AGRASEN MEDICAL RELIEF& RESEARCH SOCIETY,JAIPUR V. ITO(E), WARD-1, JAIPUR, JAIPUR

ITA 115/JPR/2025

AI Insights

The case involves Agrasen Medical Relief & Research Society, a charitable society engaged in providing medical facilities, which appealed against the order of the CIT (A) denying them exemption under section 11 for the assessment year 2017-18. The primary contention was the denial of exemption due to the non-submission of a registration certificate under section 12AA, despite the society being registered under section 12A and having an 80G approval. The Assessing Officer had included corpus donations as part of gross receipts and disallowed capital expenditures claimed as applications of income. The CIT (A) upheld the AO's decision, leading to the appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396518 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: CIT Vs. Trustee of H.E.H.the Nizam's supplement religious Endowment Trust, ACIT Circle 31(1) v/s Sh. Rahul Juneja, CIT v/s Bharat Aluminium Co. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: P.C. PARWAL
• Keywords: Depreciation; Capital expenditure; TDS; Charitable institution; Benefit of exemption
• Section: 143(3); 142(1); 11; 12AA; 12A; 80G

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh]U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 115/JPR/2025 fu/kZkj.k o\"kZ@Assessment Year : 2017-18 Agrasen Medical Relief & Research Society, Central Spine, Sector-7, Vidhyadhar Nagar, Jaipur. cuke Vs. The ITO (E), Ward-1, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATA7540F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri P.C. Parwal, C.A. jktLo dh vksj ls@Revenue by : Shri Gautam Singh Choudhary, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 01/04/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 26/05/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of ld. ADDL/JCIT(A), Bhubaneswar dated 03.12.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2017-18. The assessee has raised the following grounds of appeal :- “1. The ld. Addl. CIT (A) has erred on facts& in law in upholding the order of AO in denying exemption u/s 11 for the reason that assessee has not furnished copy of certificate of registration u/s12AA of the Act ignoring that assessee has furnished sufficient documentary evidences to established that it is registered u/s 12AA of the Act and therefore income of assessee ought to have been computed by allowing exemption u/s 11 of the Act. 2 ITA No. 115/JPR/2025 Agrasen Medical Relief & Research Society, Jaipur. 2. The Ld. Addl. CIT (A) has erred on facts & in law in disallowing the fees paid for delay in filing the TDS return of Rs. 1,58,000/- claimed as application of income and not allowing the claim of capital expenditure of Rs. 1,39,47,839/- in computing the total income. 3. The appellant craves to alter, amend and modify any ground of appeal.” 2. The brief facts of the case are that the assessee the assessee is a charitable society registered under Societies Registration Act vide order no.500/JP/89-90 dated 30.09.1990. It is engaged in providing medical facility and is running a hospital in the name of Maharaja Agrasen Hospital, Jaipur. It is registered u/s 12A of the Income Tax Act, 1961 vide registration no.37/4 dated 04.09.2008 and also approved u/s 80G of the IT Act vide Approval no.49/26 of even date. It is also granted fresh registration u/s 12A(1)(ac)(i) of IT Act vide registration dated 24.09.2021 for A.Y. 2022-23 to A.Y. 2026-27. The income of assessee for AY 2011-12 was assessed u/s 143(3) considering that it is registered u/s 12AA of the Act. The assessee filed its return of income for the year under consideration on 14.02.2018 declaring Nil income after claiming exemption under section 11 of the I.T. Act, 1961. The case of the assessee was selected for scrutiny under CASS. Accordingly, notice under section 143(2) dated 09.08.2018 was issued and served upon the assessee through e-assessment portal. Notice under section 142(1) along with questionnaire was issued on 29.01.2019 and served upon the assessee calling 3 ITA No. 115/JPR/2025 Agrasen Medical Relief & Research Society, Jaipur. for certain details/information through e-portal. In response, the assessee filed financial statements and other details. While framing the assessment order, the AO observed at page 4-5 of the order that assessee has not submitted the registration certificate under section12AA of the Act stating that the same is missing and at present not available. The AO, therefore, considered the amount of Rs. 64,60,842/- claimed as corpus donation as voluntary donation and included it in the total receipt of the year and did not allow the claim of capital expenditure of Rs. 1,39,47,839/- as application of income. Accordingly, the AO assessed the total income at Rs. 7,69,088/- computed as under :- Gross receipt including rental income as per I&E A/c 1,15,66,880 Add:- Corpus donation 64,60,842 TDS penalty 1,58,000 66,18,842 Total receipt 1,81,85,722 Less:- Expenditure as per I&E A/c including depreciation 1,74,16,634 Total income 7,69,088 On appeal filed by the assessee before the ld. CIT (A), the ld. CIT(Appeal) at Para 5.1 Page 12-13 of the order held that assessee could not established whether it is approved for exemption and if so whether the same was inforce for the year under consideration. He, therefore, upheld the order of AO denying exemption u/s 11. He further observed at Para 5.2.1 of the order that payment of TDS or interest thereon 4 ITA No. 115/JPR/2025 Agrasen Medical Relief & Research Society, Jaipur. is not admissible under the provisions of the Act. Accordingly the income computed by the AO is upheld. Aggrieved by the order of the ld. CIT (A), the assessee has filed the present appeal before the Tribunal. 3. At the time of hearing before us, the ld. A/R of the assessee has filed the written submission, which are being reproduced as under : “ At the outset it is submitted that though the assessee could not place on record the registration certificate issued u/s 12AA of the Act but it has placed on record the approval certificate u/s 80G of the Act (PB 43) which was issued on the same date on which registration u/s 12AA of the Act was granted by the CIT-II, Jaipur. It may be noted that approval u/s 80G cannot be granted unless a trust or institution or society is registered u/s 12AA of the Act as mandated by sub-clause (i) of sub-section 5 of section 80G. It may also be noted that the AO in the assessment order passed u/s 143(3) dt. 10.2.2014 for AY 2011-12 (PB 44-45) has accepted that assessee is registered u/s 12AA of the Act. The assessee has subsequently been granted fresh registration u/s 12A(1)(ac)(i) of the Act, the precondition of which is that the trust or institution is registered u/s 12AA of the Act. In these circumstances, only because assessee could not place on record registration certificate issued u/s 12AA of the Act, the benefit of exemption u/s 11 cannot be denied unless the revenue place on record any evidence that registration granted u/s 12AA of the Act is not inforce for AY 2017-18. Hence the AO be directed to compute the income u/s 11 of the Act by allowing capital expenditure of Rs.1,39,47,839/- as application of income and assess the income at Nil. It may also be noted that assessee has paid Rs.1,58,000/-, being fees u/s 234E for late filing of TDS return. It is a fee paid and is not a penalty for violation of any law. The amount so paid is not excluded from application of income under the provisions of the Act. Hon’ble AP High Court in case of CIT Vs. Trustee of H.E.H.theNizam`s supplement religious Endowment Trust 127 ITR 378(AP)has held that expenses incurred by way of payment of income tax and wealth tax during the relevant year were incidental to the carrying out of the charitable purpose of the trust. Such payment was outgoings in that particular year and was incidental to the carrying out of the objects of the trust. Therefore, the same is to be considered as application of income. 5 ITA No. 115/JPR/2025 Agrasen Medical Relief & Research Society, Jaipur. In view of above, AO be directed to recompute the income by allowing exemption u/s 11 by considering the capital expenditure and the fee paid for late filing of TDS return as application of income.” The assessee has also submitted compilation of Paper Book in respect of its case as under :- PAPER BOOK S.No. Particulars Pg. No. Filed before AO/CIT (A) 1. Copy of submission filed before CIT (A) 1A-8A CIT (A) 2. Copy of ITR and computation of income for theAY 2017-18 1-6 Both 3. Copy of audited financial statements of the assessee for the AY 2017-18 7-18 Both 4. Revised Computation of Income for the AY 2017-18 19-23 Both 5. Copy of order of Hon’ble ITAT, Delhi bench in case of ACIT Circle 31(1) v/s Sh. Rahul Juneja 24-32 CIT (A) 6. Copy of order of Hon’ble Delhi High Court in case of CIT v/s Bharat Aluminium Co. Ltd. 33-41 CIT (A) 7. Copy of reply submitted during the assessment proceedings 42 Both 8. Copy of registration certificate u/s 80G of the Act 43 Both 9. Copy of assessment order passed u/s 143(3) of the IT Act, 1961 in the case of assessee for AY 2011-12. 44-48 Both 10. Copy of fresh registration certificate u/s 12A(1)(ac)r.w.s. 12AB of the Act. 49-51 Both 4. On the other hand, the ld. D/R supported the orders of the revenue authorities. 5. We have heard the rival submissions, perused the material on record and gone through the orders of the lower authorities. We note that AO has denied 6 ITA No. 115/JPR/2025 Agrasen Medical Relief & Research Society, Jaipur. exemption u/s 11 to the assessee for the reason that it has not submitted registration certificate u/s 12AA of the Act and thus computed the total income Rs.7,69,088/- by considering the corpus donation as part of gross receipt and disallowing the claim of application on account of capital expenditure. The Ld. CIT(A) has upheld the order of AO for the reason that assessee could not establish whether it is approved for exemption and if so, whether the same was inforce for the year under consideration. We find that assessee could not place on record the registration certificate issued u/s 12AA of the Act but it has placed on record the approval certificate u/s 80G of the Act. Approval u/s 80G cannot be granted unless a trust or institution or society is registered u/s 12AA of the Act as mandated by sub-clause (i) of sub-section 5 of section 80G. We also find that AO in the assessment order passed u/s 143(3) dated 10.2.2014 for AY 2011-12 has accepted that assessee is registered u/s 12AA of the Act. The assessee has subsequently been granted fresh registration u/s 12A(1)(ac)(i) of the Act, the precondition of which is that the trust or institution is registered u/s 12AA of the Act. Thus, there is no doubt that the assessee is registered under section 12AA of the IT Act, 1961. In these circumstances, only because assessee could not place on record registration certificate issued u/s 12AA of the Act, the benefit of exemption u/s 11 cannot be denied. Further, Rs.1,58,000/- is paid by the assessee is fee for late filing of TDS return u/s 234E of the Act. It is not a penalty hence this amount has to be 7 ITA No. 115/JPR/2025 Agrasen Medical Relief & Research Society, Jaipur. considered as application of income in view of decision of Hon’ble Andhra Pradesh High Court (supra). In view of above facts, the AO is directed to compute the income of the assessee by allowing exemption u/s 11 of the Act. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26/05/2025. Sd/- Sd/- ¼ jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 26/05/2025. vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant-Agrasen Medical Relief & Research Society, Jaipur. 2. izR;FkhZ@The Respondent-The ITO (E), Ward-1, Jaipur. 3. vk;djvk;qDr@CIT 4. vk;djvk;qDr@CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@Guard File {ITA No. 115/JPR/2025} vkns'kkuqlkj@By order, lgk;d iathdkj@Asst. Registrar "