July 2022
Charitable purpose — Exemption — Disqualification where property of assessee made available for benefit of specified persons for inadequate consideration — Valuation of rent — Property of assessee let on rent in lieu of corpus donations — Burden to prove inadequacy of rent is on Department — Finding by Tribunal that rent received by assessee exceeded valuation adopted by Municipal Corporation for purpose of levying house tax — Deletion of addition by Tribunal not perverse
By K. B. Bhujle
Advocate
23 CIT(Exemption) vs. Hamdard National Foundation (India) [2022] 443 ITR 348 (Del) A.Ys.: 2007-08 to 2010-11 Date of order: 16th February, 2022 Ss. 11, 12, 13(2)(b) and 13(3) of ITA, 1961
Charitable purpose — Exemption — Disqualification where property of assessee made available for benefit of specified persons for inadequate consideration — Valuation of rent — Property of assessee let on rent in lieu of corpus donations — Burden to prove inadequacy of rent is on Department — Finding by Tribunal that rent received by assessee exceeded valuation adopted by Municipal Corporation for purpose of levying house tax — Deletion of addition by Tribunal not perverseFor the A.Y. 2007-08, the AO felt that the assessee had offered substantial concession in rent to the wakf and had let out two properties at a much lower rate as compared to the market rate in lieu of voluntary and corpus donations and therefore, invoked Section 13(2)(b) and Section 13(3) of the Income-tax Act, 1961 and denied exemption under section 11 and 12.
The Commissioner (Appeals) allowed the appeals of the assessee for the A.Ys. 2008-09 and 2010-11 but rejected the appeal for the assessment year 2009-10. For all the assessment years the Tribunal held that there was no justification for invoking the provisions of Section 13(2)(b) read with Section 13(3) by the Assessing Officer and allowed the assessee’s appeals.
On appeals by the Revenue, the
