Shiv ita977.12 IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.977 OF 2012 Commissioner of Income Tax, Central-I, Mumbai Appellant. Vs. M/s.Lilavati Kirtilal Mehta Medical Trust Respondent. Mr. P.C. Chhotaray for Appellant-Revenue. Mr. Percy Pardiwala, Senior Advocate with Mr.Kunal Vajani, Mr.Pranaya Goyal, Mr.Hilaur Vaswani i/b Wadia Ghandy & Co. for Respondent. CORAM : S.C. DHARMADHIKARI AND A.K. MENON, JJ. DATED : 10TH OCTOBER, 2014. P.C. : 1. This appeal by revenue challenges order passed by Income Tax Appellate Tribunal dated 25th July, 2011. relevant assessment year is 2002-03. 2. assessee is trust and stated to be formed and established to offer medical relief by spreading medical science and by establishing and maintaining hospital etc. return of income was filed on 28th October, 2002 declaring total income at Nil. revised return was filed on 20th November, 2002 and that was also declaring income at Nil. return was processed under 1/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: ita977.12 section 143(1)(a) of Income Tax Act on 20th February, 2003 determining refund of Rs.1,46,810/- which was granted to assessee. Later on audit scrutiny of balance sheet revealed that during year under consideration, assessee trust had advanced aggregate sum of Rs.2,30,00,000/- to M/s. Beautiful Realtor Pvt. Ltd. company in which relatives of some of trustees were interested. In prior assessment year 2001-02 as well similar advance was given to said concern and that is how revenue claimed that assessee violated provisions of section 13(1)(c)(ii) and 13(2)(a) of Income Tax Act, 1961. Therefore, upon notice to reopen assessment, once again Nil return was filed but Assessing Officer concluded that earlier advance of Rs.5,46,00,000/- plus sum advanced in assessment year in question makes total sum advanced as Rs.7,76,00,000/-, therefore, he passed order denying exemption under section 11. matter was carried to Commissioner by assessee against assessment order dated 11th November, 2003 and Commissioner relying upon prior order of tribunal allowed appeal. matter was then carried to tribunal and by impugned order tribunal has dismissed appeal of revenue. 3. Although attention of Mr.Chhotaray was invited to order passed by this Court on 16th April, 2014 in Income Tax 2/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: ita977.12 Appeal No.2025 of 2011, he submits that there are distinguishing features after Assessing Officer passed order in earlier assessment year. investigation was carried out and report of Inspector reveals that there is no entity such as M/s. Beautiful Realtor Pvt. Ltd. in existence. That was not found at given address, therefore, Assessing Officer was justified in concluding that trust had advanced money by way of loan but without adequate security or adequate interest. He, therefore, submits that substantial question of law arises for determination and consideration in this appeal. 4. Mr.Pardiwala, learned Senior Counsel appearing on behalf of respondents, on other hand, submits that issue is fully covered by order of Division Bench of this Court in Income Tax Appeal No.2025 of 2011. There are no distinguishing features. factual finding of tribunal is that there was indeed meeting of trust, resolution was passed and there was detailed correspondence by which it is evident that amount was given as advance so as to acquire immovable property or right therein in favour of trust. That did not materialise and therefore this is not case where transaction could be seen as loan. Once this is factual conclusion, then, any subsequent development will not enable revenue to once again challenge factual finding. investigation report does 3/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: ita977.12 not reveal anything but supports stand that entity M/s. Beautiful Realtor Pvt. Ltd. was indeed in existence, that it was not at relevant time untraceable. However, after good number of years Inspector visited premises of this entity but found that it has shifted to some other building, there as well, visit revealed that entity was very much functioning from those premises but has subsequently shifted therefrom. Therefore no inference can be drawn either with regard to applicability of section 13(1)(c)(ii) or section 13(2)(a). 4. With assistance of counsel appearing for parties we have perused order impugned in this appeal and our prior order. 5. facts are not in dispute. In case of Income Tax Appeal No.2025 of 2011 for assessment year 2001-02, same questions as are projected now were raised and termed as substantial questions of law at page 53 of paperbook as extract from earlier memo of appeal. 6. tribunal as also Commissioner in this case have concluded that assessee trust had given advance to this private limited company for acquisition of immovable property. It had given advance to buy immovable property which trust 4/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: ita977.12 needed for its activities. Similar advances were given in earlier years as well. However, further advances were given during assessment year under consideration. tribunal had in relation to that assessment year allowed appeal of assessee by observing that trust had not lent this part of income or property. In fact there is no lending of money and transaction is in respect of acquiring assets for purpose of trust. Therefore, finding was that there is no violation of provisions of section 13(2)(a) of Income Tax Act. 7. In year under consideration all that has been relied upon and from order of Assessing Officer is that though issue involved is similar, namely, amount is advanced to this entity with option to purchase flat at Walkeshwar but assessee was asked to satisfy about genuineness of transaction and it failed to do so. In order to further verify matter, notice under section 133 (6) of Act was issued to M/s. Beautiful Realtor Pvt. Ltd. address which has been set out in paragraph 8 of order of Assessing Officer would show that it was office address of this private limited company and which was very much in existence. That Inspector attached to unit and who was deputed to serve notice under section 133(6) of Income Tax Act could not serve it because company had shifted its office on 29th November, 2008. amount was 5/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: ita977.12 advanced partly in year 2001-02 and later on further sum in 2002-03. Inspector visited office premises of company on 29th November, 2008. He was informed that this company has shifted on 1st April, 2007 at Bandra, Mumbai and wherefrom as well it has elsewhere shifted. It is not clear as to how Assessing Officer relying on such report could have deviated from earlier orders passed in favour of assessee and by tribunal. That report does not mean that legal or corporate entity had ceased to exist or was non existent. That it had office premises and identity had been established otherwise notice and which was carried by Inspector or representative of department could not have been attempted to be delivered at all. Thereafter, no attempts were not made to find out office premises does not mean that entity ceases to exist. Inspector's report is dated 28th November, 2008. No inquiries were made with Registrar of Companies or other Statutory Authorities. No conclusion is reached that Private Limited company has been wound up or stopped its business and from which period. On basis of report alone we can't arrive at conclusion as desired by Mr.Chhotaray and on facts. Mr.Chhotaray submits that this is case where money was lent and therefore section 13(2) (a) would come into play. 8. finding of fact is against revenue. material 6/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: ita977.12 indicated that amount was advanced with option to purchase immovable property or flat for trust at Walkeshwar, Mumbai. Such being factual basis on which revenue proceeded, we do not see how transaction can be termed as loan. Even that stand of revenue has been rejected and concurrently. Then, Mr.Chhotaray relied on section 13(1)(c)(ii) of Income Tax Act and to urge that in case of trust for charitable or religious purposes or charitable or religious institution, any income thereof if part of such income or any property of trust or institution whenever created or established is during previous year used or applied, directly or indirectly for benefit of any person referred to sub-section (3) then according to Mr.Chhotaray sub-section (1) of section 13 would come into play. 9. tribunal as also Commissioner has concurrently found that amount was advanced with above option to legal entity, namely, private company and in this private limited company some relatives of one of trustees were interested. However, transaction has been probed for prior assessment year and it was found that it was for purpose of acquisition of property or flat for trust and with that option money is advanced. It is in these circumstances it was concurrently held that it was not loan. This does not fall foul of 7/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: ita977.12 section 13(1)(c) and in given facts and circumstances. For above reasons we do not find that revenue can derive any assistance from Division Bench judgment of Delhi High Court in case of Kanahya Lal Punj Charitable Trust vs. Director of Income-Tax (Exemption) reported in (2008) Vol.297 ITR 66 (Delhi) and judgment of Andhra Pradesh High Court in case of Action for Welfare and Awakening in Rural Environment (Aware) vs. Deputy Commissioner of Income-Tax reported in (2003) Vol.263 ITR 13. 10. For all these reasons appeal does not raise any substantial question of law. It is accordingly dismissed. No costs. (A.K. MENON,J.) (S.C. DHARMADHIKARI,J.) 8/8 ::: Uploaded on - 14/10/2014 ::: Downloaded on - 28/01/2019 16:14:06 ::: Commissioner of Income-tax, Central-I, Mumbai v. Lilavati Kirtilal Mehta Medical Trust