DCIT (3) 2(1), MUMBAI V. NATIONAL HEALTH & EDUCATION SOCIETY, MUMBAI

ITA 1958/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0940 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH LD
• Assessee Lawyers: S C TIWARI RITUJA PAWARLD ARS
• Keywords: Business income
• Section: 143(3); 12A; 148; 11

Judgement Text

ITA.NO.1958/MUM/2016 NATIONAL HEALTH & EDUCATION SOCIETY ASSESSMENT YEAR-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1958/MUM/2016 ( / ASSESSMENT YEAR: 2012-13) DEPUTY COMMISSIONER O F INCOME TAX (EXEMPTION)-2(1) 510, 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG MUMBAI - 400 012 / VS. NATIONAL HEALTH & EDUCATION SOCIETY C/O P.D.HINDUJA NATIONAL HOSPITAL & MEDICAL RESEARCH CENTRE VEER SAVARKAR MARG, MAHIM MUMBAI-400 016 ./ ./PAN/GIR NO. AAATN-0093-Q ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) A SSESSEE BY : S.C.TIWARI, RITUJA PAWAR,LD. ARS RE VENUE BY : H.N.SINGH, LD. CIT DR / DATE OF HEARING : 06/12/2017 / DATE OF PRONOUNCEMENT : 10/01/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2012- 13 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)-1 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-1/IT/E-II(164)/2014-15 DATED 27/01/2016 QUA RELIEF PROVIDED TO THE ASSESSEE AGAINST PHARMACY SH OPS INCOME IN TERMS OF SECTION 11(4A). THE ASSESSMENT F OR IMPUGNED AY ITA.NO.1958/MUM/2016 NATIONAL HEALTH & EDUCATION SOCIETY ASSESSMENT YEAR-2012-13 2 WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTION )- 2(1), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 05/03/2015. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING ASSOCIATION OF PERSONS (TRUST) WAS ASSESSED U/S 143(3) AT RS.16,73,87,860/- AFTER CERTAIN ADJUSTMENTS / DISALLOWANCES AS AGAINST RETU RNED DEFICIT OF RS.17,60,14,128/- FILED BY THE ASSESSEE ON 24/09/20 12. THE TRUST WAS REGISTERED U/S 12A WITH DIT (EXEMPTIONS) AND ALSO REGISTERED WITH CHARITY COMMISSIONER BOMBAY. ACCORDINGLY, IT CLAIMED EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE TRUST WAS RUNNING A PHARMACY SHOP IN THE HOSPITAL A ND ACHIEVED TURNOVER OF RS.42.83 CRORES WITH NET SURPLUS OF RS.16.73 CRO RES WHICH TRANSLATED INTO PROFIT RATE OF 39.07%. THE TURNOVER OF THE SHO P CONSTITUTED ABOUT 12.82% OF TOTAL HOSPITAL COLLECTIONS. THE INCOME FR OM THE SHOP, IN THE OPINION OF LD. AO, CONSTITUTED BUSINESS INCOME OF T HE ASSESSEE IN TERMS OF SECTION 11(4A). THE ASSESSEE DEFENDED THE SAME O N THE GROUND THAT DRUGS WERE SUPPLIED ONLY TO IN-PATIENTS UPON CONSUL TANTS PRESCRIPTION AND THE CHARGES OF THE DRUGS FORMED PART OF FINAL P ATIENT BILL. HOWEVER, LD. AO NOTED THAT THE TRUST DEED DID NOT BAR THE HO SPITAL FROM SELLING MEDICINES TO OUTSIDERS AND THE ACTIVITY OF PHARMACY SHOP WAS SYSTEMATIC BUSINESS ACTIVITY. THE LD. AO FURTHER NOTED THAT TH E TRUST WAS NOT MAINTAINING SEPARATE BOOKS OF ACCOUNTS FOR THE SHOP . FINALLY, THE NET SURPLUS OF RS.16.73 CRORES EARNED FROM THE SHOP WAS ASSESSED AS BUSINESS INCOME AGAINST WHICH EXEMPTION U/S 11 WAS DENIED TO THE ASSESSEE ON THE PREMISES THAT THE SHOP WAS NOT INCI DENTAL TO ATTAINMENT ITA.NO.1958/MUM/2016 NATIONAL HEALTH & EDUCATION SOCIETY ASSESSMENT YEAR-2012-13 3 OF OBJECTIVES OF THE TRUST AND THE ASSESSEE FAILED TO MAINTAIN SEPARATE BOOKS OF ACCOUNTS FOR THE SAME. THE LD. AO ALSO PLA CED RELIANCE ON THE OBSERVATION OF HONBLE BOMBAY HIGH COURT ORDER DATE D 25/08/2014 MADE IN WRIT PETITION NOS. 1197/2014 & 1198/2014 FI LED BY THE ASSESSEE CHALLENGING THE REOPENING NOTICES ISSUED U/S 148 FO R AY 2006-07 & 2008-09. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME SUCCE SSFULLY BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 27/01/2016 WHER E LD. CIT(A) RELYING UPON THE ORDER OF ITS PREDECESSOR IN AY 201 0-11 & 2011-12 ALLOWED THE APPEAL OF THE ASSESSEE ON THE PREMISES THAT OPERATION OF THE PHARMACY SHOP WAS INTRINSIC TO THE ACTIVITIES OF THE ASSESSEE AND NOT INCIDENTAL AND DID NOT CONSTITUTE BUSINESS AND THER EFORE, THE PROVISIONS OF SECTION 11(4A) WERE NOT APPLICABLE. THE LD. CIT(A) ALSO NOTED THE OBSERVATION OF HONBLE BOMBAY HIGH COURT MADE IN SU BSEQUENT ORDER DATED 29/09/2014 IN REVIEW PETITION FILED BY THE AS SESSEE. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEST ED THE FINDINGS OF LD.CIT(A) ON THE GROUND THAT THE ASSESSEE FAILED TO MAINTAIN SEPARATE BOOKS OF ACCOUNTS FOR PHARMACY SHOP AND THEREFORE, FAILED TO FULFILL THE CONDITIONS ENVISAGED BY SECTION 11(4A). PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR], PLACING RELIANCE ON THE STAND OF LD. CIT(A) CONTENDED THAT THE PROVISIONS OF SECTION 11(4A) WERE NOT, AT ALL, APPLICABLE SINCE THE SHOP ACTIVITY WAS INTRINSIC PART OF THE CHARITABLE ACTIVITY BEING CARRIED OUT BY THE ASSESSEE AND FORMED PART AND PARCEL OF THE S AME. OUR ATTENTION IS DRAWN TO THE ORDER OF THIS TRIBUNAL RENDERED IN ASSESSEES OWN CASE ITA.NO.1958/MUM/2016 NATIONAL HEALTH & EDUCATION SOCIETY ASSESSMENT YEAR-2012-13 4 FOR AY 2010-11 VIDE ITA NO.87/MUM/2015 DATED 17/08/ 2016 WHERE IDENTICAL QUESTION WAS DECIDED IN ASSESSEES FAVOR BY THE TRIBUNAL. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. FIRST OF ALL WE FIND THAT SO FA R AS THE RELIANCE OF LD. AO ON THE OBSERVATION OF HONBLE BOMBAY HIGH COURT IS CONCERNED, THE SAME IS UNWARRANTED IN VIEW OF THE SUBSEQUENT OBSER VATION OF HONBLE COURT IN REVIEW PETITION FILED BY THE ASSESSEE AS R IGHTLY NOTED BY LD. CIT(A) ON PAGE NO.15 OF THE APPELLATE ORDER. THEREF ORE, THE SAME COULD NOT BE OF ANY ASSISTANCE TO THE REVENUE. 6. PROCEEDING FURTHER, WE FIND THAT THE ISSUE HAS A LREADY BEEN DECIDED IN ASSESSEES FAVOR BY FIRST APPELLATE AUTH ORITY FOR AY 2010-11 & 2011-12. THIS TRIBUNAL, VIDE ITA NO.87/MUM/2015 ORD ER DATED 17/08/2016 FOR AY 2010-11, AFTER CONSIDERING THE JU DGMENT OF HONBLE BOMBAY HIGH COURT IN RENDERED IN BAUN FOUNDATION TRUST VS CCIT [2012 73 DTR 45 (BOM)] & MUMBAI TRIBUNAL IN HIRANANDANI FOUNDATION VS. ADIT [ITA NOS. 560-563/MUM/2016 ORDER DATED 27/ 05/2016] UPHELD THE STAND OF LD. CIT(A). THE REVENUE IS UNABLE TO B RING ANY CONTRARY FACTS ON RECORD AND DISTINGUISH THE FACTS OF EARLIE R YEARS WITH THAT OF IMPUGNED AY. THEREFORE, IN VIEW OF THE BINDING JUDI CIAL PRECEDENT IN THE SHAPE OF THE ORDER OF CO-ORDINATE BENCH OF THE TRIB UNAL, TAKING SAME STAND, WE DISMISS REVENUES APPEAL. 7. RESULTANTLY, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY,2018 ITA.NO.1958/MUM/2016 NATIONAL HEALTH & EDUCATION SOCIETY ASSESSMENT YEAR-2012-13 5 SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGAR WAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 10.01.2018 . SR.PS:- THIRUMALESH ! / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI