals) was justified in holding that the assessed was entitled to exemption under Section 11 of the Act for the assessment year 1995-96. As noted above, the assessed is a registered society under Section 12A(a) of the Act. It is providing services in the field of family planning, family welfare, birth control, etc. It was in existence since 1981 and it was allowed exemption under Section 11 of the Act in earlier years. The reasons given for refusing exemption under Section 11 by the Assessing Officer for the assessment year in question have been given hereinbefore. These reasons were payment of salary, rent, etc., to Mrs. Sudha Tewari, chief executive officer and project co-ordinator, rent of the house to Mr. G. K. Tewari, husband of Mrs. Sudha Tewari, loan to Tyagi Foundation and expenditure incurred on conferences and clinics. The learned Commissioner of Income-tax (Appeals) has discussed all the items in his impugned appellate order at length and held that salary, rent, etc., paid to Mrs. Sudha Tewari was reasonable and for valuable services rendered by her as chief executive officer and project coordinator and that the rent of the house paid to Mr. G. K. Tewari was also reasonable considering the location of the house in Green Park, New Delhi. No material has been brought before us to rebut the factual finding of the learned Commissioner of Income-tax (Appeals). On consideration of the mate-

rials on the file, the past record of the society, the year to year services rendered by Mrs. Sudha Tewari from its inception, we are satisfied that the salary, rent, etc., paid to her was reasonable and was not excessive and the learned Commissioner of Income-tax (Appeals) was justified in rejecting these as not valid grounds for rejecting the claim of exemption under Section 11 of the Act.

Again, we have carefully gone through the orders of the Assessing Officer and the learned Commissioner of Income-tax (Appeals) for the assessment years 1995-96 and 1996-97 on the issue of loan to Tyagi Foundation and considered the submissions and contentions made by the learned Authorised Representatives of both the sides. We are of the view that the learned Commissioner of Income-tax (Appeals) was justified in holding that there was no violation of the provisions of Section 13(5) in giving the loan to Tyagi Foundation. The learned Commissioner of Income-tax (Appeals) found that Tyagi Foundation was a separate registered society engaged in similar charitable activities and the allegation of the Assessing Officer of this society being controlled by Mrs. Sudha Tewari and others was wrong and irrelevant. No material was brought to show that Tyagi Foundation was not a genuine registered society engaged in similar charitable activities. The loan given by the assessed to Tyagi Foundation was out of the object of the assessed-society to promote its charitable activities. It was not a case that Tyagi Foundation had misused the amount of loan and utilised it for non-charitable purposes. No material was placed to show that the purchase of the property and utilisation of the property by Tyagi Foundation was for purposes other than its charitable purposes. Moreover, the loan given was fully secured by mortgage deed and in fact in the subsequent year on non-payment of the loan the property was reverted to the assessed-society. No material was placed to show that there was any non-charitable activities connected with the property in question. On the facts and in the circumstances of the case, therefore, we hold that the learned Commissioner of Income-tax (Appeals) was justified in rejecting this ground as well as for the rejection of the claim of exemption under Section 11 of the Act by the Assessing Officer.

As regards the expenses on conferences and clinics we are of the view that the learned Commissioner of Income-tax (Appeals) had correctly appreciated the facts and circumstances of the case and had rightly held that the expenditure incurred on the same was part of the charitable activities and the Assessing Officer was wrong in his view that the expenditure was incurred on non-charitable activities. The claim of depreciation allowed by the learned Commissioner of Income-tax (Appeals) for the reasons given in his impugned appellate order was also proper and justified."

3. For the assessment year 1996-97, the assessed primarily challenged the question as to the reasonableness of salary. That plea was accepted in view of

the conclusions for 1995-96. As the extracted portion of the order passed by the Tribunal goes to show the conclusions are essentially factual giving rise to no question of law. Accordingly, we do not entertain this appeal. Dismissed.