Nehru Prasutika Asptal Samiti, Aligarh V. Dy. C.I.T., Circle-1, Aligarh

CO 18/AGR/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8809 (ITAT-AGRA)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NIKHIL KUMAR
• Keywords: Charitable institution
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 218/AGRA/2013 ASSTT. YEAR : 2009-10 D.C.I.T., CIRCLE 1, VS. NEHRU PRASUTIKA ASPTAL SAMITI, ALIGARH. RAMGHAT ROAD, ALIGARH. (PAN: AAATN 6588 L) C.O. NO. 18/AGRA/2013 (IN ITA NO. 218/AGRA/2013) ASSTT. YEAR : 2009-10 NEHRU PRASUTIKA ASPTAL SAMITI, VS. D.C.I.T., CIRC LE 1, RAMGHAT ROAD, ALIGARH. ALIGARH. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.K. MISHRA, JR. D.R. ASSESSEE BY : SHRI NIKHIL KUMAR, C.A. DATE OF HEARING : 12.08.2013 DATE OF PRONOUNCEMENT OF ORDER : 14.08.2013 ORDER PER BHAVNESH SAINI, J.M.: THE DEPARTMENTAL APPEAL AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 15 .03.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. ITA NO. 218 & C.O. NO. 18/AGRA/2013 2 DEPARTMENTAL APPEAL : 3. THE REVENUE CHALLENGED THE ORDER OF THE LD. CIT( A) IN HOLDING THAT INVESTMENT OF SURPLUS FUND IN FDRS TO EARN INTEREST INCOME ON IDLE FUNDS IS DIRECTLY INCIDENTAL ACTIVITY. HENCE, SUCH INTEREST INCOME OF RS.11,32,800/- IS ELIGIBLE FOR EXEMPTION U/S. 11 OF THE IT ACT. IT IS ALSO STATED THAT EARNING OF INTEREST ON SURPLUS FUNDS CANNOT BE TREATED AS EITHER EDUCATIONAL OR CH ARITABLE ACTIVITIES. 4. THE ASSESSEE FILED RETURN OF INCOME AT NIL INCOM E ACCOMPANIED BY AUDITORS REPORT. THE ASSESSEE SOCIETY IS RUNNING A MATERNITY HOSPITAL AT ALIGARH. ALL SERVICES PERTAINING TO MATERNITY, I.E., CONSULTATION, DELIVE RY AND RELATED OPERATIONS ETC. ARE PROVIDED TO THE PATIENTS AT NOMINAL CHARGES. THE AS SESSEE SOCIETY IS REGISTERED U/S. 12AA OF THE IT ACT. THE AO ASKED THE ASSESSEE AS TO WHY INTEREST INCOME FROM FDR BE NOT TAXED. THE AO FOUND THAT AS PER SUBMISSI ONS, THE INTEREST INCOME AS PER FDR EXCEEDS 15% OF RECEIPTS ALLOWED TO BE TREAT ED AS CHARITABLE ACTIVITY AND BALANCE WAS TO BE DISALLOWED. THE INTEREST INCOME W AS FOUND TO BE TAXABLE INCOME. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND ALSO CLAIMED THAT ITS INCOME IS EXEMPT U/S. 10(23C)(IIIAE) OF THE INC OME-TAX ACT. IT WAS SUBMITTED THAT THE ASSESSEE IS A CHARITABLE TRUST RUNNING A M ATERNITY HOSPITAL AND LARGE NUMBER OF DELIVERIES AND RELATED OPERATIONS ARE CONDUCTED IN THE HOSPITAL. THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 11 AS WELL AS U/S. 10(23C)(IIIAE) OF THE IT ITA NO. 218 & C.O. NO. 18/AGRA/2013 3 ACT AND THE RECEIPTS DO NOT EXCEED RS.1 CRORE. THE INVESTMENT MADE IN THE FDRS WITH THE BANK IS PERMISSIBLE MODE U/S. 11(5) OF THE IT ACT. THE AO DISALLOWED 15% OF THE INCOME. THEREFORE, REMAINING SHOULD HAVE BEEN CONSIDERED AS THE INCOME APPLIED TO THE CHARITABLE OBJECTS. THE ASSE SSEE RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF DIT(EXEMPTION) VS. DALMIYA SHIKSHA PRATISHTHAN, 305 ITR 327, IN WHICH IT WAS HELD THAT MERELY BECAU SE THE ASSESSEE EARNS INTEREST AS A RESULT OF ITS INVESTMENT WOULD NOT MEAN THAT T HE ASSESSEE CEASED TO EXIST SOLELY FOR EDUCATIONAL PURPOSES. THE ASSESSEE ALSO RELIED UPON THE DECISION OF ITAT, DELHI BENCH IN THE CASE OF ITO VS. JESUIT CONFERENC E OF INDIA, 47 SOT 29, IN WHICH IT WAS HELD ASSESSEE TRUST WOULD NOT LOSE EXEMPTION UNDER S. 11 MERELY BECAUSE OF INVESTING SURPLUS MONEY IN MUTUAL FUND U NITS AND ENTERING FREQUENT TRANSACTIONS RELATED TO PURCHASE/SWITCHOVE R FROM ONE SUCH MUTUAL FUND SCHEME TO ANOTHER AS THE SAME IS NOT A BUSINESS ACTIVITY; EVEN OTHERWISE, THERE WAS DUE COMPLIANCE OF THE PRO VISIONS OF S. 11(4A) BY THE ASSESSEE. THE LD. CIT(A) FOUND THE CLAIM OF THE ASSESSEE TO B E CORRECT BECAUSE THE INTEREST EARNED ON SURPLUS / CORPUS FUND WAS DIRECTLY INCIDE NTAL TO THE MAIN ACTIVITIES OF THE TRUST AND THE ASSESSEES CLAIM IS ALLOWABLE BY THE ABOVE DECISION. THE AO WAS THEREFORE, DIRECTED TO ALLOW DEDUCTION U/S. 11 OF T HE IT ACT. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE DEPARTMENTAL APPEAL HAS NO MERIT AND IS LIABLE TO B E DISMISSED. THE DECISION IN THE ITA NO. 218 & C.O. NO. 18/AGRA/2013 4 CASE OF DALMIYA SHIKSHA PRATISHTHAN (SUPRA) AND ITO VS. JESUIT CONFERENCE OF INDIA (SUPRA) SQUARELY APPLY TO THE FACTS AND CIRCU MSTANCES OF THE CASE. THE ASSESSEE HAS INVESTED ITS FUNDS IN FDRS ON WHICH TH E ASSESSEE EARNED INTEREST, WHICH IS APPLIED TOWARDS THE OBJECTS OF THE ASSESSE E SOCIETY. THE FUNDS INVESTED IN FDR HAVE BEEN SHOWN IN THE BALANCE SHEET AND IS THE PROPERTY OF THE ASSESSEE- SOCIETY. MERELY BECAUSE THE ASSESSEE EARNS INTEREST ON ITS SURPLUS / CORPUS FUNDS WOULD NOT LEAD TO THE FACT THAT THE ASSESSEE EXISTS FOR PROFIT PURPOSE. THE CLAIM OF THE ASSESSEE HAS BEEN CORRECTLY ALLOWED BY THE LD. CIT(A). THE DEPARTMENTAL APPEAL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. CROSS OBJECTION: 6. THE ASSESSEE IN THE CROSS OBJECTION MADE A CLAIM OF DEDUCTION U/S. 10(23C)(IIIAE) OF THE IT ACT. THE LD. CIT(A) HELD T HAT THE ASSESSEE IS A GENERAL HOSPITAL PERTAINING TO MATERNITY WHILE THE HOSPITAL / INSTITUTION AS ENVISAGED IN SECTION 10(23C)(IIIAE) IS IN RESPECT OF MENTAL DISE ASE OR ILLNESS OR REHABILITATION EXISTING SOLELY FOR PHILANTHROPIC PURPOSES. THE ASS ESSEE HAS, HOWEVER, NOT SATISFIED THESE CONDITIONS. THEREFORE, THE CLAIM OF ASSESSEE WAS DENIED. SECTION 10(23C)(IIIAE) OF THE IT ACT READS AS UNDER : ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTIO N AND TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENT AL DEFECTIVENESS OR FOR THE RECEPTION AND TREATMENT OF PERSONS DURING C ONVALESCENCE OR OF PERSONS REQUIRING MEDICAL ATTENTION OR REHABILITATI ON, EXISTING SOLELY FOR PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROFIT, IF THE ITA NO. 218 & C.O. NO. 18/AGRA/2013 5 AGGREGATE ANNUAL RECEIPTS OF SUCH HOSPITAL OR INSTI TUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED. 7. THE AO NOTED IN THE ASSESSMENT ORDER THAT THE AS SESSEE SOCIETY IS RUNNING MATERNITY HOSPITAL AND ALL SERVICES PERTAINING TO M ATERNITY ONLY. MATERNITY IS A NATURAL PROCESS AND COULD NOT BE TERMED AS ILLNESS OR DISEASE. GIVING BIRTH AND AT THAT TIME HOSPITAL PROVIDING SERVICES FOR DELIVERY COULD NOT BE SAID TO BE PROVIDING ANY TREATMENT FOR ILLNESS OR MENTAL DEFECTIVENESS. FURTHER IN ABSENCE OF ANY DETAILS OR EVIDENCES AVAILABLE ON RECORD, WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE AND THE LD. CIT(A) WAS THEREFORE JUSTIFIED IN HOLDI NG THAT THE INGREDIENTS OF ABOVE SECTION ARE NOT FULFILLED IN THE CASE OF ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT FROM THE PAPER BOOK, THE APPLICATION OF INCOME AND DETAILS OF DELIVERIES AND OPERATIONS CONDUCTED IN THIS REGARD, WHICH IS N OT SUFFICIENT TO GRANT RELIEF UNDER THE ABOVE PROVISIONS TO THE ASSESSEE. IT IS WORTHWH ILE POINTING OUT THAT THE CHILD BIRTH IS THE NATURAL PROCESS OF GOD AND IT IS CERTA INLY THE GODS GRACE WHICH IS EXTENDED TO SUSTAIN US THROUGH IT. IT IS THE ACT OF GOD WHO DESIGNS A CHILD CONCEIVED IN THE WOMB TO BE BORN INTO THIS WORLD. IN OLDEN DA YS DELIVERIES OF CHILDREN WERE PERFECTLY CONDUCTED BY MIDWIVES AT HOME, BUT IN THE MODERN AGE, IT IS ONLY BECAUSE THE ANXIETY OF PEOPLE THAT THEY WOULD NOT BE ABLE T O MANAGE THE DISCOMFORT OR PAINS DURING LABOR, THEY CHOOSE TO TAKE BETTER FACILITIES IN THE HOSPITALS IN PRESENCE OF DOCTORS FOR THIS PURPOSE. THUS, IT MAY BE SAID THAT THE ASSESSEES MATERNITY HOSPITAL IN THE INSTANT CASE WOULD HAVE BEEN FACILITATING TH E DELIVERIES, I.E., A NATURAL PROCESS ITA NO. 218 & C.O. NO. 18/AGRA/2013 6 OF GOD. IT, THEREFORE, CAN IN NO WAY BE SAID TO BE ANY ILLNESS TO BE TREATED IN THE ASSESSEES HOSPITAL AS ENVISAGED U/S. 10(23C)(IIIAE ). THEREFORE, THE INGREDIENTS OF SECTION 10(23C)(IIIAE) BEING NOT FULFILLED, THE LD. CIT(A) HAS RIGHTLY DISALLOWED THE CLAIM OF ASSESSEE. AS A RESULT, THE CROSS OBJECTIO N OF THE ASSESSEE HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, THE DEPARTMENTAL APPEAL AS WELL A S THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY