M/s. Rajasthan Medicare Relief Society, UDAIPUR V. ITO, UDAIPUR

CO 33/JODH/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9576 (ITAT-JODHPUR)
• Duration Of Justice: 6 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-04-2014
• Assessment Year: misc
• Appeal Filed On: 01-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Depreciation; Unabsorbed depreciation; Capital expenditure
• Section: 143(3); 12AA; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 414/JU/2013 ASSESSMENT YEAR: 2009-10 THE INCOME-TAX OFFICER VS. M/S RAJASTHAN M EDICAL RELIEF WARD 1(4) SOCIETY UDAIPUR C/O M.B. GOVT. HOSPITAL UDAIPUR PAN NO. AAATR 5506 L (APPELLANT) (RESPONDENT) CO NO. 33/JU /2013 A/O ITA NO. 414/JU/2013 ASSESSMENT YEAR: 2009-10 M/S RAJASTHAN MEDICAL RELIEF VS. THE INCO ME-TAX OFFICER SOCIETY WARD 1(4) C/O M.B. GOVT. HOSPITAL UDAIPUR UDAIPUR PAN NO. AAATR 5506 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI N.A. JOSHI, DR DATE OF HEARING : 22.04.2014 DATE OF PRONOUNCEMENT : 02.05.2014 2 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL BY THE REVENUE AND CROSS OBJECTION [CO] BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF T HE CIT(A), UDAIPUR DATED 30.04.2013 PERTAINING TO A.Y 2009- 2010. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A SOCIETY RUNNING A HOSPITAL AND FINANC ED MAINLY BY THE STATE GOVERNMENT WHICH IS ESTABLISHED FOR TREATING PATIENTS SUFFERING FROM VARIOUS DISEASES. THE SOCIETY IS ESTABLISHED AS A PHILANTHROPIC INSTITUTE WHICH IS EXEMPT FROM TAX U/S 10(23)(IIIAC) OF THE INCOME-TAX ACT, 1961 ['THE ACT', FOR SHORT]. THIS ASSESSEE-SOCIETY IS ALSO REGISTERED U/S 12AA OF THE ACT VIDE LETTER DATED 16 .7.2003 W.E.F. 6.8.1997. FOR A.Y. 2009-10, THE ASSESSEE-SO CIETY FILED ITS RETURN OF INCOME [ROI] ON 7.12.2009 DECLA RING NIL INCOME. THE A.O. FOUND THAT OUT OF THE TOTAL RECEI PTS OF 3 RS. 7,52,52,002/-, THE ASSESSEE-SOCIETY HAS SPENT O NLY RS. 5,22,97,678/- DURING THE RELEVANT YEAR WHICH AMOUNT S TO 69.5% OF THE RECEIPTS AND HAS SET APART THE REMAINI NG AMOUNT. IN CASE THE ASSESSEE HAS TO SET APART RECEI PTS MORE THAN 15%, IT HAS TO DECLARE IN FORM NO. 10 UPT O THE LAST DATE ON WHICH THE RETURN U/S 139(1) OF THE ACT CAN BE FILED. IN THIS CASE, SUCH A NOTICE WAS GIVEN ON 7. 10.2011 WHICH WAS BEYOND THE PERMITTED TIME. THEREFORE, THE A.O. HAS NOT ALLOWED THE EXEMPTION QUA THIS AMOUNT AS PE R PROVISIONS OF SECTION 11(2) OF THE ACT FOR SETTING APART THE RECEIPTS WHICH WERE NOT SPENT DURING THE YEAR. THE A.O. HAS ACCEPTED CAPITAL EXPENDITURE OF RS. 73,43,708/- AFTER DEPRECIATION. THE A.O. HAS OBSERVED THAT THE ASSESS EE- SOCIETY IS NOT ENTITLED TO EXEMPTION U/S 10(23C(III AE) OF THE ACT BECAUSE ITS TOTAL RECEIPTS ARE MORE THAN RS . 1 CRORE. FINALLY, THE A.O. HAS ASSESSED THE INCOME O F THE ASSESSEE AT RS. 43,28,820/-. AGGRIEVED, THE ASSESS EE PREFERRED APPEAL AND THE LD. CIT(A) HAS GIVEN PART RELIEF TO THE ASSESSEE. 4 3. THE REVENUE HAS FILED APPEAL AGAINST THE RELIEF GRANTED TO THE ASSESSEE-SOCIETY BY RAISING THE FOLL OWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: 1. ALLOWING THE DEDUCTION U/ 11(2) OF THE I.T. ACT IGNORING THE FACT THAT THE ASSESSEE HAS NOT FILED FORM NO. 10 FOR SETTING APART OF FUNDS BEFORE THE DUE DATE OF RETURN FILING U/S 139(1) OF THE ACT. 2. ALLOWING THE SET OFF UNABSORBED DEDUCTION OF A.Y. 2008-09 OF RS. 88,26,657/- IN A.Y. 2009- 10 THOUGH NO ANY BUSINESS ACTIVITY IS CARRIED OUT AND THERE IS NO INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS. 3. ALLOWING THE CLAIM OF THE ASSESSEE THAT THE ENTIRE INCOME IS EXEMPT U/S 10(23C)(IIIAC) BEING SOCIETY SUBSTANTIALLY FINANCED BY THE GOVERNMENT IGNORING THE FACT THAT AS PER THE 5 AUDIT REPORT THE ASSESSEE CLAIMED EXEMPTION U/S 10(23C)(IIIAE) OF THE ACT AND THE A.O. DISALLOWED THE SAME AS DURING THE YEAR UNDER CONSIDERATION THE TOTAL RECEIPTS OF THE ASSESSEE EXCEEDS RS. 1 CRORE. 4. THE ASSESSEE-SOCIETY HAS RAISED THE FOLLOWING GR OUNDS IN ITS CO: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS FAIR AND JUST IN ALLOWING THE DEDUCTION U/ 11(2) OF THE I.T. ACT AS THE ASSESSEE HAS FILED FORM NO. 10 MUCH BEFORE THE DATE OF COMPLETION OF ASSESSMENT ON 20.12.2011. THE SAME IS ALLOWABLE AS HELD BY THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE AT 208 ITR 568 AND BY THE HON'BLE SUPREME COURT IN CASE REPORTED AT 247 ITR 201 [SC].. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS FAIR AND JUST IN ALLOWING THE CLAIM OF UNABSORBED DEPRECIATION OF A.Y. 2008-09 AMOUNTING TO RS. 88,26,657/- TO THE EXTENT OF INCOME AVAILABLE. THE SAME DESERVES TO BE UPHELD. 6 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS FAIR AND JUST IN ALLOWING THE EXEMPTION U/S 10(23C)(IIIAC) TO THE SOCIETY. THE SAME DESERVES TO BE UPHELD. WE FIND THAT THE CO FILED BY THE ASSESSEE HAS SIMPL Y BEEN FILED IN SUPPORT OF THE IMPUGNED FINDING. THEREFOR E, THE CROSS OBJECTION OF THE ASSESSEE STANDS DISMISSED. 5. BEFORE US, BOTH THE PARTIES HAVE ADVANCED SIMILA R ARGUMENTS IN RESPECT OF REVENUES APPEAL WHICH WERE RAISED BEFORE THE LD. CIT(A). 6. WE HAVE FOUND THAT THE TIME LIMIT FOR GIVING NOT ICE FOR ACCUMULATION IS EXTENDED UPTO THE COMPLETION OF ASSESSMENT ORDER. THIS LEGAL FACT IS FOUND SUPPORTE D BY THE JUDGEMENT OF THE HON'BLE APEX COURT RENDERED IN THE CASE OF CIT VS. NAGPUR HOTEL OWNERS ASSOCIATION [2001] 2 47 ITR 201 [SC]. FURTHER, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ANJUMAN MOINA FAKHARIA [1994] 2 08 ITR 7 568 [RAJ]. IN THE GIVEN CASE, OBVIOUSLY THE ASSESS MENT WAS COMPLETED ON 20.12.2011. THE FORM NO. 10 WAS ADMITT EDLY FILED BEFORE THE A.O. ON 7.10.2011 WHICH IS MUCH BE FORE THE COMPLETION OF THE ASSESSMENT ORDER U/S 143(3) O F THE ACT. THUS, IN VIEW OF THE ABOVE STATED DICTUM OF T HE HON'BLE JURISDICTIONAL HIGH COURT AND THAT OF THE H ON'BLE APEX COURT THE A.O. CANNOT DENY DEDUCTION U/S 11(2) OF THE ACT TO THIS ASSESSEE. THEREFORE, WE CONFIRM THI S FINDING OF THE LD. CIT(A). FURTHER, THE ASSESSEE-S OCIETY HAS CLAIMED EXEMPTION U/S 10(23C)(IIIAC) OF THE ACT AND NOT U/S 10(23C)(IIIAE) OF THE ACT AS THE RECEIPTS O F THE ASSESSEE-SOCIETY ARE FROM TREATMENT GIVEN TO THE PE RSONS SUFFERING FROM ILLNESS ON CHARITABLE CONSIDERATIONS . THE ASSESSEE SOCIETY IS SUBSTANTIALLY FOUND FINANCED BY THE STATE GOVERNMENT, WHICH FACT HAS BEEN VERIFIED BY T HE A.O. AND HAS NOT BEEN REJECTED BY HIM. THE STATE GOVERNMENT EMPLOYEES ARE EXECUTIVE OFFICE BEARERS O F THE SOCIETY AND ITS DOCTORS, NURSES AND OTHER STAFF ARE PAID BY THE STATE GOVERNMENT ITSELF. THEREFORE, WE DO NOT FIND MUCH SUBSTANCE IN GROUND NO. 3 OF REVENUES APPEAL. 8 FURTHER, SET OFF OF UNABSORBED DEPRECIATION CARRIED FORWARD FROM EARLIER YEARS COULD BE ALLOWED FROM IN COME FROM OTHER SOURCES EVEN IF THE ASSESSEE HAD NO INCO ME FALLING U/S 28 OF THE ACT. ACCORDINGLY, THE ENTIRE ADDITION MADE BY THE A.O. HAVE BEEN CORRECTLY DELETED BY THE LD. CIT(A). THEREFORE, WE DO NOT FIND ANY FORCE IN GRO UND NOS. 1,2 AND 3 OF REVENUES APPEAL AND ACCORDINGLY DISMISS THE SAME. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 02 ND MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02 ND MAY, 2014 VL/- 9 COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR