JCIT (OSD), CHENNAI V. The Arya Vysya Maternity Home Child Welfare Centre, CHENNAI

ITA 1843/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61328 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-07-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERIJ
• Keywords: Charitable institution
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 1843/MDS/2011 ASSESSMENT YEAR : 2008 09 THE JOINT COMMISSIONER OF INCOME TAX (OSD)(EXEMPTIONS) II, CHENNAI 600 034. VS. THE ARYA VYSYA MATERNITY HOME CHILD WELFARE CENTRE, NO. 158, GOVINDAPPA NAICKEN STREET, CHENNAI 600 079. [PAN: AAATT06258F] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. BETGERI,J CIT RESPONDENT BY : SHRI PHILIP GEORGE, ADVOCATE DATE OF HEARING : 11.07.2012 DATE OF PRONOUNCEMENT : 20.07.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XII, CHENNAI D ATED 30.08.2011 IN ITA NO. 361/2010-2011 FOR THE ASSESSMENT YEAR 2008- 09. SHRI T.N. BETGERI, JCIT REPRESENTED ON BEHALF OF THE REVENUE AND SHRI PHILIP GEORGE, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 2. THE ONLY ISSUE IN THE GROUNDS OF APPEAL OF THE R EVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOW ING EXEMPTION UNDER SECTION 10(23C)(IIIAE) OF THE ACT. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 18 88 84 44 43 33 3/M/ /M/ /M/ /M/11 1111 11 2 3. THE ASSESSEE IS A REGISTERED SOCIETY FILED RETUR N OF INCOME ON 19.09.2008 ADMITTING NIL INCOME AFTER CLAIMING EXEM PTION UNDER SECTION 10(23C)(IIIAE). THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 ON 13.12.2010 DETERMINING THE TOTAL INCOME AT ` .22,73,430/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER DE NIED THE ASSESSEE EXEMPTION CLAIMED UNDER SECTION 10(23C)(IIIAE) STAT ING THAT THE ASSESSEE DOES NOT SOLELY EXIST FOR PHILANTHROPIC PURPOSES AN D THERE IS AN INTENTION TO EARN PROFIT. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) ALLOWED EXEMPTION CLAIMED UNDER SECTION 10(23C)(IIIAE) BY T HE ASSESSEE. AGAINST THIS ORDER OF THE COMMISSIONER OF INCOME TAX (APPEA LS), THE REVENUE IS IN APPEAL BEFORE US. 5. THE COUNSEL FOR THE REVENUE SUBMITS THAT THE AS SESSEE SOCIETY IS HAVING TWO PROPERTIES. ONE PROPERTY WAS ENTIRELY LE T OUT AND OTHER PROPERTY WAS PARTLY LET OUT AND WAS EARNING RENTAL INCOME. T HE COUNSEL SUBMITS THAT THE ASSESSEE ACCUMULATED THE RENTAL INCOME WITH AN INTENTION TO EARN PROFIT. THE COUNSEL SUBMITS THAT THE INTENTION OF THE ASSES SEE IS TO EARN INCOME BY LETTING PROPERTY. THEREFORE, THE ASSESSING OFFICER IS JUSTIFIED IN DENYING THE EXEMPTION CLAIMED UNDER SECTION 10(23C)(IIIAE) OF T HE ACT. THE COUNSEL SUBMITS THAT THE ASSESSEE DOES NOT EXIST SOLELY FOR PHILANTHROPIC PURPOSES I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 18 88 84 44 43 33 3/M/ /M/ /M/ /M/11 1111 11 3 AND THEREFORE, NOT ENTITLED FOR EXEMPTION UNDER SEC TION 10(23C)(IIIAE). THE COUNSEL FOR THE REVENUE PLACED RELIANCE ON THE DECI SION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF NEW NOBLE EDUCATIONAL SOCIETY & ORS. V CCIT [334 ITR 303] AND THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VALLIAMMAI SOCIETY V. DCIT [32 7 ITR 337(MAD)] AND SUBMITTED THAT SINCE THE ASSESSEE SOCIETY IS RUNNIN G THE HOSPITAL WITH PROFIT MOTIVE, IT IS NOT ENTITLED FOR DEDUCTION UNDER SECT ION 10(23C)(IIIAE) OF THE ACT. 6. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ON LY ACTIVITY OF THE ASSESSEE IS RUNNING HOSPITAL FROM PAST SEVERAL YEAR S. THE COUNSEL SUBMITS THAT THE ASSESSEE EXISTS SOLELY FOR PHILANTHROPIC P URPOSE. THE COUNSEL SUBMITS THAT THE ASSESSEE IS RUNNING HOSPITAL PROVI DING MATERNITY AND CHILD CARE FACILITY AND TREATMENT TO THE POOR. THE COUNSE L SUBMITS THAT THE PROPERTIES OWNED BY THE ASSESSEE SOCIETY WERE LET O UT AND THE RENTAL INCOME WAS ACCUMULATED ONLY FOR THE PURPOSE OF UTILIZING T HE SAID INCOME FOR ATTAINMENT OF THE OBJECTS OF THE SOCIETY AND NO PAR T OF THE INCOME WAS SPENT FOR THE PURPOSE OTHER THAN THE OBJECTS OF THE SOCIE TY. THE COUNSEL SUBMITS THAT EARNING RENTAL INCOME FROM THE PROPERTY ALONE CANNOT BE THE BASIS FOR DENYING EXEMPTION UNDER SECTION 10(23C)(IIIAE) ON T HE GROUND THAT THE ASSESSEE IS EARNING INCOME AND ATTRIBUTING PROFIT M OTIVE. THE COUNSEL SUBMITS THAT THE ASSESSEE NOT ONLY ACCUMULATED THE RENTAL INCOME, BUT ALSO THE DONATIONS RECEIVED FROM PUBLIC FOR ATTAINMENT O F ITS OBJECTS. THE COUNSEL I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 18 88 84 44 43 33 3/M/ /M/ /M/ /M/11 1111 11 4 SUBMITS THAT UPTO THE ASSESSMENT YEAR 2004-05, THE ASSESSEE SOCIETY WAS CLAIMING EXEMPTION AS A CHARITABLE INSTITUTION UNDE R SECTION 11 AND FROM THE ASSESSMENT YEAR 2005-06 ONWARDS, THE SOCIETY IS CLA IMING EXEMPTION UNDER SECTION 10(23C)(IIIAE) OF THE ACT. THE COUNSEL SUBM ITS THAT IN FACT, THE ASSESSEE IS RUNNING HOSPITAL ON LOSS. THE COUNSEL S UPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING TH E EXEMPTION CLAIMED UNDER SECTION 10(23C)(IIIAE) AND PLEADED FOR SUSTAI NING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF DIT(E) VS. SAHU JAIN TRUST [56 DTR 402]. 7. WE HAVE HEARD BOTH PARTIES, PERUSED THE MATERIA LS AVAILABLE ON RECORD. THE ASSESSEE IS RUNNING A HOSPITAL FROM PAS T SO MANY YEARS IN THEIR OWN BUILDING. THE MAIN REASON FOR DISALLOWANCE OF E XEMPTION CLAIMED UNDER SECTION 10(23C)(IIIAE) APPEARS TO BE THAT THE ASSES SEE IS ACCUMULATING THE INCOME WITH A MOTIVE OF EARNING PROFITS. IN OUR OPI NION, SIMPLY BECAUSE THE ASSESSEE IS RECEIVING RENTAL INCOME AND ACCUMULATIN G SUCH INCOME FOR SPENDING THE SAID INCOME FOR ATTAINMENT OF ITS OBJE CTS BY ITSELF DOES NOT PROVE THAT THE ASSESSEE IS ACTING WITH A PROFIT MOT IVE. FURTHER, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS SPENT THE INCOME TO THE PERSONAL BENEFITS OF THE MEMBERS OF THE SOCIETY. TH E CONDITION FOR ALLOWING EXEMPTION UNDER SECTION 10(23C) IS THAT THE ASSESSE E SHOULD ENGAGE IN THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 18 88 84 44 43 33 3/M/ /M/ /M/ /M/11 1111 11 5 ACTIVITY OF PROVIDING MEDICAL RELIEF WITHOUT ANY PR OFIT MOTIVE. IN THE ASSESSEES CASE, WE DO NOT SEE THAT THE SOCIETY IS ENGAGED IN ANY ACTIVITY OF PROVIDING MEDICAL RELIEF WITH PROFIT MOTIVE. THIS I SSUE HAS BEEN ELABORATELY DEALT WITH BY THE COMMISSIONER OF INCOME TAX (APPEA LS) AND WE SEE NO REASON TO INTERFERE WITH THE VIEW TAKEN BY THE COMM ISSIONER OF INCOME TAX (APPEALS) IN ALLOWING THE EXEMPTION UNDER SECTION 1 0(23C)(IIIAE) TO THE ASSESSEE IN THE FACTS AND CIRCUMSTANCES OF THE ASSE SSEES CASE. WE ALSO SEE THAT THE CASE LAW RELIED ON BY THE REVENUE ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEE. THEREFORE, WE SUSTAIN THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REJECT THE GROUNDS OF A PPEAL OF THE REVENUE. 8. THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON FRIDAY, THE 20 TH OF JULY, 2012 AT CHENNAI. SD/ - SD/ - (N.S. SAINI) ACCOUNTANT MEMBER (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 20.07.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.