THE BHATIA GENERAL HOSPITAL, MUMBAI V. ITO (E)- I(1), MUMBAI

ITA 1588/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8340 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 17-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: R V SHAH; BHARAT J ANARTHANAN
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 12A; 10B; 12

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , ITA NO. 1156/ MUM/ 2 0 1 3 ( / ASSESSMENT YEAR: 20 09 - 10 ) INCOME - TAX OFFICER - (E)(1)(1),ROOM NO.505, PIRAMAL CHAMBER, PAREL, MUMBAI - 400012 / VS. BHATIA GENERAL HOSPITAL TRUST, TARDEO ROAD, NANA CHOWK, MUMBAI - 400070 ( / APPELLANT) ( / RESPON DENT ) ITA NO. 1588 / MUM/ 2015 ( / ASSESSMENT YEAR: 20 1 0 - 11 ) BHATIA GENERAL HOSPITAL TRUST, TARDEO ROAD, NANA CHOWK, MUMBAI - 400070 / VS. INCOME - TAX OFFICER - (E)(1)(1),ROOM NO.505, PIRAMAL CHAMBER, PAREL, MUMBAI - 400012 ./ PAN : AA A TT3440K ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : SHRI BHARAT J ANARTHANAN AND SHRI R V SHAH /RE VENUE BY : SHRI K MOHANDAS / DATE OF HEARING : 31.1.2017 / DATE OF PRONOUNCEMENT : 27. 2.2017 2 ITA NO. 1588 /MUM/2015 ITA NO. 1156 /MUM/201 3 / O R D E R PER RAJESH KUMAR, A. M: THESE TWO APPEALS ARE FILED BY THE RESPECTIVE PARTIES. ITA NO.1156/MUM/2013 IS DIRECTED AGAINST THE ORDER OF LD.CIT(A) DATED 19.11.2014 AND ITA NO.1588/MU M/2015 IS DIRECTED AGAINST THE ORDER OF CIT(A) DATED 22.12.2014 PASSED BY THE LD. CIT(A) - 1 , MUMBAI FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY . SINCE T HESE APPEALS PERTAIN TO THE SAME ASSESSEE , FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED T OGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF IN THIS CONSOLIDATED ORDER. 2. FIRST WE SHALL TAKE UP THE APPEAL FILED BY THE ASSESSEE BEARING ITA NO.1588/MUM/2015: 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE CONFIRM ATION OF THE ORDER OF THE AO IN TREATING THE REGISTRATION U/S 12A AS DEEMED TO BE CANCELLED THEREBY DENYING THE EXEMPTION U/S 11 AND U/S 12 OF THE INCOME TAX ACT, 1961 AND ASSESSING THE INCOME AT RS.5,88,70,787 / - UNDER THE NORMAL PROVISIONS OF ACT. 4. BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE FILED RETURN OF INCOME ON 29.9.2010 ALONG WITH THE INCOME AND EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM 10B DECLARING A TOTAL INCOME AT RS.NIL. THE ASSESSEE IS A CHARITABLE TRUST REGISTERED WITH DIT(E), MUMBAI U/S 12A OF THE 3 ITA NO. 1588 /MUM/2015 ITA NO. 1156 /MUM/201 3 ACT UNDER REGISTRATION NO.TR/2763 DATED 29.8.1975 AND WITH CHARITY COMMISSIONER, MUMBAI - UNDER REGISTRATION NO.A - 746 DATED 16.12.1952. THE SAID CHARITABLE TRUST WAS CREATED BY DEED DATED 11.1.1932 FOR THE PURPOSE OF SETTING UP BHATIA GENERAL HOS PITAL BESIDES OTHER OBJECTS AS REPRODUCED IN THE PARA 3 OF THE ASSESSMENT ORDER. ACCORDING TO THE AO THE SAID TRUST WAS GRANTED REGISTRATION BY CHARITY COMMISSIONER AS WELL AS BY THE INCOME TAX COMMISSIONER ON THE BASIS OF TRUST DEED DATED 11.1.1932 CO NSIDERING THE OBJECTS SPECIFIED THEREIN. HOWEVER THE OBJECT CLAUSE OF THE ASSESSEE TRUST WAS AMENDED AND THEREAFTER AN APPLICATION WAS FILED UNDER SECTION 50 OF THE BPT ACT, 1950 AND WAS ACCORDED REGISTRATION VIDE ORDER DATED 15.3.2004 BY INCLUDING EDUCATIONAL OBJECTS AND THE OTHER OBJECT OF GENERAL PUBLIC UTILITY IN ADDITION TO MEDICAL OBJECTS AS ENSHRINED IN THE ORIGINAL TRUST DEED. ACCORDING TO THE AO , THE ASSESSEE TRUST WAS REQUIRED TO RE - REGISTER ITSELF WITH THE DIRECTOR OF INCOME TAX (EXEMP TIONS), MUMBAI UNDER SECTION 12 A OF THE ACT IN VIEW OF THE AMENDMENT IN THE OBJECT CLAUSE IN THE ORIGINAL TRUST DEED AND A SHOW CAUSE NOTICE WAS ISSUED DATED 28.10.,2011 CALLING UPON THE ASSESSEE, WHETHER THE TRUST HAS BEEN RE - REGISTERED U/S 12A WITH T HE DIRECTOR (EX E MP TION ), MUMBAI ON THE BASIS OF AMENDED CLAUSES OF THE TRUST OR IF NOT TO SHOW CAUSE AS TO WHY THE TRUST SHOULD NOT BE TREATED AS NOT REGISTERED U/S 12A OF THE ACT . THE ASSESSEE HAS FILED DETAILED REPLY VIDE LETTER WHICH WAS INCORPORA TED BY THE AO IN HIS ORDER AT PAGES 3 AND 4. 4 ITA NO. 1588 /MUM/2015 ITA NO. 1156 /MUM/201 3 THE AO AFTER PERUSING THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE WAS NOT CONVINCED WITH THE SAME AND CAME TO THE CONCLUSION THAT IN VIEW OF THE NON - REGISTRATION OF THE TRUST UNDER SECTION 12A WITH DIREC TOR (EX), MUMBAI AFTER AMENDMENT IN THE OBJECT CLAUSE, THE BENEFIT PROVIDED UNDER SECTIONS 11 AND 12 OF THE ACT C OULD NOT BE GIVEN/ ALLOWED TO THE ASSESSEE AND ACCORDINGLY ASSESSED THE ASSESSEE IN THE STATUS OF ASSOCIATION OF PERSONS (AOP) BY PASSING ORDER UNDER SECTION 143(3) OF THE ACT BY ASSESSING THE INCOME OF THE ASSESSEE AT RS.6,89,24,869/ - . BEING A GGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO ALSO CONFIRMED THE ACTION OF THE AO . FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 5 . THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE ORDER PASSED BY THE LD.CIT(A) WAS AGAINST THE FACT ON RECORD AND CONTRARY TO THE PROVISIONS OF INCOME TAX ACT. THE LD. AR FILED BEFORE US A COPY OF LETTER ISSUED BY THE CIT(EX EMPTION ), MUMBAI BEARING NO. CIT(E)/U/S 12A/TR - 2763/15 - 16 DATED 29.3.2016 IN WHICH THE DIT(E) HAS CONTINUED THE REGISTRATION U/S 12A OF THE ACT AFTER AMENDMENT IN THE OBJECTS OF THE ASSESSEE TRUST . THE LD AR ALSO PRODUCED A COPY OF ASSESSMENT ORDER FOR AY 201 3 - 1 4 I N WHICH THE AO HAS ALLOWED THE BENEFITS UNDER SECTION 11 AND 12 OF THE ACT. THE DR ON THE OTHER HAND RELIED ON THE ORDER OF FAA. 5 ITA NO. 1588 /MUM/2015 ITA NO. 1156 /MUM/201 3 6. HEARD BOTH THE PARTIES, PERUSED THE MATERIAL PLACED BEFORE US AND ALSO GONE THROUGH THE IMPUGNED ORDE RS INCLUDING THE LETTER ISSUED BY THE D I T(E), DATED 29.3.2016 . A PERUSAL OF THE SAID LETTER THE DIT(E) REVEALS THAT DIT(E) ALLOWED REGISTRATION WHICH IS EXTRACTED BELOW: - OFFICE OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) 6TH FLOOR, PLRAMAL CHAMBERS, LALBAUG, MUMBAI - 400 012. NO.CIT(E)/U /S.12A/TR - 2763/ 15 - 16 DATE: 29.03.2016 TO THE TRUSTEES, THE BHATIA GENERAL HOSPITAL TRUST, TARDEO ROAD, NANA CHOWK, MUMBAI - 400 007. SIR/MADAM, SUB: REGISTRATION U/S.12A OF THE LT. ACT, 1961 - REG. REF : LETTER NO.SHR/597/ 15 - 16 DATED 23/03/2016. ***** PLEASE REFER TO THE ABOVE. 2. VIDE ABOVE STATED LETTER A REQUEST HAS BEEN MADE TO TAKE ON RECORD THE AMENDED TRUST DEED AND GRANT BENEFIT OF EXEMPTIO N U/S. 11 AND 12 OF THE LT. ACT, 1961. IT IS ALSO NOTED THAT SIMILAR REQUESTS WAS MADE ON 24/09/2012 AND 12/03/2013. 3. THIS IS TO INFORM YOU THAT THE NEW TRUST DEED WHICH WAS AMENDED ON 15/03/2004 AND DULY APPROVED BY THE CHARITY COMMISSIONER, MUMBAI UN DER A SCHEME FOR THE MANAGEMENT AND ADMINISTRATION OF THE TRUST U/S.50A(1) OF THE BOMBAY PUBLIC TRUSTS ACT, 1950 HAS BEEN TAKEN ON RECORD. THE REGISTRATION CERTIFICATE U/S.12A NO.TR - 2763 DT.29 J081 1975 SHALL CONTINUE TO BE VALID . SD/ - (SHELL ELY JINDA L ) C OMMISSIONER OF INCOME - TAX (EXEMPTIONS), MUMBAI. 6 ITA NO. 1588 /MUM/2015 ITA NO. 1156 /MUM/201 3 COPY TO: 1. THE APPLICANT. 2. GUARD FILE, ITO(E)(HQ)(TECH). MURNBAI. 3. THE RESPECTIVE A.O., MUMBAI. ( SANTOSH A. CHAVAN) TAX RECOVERY OFFICER(E), FOR CIT(E), MUMBAI. WE ALSO FIND FROM THE C OPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2013 - 14 DATED 31.3.2016 THAT THE DEPARTMENT HAS DULY ALLOWED THE EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT TO THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE VIEW THAT THE DEDUCTION UNDER SECTION 11 AND 12 OF THE ACT CANNOT BE DENIED TO THE ASSESSEE ESPECIALLY WHEN THE REGISTRATION GRANTED BY THE COMMISSIONER U/S 12A WAS ALLOWED TO BE CONTINUED MEANING THEREBY THAT THE REGISTRATION OF THE TRUST WAS CONTINU ING RETROSPECT IVELY . MOREOVER THE REVENUE ITSELF ACCEPTED AND ALLOWED DEDUCTION U/S 11 AND 12 OF THE ACT IN THE ASSESSMENT YEAR 2013 - 14 . IN VIEW OF THESE FACTS AND CIRCUMSTANCES GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 7 . THE ISSUES RAISED IN GROUNDS OF APPEAL NO.3,4 AND 5 ARE WITHOUT PREJUDICE TO THE GROUND NO.1 OF THIS APPEAL AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION . 8 . GROUND NO.6 PERTAINS TO THE SCHEME OF INDIGENT FUND AS LAID DOWN BY THE JURISDICTIONAL HIGH COURT WHICH DID NOT C O ME UP FOR DISCUSSI ONS OR HEARING BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND THEREFORE THE 7 ITA NO. 1588 /MUM/2015 ITA NO. 1156 /MUM/201 3 FAA WAS NOT JUSTIFIED IN OBSERVING THAT ASSESSEE HA D EARMARKED A SUM OF RS.126.45 LAKHS HOWEVER UTILIZED ONLY RS.56.42 LAKHS AND ENHANCED THE ASSESSMENT ACCORDINLY . SINCE, THE ISSUE WAS NEITHER DISCUSSED DURING THE ASSESSMENT PROCEEDINGS NOR IN THE APPELLATE PROCEEDINGS . W E , THEREFORE, CONSIDER IT FIT AND PROPER TO SEND THIS ISSUE BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. ACCORDINLY THE AO IS DIRECTED TO DECIDE THE ISSUE AFTER PROVIDING FAIR AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ACCORDINGLY TO THE PRINCIPLE OF NATURAL JUSTICE AS PER FACTS AND LAW . ITA NO.1156/MUM/2013 9 . THE ISSUE RAISED BY THE REVENUE IN THE SOLE GROUND OF APPEAL PERTAINS TO EXEMPTION U/S 11 OF THE INCOME TAX ACT. SINCE WE HAVE ALREADY DECIDED THE ISSUE OF EXEMPTION U/S 11 OF THE ACT IN THE APPEAL FILED BY THE ASSESSEE IN ITA NO.1588/MUM/2015 IN ASSESSEES FAVOUR . T HEREFORE, IN VIEW OF OUR DECISION IN ITA NO 1588/MUM/2015 , THE APPEAL OF THE REVENUE BECOMES INFRUCTUOUS . THEREFORE, THE APPEAL TAKEN BY THE REVENUE IS DISMISSED . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH FEB, 20 17. S D SD ( /MAHAVIR SINGH ) ( / RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 27. 2 .2017 8 ITA NO. 1588 /MUM/2015 ITA NO. 1156 /MUM/201 3 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COP Y / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI