The D.C.I.T. Circle-1, RAJKOT-GUJARAT V. Ashok Gondhia Memorial Trust, RAJKOT-GUJARAT

ITA 1310/RJT/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89153 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Charitable institution
• Section: 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBULAL, RAJKOT BENCH: RAJKOT .., , $ % BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1310/RJT/2010 ( / ASSESSMENT YEAR : 2007-08) THE DCIT CIRCLE-1 RAJKOT / VS. ASHOK GONDHIA MEMORIAL TRUST KALAWAD ROAD RAJKOT ' ./ ./ PAN/GIR NO. : AAATA 2739 G ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) AND CO NO.03/RJT/2011 FOR AY 2007-08 (IN ITA NO.1310/RJT/2010 FOR AY 2007-08) ASHOK GONDHIA MEMORIAL TRUST VS. THE DCIT RAJKOT RAJKOT (CROSS OBJECTOR .... (RE SPONDENT) REVENUE BY : SHRI M.L. MEENA CIT-DR ASSESSEE BY : SHRI D.M. RINDANI, CA ,-. / DATE OF HEARING 18/02/2015 /0 . / DATE OF PRONOUNCEMENT 27/03/2015 / O R D E R PER BENCH : THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME- TAX (APPEALS)-I, RAJKOT (CIT(A) IN SHORT) DATED 30/09/2010 PASSED FOR ASST.YEAR 2007-08. BOTH THE APPEAL AND THE CROSS O BJECTION ARE TAKEN UP ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 2 - TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FILED BY THE REVENU E, I.E. ITA NO.1310/RJT/2010 FOR AY 2007-08. THE REVENUE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL:- 1) THE LEARNED CIT(A)-I, RAJKOT HAS ERRED IN LAW A ND ON FACTS IN DELETING THE FINDING OF DENYING THE BENEFITS OF SEC TION 11 OF THE IT ACT. 2) ON LEGAL AND FACTUAL STATUS OF THE CASE, THE LE ARNED CIT(A), OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3) IT IS, THEREFORE, PRAYED THAT THE FINDING GIVEN IN THE ORDER OF THE LD.CIT(A) MAY BE DISMISSED/DELETED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 24/12/2009. WHILE FRAMING THE ASSESSMENT, TH E AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S.11 OF THE A CT AND ASSESSED AN AMOUNT OF RS.70,62,306/- AS BUSINESS INCOME. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE-TRUST HAD MADE A CLAIM OF DEPRECIATION AMOUNTING TO RS.1,10,69,763/- WHICH WA S RESTRICTED TO 1/3 RD OF THE SAME. FURTHER, THE AO RESTRICTED THE EXEMPT ION ON INTEREST INCOME TO RS.10,89,755/-. AGAINST TOTAL INTEREST OF RS.32, 69,264/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APPEAL. WHILE ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 3 - ALLOWING THE APPEAL, THE LD.CIT(A) ALLOWED THE CLAI M OF EXEMPTION U/S.11 OF THE ACT AND ALSO ALLOWED THE DEPRECIATION. AGAI NST THE FINDING OF THE LD.CIT(A), THE REVENUE AND THE ASSESSEE BOTH ARE IN APPEAL AND CROSS- OBJECTION RESPECTIVELY. 3. GROUND NO.1 OF REVENUES APPEAL IS AGAINST THE A LLOWANCE OF EXEMPTION U/S.11 OF THE ACT. THE LD.CIT-DR SUBMITT ED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIO N. HE SUBMITTED THAT THE AO HAS GIVEN A FINDING THAT THE OBJECTS OF THE ASSESSEE-TRUST CEASED TO BE CHARITABLE IN NATURE IN VIEW OF THE AGREEMENT DA TED 30/03/2006 WITH M/S.WOCKHARDT HOSPITALS LTD. A CORPORATE ENTITY FOR RUNNING THE HOSPITAL ON COMMERCIAL BASIS. HE SUBMITTED THAT THE LD.CIT( A) OUGHT TO HAVE UPHELD THE FINDING OF THE AO UNDER THE FACTS AND CI RCUMSTANCES OF THE CASE. 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE AO FAILED TO A PPRECIATE THE FACT THAT THE ASSESSEE-TRUST WAS NOT ENGAGED IN COMMERCIAL AC TIVITY. HE SUBMITTED THAT THE COMMERCIAL ACTIVITY WAS CARRIED OUT BY M/S .WOCKHARDT HOSPITALS LTD. WHO WAS TO PAY A MINIMUM FIXED AMOUNT FOR USI NG THE PROPERTY OF THE TRUST AND THE AMOUNT SO RECEIVED WAS APPLIED FO R THE MEDICAL ASSISTANCE TO THE PATIENTS. HE SUBMITTED THAT THE NATURE OF BEING CHARITABLE IS NOT EVEN DOUBTED BY THE CHARITABLE CO MMISSIONER WHO IS THE APPROPRIATE AUTHORITY TO GIVE A FINDING ABOUT THE NATURE OF THE ACTIVITY CARRIED OUT BY THE ASSESSEE-TRUST. HE FURTHER SUBM ITTED THAT UNDER THE IDENTICAL FACTS, THE COORDINATE BENCH (ITAT MUMBAI BENCH H ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 4 - MUMBAI) IN THE CASE OF DY.DIRECTOR OF INCOME-TAX VS . HABIB ISMAIL HOSPITAL & MEDICAL TRUST IN ITA NO.5603/MUM/2009 FO R AY 2006-07, ORDER DATED 21/03/2012, HAD DECIDED THE ISSUE IN FA VOUR OF THE ASSESSEE. HE SUBMITTED THAT THE AO HAS NOT APPRECIATED THE OB JECTS OF THE TRUST IN RIGHT PERSPECTIVE. THE AO GROSSLY ERRED IN REACHIN G TO A CONCLUSION THAT THE OBJECTS OF THE ASSESSEE-TRUST CEASED TO BE CHAR ITABLE IN NATURE. THEREFORE, THE AO WAS NOT JUSTIFIED IN DENYING THE EXEMPTION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO DENIED THE CLAIM OF EXEMPTION U /S.11 OF THE ACT BY OBSERVING THAT THE ASSESSEE-TRUST ENTERED INTO AN A GREEMENT WITH M/S.WOCKHARDT HOSPITALS LTD. FOR COMMERCIAL EXPLOIT ATION OF THE PROPERTIES OF THE TRUST, THEREFORE THE NATURE OF TH E ACTIVITY WAS NO MORE A CHARITABLE ACTIVITY. THE AO OBSERVED THAT FROM THE PLAIN READING OF THE TERMS OF THE CONTRACT, IT IS CLEAR THAT THOUGH THE OWNERSHIP OF THE LAND AND BUILDING HAS NOT BEEN PASSED ON TO M/S.WOCKHARDT HO SPITALS LTD. EVEN THEN AFTER THIS CONTRACT THE WHOLE MANAGEMENT OF TH E TRUST PROPERTY IS UNDER THE CONTROL OF NEW COMPANY AND THE SAME IS CO MMERCIALLY BEING EXPLOITED FOR THE BENEFIT OF THE SAID COMPANY. THE TRUST DOES NOT HAVE ANY CONTROL OVER THE RUNNING OF THE HOSPITAL. EVEN THE MEDICAL RELIEF SAID TO BE PROVIDED TO THE INDIVIDUAL PATIENTS HAVE BEEN GIVEN TO THE PATIENTS WHO HAVE UNDERGONE TREATMENT IN M/S.WOCKDARDT HOSPI TALS LTD. THE TRUST HAS STOPPED CARRYING OUT ANY KIND OF ACTIVITY WHATSOEVER WITH REGARD TO PROVIDING MEDICAL ASSISTANCE TO THE PATIENTS. WHAT IS MERELY DONE IS ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 5 - BILLS OF FEW PATIENTS HAVE BEEN DISCOUNTED BY THE T RUST. HOWEVER, THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND EXA MINING THE TERMS OF THE CONTRACT HELD AS UNDER:- 17. I HAVE CAREFULLY CONSIDERED THE RIVAL CONT ENTIONS. I FIND THAT THE A.O. APPEARS TO HAVE BEEN CARRIED AWAY BY THE MANAG EMENT OPERATIONAL AGREEMENT ENTERED INTO BY THE APPELLANT TRUST WITH EFFECT FROM AUG-2006 WITH WOCKHARDT HOSPITALS LTD. THE A.O. HAS PRIMARIL Y FAILED TO APPRECIATE THAT THE APPELLANT TRUST AND WOCKHARDT HOSPITALS LT D ARE TWO SEPARATE LEGAL ENTITIES AND THE COMMERCIAL ASPECT OF RUNNING AND O PERATING THE HOSPITAL WITH EFFECT FROM THE DATE OF THE IMPUGNED AGREEMENT CAN BE ASCRIBED AND ATTRIBUTED TO WOCKHARDT HOSPITALS LTD AND NOT TO TH E APPELLANT TRUST. THE SALIENT FEATURES OF THE AGREEMENT ENTERED INTO B Y THE APPELLANT TRUST WITH WOCKHARDT HOSPITALS LTD ARE AS UNDER : (I) OWNERSHIP OF HOSPITAL PREMISES AND THE LAND SH ALL REMAIN WITH THE TRUST. NO INTEREST THEREIN OF WOCKHARDT OR ANY OTHE R PARTY HAS BEEN CREATED. PRESENTLY OWNED EQUIPMENTS, FURNITURE ETC. WILL ALSO CONTINUE TO BELONG TO THE TRUST ONLY. (II) WOCKHARDT HAS ASSUMED AND UNDERTAKEN ALL LIAB ILITIES FOR RUNNING AND MANAGING THE HOSPITAL AT ITS COST AND RISK. IT WILL INVEST AND HAS INVESTED SUBSTANTIAL AMOUNTS BY WAY OF EQUIPMENTS, FACILITIES, KNOW-HOW, ADMINISTRATIVE SKILLS AS WELL AS MEDICAL EXPERTISE OF ITS TEAM OF DOCTORS IN PROFESSIONALS INTO THE TRUST HOS PITAL. (III) THE TRUST DOES NOT AND IS NOT REQUIRED TO RU N THE HOSPITAL. (IV) THE REVENUE ARISING FROM MANAGING THE HOSPITAL SHALL BE RAISED AND MANAGED BY WOCKHARDT. (V) THE TRUST SHALL CONTINUE TO OBSERVE AND ABIDE B Y ALL CONDITIONS OF UTILIZATION OF FUNDS FOR MEDICAL TREATMENT, CONDITI ONS ATTACHED BY WAY OF MEANS OF DONORS TO HOSPITAL WARDS, BEDS ETC. , SMRITI DIVAS DAAN YOJANA SUBJECT TO WHICH DONATIONS IN PAST HAVE BEEN RECEIVED BY THE TRUST IN THE SAID HOSPITAL. IN OTHER WORDS, THE CONDITIONS AND ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 6 - SENTIMENTS ATTACHED TO ALL SMALL AND LARGE DONATION S SHALL BE CONTINUED TO BE OBSERVED UNDER THE AGREEMENT WITH W OCKHARDT. 2. VIDE CLAUSE 4 OF THE AGREEMENT, WOCKHARDT HOSPIT ALS LTD HAS BEEN GRANTED PERMISSION OR LICENSE TO MANAGE THE TRUST H OSPITAL AND TO USE THE EQUIPMENT, UTILITIES AND ANCILLARY FACILITI ES AND TO DO ALL ACTS AND DEEDS NECESSARY FOR OPERATING AND MANAGING THE HOSPITAL. 3. UNDER CLAUSE 7, DETAILED RIGHTS AND OBLIGATIONS OF WOCKHARDT HOSPITALS LTD ARE PROVIDED FOR. ALL EXPENSES AND LIABILITIES ARE TO BE BORNE BY WHL TO THE TOTAL EXCLUSION OF ASHOK GONDHIA MEMORIA L TRUST. WOCKHARDT HOSPITALS LTD IS NOT AN AGENT OR REPRESEN TATIVE OF ASHOK GONDHIA MEMORIAL TRUST. SUB-CLAUSE (N) SPECIFICALLY PROVIDES THAT WOCKHARDT SHALL NOT (I) DESCRIBE ITSELF AS A N AGENT, LESSEE OR REPRESENTATIVE OF ASHOK GONDHIA MEMORIAL ( TRUST; (II) MAKE ANY REPRESENTATIONS TO ANY CUSTOMER OR ANY THIRD PARTY OR GIVE AN IMPRESSION THAT IT HAS A RELATIONSHIP WITH ASHOK GONDHIA MEMORIAL TRUST WHICH MAY REQUIRE ASHOK GO NDHIA MEMORIAL TRUST TO UNDERTAKE TO OR BE LIABLE FOR, WHETHER DIR ECTLY OR INDIRECTLY, ANY OBLIGATION AND OR RESPONSIBILITY TO ANY CUSTOME R OR THIRD PARTY. 4. CLAUSE 8, DESCRIBED RIGHTS AND COVENANTS OF ASHO K GONDHIA MEMORIAL TRUST. ASHOK GONDHIA MEMORIAL TRUST CAN INSPECT THE HOSPITAL AT ANY TIME, IT CAN ESCORT DONORS, VISITORS ETC. AND CAN RECEIVE DONATIONS FOR THE PURPOSE OF OBJECTS OF THE CHARITA BLE ACTIVITIES OF THE SAID HOSPITAL ETC. ASHOK GONDHIA MEMORIAL TRUST S HALL CONTINUE TO OWN ITS ASSETS IN THE HOSPITAL AND SHALL ALSO CONTI NUE TO PAY FOR ANY LOANS TAKEN BY IT. 5. UNDER CLAUSE 8,, ASHOK GONDHIA MEMORIAL TRUST S HALL NOT USE THE TRADE NAME OR LOGO OF WOCKHARDT HOSPITALS LTD. AT ANY TIM E AND SHALL ALSO NOT DESCRIBE ITSELF AS AGENT, LESSOR OR REPRESENTAT IVE OF WOCKHARDT HOSPITALS LTD. AS PER SUB-CLAUSE (I), TRUST IS NOT AN AGENT, LESSOR OR REPRESENTATIVE OF WOCKHARDT HOSPITALS LTD. AND THE TRUST SHALL NOT MAKE ANY REPRESENTATIONS TO ANY CUSTOMER OR ANY THI RD PARTY OR GIVE AN IMPRESSION THAT IT HAS A RELATIONSHIP WITH WOCKH ARDT HOSPITALS LTD. WHICH MAY REQUIRE WOCKHARDT HOSPITALS LTD. TO UNDERTAKE TO OR BE LIABLE FOR, WHETHER DIRECTLY OR INDIRECTLY, ANY OBLIGATION AND OR RESPONSIBILITY TO ANY CUSTOMER OR THIRD PARTY. ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 7 - 6. THE TITLE TO THE .HOSPITAL, I.E. THE OWNERSHIP O F THE BUILDING, LAND AND EXISTING ASSETS OF ASHOK GONDHIA MEMORIAL TRUST SHA LL CONTINUE TO BE EXCLUSIVELY VESTED WITH ASHOK GONDHIA MEMORIAL T RUST AND ASHOK GONDHIA MEMORIAL TRUST CONTINUES IN LEGAL POS SESSION OF ITS ASSETS. 7. CLAUSE 11.6 PROVIDES THAT THE BILLING TO PATIENT S IS TO BE DONE BY WOCKHARDT HOSPITALS LTD. AS CAN BE OBSERVED FROM THE ABOVE THAT THE TRUST IT SELF WILL CONTINUE TO APPLY ITS INCOME FROM HOSPITAL AND ITS OTHER ACTIVITIES FOR ITS MEDICAL/CHARITABLE OBJECTS ONLY. EVEN PRIOR TO THE AGREEMENT, LIKE MANY OTHER TRUST HOSPITALS OR CHARITABLE EDUCATIONAL INS TITUTIONS ALL OVER THE COUNTRY, THE TRUST HAS BEEN CHARGING MEDICAL SERVIC E FEES FROM PATIENTS. EVEN AFTER THE MANAGEMENT BY WOCKHARDT, THE REVENU E COMING TO THE TRUST SHALL CONTINUE TO BE USED FOR THE MEDICAL/CHARITABL E OBJECTS OF THE TRUST IN ACCORDANCE WITH ALL APPLICABLE LAWS THIS REGARD. H ENCE, THERE IS NO BASIC CHANGE IN THE OBJECTS OR CHARACTER OF THE TRUST OR ITS PROPERTIES. THE PROPERTIES SHALL CONTINUE TO BE HELD IN TRUST AND I NCOME THEREFROM SHALL CONTINUE TO BE APPLIED FOR MEDICAL OBJECTS, AS AT P RESENT. NOWHERE IN THE ENTIRE AGREEMENT, IS THERE ANY CLAUSE WHICH LEADS T O EVEN A REMOTE INDICATION THAT THE OPERATIONS OF THE HOSPITAL ARE JOINT RESPONSIBILITIES OF BOTH THE APPELLANT TRUST AND WOCKHARDT HOSPITALS LT D. THE SILENT FEATURES OF THE MANAGEMENT AGREEMENT REPRODUCED BY THE A.O. AT PARA-5.2 OF HER ORDER CLEARLY STATE THAT IT IS ONLY THE MANAGEMENT AND THE OPERATIONS OF THE HOSPITAL THAT ARE NOW BEING HANDED OVER BY THE APPE LLANT TRUST TO WOCKHARDT HOSPITALS LTD. NO RIGHTS ARE CREATED IN THE LAND OR THE PROPERTY OF THE TRUST. THE AGREEMENT CLEARLY SHOWS AND ALSO NOWHERE PROVIDES THAT WOCKHARDT HOSPITALS LTD IS AN AGENT OF THE TRUST OR VICE VERSA. ON THE CONTRARY, THERE ARE NEGATIVE AVE RMENTS IN THE AGREEMENT TO THIS EFFECT. THE ACTUAL CONDUCT OF BOTH THE PARTIES SUPPORTS THE AGREEMENT, BECAUSE BOTH PARTIES BEING SEPARATE LEGA L ENTITIES ORGANISED UNDER DIFFERENT LAWS GOVERNING THEM, THEY HAVE PREP ARED SEPARATE ACCOUNTS, THEIR INCOMES ARE SEPARATE AND THE TRUST HAS NOT RECEIVED ANY THING BY RUNNING THE HOSPITAL BUT IT HAS ONLY RECEI VED INCOME FROM INVESTMENT ARID COMPENSATION FROM WOCKHARDT HOSPITA LS LTD FOR PERMITTING WOCKHARDT HOSPITALS LTD TO RUN THE HOSPITAL ACTIVIT IES OF AND BY WOCKHARDT HOSPITALS LTD FROM PROPERTIES OF THE TRUST: THE INCOME SO RECEIV ED BY THE TRUST HAS BEEN DULY UTILISED BY IT ON ITS OBJECTS, AS MANDATED BY SEC. 11. IT IS ALSO NOT IN DISPUTE THAT THE ENTIRE RESPONSIBILITY AND THE LIABILITY OF RUNNING ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 8 - AND OPERATING THE HOSPITAL RESTS WITH WOCKHARDT HOS PITALS LTD. THE RISK AND REWARDS OF RUNNING THE HOSPITAL ARE THAT OF WOC KHARDT HOSPITALS LTD AND NOT OF EITHER THE APPELLANT TRUST OR JOINT. HE NCE THE TRUST CANNOT BE SAID TO BE ENGAGED IN THE BUSINESS OF RUNNING THE HOSPI TAL. WOCKHARDT HOSPITALS LTD IS A CORPORATE ENTITY WHICH HAS APPROPRIATED EN TIRELY THE RECEIPTS ARISING FROM RUNNING THE HOSPITAL IN ITS OWN NAME A ND HENCE WHAT DOES NOT RIGHTFULLY BELONG TO THE TRUST BUT BELONGS TO WHL, CANNOT BE BRANDED AS ACTIVITY CARRIED OUT BY THE TRUST. THE AO HAS FAILE D TO APPRECIATE THAT THE PROPERTY CONTINUES TO BELONG TO THE TRUST, THAT IT IS NOT THE TRUST WHICH HAS USED IT TO RUN THE HOSPITAL ON COMMERCIAL BASIS. I THEREFORE FIND THAT FUNDAMENTAL PRESUMPTION DRAWN BY THE A.O. THAT THE APPELLANT TRUST HAS ENGAGED ITSELF IN THE BUSINESS ACTIVITIES IS CONTRA RY TO THE FACTS. IF THE ANALOGY ADOPTED BY THE A.O. WERE TO BE CORRECT THEN IN ALL THOSE CASES WHERE PUBLIC CHARITABLE TRUST HAVE GIVEN PROPERT IES ON RENT, THE BUSINESS OF THE! TENANT WOULD ESSENTIALLY BECOME TH E BUSINESS OF THE LANDLORD CHARITABLE TRUST. SUCH A POSITION CANNOT B E ACCEPTED UNDER LAW. THE A.O. IN MY VIEW HAS FAILED TO OBSERVE THAT THE APPELLANT TRUST HAS NO PARTICIPATION WHATSOEVER IN RUNNING THE HOSPITAL NO R ANY LIABILITIES THERE TO AND IT IS ONLY ENTITLED TO THE CONSIDERATION THAT I S SO AGREED UPON BETWEEN THE APPELLANT TRUST AND THE WOCKHARDT HOSPITALS LT D AND TO THAT EXTENT, IT CANNOT BE FACTUALLY CONCLUDED THAT THE APPELLANT TR UST HAS ENTERED INTO BUSINESS OPERATIONS. I ALSO FIND THAT THE A.O. HAS NOT APPRECIATED THE OBJECTS OF THE TRUST AS SO LAID OUT IN PAR'A-5.1 OF THE TRUST DEED IN A CORRECT PERSPECTIVE. ALL THE OBJECTS STATED ARE PLAINLY THE OBJECTS OF THE TRUST AND ALL THESE OBJECTS HAVE BEEN ACCEPTED AS CHARITABLE IN NATURE IN THE PAST. THE OBJECT STATED AT CLAUSE6-7 OF THE TRUST DEED STATES TO CARRY OUT ACTIVITIES CONCERNING MEDICAL NEED AND/OR RELIEF CARRYING OUT ACTIVITIES CONCERNING MEDICAL RELIEF AND/OR NEED IS ALSO ONE OF THE OBJEC TS OF THE APPELLANT TRUST. I ALSO FIND THAT THE A.O. HAS DRAWN AN INCORRECT INF ERENCE ON FACTS BY CONCLUDING THAT MEDICAL RELIEF CAN PER SE ONLY BE C ONSIDERED AS SUCH IF IT IS BACKED UP BY SOME KIND OF MEDICAL INSTITUTION AND I NFRASTRUCTURAL BACK UP. SECTION 2(15} OF THE ACT DEFINES CHARITABLE PURPOSE TO INCLUDE (I) RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF & THE ADVANCEME NT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE TERM RELIEF IS NOT Q UALIFIED BY THE REQUIREMENT OF ANY INFRASTRUCTURE. IF | THE AO'S ANALOGY WERE T O BE ACCEPTED THAN EVEN THE TERM 'RELIEF TO THE POOR' WOULD ESSENTIALLY MEA N RELIEF WHICH HAS SOME INFRASTRUCTURE TO SERVE THE POOR. THE AO'S ANALOGY WOULD QUALIFY THE TERM RELIEF WHICH IS NOT THE INTENTION OF THE LEGISLATUR E. THE MEANING OF THE TERM RELIEF AS PER THE RANDOM HOUSE DICTIONARY MEANS -(1 ) ALLEVIATION, EASE, OR .DELIVERANCE I THROUGH THE REMOVAL OF PAIN, DISTRES S, OPPRESSION ETC. (2) A ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 9 - MEANS OR THING THAT RELIEVES PAIN, DISTRESS, ANXIET Y ETC (3) MONEY, FOOD OR OTHER HELP GIVEN TO THOSE IN POVERTY OR NEED. SECTI ON 2(15) MERELY USES THE TERM RELIEF AND THE SAID TERM IS QUALIFIED ONLY BY THE PURPOSE FOR WHICH THE SAID RELIEF IS TO BE CONSIDERED WHICH IS RELIEF TO THE POOR AND MEDICAL RELIEF. THE TERM RELIEF THEREFORE HAS TO BE READ IN THE ORD INARY SENSE OF THE TERM. IT IS NOT IN DISPUTE THAT CARRYING OUT OF ACTIVITIES C ONCERNING MEDICAL RELIEF IS ONE OF THE OBJECTS OF THE APPELLANT TRUST. IT IS AL SO NOT IN DISPUTE THAT THE SAID OBJECTIVE IS CHARITABLE IN NATURE. THE ONLY DI SPUTE APPEARS TO BE TO THE INTERPRETATION OF THE TERM RELIEF GIVEN BY THE AO S INCE IN HER OPINION, MEDICAL RELIEF CAN BE CONSIDERED AS SUCH ONLY WHEN THE SAME IS PROVIDED ALONG WITH SOME ALLIED MEDICAL INFRASTRUCTURE. AS P ER THE CONTENTION OF THE AO MERELY PROVIDING FINANCIAL ASSISTANCE FOR MEDICA L PURPOSES TO NEEDY PATIENTS DOES NOT CONSTITUTE MEDICAL RELIEF. THE AO CONSIDERS THE SAME TO BE INCIDENTAL ACTIVITY AND IN THE OPINION OF THE AO TH E SAME CAN BE CONSIDERED AS BEING 'MEDICAL RELIEF' FOR A CHARITABLE TRUST WO ULD BE ONLY WHEN THE SAME IS BACKED BY SOME MEDICAL INFRASTRUCTURE. THE AO HAS SOUGHT TO EXTEND THE SCOPE OF THE OBJECTS OF THE TRUST AS SO LAID OUT IN ITS DEED BY IMPORTING THE REQUIREMENT OF RUNNING OF A HOSPITAL. THIS THE AO IS NOT EMPOWERED TO DO. THE OBJECTS OF A TRUST HAVE TO BE READ AS THEY ARE. THAT THE APPELLANT TRUST HAS PROVIDED FINANCIAL ASSISTAN CE TO NEEDY PATIENTS FOR MEDICAL PURPOSES IS ALSO NOT IN DISPUTE, THE AO'S CONTENT/ON THAT THE APPELLANT TRUST HAS DISCOUNTED BILLS OF A FEW PATIE NTS IS MISPLACED ON FACTS SINCE PROVIDING OF FINANCIAL RELIEF CANNOT BE CONSI DERED AS DISCOUNTING OF BILLS SINCE THE RELIEF IS PROVIDED QUA PATIENT. TH E AOS RELIANCE ON THE DECISION OF THE HON. GUJARAT HIGH COURT IN THE CASE OF CIT VS. SORABJ NUSSERWANJI PAREKH'S CASE (201 ITR 939) AND (211 IT R 633) IS ALSO MISPLACED AND MUCH TO THE CONTRARY GOES ON TO ADVAN CE THE CASE OF THE APPELLANT IN AS MUCH AS IN THE SAID CASE THE TRUST WAS CREATED SOLELY FOR RUNNING AN EDUCATIONAL INSTITUTION AND THE ASSESSEE TRUST HAD CLAIMED EXEMPTION U/S. 10(22) OF THE ACT & IN THE SAID DECI SION ITSELF THE HON. GUJARAT HIGH COURT HAS HELD THAT THE TRUST WAS ENTI TLED TO THE BENEFITS OF 11 OF THE ACT BUT NOT ENTITLED TO THE EXEMPTION U/S. 1 0(22) OF THE ACT SINCE THE SAID EXEMPTION WAS AVAILABLE ONLY IF AN ASSESSEE OP ERATED AN EDUCATIONAL INSTITUTION. IT WAS UNDER THIS SET OF FACTS THAT TH E HON. GUJARAT HIGH COURT HELD' THAT SINCE THE ASSESSEE WAS NOT RUNNING AN ED UCATIONAL INSTITUTION IT COULD NOT FALL WITHIN THE AMBIT OF SEC 10(22). HOWE VER THE HON. GUJARAT HIGH COURT HAS NOT DENIED CLAIM U/S. 11 WHICH IS WH AT THE APPELLANT TRUST IS ASSESSED UNDER. THE AO'S RELIANCE ON THE DECISION O F THE HON. MADRAS HIGH COURT IN THE CASE OF ADD. CIT V/S. VICTORIA TECHNIC AL INSTITUTE (120 ITR 358) IS ALSO .INCORRECT SINCE THE SAID DECISION HAS SINC E BEEN REVERSED BY THE ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 10 - HON. SUPREME COURT IN 188 ITR 57.THE AO'S RELIANCE ON THE DECISION OF THE HON. SUPREME COURT IN THE CASE OF SOLE TRUSTEE LOK SHIKSHANA TRUST V/S CIT ( 101 ITR 234) IS ALSO INCORRECT ON FACTS APART FROM THE FACTS THAT A MAJOR PART OF THE SAID DECISION HAS SINCE BEEN OVER RULED BY A LARGER BENCH OF THE HON, SUPREME COURT IN THE CASE OF ADDL CIT V /S SURAT ART SILK CLOTH MANUFACTURER ASSOCIATION (121 ITR 1 SC). THIS APART THE CASE OF LOK SHIKSHANA TRUST DEALT WITH A WHOLLY DIFFERENT ISSUE WHERE A SOLE TRUSTEE HAD TRIED TO ESTABLISH HIS BUSINESS OF PUBLISHING A NEW SPAPER AS BEING CHARITABLE IN NATURE. I THEREFORE HOLD THAT THE AO' S CONTENTION THAT THE APPELLANT HAS NOT PROVIDED MEDICAL RELIEF AND IS TH EREFORE NOT ENTITLED TO THE BENEFITS OF SECTION 11 IS NOT CORRECT BOTH ON FACTS ;AND IN LAW AND DIRECT THAT THE APPELLANT IS ENTITLED TO THE BENEFITS OF SECTIO N 11 . I ALSO HOLD THAT THE AC'S CONTENTION THAT MEDICAL RELIEF CAN BE SAID TO HAVE BEEN PROVIDED ONLY WHEN IT IS BACKED UP AND ACCOMPANIED BY SOME MEDICA L INFRASTRUCTURE IS NOT TENABLE IN LAW AND TRAVELS BEYOND THE DEFINITIO N OF CHARITABLE PURPOSE LAID DOWN IN SECTION 2(15) OF THE ACT AND THEREFORE HOLD THAT THE EXPENSES ON MEDICAL RELIEF INCURRED BY THE APPELLANT ARE EXP ENSES INCURRED FOR THE OBJECTS OF THE APPELLANT TRUST. I ALSO HOLD THAT TH E AO'S CONTENTION THAT THE APPELLANT HAS ENGAGED IN BUSINESS AND THEREFORE THE PROVISIONS OF SECTION 11(4A) ARE ATTRACTED IS ALSO INCORRECT ON FACTS AND IN LAW. EVEN OTHERWISE AS SO HELD BY THE HON.SUPREME COURT IN THE CASE OF THANTHI TRUST, THAT EVEN IF THERE IS BUSINESS RUN BY THE TRUST, SO LONG AS T HE TRUST APPLIES THE INCOME FROM SUCH BUSINESS FOR OBJECTS OF THE TRUST, IT AMO UNTS TO APPLICATION OF INCOME FOR THE PURPOSES OF SEC.11 AND THAT THE APPE LLANT HAS APPLIED ITS INCOME SOLELY FOR PROVIDING FINANCIAL RELIEF TO THE NEEDY PATIENTS IS NOT IN DISPUTE AND TO THAT EXTENT IT WILL CONSTITUTE APPLI CATION OF INCOME WITHIN THE MEANING OF SECTION 11. I THEREFORE DECIDE GROUND N OS.1,2 & 6 IN FAVOUR OF THE APPELLANT. 4.1. WE FIND THAT THE AO DENIED THE EXEMPTION U/S.1 1 OF THE ACT ON THE BASIS OF INFERENCE THAT THE ASSESSEE IS NOT CARRYIN G OUT THE ACTIVITIES AS PER ITS OBJECT. HOWEVER, THE LD.CIT(A) HAS GIVEN A FIN DING THAT THE INFERENCE AS DRAWN BY THE AO IS INCORRECT. AS PER ONE OF THE OBJECTS, EMBEDDED INTO THE CLAUSE-7 OF THE TRUST-DEED, IT IS ENVISAGE D TO CARRY OUT ACTIVITIES CONCERNING MEDICAL NEED AND OR RELIEF. IT IS UNDIS PUTED FACT THAT THE ASSESSEE-TRUST HAS GIVEN MONITORY BENEFITS TO THE PATIENTS BY DISCOUNTING ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 11 - THE BILLS AND ALSO BY GIVING FINANCIAL AID TO THE P ATIENTS. IT IS NOT THE CASE OF THE AO THAT THE FUNDS OF THE ASSESSEE-TRUST HAS BEEN APPLIED FOR OTHER THAN THE OBJECTS OF THE TRUST-DEED. THE ONLY OBJEC TION OF THE AO IS THAT THE ASSESSEE-TRUST HAS EXECUTED AN AGREEMENT WITH A COMPANY WHICH IS COMMERCIALLY EXPLOITING THE PROPERTIES OF THE ASSES SEE-TRUST. THE LD.CIT(A) HAS OBSERVED THAT THE APPELLANT-TRUST HAS APPLIED ITS INCOME TO THE NEEDY PATIENTS. THIS FINDING ON FACT IS NOT CO NTROVERTED BY THE REVENUE BY PLACING ANY MATERIAL ON RECORD. FURTHE R, THE AO WRONGLY CONSTRUED THE TERM MEDICAL RELIEF. THE LD.CIT(A) HAS RIGHTLY HELD THAT THE MEDICAL RELIEF IS NOT DEPENDENT UPON INFRASTR UCTURE. IN THAT EVENT, THE MEDICAL CAMPS ORGANIZED BY A TRUST WITH THE HEL P OR ON PAYMENT TO ANY HOSPITAL WOULD NOT FALL UNDER MEDICAL RELIEF AS THE TRUST HAS ONLY MADE PAYMENT OF MEDICINE, DOCTORS FEE AND OTHER ME DICAL FACILITY. THIS IN OUR CONSIDERED VIEW WOULD DEFEAT THE VERY OBJECT OF THE PROVISION OF SECTION-11. MOREOVER, THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE ORDER OF THE CHARITY COMMISSIONER WHO HAS OBSERVED THAT L OOKING TO ALL THE FACTS, IT IS SEEN THAT NO IMMOVABLE PROPERTY OF THE TRUST HAS BEEN TRANSFERRED. THE OWNERSHIP OF THE TRUST IS ALSO SE EN IN THE NAME OF THE ASSESSEE-TRUST IN THE REVENUE RECORDS. THE ACTIVIT IES CARRIED OUT AS PER THE OBJECTS OF THE TRUST. A STATEMENT OF THE LIST OF THE TREATMENTS GIVEN BY THE TRUST IS SUBMITTED IN THE MATTER, WHICH SHOWS THAT AS THE TRUSTS INCOME INCREASES, THERE HAS BEEN A CORRESPONDING AN D SUCCESSIVE INCREASE ALSO IN THE TREATMENT HELP GIVEN BY THE TRUST. T HEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CI T(A), SAME IS HEREBY UPHELD. THUS, GROUND NO.1 REVENUES APPEAL IS REJE CTED. ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 12 - 5. GROUND NOS.2 & 3 ARE GENERAL IN NATURE WHICH REQ UIRE NO INDEPENDENT ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. NOW, WE TAKE UP THE ASSESSEES CROSS OBJECTION N O.03/RJT/2011 ARISING OUT OF ITA NO.1310/RJT/2010. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS CROSS-OBJECTION:- 1. THE LEARNED CIT(APPEALS)-I, RAJKOT HAS RIGHTLY UPHELD THE CLAIM FOR DEDUCTION U/S.11 OF THE I.T.ACT AND THERE BY DELETING THE ADDITION OF RS.70,62,306/- MADE BY THE A.O. AS BUSI NESS INCOME. 2. THE LEARNED CIT(APPEALS)-I, RAJKOT HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. BY WAY OF RESTRICTING THE CLAIM OF DEPRECIATION FROM RS.1,10,69,763/- TO RS.36,89,921/ -. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (APPEALS)-I, RAJKOT ERRED IN DISMISSING THE ALTERNATIVE GROUND O F APPEAL WITH REGARD TO CLAIM OF RS.21,74,364/- BY WAY OF MEDICAL RELIEF. 4. THE LEARNED CIT(APPEALS)-I, RAJKOT HAS RIGHTLY ALLOWED THE CLAIM FOR SET-OFF OF DEFICIT OF EARLIER ASSESSMENT YEARS AGAINST INCOME FOR THE YEAR BEING AN ALTERNATIVE GROUND BEF ORE HIM. 7.1. THE ONLY EFFECTIVE GROUND RAISED IN THE CROSS -OBJECTION IS GROUND NO.3 WHICH READS AS UNDER:- 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T(APPEALS)-I, RAJKOT ERRED IN DISMISSING THE ALTERNATIVE GROUND O F APPEAL WITH REGARD TO CLAIM OF RS.21,74,364/- BY WAY OF MEDICAL RELIEF. ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 13 - 8. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE LD.CIT(A) WAS NOT JUSTIFIED IN REJECTING THE GROUND. 8.1. ON THE CONTRARY, LD.CIT-DR SUBMITTED THAT THIS WAS ONLY AN ALTERNATIVE PLEA OF THE ASSESSEE WHICH WAS REJECTED ON THE FACT THAT THE MAIN GROUND OF THE ASSESSEE WAS ALLOWED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT THE GROUND WHICH WAS REJE CTED ON THE BASIS THAT THE MAIN GROUND WAS ALLOWED AND THIS BEING ALTERNAT IVE GROUND, THEREFORE WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDE R OF THE LD.CIT(A), SAME IS HEREBY UPHELD AND THE GROUND RAISED IN THE CROSS OBJECTION IS DISMISSED. 10. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE AND THE CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISM ISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 27 TH DAY OF MARCH, 201 5 AT AHMEDABAD SD/- SD/- ( .. ) ( ) $ ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27 / 03 /2015 ..,,.$../ T.C. NAIR, SR. PS ITA NO.1310//RJT/2010(BY REVEN UE) AND CO NO.03/RJT/2011 (BY ASSESSEE) DCIT VS. ASHOK GONDHIA MEMORIAL TRUST ASST.YEAR - 2007-08 - 14 - / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 5 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-I, RAJKOT 5. 8,9*$$ , , /DR,ITAT,RAJKOT 6. 9DEF- / GUARD FILE. / BY ORDER, +8*$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) & ' , / ITAT, RAJKOT 1. DATE OF DICTATION .. 24.3.15 (DICTATION-PAD 16 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.3.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S.27.3.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.3.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER