The assessee, a cooperative society
was running two educational institutions on a leased land. The land was taken
in accordance with a renewable lease deed for a period of 30 years. The AO took
the assumption that the lessor will get the benefit, at the end of the tenure
of the lease, in the form of capital structure on the land; hence, it invoked
the provisions of section 13 of IT Act and disallowed the exemption under
section 11 and 12 of IT Act. However, CIT(A) deleted the addition made by AO on
the basis of supplementary lease deed which provided for the payment to the
society for capital structure by the lessor, if it couldn't be removed at the
expiry of lease term.
The Tribunal dismissed the appeal of
revenue and allowed the exemption under section 11 and 12 to assessee, it held
on the following grounds:
1)
The assessee was in an advantageous position to get a land at such a lower rate
and allowed to carry out the construction on the leased land at its own cost;
2)
Even if the lease deed is not renewed at the expiry of its term, the structure
can be removed by the assessee society; and
3)
AO allowed depreciation to the assessee @ 10% on building i.e. AO admitted the
ownership of the building with the assessee.
Therefore, the order of the CIT (A)
was upheld and exemption under section was 11 and 12 allowed to the assessee -
ACIT v. N.L. EDUCATION SOCIETY [2012] 22 taxman 285 (Agra -
Trib.)
