IN INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA No.588/Chny/2019 Assessment Year 2010-11 Deputy Commissioner of Income Vs. M/s.Jeppiaar Educational Tax (Exemptions), Trust, New No.29A,Old Chennai Circle,Ayakar Bhavan, No.12, Gajapathy Street, Annexe Bldg.,III floor, Royapettah, Chennai 600 034. Chennai 600 014. [PAN: AAATJ0562E] (Appellant) (Respondent) Appellant by Mr.D.Divahar,JCIT,D.R Respondent by Smt.S.Vidya,C.A and Shri Sriraj Gokavarapu,C.A , Date of Hearing 19.09.2019 Date of Pronouncement 19.09.2019 ORDER PER GEORGE MATHAN, JUDICIAL MEMBER This is appeal filed by Revenue against Order of Commissioner of Income Tax (Appeals)-17, Chennai, in ITA No.Tr.321/2016-17 dated 20.12.2018 for AY 2010-11. ITA No.588/Chny/2019. Mr.D.Divahar represented on behalf of Revenue and Smt.S.Vidya,C.A and Shri Sriraj Gokavarapu represented on behalf of assessee. 3. Revenue has raised following grounds for adjudication. 1. order of ld. CIT(A) is contrary to law and facts of case. 2. ld.CIT(A) erred in hlding that exemption u/s.11 cannot be denied while interest bearing funds are diverted to specified persons u/s.13(3) of Income Tax Act, 1961 namely M/s.Holy Satellite Town Ltd., and M/s.Jet Associates without charging any interest which is in violation of provisions of section 13(1)(c) r.w.s.13(2)(a) of Income Tax Act, 1961. 2.1 On facts and circumstances of case, ld.CIT(A) has erred in holding that there is no case for making disallowance in respect of interest amounting to Rs.4,82,10,602/- without appreciating fact that transactions are not genuine business transactions but only intended to benefit trustees/other concerns. 2.2. ld.CIT(A) erred by relying on I.T.A.T orders passed for earlier assessment years without noting that orders relied upon have not been accepted by department and appeals have been filed before Hon ble Madras High Court and issue has not become final. 3. For these and other grounds that may be adduced at time of hearing, it is prayed that order of ld. CIT(A) may be set aside and that of Assessing Officer may be restored. 4. At time of hearing, it is fairly agreed by both sides that issue was squarely covered by decision of Co-ordinate Bench of this Tribunal in assessee s own case for assessment year 2009-10 in ITA No.86/Mds./2013 vide order dated ITA No.588/Chny/2019 :- 3 -: 22.04.2013, and for assessment years 2001-02 to 2007-08 in ITA Nos.1333, 1334, 1591 to 1595/Mds./2010 vide order dated 15.06.2011. For assessment year 2009-10 in Revenue s Appeal in ITA No.86/Mds./2013 vide order dated 22.04.2014, Co-ordinate Bench of Tribunal in assessee s own case has categorically held at para-5, relevant portion as follows:- In its earlier orders, Tribunal has consistently held that transactions assessee had with M/s.Holy Satellite Town Ltd., and M/s.Jet Associates are business transactions and payments made by assessee-trust are against supply of goods and rendering of services. When character of payments are held to be in nature of business transactions and for valid consideration, it is not possible for Tribunal to hold different view that payments must be treated as indirectly diverted by assessee. It is also necessary to take into consideration argument of learned Chartered Accountant appearing for assessee that quantum of supply of goods and services availed by assessee-trust from those concerns have increased manifold and increase in payments made to those concerns are only reflection of increase in quantum of supply of goods and services. Therefore, we find that this appeal has to be decided by following binding decisions of Co-ordinate Benches rendered for earlier assessment years. This has been followed by decision of Co-ordinate Bench of Tribunal in assessee s own case for assessment years 2001-02 to 2007-08 in ITA Nos.1333, 1334, 1591 to 1595/Mds./2010 vide order dated 15.06.2011 wherein it has been held as follows:- ITA No.588/Chny/2019 :- 4 -: 35.2. assessee-trust had made certain payments to M/s. Holy Satellite Town Ltd. payments were made for supply of ready mix concrete for construction of assessee's buildings. M/s. Holy Satellite Town Ltd. is associate concern coming within purview of sec.13(3). Assessing Officer and Commissioner of Income-tax (Appeals) held that payments were made by assessee-trust to said company, :- 45 -: ITA 1333, 1334 etc & CO 116 to 120/10 even when balance of amounts are still recoverable from that company. It is case of lower authorities that when huge balances are outstanding from M/s. Holy Satellite Town Ltd., there was no justification for assessee to make further payments in favour of that company. It is also finding of lower authorities that M/s. Holy Satellite Town Ltd. has supplied ready mix concrete not only to assessee-trust but also to outsiders. It is, in these facts and circumstances of case, that lower authorities have held that advances made by assessee to M/s. Holy Satellite Town Ltd. were in nature of deposits made in contravention of sec.13(1)(d). 35.3. We considered issue in detailed manner. It is fact on record as well as reinforced by observations of lower authorities that M/s. Holy Satellite Town Ltd. is engaged in business of ready mix concrete and said company is supplying entire quantity of ready mix concrete required by assessee-trust for constructing its buildings. case of lower authorities is that M/s. Holy Satellite Town Ltd. is supplying ready mix concrete to outside parties also. But most important question to be looked into, is whether assessee-trust has purchased ready mix concrete from any party other than M/s. Holy Satellite Town Ltd.. answer is no. assessee is purchasing ready mix concrete only from M/s. Holy Satellite Town Ltd. It may be selling outsiders when surplus ready mix concrete is available occasionally. That fact does not dilute business relationship between assessee-trust and M/s. Holy Satellite Town Ltd. 35.4. contention of assessee-trust is that as assessee is constructing buildings and campuses for housing its educational ITA No.588/Chny/2019 :- 5 -: institutions at large scale and therefore necessary to ensure uninterrupted supply of ready mix concrete. It is for that purpose according to assessee, advances are given to M/s. Holy Satellite Town Ltd.. 35.5. It is also to be seen that M/s. Holy Satellite Town Ltd. is supplying ready mix concrete to assessee-trust, by and large at rate lower than open market rate. 35.6. When these crucial facts are considered together, and normal conclusion arrived at is that relation between assessee-trust and M/s. Holy Satellite Town Ltd. is business :- 47 -: ITA 1333, 1334 etc & CO 116 to 120/10 relation. corollary of this finding is that account of M/s. Holy Satellite Town Ltd. maintained in accounts of assessee-trust is running business account. These basic characteristics are not changed only for reason that M/s. Holy Satellite Town Ltd. is entity coming under sec.13(3). 5. It was submitted by ld.DR that order of Tribunal has not been accepted by Department. Further, ld.DR submitted that appeal has been filed before Hon ble Madras High Court and issue has not become final. 6. We have heard rival contentions and perused material available on record. As it is noticed that issue in present appeal is squarely covered by decision of Co-ordinate Bench of Tribunal in assessee s own case for earlier assessment years, and as it is noticed that ld.CIT(A) has followed judicial discipline by following decision of Co-ordinate Bench of this Tribunal in assessee s own case referred to supra, we find no error in order of ld. CIT(A), which ITA No.588/Chny/2019 calls for any interference. Consequently, appeal filed by Revenue stands dismissed. 7. In result, appeal of Revenue is dismissed. Order pronounced in open Court after conclusion of hearing on 19th September, 2019 in Chennai. Sd/- Sd/- (INTURI RAMA RAO) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, 3 Dated 19th September, 2019. K S Sundaram , Copy to 1. Appellant 4. Respondent 5. DR 3. CIT(A) 6. GF Deputy Commissioner of Income-tax (Exemptions), Chennai Circle, Chennai v. Jeppiaar Educational Trust