M/s. Mool Chand Kharati Ram Trust, New Delhi V. ADIT (E), New Delhi

CO 259/DEL/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1426 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 18-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DAB JYOTI DAS
• Keywords: Depreciation; Charitable institution; Cancellation of registration
• Section: 12A; 12; 11

Judgement Text

ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 2850/DEL/2011 A.Y. : 200 7 - 0 8 JOINT DIRECTOR OF INCOME TAX (E), (OSD), INV., CIRCLE-I, ROOM NO. 311, AAYAKAR BHAVAN, LAXMI NAGAR, DISTT. CENTRE, DELHI 110 092 VS. MOOL CHAND KHARAITI RAM TRUST, LAJPAT NAGAR-III, NEW DELHI 110024 (PAN: AAATM0394H) C.O. NO. 229/DEL/2011 (IN ITA NO. 2850/DEL/2011) A.Y. : 200 7 - 0 8 MOOL CHAND KHARAITI RAM TRUST, LAJPAT NAGAR-III, NEW DELHI 110024 (PAN: AAATM0394H) VS. JOINT DIRECTOR OF INCOME TAX (E), (OSD), INV., CIRCLE-I, ROOM NO. 311, AAYAKAR BHAVAN, LAXMI NAGAR, DISTT. CENTRE, DELHI 110 092 I.T.A. NO. 2127 /DEL/201 2 A.Y. : 200 8 - 0 9 ADIT(E), INV., CIRCLE - I, DELHI VS. MOOL CHAND KHARAITI RAM TRUST, LAJPAT NAGAR-III, NEW DELHI 110024 (PAN: AAATM0394H) C.O. NO. 259/DEL/2012 (IN ITA NO. 2127/DEL/2012) A.Y. : 200 8 - 0 9 MOOL CHAND KHARAITI RAM TRUST, LAJPAT NAGAR-III, NEW DELHI 110024 (PAN: AAATM0394H) VS. ADIT(E),INV., CIRCLE - I, DELHI I.T.A. NO. 985/DEL/2015 A.Y. : 200 9 - 10 MOOL CHAND KHARAITI RAM TRUST, LAJPAT NAGAR-III, VS. ADDL. DIRECTOR OF INCOME TAX (E), RANGE-1, DELHI ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 2 NEW DELHI 110024 (PAN: AAATM0394H) I.T.A. NO. 1962 /DEL/201 5 A.Y. : 200 9 - 10 DY. COMMISSIONER OF INCOME TAX (E), CIRCLE 1(1), E-2, BLOCK, PRATYAKSH KAR BHAWAN, DR. SHYAMA PRASAD MUKHERJEE CIVIC CENTRE, NEW DELHI 2 VS. MOOL CHAND KHARAITI RAM TRUST, LAJPAT NAGAR-III, NEW DELHI 110024 (PAN: AAATM0394H) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSE BY : SHRI GAUTAM JAIN, ADV. DEPARTMENT BY : SHRI DAB JYOTI DAS, CIT(DR) DATE OF HEARING : 18-11-2015 DATE OF ORDER : 20-11-2015 ORDER ORDER ORDER ORDER PER PER PER PER BENCH BENCH BENCH BENCH REVENUE & ASSESSEE HAVE FILED THESE APPEALS, CROSS OBJECTIONS AND CROSS APPEALS AGINST THE SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PERTAINING TO ASSESSMENT YEAR S 2007-08 TO 2009-10. SINCE THE ISSUE INVOLVED IN THESE APPEALS, CROSS OB JECTIONS AND CROSS APPEALS IS COMMON AND IDENTICAL, HENCE, WE ARE CONSOLIDATED TH ESE APPEALS/CO/CROSS APPEALS BY THIS COMMON ORDER FOR THE SAKE OF CONVEN IENCE, BY DEALING WITH ITA NO. 2850/DEL/2011 (AY 2007-08). 2. THE GROUNDS RAISED IN REVENUES APPEAL NO. 2850 /DEL/2011 (AY 2007- 08) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEES CLAIM OF ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 3 EXEMPTION U/S. 11 & 12 OF THE I.T. ACT AS THE ASSES SEE HAS NOT FULFILLED THE CONDITION OF SECTION 12A ACCORDING TO WHICH THE ASSESSEE HAS TO CARRY OUT ACTIVITIES IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEAR ING. 2.1 THE GROUNDS RAISED IN ASSESSEES C.O. NO. 229/ DEL/2011 (AY 2007-08) READ AS UNDER:- 1. THAT IN THE ALTERNATIVE AND, WITHOUT PREJUDICE T O THE CLAIM THAT, ASSESSEE IS ENTITLED TO EXEMPTION U/S. 11 & 1 2 OF THE ACT, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT, ASSE SSEE WAS ALSO ENTITLED TO EXEMPTION U/S. 10(23C)(VIA) OF THE ACT. 2. THAT EVEN OTHERWISE AND ASSUMING FOR SAKE OF AN ARGUMENT THOUGH THE SAME WAS SERIOUSLY DISPUTED THAT THE APP ELLANT WAS NOT ENTITLED TO EXEMPTION U/S. 11 & 12 AND 10(2 3C)(VIA) OF THE ACT AND, WAS ASSESSABLE AS AN AOP, ASSESSEE IS ENTITLED TO CARRY FORWARD OF BUSINESS LOSS DETERMINED AT RS. 4,53,47,744/-. 3. THE GROUNDS RAISED IN REVENUES APPEAL ITA NO. 2 127/DEL/2012 (AY 2008-09) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ASSESSEE S CLAIM OF EXEMPTION U/S. 11 & 12 OF THE I.T. ACT WITHOUT APPR ECIATING THE FACT THAT THE ACTIVITIES OF THE ASSESSEES WERE NO T IN ACCORDANCE WITH THE TRUST DEED. ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 4 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE H ONBLE HIGH COURT HAS HELD THE CANCELLATION OF REGISTRATION U/S . 12AA(3) AS INVALID ON TECHNICAL GROUNDS AND NOT ON MERITS. HE HAS ALSO FAILED TO TAKE COGNIZANCE OF THE FACT THAT TH E SLP HAS BEEN FILED AGAINST THE SAID ORDER OF THE HIGH COUR T AND THE DECISION OF THE APEX COURT IS PENDING. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEAR ING. 3.1 THE GROUNDS RAISED IN ASSESSEES C.O. NO. 259/D EL/2011 (AY 2008-09) READ AS UNDER:- 1. THAT IN THE ALTERNATIVE AND, WITHOUT PREJUDICE T O THE CLAIM THAT, ASSESSEE IS ENTITLED TO EXEMPTION U/S. 11 & 1 2 OF THE ACT, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT, ASSE SSEE WAS ALSO ENTITLED TO EXEMPTION U/S. 10(23C)(VIA) OF THE ACT. 2. THAT EVEN OTHERWISE AND ASSUMING FOR SAKE OF AN ARGUMENT THOUGH THE SAME WAS SERIOUSLY DISPUTED THAT APPELLA NT WAS NOT ENTITLED TO EXEMPTION U/S. 11 & 12 AND 10(23C)( VIA) OF THE ACT AND, WAS ASSESSABLE AS AN AOP, ASSESSEE IS ENTI TLED TO CARRY FORWARD OF BUSINESS LOSS DETERMINED AT RS. 40 ,21,183/-. 4. THE GROUNDS RAISED IN ASSESSEES APPEAL NO. 985/ DEL/2015 (AY 2009- 10) READ AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-40, NEW DELHI HAS ERRED IN LAW AND ON FACTS IN CONFIRMING T HE ACTION OF THE LEARNED ASSESSING OFFICER DENYING THE CLAIM OF EXEMPTION UL S 11 AND 12 OF THE ACT. ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 5 2. THAT IN ARRIVING AT THE AFORESAID CONCLUSION, TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT, SINCE APPELLANT IS A CHARITABLE INSTITUTION ENGAGED IN RU NNING HOSPITALS (BOTH ALLOPATHIC AND, AYURVEDIC), WHICH CONSTITUTES TO BE A CHARITABLE ACTIVITY U/S 2(15) OF THE ACT AND, THEREFORE BOTH IN LAW AND , ON FACT, THE ENTIRE RECEIPT OF THE APPELLANT INSTITUTION WAS EXEMPT U/S 11 AND 12 OF THE ACT. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FURTHER NOT ONLY FAILED TO COMPREHEND THE FACTS OF THE CASE OF THE APPELLANT BUT ALSO MISCONSTRUED THE STATUTORY PROVISIONS OF LAW A ND THEREFORE, DENIAL OF CLAIM OF EXEMPTION IS ALTOGETHER ARBITRARY, ILLEGAL AND THEREFORE, UNSUSTAINABLE. 2.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FAILED TO APPRECIATE THAT THE APPELLANT HAD NOT BEEN RESTR ICTED TO OPEN AND RUN ALLOPATHIC HOSPITAL UNDER THE WILL OF SETTLOR AND, ALSO WHEN THE REGISTRATION WAS GRANTED UNDER SECTION 12A OF THE ACT. INFACT TH E LEARNED ASSESSING OFFICER HAS OVERLOOKED THAT, NEITHER THE WILL OF TH E SETTLOR AND, NOR THE LEARNED COMMISSIONER OF INCOME TAX-II HAD RESTRICTE D OR PROHIBITED THE TRUST TO RUN THE TRUST WITH THE HELP AND, AID OF AL LOPATHIC MEDICINES. MOREOVER, WHILE GRANTING REGISTRATION TO THE TRUST, THE ACCOUNTS OF THE HOSPITAL HAD NOT ONLY BEEN PLACED ON RECORD BUT WER E DULY CONSIDERED AND, IT WAS ONLY ON CONSIDERATION OF SUCH ALLOPATHI C ACTIVITIES THAT, THE APPELLANT WAS HELD TO BE A CHARITABLE INSTITUTION, WHICH HAD NOT OFFENDED THE OBJECTS OF THE TRUST SO AS TO GRANT A REGISTRAT ION CERTIFICATE UNDER SECTION 12A OF THE ACT. 2.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS ALSO FAILED TO ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 6 APPRECIATE THAT THE APPELLANT HAS BEEN CARRYING ON ALLOPATHIC ACTIVITIES ALONG-WITH AYURVEDIC ACTIVITIES IN ACCORDANCE WITH THE WILL OF THE SETTLOR SINCE 1958 AND, ACCORDING CLAIM OF EXEMPTION U/S 11 AND, 12 OF THE ACT OR ALTERNATIVELY U/S 10(22A)/10(23)(VI) OF THE ACT HAS BEEN CLAIMED AND, ALLOWED AS SUCH. HENCE, THE CONCLUSION OF THE LD. CIT(A) TO DENY EXEMPTION IN THE YEAR UNDER CONSIDERATION IS ARBITRARY, UNJUSTIFIED , MISCONCEIVED, MISPLACED AND, NOT IN ACCORDANCE WITH LAW. 2.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO ERRED IN UPHOLDING THAT, DESPITE THE FACT THAT THE ACTIVITIE S OF THE TRUST ARE CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT, THE CLAIM OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT IS NOT TENABLE SINCE A CTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. 3. THAT IN ANY CASE AND, EVEN OTHER-WISE THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT, HE WAS DUTY BOUND TO GRANT EXEMPTION U/S 10(23C)(VIA) OF THE ACT SINCE T HE APPLICATION MADE BY THE APPELLANT HAD BEEN IMPLIEDLY ACCEPTED ON THE SA ME TERMS AND, CONDITIONS HERETO BEFORE. IT IS PRAYED IT BE HELD THAT, THE APPELLANT IS A CH ARITABLE INSTITUTION CARRYING ON CHARITABLE ACTIVITIES UNDER SECTION 2(1 5) OF THE ACT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AND IS THE REFORE, IS ENTITLED TO ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 7 EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT AND, A PPEAL OF THE APPELLANT-TRUST BE ALLOWED. 4.1 THE GROUNDS RAISED IN REVENUES APPEAL NO. 19 62/DEL/2015/DEL/2015 (AY 2009-10) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF CARRY FOR WARD OF LOSSES DISREGARDING THE FACTS THAT THE SET OFF AND CARRY F ORWARD OF LOSSES ARE DEALT WITH BY THE PROVISIONS OF SECTION 70, 71, 72, 73 & 74 OF THE INCOME TAX ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF CARRY FOR WARD OF LOSSES DISREGARDING THE FACTS THAT THE PROVISIONS OF THE A CT ARE NOT APPLICABLE IN THE CASES WHO ARE CLAIMING EXEMPTION U/S. 11 & 12 OF THE I.T. ACT, 1961. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME FOR THE AY 2007-08 ON 2.11.2007 DECLARING NIL INCOM E. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS ISSUED ON 8 .9.2008 FIXING THE CASE FOR 15.9.2008. IN RESPONSE TO THE NOTICE, ASSESSEES AUTHORISED REPRESENTATIVE ALONGWITH ITS EMPLOYEES ATTENDED THE PROCEEDINGS FR OM TIME TO TIME, FILED THE DETAILS AND PRODUCED THE BOOKS OF ACCOUNTS WHICH WE RE EXAMINED. THE ASSESSEE WAS REGISTERED U/S. 12A(A) OF THE I.T. ACT AND ALSO APPROVED U/S. ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 8 80G(5)(VI) OF THE I.T. ACT FOR THE PERIOD 1.4.2007 TO 31.3.2010. THE ASSESSEE IS RUNNING A HOSPITAL IN THE NAME OF SH. MOOLCHAND KHA IRATI RAM HOSPITAL AND AYURVEDIC RESEARCH INSTITUTE AT LAJPAT NAGAR, NEW D ELHI. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED A CO PY OF THE WILL OF LATE LALA KHAIRATI RAM BY WHICH THE TRUST CAME INTO EXISTENCE . 5.1 THE AO OBSERVED THAT THE CLAIM OF THE ASSESSEE THAT THE ACTIVITIES OF THE TRUST ARE NOT CHARITABLE WITHIN THE MEANING O SECTI ON 2(15) OF THE I.T. ACT DOES NOT JUSTIFY THE CLAIM OF EXEMPTION IN THE FACTS AND CIR CUMSTANCES OF THE CASE. THE ACTIVITIES OF THE TRUST MAY BE CHARITABLE PER SE. BUT THE ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THUS THE TRUST IS NOT ELIGIBLE FOR BENEFITS U/S. 11 & 12 OF THE I.T. ACT. AO ALSO HELD THAT FO R THE REASONS DISCUSSED IN DETAIL IN ASSESSMENT FOR ASSESSMENT YEAR 2006-07, THE ASSE SSEE IS NOT ENTITLED TO THE BENEFIT OF U/S. 11 /12 OF THE I.T. ACT. FURTHER, OT HERWISE ALSO, SINCE THE REGISTRATION U/S. 12A HAS SINCE BEEN WITHDRAWN BY THE DIT(E), TH E ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF SECTION 11/12 OF THE I.T. ACT, 1961. 6. AGGRIEVED, ASSESSEE APPEALED BEFORE THE LD. CIT (A), WHO VIDE IMPUGNED ORDER DATED 11.4.2011 HAS PARTLY ALLOWED THE APPEA L OF THE ASSESSEE BY HOLDING VIDE PARA NO. 3.3 AT PAGE NO. 9 OF THE IMPUGNED ORD ER AS UNDER:- ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 9 3.3. I HAVE GONE THROUGH THE SUBMISSION OF THE TR USTEE AS WELL AS RELIANCE ON VARIOUS CASE LAWS. IT IS ALSO A FACT O N RECORD THAT HONBLE TRIBUNAL VIDE ORDER DATED 12.3.2010 HAS CAN CELLED DIT(E) ORDER U/S. 12AA(3). SO ASSESSEE HAS BEEN GRANTED E XEMPTION U/S. 12A. SO IN VIEW OF MY FINDINGS IN THE APPELLATE ORD ER FOR THE A.Y. 2006-07 AND IN VIEW OF THE HONBLE ITAT DECISION AS MENTIONED ABOVE, BY WHICH ASSESSEE HAS BEEN GRANTED EXEMPTION U/S. 12A OF THE I.T. ACT, GROUND NO. 1 TO 4 ARE ALLOWED IN FAVO R OF THE APPELLANT. 7. AGAINST THE ORDER DATED 11.4.2011 PASSED BY THE LD. FIRST APPELLATE AUTHORITY, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL . 8. LD. DR RELIED UPON THE ORDER PASSED BY THE AO AN D REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND REQ UESTED THAT THE ORDER OF THE ASSESSING OFFICER MAY BE UPHELD. 9. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE STA TED THAT THE ISSUE IN DISPUTE WAS FIRST TIME RAISED IN ASSESSMENT YEAR 2006-07, WHEREBY THE ASSESSING OFFICER BY AN ORDER DATED 31.12.2008 DENI ED THE CLAIM. HOWEVER, THE LD. CIT(A), BY AN ORDER DATED 15.10.2010 ALLOWE D THE CLAIM. THE ITAT VIDE ITS ORDER DATED 3.2.2012 REVERSED THE CONCLUSION OF THE CIT(A). AGAINST WHICH THE ASSESSEE WAS IN FURTHER APPEAL BEFORE THE HONB LE HIGH COURT, WHO SET ASIDE THE ORDER OF THE TRIBUNAL VIDE ITS JUDGMENT DATED 2 7.7.2015 IN ASSESSEES OWN CASE TITLE AS MOOL CHAND KHAIRATI RAM TRUST VS. DIR ECTOR OF INCOME TAX (EXEMPTIONS) REPORTED IN [2015] 59 TAXMANN.COM 398 (DELHI) DECIDED VIDE ITA NO. 141 OF 2013. HE FURTHER STATED THAT SINCE THE H ONBLE HIGH COURT AS AFORESAID, IN ASSESSEES OWN CASE HAS DECIDED THE I SSUE IN DISPUTE IN FAVOR OF THE ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 10 ASSESSEE FOR THE ASSESSMENT YEAR 2006-07, THE SAME MAY BE RESPECTFULLY FOLLOWED IN THE SUBSEQUENT ASSESSMENT YEARS I.E. 20 07-08 TO 2009-10 AND ACCORDINGLY, HE REQUESTED THAT THE ACTION OF THE LD . CIT(A) MAY BE UPHELD OF ALLOWING THE CLAIM IN DISPUTE BY DISMISSING THE A PPEAL OF THE REVENUE. HE HAS FILED THE COPY OF THE SAID JUDGMENT DATED 27.7.2015 FOR READY REFERENCE. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH THE JUDGMENT DATED 27.7.2015 PASSED BY THE HONBLE JURISDICTIONAL HI GH COURT FOR THE ASSTT. YEAR 2006-07 IN ASSESSEES OWN CASE TITLE AS MOOL CHAND KHAIRATI RAM TRUST VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) REPORTED IN [2 015] 59 TAXMANN.COM 398 (DELHI) DECIDED VIDE ITA NO. 141 OF 2013. THE RELEV ANT FINDING OF THE SAID JUDGMENT I.E. PARA NOS. 32 TO 46 IS REPRODUCED BELO W FOR THE SAKE OF CONVENIENCE. 32. THE ONLY CONTROVERSY THAT REMAINS TO BE ADDRE SSED IS WHETHER THE AO AND THE TRIBUNAL WERE JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD APPLIED ITSINCOME FOR PURPOSES OTHER THAN ITS OBJEC TS. 33. ACCORDING TO THE REVENUE, THE OBJECTS OF TH E TRUST WOULD NOT PERMIT RUNNING OF A HOSPITAL WHERE PATIENTS ARE TREATED UN DER THE ALLOPATHIC SYSTEMOF MEDICINE. THE ASSESSEE HAD DISP UTED THE SAME AND HAD SUBMITTED A LETTER DATED 9TH DECEMBER, 2008 , INTER ALIA, EXPLAINING THAT THE INSTITUTION RUN BY THE ASSESSEE IS AN INTEGRATED INSTITUTION, WHICH HAS MADE SIGNIFICANT ADVANCES IN THE FIELD OF AYURVEDIC MEDICINE. THE ASSESSEE FURTHER EXPLAINED THAT THE HOSPITAL IN QUESTION INTEGRATES BOTH THE AYURVEDIC SYSTEM OF MEDICINE AS WELL AS ALLOPATHIC SERVICES, TO PROVIDE THE BEST ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 11 TREATMENT TO THE PATIENTS AND THE AYURVEDIC TREATME NT PROVIDED BY THE HOSPITAL UTILIZES METHODS OF INVESTIGATION USED UNDER THE SYSTEM OF MODERN MEDICINE. THE RELEVANT EXTRACT OF THE SAI D LETTER IS QUOTED BELOW:- AS IS EVIDENT FROM THE NAME OF THE HOSPITAL, THIS HOSPITAL IS PIONEER IN THE FIELD OF AYURVEDIC EDUCATION AND IMP ROVING AYURVEDIC SYSTEM OF MEDICINE BY AYURVEDIC RESEARCH. OVER THE PAST SEVERAL YEARS THE HOSPITAL HAS DEVELOPED N EW TECHNIQUES OF TENDERING SERVICES IN THE AYURVEDIC M EDICINE; TO NAME A FEW: 1. SCIENTIFIC APPLICATION OF PANCHKARMA AND MEDICIN E WHICH INCLUDES A. PIZHICHIL TREATMENT (SARVANG SNEH DHARA) FOR DEF ORMED RHEUMATOID ARTHRITIS (AMAVATA) B. KATI BASIL FOR DISC PROLARSE (KATISHULA, KATISTA MBHA), C. VIRECHAN KRIYA : KEEPING IN VIEW THE VALUES OF S ERUM ELECTROLYTES, LIPID PROFILE FOR PSORIASIS AND SKIN DISEASES. D. SHIROBASTI TRREATMENT FOR INSOMNIA, HYPERTENSION , ALOPACOA. 2. DEVELOPED VARIOUS COMBINATION OF DRUGS LIKE: A) RAJ RASAYAN FOR PROSTATE ENLARGEMENT B) GRIDHRASIHAR CHURNA FOR SCIATICA C) MUKHDUSHIKAHAR CHURNA FOR ACNE, HYPERPIGMENTATIO N D) SHWITRAHAR CHURNA FOR LEUCODERMA ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 12 3. TO SPREAD AWARENESS AND EDUCATE THE AYURVEDIC P HYSICIANS, THE FOLLOWING WORK HAS BEEN DONE; A. TENTH CENTURY GRANTHS HAVE BEEN TRANSLATED INTO HINDI LIKE ASHTANG HRIDYA, CHARAK SAMHITA, BHASHJYA RATNAWALI ETC. B. THE FOLLOWING BOOKS AND LITERATURE HAS BEEN PUBL ISHED; I. DEHADHATWAGNI VIGYANAM II. PANCH KARMA CHITIKSA III. CHIKITSA KALIKA IV. COMPILATION OF SUTRAS FROM DIFFERENT 'GRANTHAS'. C. THE TRUST IS ENGAGED IN THE FOLLOWING TRAINING A ND EDUCATION RELATED ACTIVITIES FOR CREATING AND SPREADING AWARE NESS ABOUT AYURVEDIC SYSTEM OF MEDICINE; I. INTERNS FOR AYURVEDIC EDUCATION ARE TAKEN, WHO A RE NOT ONLY TAUGHT THE AYURVEDIC MEDICINE BUT ALSO GIVEN HANDS ON PRACTICAL EXPERIENCE AND CLINICAL KNOWLEDGE ABOUT AYURVEDIC S YSTEM OF MEDICINE. II. THE TRUST RUNS DEDICATED INDOOR FACILITY ON AYU RVEDIC AND MANAGES 40 BEDS WHEREIN THE TREATMENT IS GIVEN FREE . III. AYURVEDIC MEDICINES ARE DISPENSED AND PROVIDED AT NOMINAL COST AND IN CASE OF DESERVING PATIENT EVEN FREE. ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 13 IV. EVERY THIRD FRIDAY OF THE MONTH, TRUST ORGANIZE S AYURVEDIC SAMBHASHA PARISHAD AND DOCTORS FROM FAR AND WIDE CO ME AND ATTEND THE EVENT. V. SCHOLARSHIPS TO THE STUDENTS OF SHRIMADHYANAND V ED ARSH MAHAVIDHAYALA NYAS ARE GIVEN TO ENCOURAGE AND PROMO TE AYURVEDA. VI. ON SIDE CAMPS ARE ORGANIZED AT VARIOUS PLACES T O PROMOTE AYURVEDIC SYSTEM OF MEDICINE. VII. OUR AYURVEDA CHARYAS ARE INVOLVED AND ENGAGED IN GIVING TALKS, LECTURERS AND HOLDING WORKSHOPS AT VARIOUS P LACES LIKE NTPC, TCIL, RESERVE BANK OF INDIA AND OTHER PLACES. VIII. PANCHKARMA TEACHING AND TRAINING COURSES HAVE BEEN DEVELOPED AND ARE MODIFIED ON REGULAR BASIS. D. AS A PART OF PIONEER AYURVEDIC INSTITUTE THE HOS PITAL PROVIDE STATE OF ART AYURVEDIC FACILITIES AS : I PANCH KARMA II STRI ROG III. SHALYA SHALKYA IV KAYA CHIKITSA. 4. AYURVEDIC PHARMACY THROUGH WHICH MEDICINES ARE B EING MANUFACTURED AND DISPENSED CATERS TO THE NEEDS OF PATIENTS COMIN G FOR AYURVEDIC ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 14 TREATMENT TO THE HOSPITAL. BESIDES THIS, MOOLCHAND HAS DEVELOPED THE FOLLOWING IMPORTANT PATIENT MEDICINES: A. MOOLCHAND CHITRAK HARITAKI FOR BRONCHITIS, ALLER GIC RHINITIS, SINUSITIS AND CONTINUOUS DRY COUGH B. RAJ RASAYAN FOR REJUVENATION, PROSTATE ENLARGEME NT, URINARY DISORDERS. C. CHYAWAN PRASH AS GENERAL REJUVENATIVE TONIC. D. ABHRAK MIASMA FOR CARDIAC AILMENTS, FEVER, BRONC HITIS, CHEST CONGESTION, BRONCHIAL ASTHMA. 5. IT HAS BEEN CLINICALLY PROVEN AS RESULT OF CONTI NUOUS RESEARCH THAT WE HAVE DEVELOPED NOT ONLY TREATMENT BUT ABSOLUTE CARE OF: A. DIABETES B. O.A. C. RHENATOLD D. PSORIASIS E. BRONCHIAL ASTHMA F. LEUCODERMA G. HEPATITIS H. HEPATITIS B I. HYPERTENSION ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 15 J. PARALYSIS K. CVA L. DEADDDICTION PROGRAMME FOR ALCOHOL FOR DRUGS AND SMOKING M. PSYCHOLOGICAL PROBLEMS. 6. IN ORDER TO PROMOTE AYURVEDIC MEDICINE, HELP IS TAKEN FROM MODERN MEDICINE SYSTEM AND TRUST RUNS VARIOUS ALLOPATHIC S ERVICES BOTH IN MEDICINE AND SURGERY SUCH AS DEPARTMENT OF MEDICINE (GASTROENTEROLOGY, RESPIRATORY & PULMONOLOGY, CARD IOLOGY, ONCOLOGY AND INTERNAL MEDICINE): DEPARTMENT OF SURG ERY (GENERAL SURGERY, URO SURGERY, COSMETIC AND PLASTIC SURGERY, PAEDIATRIC SURGERY); DEPARTMENT OF ORTHOPEDICS; DEPARTMENT OF ANESTHESIA; DEPARTMENT OF PAEDIATRICS; DEPARTMENT OF NEONATOLOG Y, DEPARTMENT OF NEPHROLOGY; DEPARTMENT OF OBS & GYNAE ; DEPARTMENT OF NEUROLOGY; DEPARTMENT OF DENTAL; DEPA RTMENT OF OPHTHALMOLOGY; DEPARTMENT OF ENT AND DEPARTMENT OF PHYSIOTHERAPY. THIS IS UNIQUE HOSPITAL THAT INTEGRATES BOTH AYURVE DIC SYSTEM OF MEDICINE AND ALLOPATHIC SERVICES TO GIVE BEST RESUL TS TO THE PATENTS AND WHICH HELPS IN IMPROVING THE TREATMENT AND OBTA IN BEST RESULTS OUT OF THIS. THE AYURVEDIC HOSPITAL UTILIZES VARIOU S MODERN MEDICINE METHOD OF INVESTIGATION SUCH AS ; A. BLOOD HEMATOLOGY B. MICROBIOLOGY C X-RAY ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 16 C. C. T. SCAN D. ULTRASOUND E. ECG F. ECO G. ANGIOGRAPHY THE TRUST IS ALSO ENGAGED IN RUNNING VARIOUS HEALTH CHECK CLINICS, DIET SERVICE CLINICS IN REMOTE AREAS IN ORDER TO AUGMENT HEALTH CARE SERVICES USING AYURVEDIC SYSTEM OF MEDICINE. 7. IN ORDER TO FURTHER - SPREAD EDUCATION, AWARENES S AND HELP IN RESEARCH IN AYURVEDIC AND MODERN MEDICINE A FULLFLE DGED SCIENTIFIC LIBRARY IS MAINTAIN BY THE HOSPITAL WHICH HAS : A. MORE THAN, ONE THOUSAND HOOKS ARE AVAILABLE IN T HE LIBRARY INCLUDING ALL LEADING JOURNALS. B. BESIDES VARIOUS SUBSCRIPTIONS AVAILABLE, THE LIB RARY IS OPEN FOR STUDENT STAFF PHYSICIANS, TRAIEES, INTERNS AND TECH NICIANS. 8. TO FURTHER SPREAD EDUCATION, HOSPITAL ALSO PROV IDES DIPLOMA IN NURSING WHICH IS REGISTERED UNDER AEGIS OF DELHI NU RSING COUNCIL AND EVERY YEAR 30 STUDENT ENROLL FOR THIS COURSE. T HIS DURATION FOR THIS DIPLOMA COURSE IS 3-1/2 YEARS. THROUGH THIS CO URSE, HANDS ON TRAINING IS ALSO PROVIDED IN AYURVEDIC SYSTEM OF ME DICINE. IT IS A MATTER OF PRIDE THAT PHYSICIANS FROM FAR AN D WIDE COME FOR AYURVEDIC TRAINING TO THIS INSTITUTE. FROM THE PERU SAL OF THE ABOVE, IT ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 17 MAY BE APPRECIATED THAT LOT OF ACTIVITIES IS BEING DONE TO IMPROVE AYURVEDIC SYSTEM OF MEDICINES AND PREACHING THE SAM E. IT IS RESPECTFULLY SUBMITTED THAT YOUR CONTENTIONS/OBSERV ATIONS THAT 'IT IS NO WHERE PERMITTED TO OPEN AND RUN ALLOPATHIC HOSPI TAL' IS PRIMA FACIE UNTENABLE BECAUSE OF THE FACT THAT TRUST HAS OPENED PRIMARILY AN AYURVEDIC HOSPITAL AND TAKING HELP FROM ALLOPATH IC SYSTEM OF MEDICINES OR ANY OTHER SYSTEM OF MEDICINES IS NOT P ROHIBITED, IT MEANS THAT IT IS PERMITTED. WHILE PROMOTING AYURVED A, THE OTHER SYSTEM OF MEDICINE ALSO GOT PROMOTED. IT SERVES THE GENERAL GOOD OF THE COMMUNITY WHILE RETAINING ITS CHARITABLE NAT URE AT A ALL POINTS OF TIME. IT WILL BE APPRECIATED THAT THIS IS PERMIS SIBLE UNDER THE PROVISIONS OF THE TRUST DEED AS WELL AS UNDER THE P ROVISIONS OF THE INCOME TAX, 1961. IT WILL ALSO BE APPRECIATED THAT THE TRUST HAS NOT CHANGED ITS ACTIVITIES/SYSTEM OF MEDICINES OF BE IT AYURVEDA OR BE IT ALLOPATHIC FROM THE VERY BEGINNING. IT IS SUBMITTED THAT TRUST CAN ONLY OPEN HOSPITAL BUT CANNOT COMPEL THE COMMUNITY TO CHOOSE THE SYSTEM OF MEDICINES. THUS WHILE PROVIDING AYURVEDA AND CONTIN UOUSLY IMPROVING THE AYURVEDIC SYSTEM OF MEDICINES, PATENT S WANTING ALLOPATHIC TREATMENT ARE BEING PROVIDED ALLOPATHIC TREATMENT AS WELL. THIS IS UNIQUE HOSPITAL WHERE IN ORDER TO IMPROVE A YURVEDIC SYSTEM OF MEDICINES AND CREATE AWARENESS ABOUT THE AYURVED IC SYSTEM OF MEDICINES ARE BEING ADOPTED. ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 18 THE NAME OF THE HOSPITAL IS NOT MOOLCHND HOSPITAL B UT MOOLCHAND KHAIRATI RAM HOSPITAL AND AYURVEDIC RESEARCH INSTIT UTE. 34. THE ASSERTION MADE BY THE ASSESSEE THAT IT PROV IDES TREATMENT UNDER THE AYURVEDIC SYSTEM AT THE HOSPITAL IN QUESTION AN D IS INVOLVED IN THE ADVANCEMENT OF THE AYURVEDIC MEDICINE IS NOT DI SPUTED BY THE AO. IT IS ALSO NOT DISPUTED THAT THE HOSPITAL RUN B Y THE ASSESSEE IS AN INTEGRATED HOSPITAL OFFERING TREATMENTS UNDER THE A YURVEDIC SYSTEM OF MEDICINE AS WELL AS UNDER THE ALLOPATHIC SYSTEM OF MEDICINE. THE REVENUE ALSO DOES NOT DISPUTE THE ASSESSEES CONTEN TION THAT THE TREATMENT UNDER THE AYURVEDIC SYSTEM OF MEDICINE DR AWS SIGNIFICANTLY FROM INVESTIGATION TECHNIQUES USED UN DER MODERN MEDICINE SYSTEM. IN THE CIRCUMSTANCES, THE LIMITED ISSUE TO BE ADDRESSED IS WHETHER RUNNING OF SUCH HOSPITALS WHIC H PROVIDES ALLOPATHIC AS WELL AS AYURVEDIC TREATMENT AND INCLU DES INVESTIGATION TECHNIQUES OF MODERN MEDICINE WOULD BE CONTRARY TO THE OBJECT OF THE ASSESSEE TRUST. 35. A PLAIN READING OF THE OBJECTS INDICATES THAT I T INCLUDES DEVISING MEANS FOR IMPARTING EDUCATION AND IMPROVING AYURVED IC SYSTEM OF MEDICINE AND PREACHING THE SAME. IT IS ALSO EXPRES SLY CLARIFIED THAT THE ASSESSEE IS NOT PROHIBITED TO TAKE HELP FROM TH E ENGLISH, UNANI OR ANY OTHER SYSTEM OF MEDICINE FOR ITS OBJECT. F URTHER, IT IS ALSO EXPRESSLY PROVIDED THAT ACCORDING TO THE NEED, ONE OR MORE AYURVEDIC HOSPITALS MAY BE OPENED. IT IS AT ONCE CL EAR THAT THE OBJECT DOES NOT PROHIBIT RUNNING OF AN ALLOPATHIC H OSPITAL OR DRAWING FROM ANY THE OTHER SYSTEM OF MEDICINE FOR I MPROVING THE AYURVEDIC SYSTEM OF MEDICINE. THE ASSESSEES ENDEAV OUR OF RUNNING ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 19 A HOSPITAL PROVIDING MODERN TECHNIQUES AND TREATMEN T WHICH WOULD ALSO BE A SOURCE FOR IMPROVING AYURVEDIC SYSTEM OF MEDICINE WOULD, PLAINLY, BE AN ACTIVITY TOWARDS THE OBJECTS AS SPECIFIED. MERELY BECAUSE, RUNNING OF AN ALLOPATHIC HOSPITAL I S NOT SPECIFICALLY MENTIONED, IT DOES NOT NECESSARILY MEAN THAT THE SA ME WOULD BE ULTRA VIRES THE OBJECTS, AS ESTABLISHMENT OF AN ALL OPATHIC HOSPITAL DOES ASSIST THE ASSESSEE IN ITS OBJECT OF IMPROVING THE AYURVEDIC SYSTEM AND TAKING ASSISTANCE FROM THE ALLOPATHIC SY STEM OF MEDICINE. ANY ACTIVITY REASONABLY INCIDENTAL TO THE OBJECT WOULD NOT BE ULTRA VIRES THE OBJECTS. AS EXPLAINED BY THE ASS ESSEE, THE MODERN INVESTIGATION TECHNIQUES ARE EQUALLY UTILIZED FOR T REATMENT UNDER AYURVEDIC SYSTEM. 36. IN LAKSHMANASWAMI MUDALIAR V. LIFE INSURANCE CO RPORATION: AIR 1963 SC 1185, THE SUPREME COURT HAD OBSERVED AS UND ER: (13) POWER TO CARRY OUT AN OBJECT, UNDOUBTEDLY INC LUDES POWER TO CARRY OUT WHAT IS INCIDENTAL OR CONDUCIVE TO THE AT TAINMENT OF THAT OBJECT, FOR SUCH EXTENSION MERELY PERMITS SOMETHING TO BE DONE WHICH IS CONNECTED WITH THE OBJECTS TO BE ATTAINED, AS BEING NATURALLY CONDUCIVE THERETO. 37. ALTHOUGH THE ABOVE OBSERVATIONS WERE MADE IN TH E CONTEXT OF INTERPRETATION OF THE OBJECT CLAUSE OF A MEMORANDUM OF ASSOCIATION OF A COMPANY, THE PRINCIPLE WOULD ALSO BE APPLICABLE TO DETERMINE WHETHER ANY ACTIVITY IS ULTRA VIRES TH E PURPOSE OF A TRUST. ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 20 38. THUS, IN OUR VIEW, THE AO AND THE TRIBUNAL ERRE D IN CONCLUDING THAT THE ASSESSEES ACTIVITIES WERE IN EXCESS OF IT S OBJECTS. RUNNING AN INTEGRATED HOSPITAL WOULD CLEARLY BE CONDUCIVE T O THE OBJECTS OF THE ASSESSEE. THE TRUSTEES HAVE CARRIED OUT THE ACT IVITIES OF THE TRUST BONAFIDE AND IN A MANNER, WHICH ACCORDING TO THEM B EST SUBSERVED THE CHARITABLE OBJECTS AND THE INTENT OF THE SETTLO R. THUS THE ACTIVITIES OF THE ASSESSEE CANNOT BE HELD TO BE ULTRA VIRES IT S OBJECTS. THE AO AND THE TRIBUNAL WERE UNDULY INFLUENCED BY THE PROP ORTION OF THE RECEIPTS PERTAINING TO THE AYURVEDIC RESEARCH INSTI TUTE AND THE HOSPITAL. IN OUR VIEW, THE FACT THAT THE PROPORTION OF RECEIPTS PERTAINING TO THE AYURVEDIC RESEARCH INSTITUTE IS S IGNIFICANTLY LOWER THAN THAT PERTAINING TO THE HOSPITAL WOULD, IN THE FACTS OF THE PRESENT CASE, NOT BE MATERIAL. UNDISPUTEDLY, SIGNIFICANT AC TIVITIES ARE CARRIED OUT BY THE ASSESSEE FOR ADVANCEMENT AND IMP ROVEMENT OF THE AYURVEDIC SYSTEM OF MEDICINE IN THE INSTITUTION ESTABLISHED BY THE ASSESSEE AND THOUGH THE RECEIPTS FROM THE ALLOPATHI C TREATMENT ARE LARGER, THE SAME DOES NOT MILITATE AGAINST THE OBJE CT FOR WHICH THE INSTITUTION HAS BEEN SET UP AND RUN. 39. THE NEXT ISSUE TO BE ADDRESSED IS WHETHER IT WA S OPEN FOR THE AO TO TAKE A VIEW DIFFERENT FROM THE ONE THAT HAS B EEN ACCEPTED BY THE REVENUE FOR THE PAST SEVERAL DECADES. IT IS WEL L ESTABLISHED THAT EACH YEAR IS A SEPARATE ASSESSMENT UNIT AND THE PRI NCIPLES OF RES JUDICATA ARE NOT APPLICABLE. HOWEVER, IN THIS CASE, IT WOULD BE APPROPRIATE TO NOTE THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE HAVE BEEN ACCEPTED AS BEING AMENABLE TO EXEMPTION U NDER SECTION 11 OF THE ACT FOR THE PAST SEVERAL DECADES. IN THE PAST ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 21 PERIOD, THE ASSESSEE HAS BEEN GRANTED EXEMPTION UND ER SECTION 11 OF THE ACT AND ALSO UNDER SECTION 10(22)/10(22A) OR SECTION 10(23C) OF THE ACT. CONCEDEDLY, THE EXEMPTIONS GRAN TED TO THE ASSESSEE FOR PAST SEVERAL DECADES WOULD NOT BE AVAI LABLE IF THE ACTIVITIES OF THE ASSESSEE WERE CONSIDERED BY THE C ONCERNED AOS/AUTHORITIES TO BE ULTRA VIRES ITS OBJECTS. 40. IN THE CIRCUMSTANCES, IT WOULD NOT BE APPOSITE TO PERMIT THE REVENUE TO CHALLENGE A POSITION THAT HAS BEEN SUSTA INED OVER SEVERAL DECADES WITHOUT THERE BEING ANY MATERIAL CH ANGE. IN RADHASOAMI SATSANG (SUPRA), THE SUPREME COURT OBSER VED AS UNDER:- .EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECID ED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WH ERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT AL L APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 41. IN PARASHURAM POTTERY WORKS CO. LTD. V. ITO: (1 977) 106 ITR 1 SC, THE SUPREME COURT REITERATED THE PRINCIPLE THAT IF THE PARTIES HAVE ALLOWED A POSITION TO SUSTAIN, IT WOULD NOT BE APPROPRIATE TO CHANGE THE POSITION IN A SUBSEQUENT YEAR. THE SAID DECISIONS HAVE ALSO BEEN FOLLOWED BY THE SUPREME COURT IN ITS LATE R DECISION IN EXCEL INDUSTRIES LTD. (SUPRA). ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 22 42. IN KRISHAK BHARATI CO-OPERATIVE LTD. (SUPRA), A DIVISION BENCH OF THIS COURT STRUCK A NOTE OF CAUTION THAT THE RULE O F CONSISTENCY IS NOT OF A WIDE APPLICATION AND A BLIND ADHERENCE TO THIS RULE WOULD LEAD TO ANOMALOUS RESULTS. THUS, IN THE CIRCUMSTANCES, W HERE THE VIEWS ARE MISTAKEN AND APPARENTLY ERRONEOUS, IT WOULD NOT BE APPOSITE TO COMPEL THE REVENUE TO FOLLOW THE SAME ON THE PRINCI PLE OF ESTOPPEL OR OF CONSISTENCY. HOWEVER, IN CASES, WHERE TWO VIE WS ARE PLAUSIBLE, IT WOULD BE, PLAINLY, WHIMSICAL TO FRAM E AN ASSESSMENT CONTRARY TO THE POSITION ACCEPTED IN EARLIER YEARS. THIS WOULD RENDER THE EXERCISE OF ASSESSMENT HIGHLY SUBJECTIVE; CLEAR LY, AN ASSESSEE CANNOT BE SUBJECTED TO SUCH VAGARIES. INDISPUTABLY, THE POWERS OF AO ARE WIDE BUT ITS EXERCISE CANNOT BE UNDISCIPLINE D. IN CASES WHERE THERE IS A PALPABLE MISTAKE OR THE POSITION A CCEPTED BY THE REVENUE IN EARLIER YEARS IS APPARENTLY ERRONEOUS, T HE AO WOULD NOT BE BOUND TO ACCEPT THE VIEW OF HIS PREDECESSORS. HO WEVER, IN CASES - SUCH AS THE PRESENT CASE - WHERE THE ASSESS EES CLAIM FOR EXEMPTION HAS BEEN ACCEPTED FOR SEVERAL DECADES, IT WOULD NOT BE OPEN FOR AO TO THINK OF NEW GROUNDS, WHICH AT BEST RAISE CONTENTIOUS ISSUES, TO CAST A WIDER NET OF TAX. IT IS TRITE LAW, THAT IF TWO VIEWS ARE POSSIBLE, THE ONE FAVORING THE ASSESS EE MUST BE ADOPTED. THIS RULE WOULD APPLY A FORTIORI IN CASES WHERE THE ASSESSEES CLAIM HAS BEEN CONSISTENTLY ACCEPTED BY THE REVENUE IN THE PAST. THUS, IN CASES WHERE THE CLAIM OF AN ASSE SSEE HAS BEEN ACCEPTED IN EARLIER YEARS, UNLESS THE CLAIM OF AN A SSESSEE IS FOUND TO BE DEVOID OF ANY BASIS OR PLAINLY CONTRARY TO LA W, IT WOULD NOT BE OPEN FOR THE AO TO TAKE A VIEW CONTRARY TO THE POSI TION WHICH HAS ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 23 BEEN ACCEPTED BY THE REVENUE IN EARLIER YEARS AND H AS BEEN PERMITTED TO SUSTAIN FOR A SIGNIFICANT PERIOD OF TI ME. 43. IN THE FACTS OF THE PRESENT CASE, IT IS NOT POS SIBLE TO ACCEPT THAT GRANT OF EXEMPTION TO THE ASSESSEE FOR THE PAST SEV ERAL DECADES WAS PALPABLY ERRONEOUS AND SUCCESSIVE AOS WERE WRON G IN ACCEPTING THAT THE ACTIVITIES OF THE ASSESSEE WERE IN FURTHERANCE OF ITS CHARITABLE OBJECTS, ENTITLING THE ASSESSEE TO E SCAPE THE LEVY OF INCOME TAX. 44. IN VIEW OF THE ABOVE, THE SECOND QUESTION IS AN SWERED IN AFFIRMATIVE AND ASSESSEE WOULD NOT BE ENTITLED TO E XEMPTION UNDER SECTION 11 OF THE ACT IF ITS ACTIVITIES ARE OUTSIDE THE SCOPE OF ITS OBJECTS, EVEN IF ITS ACTIVITIES ARE CHARITABLE IN N ATURE. HOWEVER, THE FIRST QUESTION IS ANSWERED IN THE NEGATIVE AND IN F AVOUR OF THE ASSESSEE AND IN OUR VIEW, THE TRIBUNAL WAS NOT JUST IFIED IN ALLOWING THE REVENUES APPEAL AND DENYING THE ASSESSEES CLA IM UNDER SECTION 11 OF THE ACT. 45. INSOFAR AS THE ISSUE REGARDING DEPRECIATION ON ASSETS USED FOR PROVIDING ALLOPATHIC SYSTEMS OF MEDICINE IS CONCERN ED, THE LEARNED COUNSEL FOR THE REVENUE DID NOT DISPUTE THAT THE DE PRECIATION WOULD ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 24 BE ALLOWABLE IF THE ACTIVITIES OF THE ASSESSEE WERE CONSIDERED TO BE WITHIN THE SCOPE OF ITS OBJECTS. THE TRIBUNAL HAD D ENIED THE CLAIM OF DEPRECIATION, IN RESPECT OF ASSETS USED FOR PROVIDI NG MEDICAL RELIEF THROUGH ALLOPATHIC SYSTEM OF MEDICINE, ONLY ON THE BASIS THAT THE ASSESSEES ACTIVITY FOR RUNNING THE HOSPITAL WAS U LTRA VIRES ITS OBJECTS. IN THE CIRCUMSTANCES, THE THIRD QUESTION I S TO BE ANSWERED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 46. IN VIEW OF THE AFORESAID, THE IMPUGNED ORDER OF THE TRIBUNAL IS SET ASIDE. THE APPEAL IS DISPOSED OF. NO ORDER AS T O COSTS. 10.1 AFTER GOING THROUGH THE AFORESAID JUDGMENT O F THE HONBLE HIGH COURT AS WELL AS THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY DECIDED THE ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE. WE FURTHER FIND THAT THE HO NBLE JURISDICTIONAL HIGH COURT VIDE ITS JUDGMENT DATED 27.7.2015 PASSED IN THE ASS ESSEES OWN CASE FOR THE ASSTT. YEAR 2006-07 IN FAVOUR OF THE ASSESSEE, AS REFERRED ABOVE AND THEREFORE, IN OUR CONSIDERED VIEW, FOLLOWING THE SAME RATIO I S BINDING PRECEDENT IN RESPECT OF THE SUBSEQUENT ASSESSMENT YEARS I.E. ASSTT. YEAR S 2007-08 TO 2008-09 AND ACCORDINGLY, THE ASSESSEE IS ENTITLED F OR THE EXEMPTION/CLAIM U/S. 11 & 12 OF THE I.T. ACT, 1961 IN THESE ASSESSMENT YEARS. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. C IT(A), HENCE, WE UPHOLD THE ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 25 IMPUGNED ORDER ON THE ISSUE IN DISPUTE AND DISMISS THE APPEAL FILED BY THE REVENUE RELEVANT TO ASSESSMENT YEAR 2007-08. AS RE GARDS ASSESSMENT YEAR 2008-09 IS CONCERNED, FOLLOWING THE CONSISTENT VIE W, THE APPEAL FOR THE ASSTT. YEAR 2008-09 FILED BY THE REVENUE SHALL ALSO STAND DISMISSED. 11. AS WE HAVE ALREADY DISMISSED BOTH THE APPEALS FOR THE ASSTT. YEARS 2007-08 TO 2008-09 FILED BY THE REVENUE, AS AFORESA ID, THE ASSESSEES CROSS OBJECTIONS FOR THE ASSTT. YEAR 2007-08 TO 2008-09 H AVE BECOME INFRUCTUOUS AND DISMISSED AS SUCH. 12. AS REGARDS THE ASSESSEES APPEAL NO. 985/DEL/20 15 (AY 2009-10) IS CONCERNED, SINCE WE HAVE RESPECTFULLY FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FO R THE ASSTT. YEAR 2006-07 IN THE REVENUE APPEALS FOR THE ASSTT. YEAR 2007-08 & 2 008-09 AND ACCORDINGLY, THE REVENUE APPEALS FOR THESE TWO YEARS WERE DISMIS SED, AS AFORESAID, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW, THE A SSESSEE IS ENTITLED FOR THE CLAIM OF EXEMPTION IN DISPUTE RAISED IN THE APPEAL IN DI SPUTE AND ACCORDINGLY, THE APPEAL OF THE ASSESSEE RELEVANT TO ASSESSMENT YEAR 2009-10 BEING ITA NO. 985/DEL/2015 STANDS ALLOWED. CONSEQUENTLY, THE APP EAL NO. 1962/DEL/2015 FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-1 0 STANDS DISMISSED. ITA NOS. 2850/DEL/2011&2127/DEL/2012; CO NO. 229/DEL/2011&259/DEL/2012 & ITA NOS. 985&1962/DEL/2015 26 13. IN THE RESULT, ALL THE APPEALS FILED BY THE RE VENUE FOR THE ASSTT. YEARS 2007-08 TO 2009-10, IN THE AFORESAID MANNER STANDS DISMISSED AND BOTH THE CROSS OBJECTION FOR THE ASSTT YEAR 2007-08 TO 2008 -09 STAND DISMISSED AS INFRUCTUOUS AND THE APPEAL FILED BY THE ASSESSEE RE LEVANT TO ASSESSMENT YEAR 2009-10 STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/11/2015. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - [ [[ [PRASHANT PRASHANT PRASHANT PRASHANT MAHARISHI MAHARISHI MAHARISHI MAHARISHI] ]] ] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATE: DATE: DATE: DATE: 2 22 20 00 0- -- -11 1111 11- -- -2015 2015 2015 2015 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR