IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.5494/MUM/2024 (Assessment Year : 2011–12)

ITO (Exemption) – 2(4), Room No.609, 6^th Floor, MTNL Building, Peddar Road, Mumbai – 400026 Maharashtra ……………. Appellant v/s Vaibhav Medical and Education Foundation, C-1, Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai - 400030, ……………. Respondent Maharashtra PAN – AAATV3207A Assessee by : S/Shri Ronal Doshi a/w Deep Chouhan Revenue by : Shri Ashish Heliwal, CIT-DR Date of Hearing – 05/12/2024 Date of Order – 24/02/2025

O R D E R

PER SANDEEP SINGH KARHAIL, J.M.

The Revenue has filed the present appeal against the impugned order dated 23.08.2024 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the Assessment Year 2011-12.

2. In this appeal, the Revenue has raised the following grounds: –

“1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is right in allowing exemption us 11 of the Act without appreciating the fact that the diversion of funds for the benefit of the related parties mentioned in section 13(3) of the Act are not for charitable activities of the assessee and are not for the benefit of public at large and hence liable for disallowance?

2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the fact where the funds of the trust were diverted and used for the benefit of excluded person are covered within the provision of section 13(2)(b) and 13(2)(g)?

3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CITIA) is correct in ignoring the fact where the rents paid for premise and was diverted and used for the benefit of excluded person are covered within the provision of section 13(2)(a)?

4. Without prejudice to the above substantial question of law, whether on facts and circumstances of the case and in law the Ld. CIT(A) was justified in not appreciating the fact that if a charitable entity provides any benefits to its members who are also substantial contributors, then it loses the benefit of section 11 and its charitable character as provisions of Section 13(1) (c) read with Section 13(3) (b) are clearly invoked?

5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing standard deduction u/s. 24 of the Act while computing the Income from House Property as the said deduction is not available for charitable Trust/entity/institution as held in the assessee own case for AY 2012-13 on the basis of the decision of the co- ordinate Bench of the Hon'ble ITAT in ITA No. 106/Mum/2016 Nandlal Tolan? Charitable US. ITO(E)-2(1), Mumbai?

6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing relief on account of addition made u/s 145 as the assessee has employed two types of accounting method one is Mercantile system in light of Companies Act being a section 25 Company and using 'Cash method of Accounting' for the purpose of Income tax Act when purpose of Section 145 deals having consistent method to minimise the possibility of unfair deductions or escaping chargeability under the Act?”

3. The issue arising in Grounds No.1 to 4 raised in Revenue’s appeal pertains to the deletion of disallowance of interest expenditure made under sections 13(2)(a), 13(2)(b) and 13(2)(g) of the Act.

4. The brief facts of the case pertaining to this issue as emanating from the record are: The assessee is registered as a charitable organization with DIT (Exemption), Mumbai under section 12A of the Act and was also issued a certificate under section 80G of the Act. Accordingly, the assessee claimed exemption under section 11 of the Act. For the year under consideration, the assessee filed its return of income on 30.09.2011 along with income and