Itta/500/2006 Of M/S. National Academy Of Construction v. Assistant Director Of Income Tax(Exemptions)-1, Hyderabad

lil fHE HIGH COURT FOR THE STATE OF TELANGi\NAAT HYDERABAD THURSDAY,THE THIRTY FIRST DAY OF TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI [JUSTICE P.SAM KOSHY]ANDTHE HONOURABLE SRI JUSTICE I,T.T A. Nrf. 500 0F 2006r.T.T.A. NO. 555 556 [0F ][2013 ][l.T.][T.A. ][Nos.2][ 143 ][and]293 of 2O14 I,T.T,A.NO. 500 0F 2006 1lncrnr.iaxTribunalAppealUrrderSection260AoiLllt:llt..'rlr.'TaxAct.againstt,re order ol tht [Income ]['l ][ax Appellate ][Tribunal' ][Hyderabad ][Berrch ][' ][i! ]['' ][H1'derabad ][in ][['l ][A]ljtr. 0,57 ' 1..l,:.abad [, ][2005 ][. ][lor ][assessment ][Year ][200l-2001 ]['lat.'' ]['()-06-2006 ][prelened]V ' I{:-derabad [in]irsarrrst th0 [r)t,.:.t t)f tlic ][Clon.rmissioner ][of ][lncome ][Tar ][( ][Appcals ] lrppealNoltirrr'\l)lT(t'.)-llCIT(A)-IV/05-06dated08-()9-20()5prcl'erredagainstthe(.rr k'r t,l'tlt ['. ]r. I)ilcclcr ol-Income [Tax (E) ]' [tlydetabaC ][datcd ][i ][l ][llr':l{ ][05 ][I'AN/(ilR ][No'],ir, l\l [\-55]'.jr.,\07(l [t€.tween: lril/S. l,latir,nai [ll'cademy ][Of ][Constructio ][n' ][lzzal Nagar.Viilaoe ][Lint ][ampally ][Mandal']tt R.Distrrct, Hvderabad, [*p]f,;lil";H"idlC"'i"iiitt'taj ][cJntnetd ]' [c ][i ][chari' ][ased]€;4 years. S/o [Sri ][C. ][Padmanabhan] ...APPELLANT Al lE Assistant [Llirectcr Of lncome ][Tax(Exemptions)-1 ][' ][Hyderabad] ..RESPONDENT Oc,unsiel [f ][c,r ][the ][Appellant: ] [S' ] (lounsel for the Respondent: [Ms' ][K' ] r.T.T.A.NO. sss oF 2013 ([ncr,nr'iax Tribunal Appeal Under Section 260 - A ot ihe Irrcr,nre'fax Act. againstLle order ot'the Income Tax Appellate I'ribunal, Hyderabad Bench ' A '. Hyderabad in ITA|.lo- 1035 Hl derabad I 2008 . for assessment Year 2005-200(r Jated I l-09-2009prrlclrcd al-air si the Older of the Commissioner of lncome [a\ ( Appeals ) - IV ,Ilydcrahad dated 30-05-2008 in Appeal No. 0l2l/ADIT (E) -t / C.l.l . ( A) - IV I 2007-081: [rc ][fi:rrr:d ][arr:rin-t ][thcOrdero{ ][the ][Deputy ][Director ][of ][Income'[ar ][(l ][i l. ][Hyderabad dated]i7. 1l-100i l'.\'i/CtR No. N- 055 Between: llis l\ati:r:a Acaderny Of Construction, NAC Campus [Kondapur ][Post,]Oyberabad I-iyderabad.' rep., by its Director General [Sri ][Pradip Kumar Agarual']Sio.Late Om irakash , agdd 64'years, R/o. Plot No.6, [Road ][No ][10. ][Noor ][Nagar,][]arr;ara H lis. Hyderabad - 500034. ...APPELLANT Irhl[) Deputy Drrecior Of lncome Tax(Exemptions)-1 , [Ayakar ][Bhavan ][Basheer ][Bagh,]llyderabarl ...RESPONOENT LT.T.A.M.P.No[. ]829 [of ][2013 ][:] Petiticn Under [Section ][151 ][of ] [praying ][for ][the ][aforesaid ][reasons]s.tated in tne [accompanying affidavit ][filed therewith' the ][Hon'ble Court ][may ][be]pleased to [pass ][an ][order staying all ][further ][proceedings pursuant ][to ][the order]crf the assessment [dated ][27 -11-2OO7] Oc,unsel [lc,r ][the ][Appellant: ] [S' ] Oounsel [lor ][the ][Respondent: ][Ms' ][K' ] LT.'l .L.NCl. 5sri OF 20't3 (lnconie IaxTribunal Appeal Under Section 260 - A of the Irrconre'I'ax Act, againstthe ordcr o:'tl'c !ncorre far Appcllate Tribunal. Hldcrabad Bench ' .4. '. Hyderabad in ITA|Jo. 192 ilrdcrabad I 2009 , for assessment Y ear 2006-2007 da(ed 10-09-2009pref'erred against lhe Order of the Commissioner of Income l'ax ( Appeals ) - IV ,Flydt:rabad rl:Lr,.ri I5-ll-2008 in Appeal No. 0127/ADIT (E) -I / [('.i ]i'. ( A) - tV 12007-08Lrrelbncd [against ][the ][Order ][ofthe ][Deputy ][Dircctor ][of ][Income ][Tax ][(E) ] , [Hyderabad ][dated]27-08-200E P.\'iiGIR No. AAAAB0749MRetween: Irl/s. National Academy Of Construction, NAC Campus. Kondapur Post,Cyberabari 1-yderabad. rep., by its Director General Sri Praclip Kumar Agarwal,S/o.Late [()n ][,r.akash ]. aged 64 years, R/o. Plot No.6, Road No. 10. Noor Nagar,E\aniara l1 l,s l-',vderabad - 500034. ...APPELLANT I\ND [)e pr.rfy [p ][ier.lrc, ]Of In':oms lrr,aremptions)-1, Ayakar Bhavan l3asheer Bagh,llyderaoar: Irl/s. National Academy Of Construction, NAC Campus. Kondapur Post,Cyberabari 1-yderabad. rep., by its Director General Sri Praclip Kumar Agarwal,S/o.Late [()n ][,r.akash ]. aged 64 years, R/o. Plot No.6, Road No. 10. Noor Nagar,E\aniara l1 l,s l-',vderabad - 500034. ...APPELLANT I\ND [)e pr.rfy [p ][ier.lrc, ]Of In':oms lrr,aremptions)-1, Ayakar Bhavan l3asheer Bagh,llyderaoar: ...RESPONDENT 1.1'.T.P,.M.!.N:. 830 of 2013 : Petition Under Section 151 of CPC praying for the aforesaid reasonsstated in the accompanying affidavit filed therewith, the Hon'ble Court may begrk>ased t: pas;s an order staying all further proceedings pursuant to the ordercrf the ass.essn-rent dated 27 -08-2008. Counsel for the Appellant: SRI S. RAVI Oc,uns;el lr-.r L rrr Respondent: Ms. K. MAMATA l.T.T'.+. \O. [2 ]OF [2014] (rnconrc t'ax Tribunal Appeat Under Section260 - H oftN\tfttntgTtx A.c\. ,or',""ttrc ordcr oi'tf,r' Irtcomc lax Appellate lribunal. [{ydcrabad Bench'B'. Hyderabad in ITANo. 764 [i ]Llyderabad I 2012 , lor asscssment Year 2007-2008 dated [0E-03-2013]pref'erred againsl the Order ot'the Commissioner of Income Tax [( ][Appcals ]) [Guntur ][dated]27 -l'|-',t-Ol I irr : LA No. 0l-16i08-09 [prelerred against tlte Order ][of ][tlre ][Deputy ][Director ][of]Income Tax (E) [. ]I , I{yderabad dated [22-12-2008 ] [No. ][ ] Eletween: M/s- National Academy Of Construction, [Camp-us, ][K-ondapur ][Post,]CyneraUaO Hyderabad.'rep., [by its ][Director ][General ][SJi ][Pradip Kumar ][Agarwal']S;iofaie Om F.akash , [agdd ][Oa-years, ][Ryo. ][PIot ][No.6, ][Road ][No 10 ][Noor ][Nagar,]Elanjara H I;s, [-i,rderabad ]- [500034.] ...APPELLANT/ ApPellant AND l\sst- Directcr Of lncorne [Tax(Exemptions), Ayakar Bhavan, Basheer ][Bagh,]llyderabatt ,..RESPONDENT l.A. NO. 1 0F 2014 Petrticrr under section [151 ][of ][cPC ][praying ][for ][the ][aforesaid ][reasons]stated in the accompanying [affidavit filed ][therewith, ][the ][Hon'ble ][court ][may ][be]pleased to pass an order staying [all ][further ][proceedings pursuant ][to ][the order]crf the ass.ess nrent dated [22-'12'2008--] Counsel [f ]or the Appellant: [S. ] Counsel for tne Respondent: [Ms. ][K. ] I.T.T.A. NO. 143 [()F ]2014 (lnconre ['[ax ]l'ribunal Appeal tJnder Scction 2(i0 A oi thc Inconre l-ax Act, againsttire order oi'the Income ['fax ]Appcllate Tribunal, Hydcrabad Bench ' A ', Hyderabad in ITANo. 627 / tlydcrabad, / 2007 , for assessmenr Year 2004-200,5 dated 1l-09-2009prc{brred z,r.airrst the Order ol thc Conrntissioner of [ncoure lirx ( Appeals ) - IVHyderabad dated 30-03-2007 in Appeal No. 0548/DDIT (E) - I / C.l l' ( A) -lV I 2006-07 preferrcd aqainst the Order oflhe Deputl, Director ofIncolnc lar [(E) ]. Hyderabad dated27 12-2006 ,'A\iGlR No. AAAAI]0794M Between: ll/s. Naticna Acaderny Of Construction, NAC Canrpus. Kondapur Post,Oyberabad. Fiyderabad. rep., by its Director General Sri Pradip Kumar Agarwal,S/o.Late Om Prakash , aged 64 years, R/o. Plot No.6, Road No. 10. Noor Nagar,Banjara Hilis, Hyderabad - 500034. ...APPELLANTAND l\sst. Director [(Jf ]lncome Tax(Exemptions) - I , Ayakar Bhavan, Basheer Bagh,..RESPONDENTliyderabad |.T.T.A.M P. r'ro. 129 0F 2014 Petition Under Section 151 of CPC praying for the aforesaid reasonsstated in the accompanying affidavit filed therewith, the Hon'ble Court may beFleased [to ][pass ][an ][order staying all ][further ][proceedings pursuant ][to ][the order]of the assessment dated 27 -12-2006. Counsel for the Appellant: SRI S. RAVI Oc,unsiel tor th o Respondent: Ms. K. MAMATA L1'. 1'.ir. 'iO. 293 OF 2014 l\sst. Director [(Jf ]lncome Tax(Exemptions) - I , Ayakar Bhavan, Basheer Bagh,..RESPONDENTliyderabad |.T.T.A.M P. r'ro. 129 0F 2014 Petition Under Section 151 of CPC praying for the aforesaid reasonsstated in the accompanying affidavit filed therewith, the Hon'ble Court may beFleased [to ][pass ][an ][order staying all ][further ][proceedings pursuant ][to ][the order]of the assessment dated 27 -12-2006. Counsel for the Appellant: SRI S. RAVI Oc,unsiel tor th o Respondent: Ms. K. MAMATA L1'. 1'.ir. 'iO. 293 OF 2014 (lncome l'ax Tribunal Appeal Under Scction 2(r0 - A of thc lncorne Tax Act, againstthe order of the Income ['l'ax ]Appellate Tribunal, Hyderabad Bench [' ]A ['. ]l{yderabad in ITAl'{o. 800 ,' ilyderabad, I 2006 , lor asscssment Year 200J-2(X)-1 dated I t-09-2009preferred against the Order of the Commissioner of lncome Tax ( Appeals ) - IVIlyderabad daterl 14-07-2006 in Appeal No. 0020/ADtI(El)-L C'.I.'i. ( A)-IV/2006-C'7 prefered against the Order o[ the Asst. Dircctor of Inconre 1 ax [( ]U) - I . Hyderabaddated 28-02-2006 PAN/GIR No. AAAA0794M/ N-055 .EBetween: M/s. National Academy Of Construction, NAC Campus, Kondapur Post,Cyberabarj, Hyderabad. rep., by its Director General Sri Pradip Kumar Agarwal,[ianjara S/o.Late Hrlis, Om Prakash Hyderabad , aged 64 years, R/o. Plot - 500034. No. 6, RoaC ...Ai']PE No -LANT10. Noor Nagar,I\ND lisst. Director Of lncome Tax(Exemptions) - | , Ayakar Bhavan, Basheer [Bagh,]..RESPONDENTllyderabad ..RESPONDENTllyderabad |.T.T.A.M.P. NO. 305 0F 2014 Petition Under Section ['151 ]of CPC [praying ]for the aforesaid reasonss,urted in the accompanying affidavit filed therewith, the Horr'bie Court may bepleased to pass an order staying all further proceedings pursuant to the orderof the assessment dated 28-02-2006. Oc,unsel for the Appellant: SRI S. RAVI Counsel forthe Respondent: Ms. K. MAMATA 'l tre Court delivered the following: Common Judgment HONOURABLE SRI JUSTICE P. SAM KOSITYANDHON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTYI.T.T.A.No.5OO of 2O06 I.T.T.A.No.555 556 of 2013I.T.T.A.Nos.2 143 and 293 of2Ol4 COMMON JUDGMENT i (per Hon'ble Srt Justice P.Sam Koshg) We have heard Sri S.Ravi, learned counsel for the appellant andMs.K.Mamata, learned standing counsel for the respondent.Ms.K.Mamata, learned standing counsel for the respondent. 1. Since all these appeals are of the same assessee and thegrounds of appeal being also same, the question of law decided alsobeing the same, all these connected matters are taken andup decided by this common order. For convenience, I.T.T.A.No.5O0 of2OO6 is taken up as the lead case so far as the facts are concerned.2. The instant appeal under Section 260-A of the Income TaxAct, 1961 (for short, 'the ActJ is frled assailing the order passed bythe Income Tax Appellate Tribunal, Hyderabad Bench (B) (for short,'the Tribunal') in I.T.A.T.No. 1067 IHYD /2OOS decided on30.06.2006 for the Assessment Year 2OO2-2OO3. 3. Vide the impugned order, the Tribunal disrnissed the appealof the appellant-assessee aflirming the order passed by theCommissioner of Income Tax (Appeals) - IV, Hyderabad, datedO7.O4.2O05, who in turn had affirmed the order passed by theAssessrrrent Offrcer dated 14.03.2005 after cornpletion of theassessrnent under Section 143(3) determining income ofRs.7,16,56,7OOl-. itzii pSK,.i & LNA,JIT'IA_500 2006 and batch 4.The appellants are primarily aggrieved of the refusdl ofexemption claimed under Section 11 of the Income Tax Act. 5. The appeal was admitted ort 22.Ct9.2O14 on tl-e question oflaw, [.riz., ]" uhether the exemption clain,,_ed. bg the appeiiant urtderSection 1 1 of the Income Tax Act i_s acceptable?" 3. Vide the impugned order, the Tribunal disrnissed the appealof the appellant-assessee aflirming the order passed by theCommissioner of Income Tax (Appeals) - IV, Hyderabad, datedO7.O4.2O05, who in turn had affirmed the order passed by theAssessrrrent Offrcer dated 14.03.2005 after cornpletion of theassessrnent under Section 143(3) determining income ofRs.7,16,56,7OOl-. itzii pSK,.i & LNA,JIT'IA_500 2006 and batch 4.The appellants are primarily aggrieved of the refusdl ofexemption claimed under Section 11 of the Income Tax Act. 5. The appeal was admitted ort 22.Ct9.2O14 on tl-e question oflaw, [.riz., ]" uhether the exemption clain,,_ed. bg the appeiiant urtderSection 1 1 of the Income Tax Act i_s acceptable?" 6. Hou.ever, during the course of hr:aring of the appeal frnally,the learned Senior Counsel appearir:,g for the appellants alsostressed hard for considering the question of law, viz., " ttLtether onfocts [and in ][the ][ciratmstances ]of the ca:;e, the word. [,fund_' ]in Section13(1)L, of the lncone Tax Act, j961 can applA onIA to seruice incomeand. not to 'corpus' of the trust?,,. He further stressed upon thequcsiloil ^,,^-.;^_ oi [^a ][r^--. ]iaii as iu [_]-wirElher fhe Tritrunal shoulci have helci iirat,in any errent ancl without prejudice to the clairn of the appellantsthe denia! cf exemption on the u'hole of the receipt -itu-as illcgal atleast the amount to be taxed should have been conflned to theamount invested by the appellants in I-[TEX". 7. The facts relevant for decision on the present appeal ane thatthe appellants herein is a [,Society, ]unrler the Andhra pradesh (nowTelangana areal Public Societies Registration Act. The sarne wasregistered under Sectiot L2-A, and arso had the exemption underSection 80G of the Income Tax Act. ::3:: PSK,J & I,NA,JITTA_500_2006 and batch 7. The facts relevant for decision on the present appeal ane thatthe appellants herein is a [,Society, ]unrler the Andhra pradesh (nowTelangana areal Public Societies Registration Act. The sarne wasregistered under Sectiot L2-A, and arso had the exemption underSection 80G of the Income Tax Act. ::3:: PSK,J & I,NA,JITTA_500_2006 and batch 8The substantial object of the above Society was, (i) toestablish and form a National Academy for Construction (N.A.C.);(ii) for the service and benefit of the construction and alliedindustries by creating awareness, imparting training for increasingits relevance to the national level and also ensuring quality to the(ii) for the service and benefit of the construction and alliedindustries by creating awareness, imparting training for increasingits relevance to the national level and also ensuring quality to theinternational standards. The mission statement of the Society alsowas on similar terms which were primarily to develop thewas on similar terms which were primarily to develop thetechnological advancement in the competitive construction industrywhich serves India's economical needs. To ensure quality in workwhich serves India's economical needs. To ensure quality in workadherence, to ensure having long-lasting aesthetical construction.To modernize construction with methodologies, materials andtechnologies. To encourage their use to upgrade the knowledge andskills of construction engineers, contractors, managers, supervisorand workers and inculcate professionalism, etc. VariousDepartments of the State Government were admitted as patronensure having long-lasting aesthetical construction.To modernize construction with methodologies, materials andtechnologies. To encourage their use to upgrade the knowledge andskills of construction engineers, contractors, managers, supervisorand workers and inculcate professionalism, etc. VariousDepartments of the State Government were admitted as patronmembers of the appellant society. patron members were requiredto contribute t 3O lakhs each as a One-Time Membership.to contribute t 3O lakhs each as a One-Time Membership.However, the only exception was two private limited companies, i.e.,Larsen & Toubro Limited and Nagarjuna Construction CompanyLimited, who were the only two private players who were admittedas patron members. The erstwhile Government of Andhra pradeshLarsen & Toubro Limited and Nagarjuna Construction CompanyLimited, who were the only two private players who were admittedas patron members. The erstwhile Government of Andhra pradeshhad also allotted land of extent 167.30 acres to the appellant_N.A.C. The Government of Andhra pradesh issued a GovernmentN.A.C. The Government of Andhra pradesh issued a GovernmentOrder, dated 19.05. 1998 and 2O.06.1998 and through the said PSK.J & LNA.JITTA 500 2006 and batch G.O., the Covernment decided the sc,urce of revenue [for ][the]appellant-N.A.C C)ther than the membership fees it [was ][also]ordered that O.25% of the contract vaiue has to [be ][deducted ][from]all the contractor's bill at the time of raising of bills [anC its]remittance. In addition, certain other State Government [bodies,]viz., Urban Development Authoritv, tht: Municipal Corporation [of]Hyderabad, Cyberabad Development Authority, the [Department ][of]Tourism, u,ere also invited to be participants in this [project. ][It ][is]note\,',orthy to mention here that th,: hnancial [participation ][of]Larsen & Toubrc Infositv was to the [,3xtent ]of t.8. i2 [crores, ][i.e.,]around I i% of the equity share. PSK.J & LNA.JITTA 500 2006 and batch G.O., the Covernment decided the sc,urce of revenue [for ][the]appellant-N.A.C C)ther than the membership fees it [was ][also]ordered that O.25% of the contract vaiue has to [be ][deducted ][from]all the contractor's bill at the time of raising of bills [anC its]remittance. In addition, certain other State Government [bodies,]viz., Urban Development Authoritv, tht: Municipal Corporation [of]Hyderabad, Cyberabad Development Authority, the [Department ][of]Tourism, u,ere also invited to be participants in this [project. ][It ][is]note\,',orthy to mention here that th,: hnancial [participation ][of]Larsen & Toubrc Infositv was to the [,3xtent ]of t.8. i2 [crores, ][i.e.,]around I i% of the equity share. S. The appellants in between incorporated a [joint ][stock]company under the Cornpanies Act, 1956. The said company [was]known as Hvderabad International Ilxpositions Limited [(HITEX).]The said compary was incorporateci with an intention of [holding]exhibitions and also to promote object and mission [of ][the]appellant's society. The appellants h.ave been frling their [returns]periodicallv claiming for exemption on its net service from [income]tax for the Assessment Y ear 2OO2-2O03, and [they have ][fiied ][returns]claiming exemption of its serv-ice amounting to [Rs.7.16 ][crores.] 1O. During the course of assessment, the Assessing [Oflicer found]that the appellant-N.A.C. [has ][made ][em ][investment of ][Rs- ][1.50 ][crores]in the equil.y of HITEX. This, [accor-ding ][to ][the ][Assessing ][Ofhcer,] PSK,J & LNA,JITTA 500 2006 and batchITTA 500 2006 and batch was in violation of Section 1 1(5) of the Act. Accordingly, theAssessing Officer had refused to grant exemption under Section 1 Ito the appellants and passed the Assessment Order on 14.03.2O05.On account of the fact that the appellant company had made aniavestment of Rs. 1.5 crores into the joint stock company towardseguity, the assessing officer found the same to be in violation ofSection I 1 (5) of the Act. I 1. Consequently, the assessing officer taxed the entire surplus of Rs.7.16 crores for the year under consideration. The exemptionsotrght for under Section 11 by the appellant company stoodrejected. It is this order which was subjected to challenge before theCornmissioner of Income Tax (Appea-ls) unsuccessfully by theappellants-N.A.C. The appellants were further unsuccessful in theirfurther attempt before the Tribunal while challenging the orderPassed by the Commissioner of Income Tax (Appea-ls) as well. 12 - According to the appellant, the Tribunat in the course of cot-rfirming the order passed by the CIT Appeals as also theassessing officer's order, reached to a pewerse finding which wasot[s*'i"" not sustainable. According to the appellant, the finding ofIT\T is also perverse for the reason that, all that was required to beensured assessing officer's order, reached to a pewerse finding which wasot[s*'i"" not sustainable. According to the appellant, the finding ofIT\T is also perverse for the reason that, all that was required to beensured was whether the income of the society is utilised only forthe objects for which the society stands established. As analte the objects for which the society stands established. As analte rnative to the argument, it was also contended *y-the appellant PSK.J & LNA..I ITTA 500 2006 and batch that even if the finding of the Tribun.al u,as to be accepted, theappellant should have been held liable 1:o pay tax only to the extentof the quantum that the riepartment h€,d expended its contributiontow'ards lv{/s. HITEX. In other wor,ls, according to the appellante..,en if the versicn of ITAT is found to be justi{iable, the incomewhich can be held to be not entitled for exemption would be only tothe extent of the investment that the appellant society hadcontributed in the company M/s. HITEX. 13. Learned Senior Counsel for the appellant heavily relied upon PSK.J & LNA..I ITTA 500 2006 and batch that even if the finding of the Tribun.al u,as to be accepted, theappellant should have been held liable 1:o pay tax only to the extentof the quantum that the riepartment h€,d expended its contributiontow'ards lv{/s. HITEX. In other wor,ls, according to the appellante..,en if the versicn of ITAT is found to be justi{iable, the incomewhich can be held to be not entitled for exemption would be only tothe extent of the investment that the appellant society hadcontributed in the company M/s. HITEX. 13. Learned Senior Counsel for the appellant heavily relied upon the Government order dated l9.O:). lggg which was furthermodiheci vide Governrnent order rlated 20.06.199g. Whilecanvassing his case, so iar as tl.e funds generated by theappellant's establishment are concerlred according to the learnedSenior Counsel, since the funds were paid voluntarily by themembers and that the entire contrit,ution made by the membersbecame part of the Corpus. Further whatever contributions thathave been made by the appellant to M/s. HITBX was from thea-foresaid corpus and was not from the funds of the company.Therefore the appeliant could not have been denied exemptionunder Section I 1 , as sought for by the appellant. That thecontribution made from the corpus to M/s. HITEX cannot be inviolation of Section 1 1 (5) of the Act. PSK,J & LNA,JITTA_500 2006 and batclrITTA_500 2006 and batclr 14It was the further contention of the learned counsel for theappellant that the appellants were entitled to accumulat e 2}o/o oftheir income which in the instant case comes to around Rs.2.2their income which in the instant case comes to around Rs.2.2crores and it is only an amount of Rs. 1.5 crores which has beeninvested by the appellant. Hence, the provision of Section I 1 (5) ofthe Income Tax Act would not had been attracted in the instantinvested by the appellant. Hence, the provision of Section I 1 (5) ofthe Income Tax Act would not had been attracted in the instantcase. It was also the contention of the learned counsel for theaPpellant that even otherwise, the amount of Rs. 1.5 crores spent bythe appellant towards HITEX was the amount collected by way ofmembership fees and which again is a capital receipt and thereforeboth, section 11 (5) and Section 13 (l) (d) of the Act, would not beapplicable.aPpellant that even otherwise, the amount of Rs. 1.5 crores spent bythe appellant towards HITEX was the amount collected by way ofmembership fees and which again is a capital receipt and thereforeboth, section 11 (5) and Section 13 (l) (d) of the Act, would not beapplicable. 15- Learned counsel appearing for the department on the otherharrd justifying the order of the ITAT, contended that since theorder of the assessing ofhcer has already been subjected to scrutinyand challenge, there is hardly any scope left for the High Court inthe instaxt case, particularly, in exercise of its powers underSecli6n 260 A ol the Act. It was the contention of the learnedcotlrrsel for the Revenue that since there is already a concurrentfinding of fact, no substantial question of la-w as such remains to beadjr-rdicated upon through the present appeal. 16. According to the learned counsel for the Revenue, the verypurpose of constituting the company - M/s. HITDX was with an PSK,.I & I,NA,JITI'A-500-2006 and batch commercial intention. It u,as the content,ion of the department thatthe management of HITEX is ear:ning huge arnounts of revenuefrom the hundred acres of land which HITEX has received from thefrom the hundred acres of land which HITEX has received from theappellant company. it was iurther r:ontention of the learnedcounsel for the Revenue that the appellant company have alreadyparted hundred acres of their land, (which they had received fromthe Government) to M/ s. HITEX, which itself establishes the factthat they have deviated frorn the object and mission of the society.that they have deviated frorn the object and mission of the society. 16. According to the learned counsel for the Revenue, the verypurpose of constituting the company - M/s. HITDX was with an PSK,.I & I,NA,JITI'A-500-2006 and batch commercial intention. It u,as the content,ion of the department thatthe management of HITEX is ear:ning huge arnounts of revenuefrom the hundred acres of land which HITEX has received from thefrom the hundred acres of land which HITEX has received from theappellant company. it was iurther r:ontention of the learnedcounsel for the Revenue that the appellant company have alreadyparted hundred acres of their land, (which they had received fromthe Government) to M/ s. HITEX, which itself establishes the factthat they have deviated frorn the object and mission of the society.that they have deviated frorn the object and mission of the society. 17. Further, in turn HITEX has gone cc,mmercial by collecting hugeamounts of rents by way of regularly organizing exhibitions over theamounts of rents by way of regularly organizing exhibitions over theland of the appellant u,hich stood ;rllotted to M/s. HITEX byappellant. Learned counsei lor the Revr:nue. further contended thatappellant. Learned counsei lor the Revr:nue. further contended thatsince there was a deviation from the object and mission by thesociety, the assessing officer has righrly refused the exemptiorr asclaimed under Section I 1 of the Act.claimed under Section I 1 of the Act. 18. Having heard the contentions ptrt forth on either side and on perusal or records, it would be relevant at this juncture to takenote of the admitted factual matrix of the case. Admittedly, thenote of the admitted factual matrix of the case. Admittedly, theappellant is et society e stablished with a specific purpose, ot2jectand mission. According to the appell;rnt, it was not established toand mission. According to the appell;rnt, it was not established toearn profits, but was u,ith an intention of promoting the quality ofconstruction and bringing international standards. The said ot2jectand mission could have been ac nieved only by undertaacingconstruction and bringing international standards. The said ot2jectand mission could have been ac nieved only by undertaacing PSK,J & LNA,JITTA 500 2006 and batchITTA 500 2006 and batch activities for the promotion of education, training, research andimparting professionalism and skill formation at a levels ofimparting professionalism and skill formation at a levels ofconstruction. It was with an intention of exercising and expandingthe object and mission that the society constituted a joint venture _M/s. HITEX with an intention of achieving the mission and objectof the societ5z in a better manner as is claimed by the appellant.M/s. HITEX with an intention of achieving the mission and objectof the societ5z in a better manner as is claimed by the appellant. 19. However, in contravention to the aforesaid mission andobjects, what is apparently visible from tJle pleadings of theappellants is that, the Government initially had all0tted Rs. 167crores of land to the appellants in achieving the goal. However, theappellants in addition to the establishment of a joint venture _ M/s.HITEX, also parted hundred acres of their land to M/s. HITEX. Thenewly established joint venture i.e. M/s. HITEX started utilizing theland for purpose of holding exhibitions of all natures and in theprocess, has been earning huge amounts in the form of rental onthe same. It is also learnt that HITEX has also used the said landfor commercial purpose by allotting the land to other commercialestablishments. Thus, earning profits is in clear violation of thepurpose, mission and object of the society. It was this aspect,which was dl. ly considered by the assessing olficer at the firstinstance and by the CIT Appeals later on, and the two orders werefurther also aJfirmed by the ITAT. Thus, there is a concurrent :: l0::PSK.J & LNA,JIT.fA 500 2006 [and batch] hnciing of the two appeilant forums based on factual [matrix]available on record and most of which beLng undisputed. :: l0::PSK.J & LNA,JIT.fA 500 2006 [and batch] hnciing of the two appeilant forums based on factual [matrix]available on record and most of which beLng undisputed. 20. As regards the alternative prayer of the apoellant [of]at least refusal of exemption uncier :iection 11 of the [Act ][be]restrictbd to the extent of investment made by the appellant [in ][the]joint venture unit i.e. Mls. HITEX, would not be acceptable for thereason that with the amount of investrnent already carried [out ][by]the appellant in M/s. HITEX, coupl:d with the fact that [the]appellant have parted hundred acres cl- land allotted to them [to ][be]used by the said joint venture - M/s. FIITEX lor gaining rentai [and]other income. The said [joint ]ventule has beeo earning [huge]anounts of income from the said land by giving it on rent for [many]other purposes, in addition to, holding of exhibitions, etc. [The]income of which, or the profrt earned by the [joint ]venture also [being]shared with the appellants to some extent also rvould lead [to ][the]contravention of the object, purpose and mission of the society [with]which, it was established. 21 . The appellant contended that the amounts lying in the corpus was from the voluntar5r :ontributions made by themembers. Therefore, the investmont towards the equity ofM/s.HITEX by the assessee shouid n,tt be treated as al investmentor a deposit within the meaning 13 (f ) (d). It is only channelizing ofits funds and that too from the corpus which has- been received ::l l:: exclusively from the membership fees collected [from ][its ][members']The said contention of the appellant [cannot ][be ][accepted ][for ][the]suttple reason that the Government [Instructions/ ][Government]orders on the basis of which the appellalt [company was ][receiving]fu\ds were no longer exists as the same [were ][struck ][dovrn ][by ][this]Court. 22. It is relevant to mention that [Section ][13(1Xd) ][of ][ttre ][Act]Prohibits exemption [of ][any sum ][invested ][or ][deposited ][otherwise]than anY mode specified under [Section ][1 ][1(5)of ][the Act' ][The]Andhra [Pradesh]aPpellant society has been registered [under]Act and also [has](Telangana Area) Public Societies [Registration]e><emption under Section 8OG of the [Income Tax ][Act ][as ][well as' In]view of the investment of Rs.1'5 crore [in ] [Society' ][which ][is]established with commercial intend, [the ][Appellant-Society ][clearly]deviated from its objects, for [whickr ][tkre ][society ][has ][been]established. The appellant-Society [by ][acting ][contrary to ][its ][objects]cQrrnot claim exemption under Section [l1 ][of ][the ][Act' ][The ][deviation']cQntravention, disentitles the [society ][from ][claiming ][the]b enefrt/ exemption under Section [1 ][1 ][of ][the ][Act' ][tt ][is ][pertinent ][to]rote that Section 13 (1)(d) as [amended ][by ][the ][Finance ][Act' ][1983']P riovides ttrat [the ][income ][of ][any ][charitable or ][religious ][trust ][or]irrstitution will not be entitled to exemption [under ][Sections ][11 ][and]I 2, if certain conditions stipulated [therein ][are ][not ][complied ][with ]['] ::12:: PSK.J & Li.{A..1ITI'A 500 2006 2006 and barch 500 2006 2006 and barch23. In 199g, the Government cf Ar:dhra pradesh established theNational Academy of Construction INAC) by orders in G.O.Ms.No. I O3, Trarsport, Roads & BuildirLgs (R.lIl) Department, datedi6.6.1998, 'a.ith the objective of 6ch!sr7!ng development of theconstruction inciustry, and engaging in activities for the promoticnof education, training, research, profe:;sionalism and skill formationin the construction industry. So as to ensure adequate availabilityof funds to NAC, the Government of Andhra pradesh issuedG.O.Ms.No.92, T.R&B (B.I) Department, Cared 19.S.1998 directingthe Executive Engineers to conclude supplemental agreements vviththe contractors for works under execution, and for those works tobe entrusted in future, to deduct O.2i;%o ol the gross amount of thebill ai,d remit it to the ICTI. 24. About two years aJter G.O.Ms.No.92 was issued, the 24. About two years aJter G.O.Ms.No.92 was issued, the Government issued yet another order uide G.O.Ms. No.6 I T.R&B, (R.III) Department, dated ll.4.2OOO, clirecting inclusion of a clatrsein the tender notices and agreements lbr recovery of O.25yo from thegross bill of the contractors, with a view to mobilize funds for theNAC. A similar order, being G.O.Ids.No.98, Irrigation & CADDepartment, dated S.7.2O00, was issued directing inclusion of sucha clause from 1.6.200O. 25. G.O.Ms.No.92, dated dated 19.0S.1,)98, G.O.Ms.No.92, dated dated 19.0S.1,)98,issued by rhe R&.E}Department and c.O.Ms.No.9g, da tedO5.07.2O0O issued Lry PSK,J & LNA,JlTl'A_500_2006 and batch Irrigation & CAD Department, were challenged by hling WritPetition No.23750 of 2O2O and batch and the learned single Judgeof ttris court, vide order dated rg.oz .2oos, set aside the twoimpugned Government Orders holding that the impugned deductionof o.25vo from gross bills as contribution to NAC, -i.s not traceable toang lano for the time being in forcd , and that the resolution of theBuilders Association of India itself, "does not take autay lLghts ofpetttioners to challenge the impugned. ord.er more particularlg uhensaid G.O. is rssued uitLaut ang statutory autharitgl . 26. Challenging the same, the State of Andhra pradesh andothers Iiled Writ Appeal Nos.2l 17 of 2OO5 and batch and 76O of20O8 and the Division Bench of this Court dismissed the said WritAppeals vide order dated 2l.OZ.2O 1O with the observation that .it isvery clear that the Government itself contemplated the mandatorycontributions to be made by the contractors. The law does notpermit such extraction by forceful contributions. As rightly held bythe learned shgle Judge, the Govemment Orders lack legalsanction and, therefore, they cannot be sustained." 27. In view of passing of G.O.Ms.No.92 dated, 19.05.199g, the corpus amount generated by the appellant is not voluntar5rcontribution and thus, the contention of the appellant thatrnvestment of Rs. l.5 crore in HITEX be treatedas group corplrsfund is not sustainable.fund is not sustainable. :: l4::PSK..I & I-NA..IITTA -s00 2006 and [batch] 28. The appellant is a society, registered under [An<ihra ][Pradesh](Telangana A^rea) F:blic Societies Registration Act and [is ][registered]under Section 12A and exempted under Section BOG [of ][Income ][Ta;e]Act. i961. The principal object of the ssciety was, [uscd ][tc ][irnpart]training, promotion of education, [rest:arch ]etc, [in ][the ][held ][of]construction and allied industries. Howt:ver, [contrary to ][the ][objects]of the societ..,, an amount of Rs.1.5 crore [was ][invested ][in ][HITEX,]the objects of rvhich are not similar to that off the [appellant ][society]and in fact, it is also invoived in using the land for [commercial]purpose. Apari from investment of l?s. 1.5 crore in [HITEX, ][the]appetlant society had also transferred [100 acres ][of ][lanC ][on ][lease]out of 167.30 Acres of land which was allotted by [the ][Government]to the Appellant. The Assessing OIIict:r [had taken note ][of transfer]oi 10O acres by the appeflant societrr to [HITEX, hcrr'ever, ][in ][his]wisdom, he did not further enquire into the [terms and conditions of]such transfer ald as to whether lease rental [or ][any amounts ][are]being received by the appellant society. 29. Thus, investment of Rs.1.5 crore [arrd ][transfer ][of ][10O ][acres ][of]land by the Appellant to HITEX [squarely covered ][under ][Section]13(lxd) of the Act, 196 I and, therefore, [the appellant ][society ][made]themselves rlisentitle to the [beneht ][under Section 11 ][of ][the ][Act']196 1 in view of violation of section [1 ] [(5) ][of ][the ][Act, ][1 ][96 ][1 ]['] ::lS:: I,SK.J & LNA I 29. Thus, investment of Rs.1.5 crore [arrd ][transfer ][of ][10O ][acres ][of]land by the Appellant to HITEX [squarely covered ][under ][Section]13(lxd) of the Act, 196 I and, therefore, [the appellant ][society ][made]themselves rlisentitle to the [beneht ][under Section 11 ][of ][the ][Act']196 1 in view of violation of section [1 ] [(5) ][of ][the ][Act, ][1 ][96 ][1 ]['] ::lS:: I,SK.J & LNA I 30. The Dethi High Court in DIT (Dxempr,"r,,1,"!*))'r:::;::rt:::Trust,r deart with an issue of whefier the assessee violated Sectiont3(txcxii) read with Section r3(3) of the IT Acr. The courr the contentions ";;;;of the Revenue that the real motive of the assesseewas to advance its surplus monies to AplL without charging anyinterest and since ApIL was a prohibited person within the meaning ofSection 13(3), it was held that the assessee has committed a violationof the provisions of Section 13 of the Income tax Acr and therefore, theTrust was not eligible for the endre exemption under Section I I of theIT Act.l3l 31The High Court of Kerala rn Agappa Child Centre v_ CITtTt dealtwith a similar issue. The Assessee a public charitabletrust,with a similar issue. The Assessee a public charitabletrust,purchased a refrigerator and kept it at the residence o[ its managingtrustee.The Court held that the Managing Trustee was one o[ theprohibited prohibited persons as per Section l3(3). Therefore, the Court held thatthe entire exemption of the trust is to be denied.the entire exemption of the trust is to be denied. 32. In view of the facts e.xplained above, the appellant failed to makeout any case warranting interference of this Bench with the orderpassed by the Income Tax Appellate Tribunal. 33. For all the aforesaid reasons, we are of the firm view that the question of law frarned by the Court while admitting the petition, soalso the question of law st.essed by the learned Senior Counsel forthe appellalt during the course of the arguments deserves to be II, :; 16::PSK.J & t-NA.JITTA 500 2006 [and ][batch] decided in the negative. [Thus, ][all ][these ][l\ppeals ][deserves ][to ][be and]are accordingly [rejected, con{irming ][the ][concurrent ][frnding ][of ][facts]arrived at by the [two forums ][below. ][No ol:der as ][to costs'] JtAs a sequei, misceiianeous [petitions ][pending, ][if ][any,][ shali]stand closed SKERSN,- M. VIJAYA TRJOINT SECTION [ R] ,/TRUE [COPY'I] KosHYone Fair ".o,rr:? lff ff{:i:rT,',,11f:i'.:ilto" ARAY [s ] [ErrY]c n e [a ][i ][r ][c ][o p ][y ][to ][r. ]*f ** i ffl i 5,:Jl.'.ir',lt To [. Th,: [Intorne ][1'ar ][Appcllatc ][Tribunal' ][tlyderabad ][Bench' ] "H.vrlcr:rilatlH.vrlcr:rilatl H.vrlcr:rilatl2. Th,: [r':i trrne ][-['ax ][Appcllatc ][Tribunal][, ][Ilyderabad ][Bench ]["A"][{Y dere dere [[bad']][{Y dere dere [[bad']] [{Y dere dere [[bad']]i. The [(- ][otnrnissioncr of ][incorre ][Tai ][( ][A'ppeals ][) ][- ][tV ][Hvrlerabad'] 4.'Ih,: [,rr.t. ][Directorof ][IncotneTax([])-I'flyderatrad'] 3. The [I)epul-v ][l)ircctor ][of lncome ][Tax ][lp) ][' ][Ilyderabad'] 6. The [Conrmissioner of Income ][Tax ][( l\ppeals ) ][Guntur] ?. ['1 ][1 ] [''Dies] g- The uncrer secretary, [union ][of ][lndia ][Ministry ][of ][Law, ][Juslice ][and ][cornpany]qffarrs l'lew Delhtl'lew DelhtDelhtqffarrs l'lew Delhtl'lew DelhtDelht qffarrs l'lew Delhtl'lew DelhtDelhtis h [c ][o u ][rt ][ro ][r ][th ][e ][s ][tate ][or]is h [c ][o u ][rt ][ro ][r ][th ][e ][s ][tate ][or], "il",lrl3i:fl".1 +H ff :,.""' il ; S'd:i'il?1,ti:"1: +H ff :,.""' il ; S'd:i'il?1,ti:"1: l0.Ont: [C(l ][ro ][SRt ] [ASSOCIATES' ][ACvocate 11.One [io ][Srr ] [KIRAN' ][Advocate ][(OPUC)] K MAMATA [Advocat€'| ][ ][2.Onc [C() ][:o ][lt/ls ]['] 13.1vg,;. [6:;-r ][loPies]Lul HIGH COURT PSKJ & LNAJ DATED:31 l0gl2023 1.,,R. Cc'0"' [,to ]tle marked.- S'i r.:-,:C,'-)2E [[[1 ][2m].i^,i ,i1\,.;lt, CON{N,TON JI.]DGN{ENTI T.l .L. Nrl. :iiii l)F :)(lG6r.T.T.A. NO. 555 556 0F 2013l.T.T.A. Nos. 2 i43 anci 293 oi ?Ai4 qffarrs l'lew Delhtl'lew DelhtDelhtis h [c ][o u ][rt ][ro ][r ][th ][e ][s ][tate ][or]is h [c ][o u ][rt ][ro ][r ][th ][e ][s ][tate ][or], "il",lrl3i:fl".1 +H ff :,.""' il ; S'd:i'il?1,ti:"1: +H ff :,.""' il ; S'd:i'il?1,ti:"1: l0.Ont: [C(l ][ro ][SRt ] [ASSOCIATES' ][ACvocate 11.One [io ][Srr ] [KIRAN' ][Advocate ][(OPUC)] K MAMATA [Advocat€'| ][ ][2.Onc [C() ][:o ][lt/ls ]['] 13.1vg,;. [6:;-r ][loPies]Lul HIGH COURT PSKJ & LNAJ DATED:31 l0gl2023 1.,,R. Cc'0"' [,to ]tle marked.- S'i r.:-,:C,'-)2E [[[1 ][2m].i^,i ,i1\,.;lt, CON{N,TON JI.]DGN{ENTI T.l .L. Nrl. :iiii l)F :)(lG6r.T.T.A. NO. 555 556 0F 2013l.T.T.A. Nos. 2 i43 anci 293 oi ?Ai4 r\ll the irDll( als are re.iected\v ithout ['ia) ][j: ][j] LD[2n]