BANK OF INDIA RETIRED EMPLOYEES MEDICAL ASSISTANCE SCHEME , MUMBAI V. ITO (E)-1(1), MUMBAI

ITA 2186/MUM/2023

AI Insights

The case involves cross appeals by the Bank of India Retired Employees Medical Assistance Scheme and the Income Tax Officer, Exemption-1, Mumbai, concerning the assessment years 2010-11 and 2013-14. The primary issue was the eligibility of the Trust to benefits under Sections 11 and 12 of the Income Tax Act, 1961, following its registration under Section 12A. The Tribunal found that the Trust, being registered under Section 12A, is entitled to the benefits of Sections 11 and 12, which include the application of income towards the objects of the Trust. The Tribunal reversed the decision of the learned CIT (A) regarding the non-allowance of certain expenditures and directed their deduction.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125197 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-09-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2023
• Other Referred Cases: ITA No. 6844/Mum/2013
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 147; 148; 12; 11; 143(3); 260A; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI SANDEEP SINGH KARHAIL, JM ITA No. 2186 & 2190/Mum/2023 (Assessment Year: 2010-11 & 2013-14) Ba n k o f I n d ia Re t ir e d Em p l o ye e s Me d ic a l As s it a n c e S c h e m e C-5 , G Blo c k , St a r H o u s e , B a n d r a Ku r l a Co m p le x, Ba n d r a ( E) , Mu m b a i-4 0 0 0 5 1 Vs. ITO, Ward Exempt 1(1), 6 th Floor, Cumballa Hill, MTNL Building, Pedder Road, Mumbai-400026 (Appellant) (Respondent) PAN No. AABTB3373J ITA No. 2319 & 2320/Mum/2023 (Assessment Year: 2010-11 & 2013-14) ITO, Ward Exempt 1(1), 6 th Floor, Cumballa Hill, MTNL Building, Pedder Road, Mumbai-400026 Vs. Ba n k o f I n d ia Re t ir e d Em p l o ye e s Me d ic a l As s is t a n c e Sc h e m e C-5 , G Blo c k , St a r H o u s e , B a n d r a Ku r l a Co m p le x, Ba n d r a ( E) , Mu m b a i-4 0 0 0 5 1 (Appellant) (Respondent) PAN No. AABTB3373J Assessee by : Shri Rajesh S Shah, AR Revenue by : Shri Ashok Kumar Ambastha, DR Date of hearing: 27.09.2023 Date of pronouncement : 28.09.2023 O R D E R PER BENCH: 01. These are the four cross appeals for A.Y. 2010-11 and 2013-14 involving similar grounds of appeal and identical facts, therefore, disposed off by this common order. Page | 2 ITA No.2190, 2320, 2319, 2186/Mum/2023 Bank of India, Retired Employees Medical Assistance Scheme; A.Y.10-11 & 13-14 02. ITA No.2319/Mum/2023 is filed by the Income Tax Officer, Exemption-1, Mumbai (the learned Assessing Officer) and ITA No.2186/Mum/2023, is filed by assessee for A.Y. 2010-11 against the appellate order passed by National Faceless Appeal centre, Delhi [the learned CIT (A)] dated 2 nd May, 2023. 03. Assessee has raised following grounds of appeal:- “1. a) On the facts and circumstances of the case, CIT(A) erred in not deciding ground of appeal in respect of disallowance of expenses incurred of Rs. 1,18,91,652 for the objects of the trust and administrative expenses on the plea that the said ground is not arising out of the order passed by the assessing officer though the AO has clearly stated in the order that the expenditure is not allowable. b) The CIT(A) ought to have decided the matter of disallowance of expenses. 2. On the facts and circumstances of the case and in law, the CIT(A) erred in not going through the order of the AO where it has been clearly mentioned as under: At Para 14 of the order: "Therefore, interest income of Rs.1,22,74,579 received by the assessee is brought to tax separately, treating an income within the meaning of Section 2(15) of the IT Act and no expenses are allowed, as no real expenditure is incurred to earn this income." Therefore, the ground is coming out of the assessment order and hence the said ground is allowable on the basis of ITAT orders of the earlier years and the appellant has been granted S.12A certificate. 3. a) Without prejudice to above, the appellant pleads that a ground may be admitted to allow the expenditure Page | 3 ITA No.2190, 2320, 2319, 2186/Mum/2023 Bank of India, Retired Employees Medical Assistance Scheme; A.Y.10-11 & 13-14 incurred of the objects of the trust of Rs.1,18,91,652 since the trust is recognized u/s. 12A of the Act. b) The appellant submits that the honorable Tribunal has power to admit and decide the new ground of appeal.” 04. The learned Assessing Officer has raised following grounds of appeal: - “1. Whether on the facts of the case and in law, the Ld. CIT(A) was justified in directing the AO to allow the benefit of exemption u/s 11 of the IT Act without appreciating the fact that the main object of the assessee trust is mainly meant for the sole benefit of the members, who are the retired employees of the bank and their dependent spouse, and not for the benefit of the public at large, therefore these objects are not covered within the ambit of charitable purpose' as defined under the provisions of section 2(15) of the Act. 2. Whether on the facts of the case and in law, the Ld. CITIA) was justified in directing the AO to allow the benefit of exemption u/s 11 of the IT Act without appreciating the fact that the Department has not accepted the order, ITA No. 6844/Mum/2013 dated 03/10/2018 of the Hon'ble ITAT on merits, directing to grant Registration u/s 12A of the Act, and has filed an appeal u/s. 260A of the IT Act to the Hon'ble High Court vide ITXA No.571/2020 and the same is pending for adjudication before the Hon'ble High Court. 3. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CITA) was justified in allowing the benefit of exemption u/s 11 &12 of the LT Act, 1961 to the assessee, ignoring the fact that once the assessee is hit by the proviso to section 2(15) of the I.T. Act, its objects are Page | 4 ITA No.2190, 2320, 2319, 2186/Mum/2023 Bank of India, Retired Employees Medical Assistance Scheme; A.Y.10-11 & 13-14 no more charitable objects then such activities cannot be treated as income derived from property held for charitable purposes and therefore such income is also not exempt u/s 11 of the Act?” 05. The brief fact of the case is that Assessee is a trust governed by and administered under Bank of India retired employees medical assistance scheme, formulated by the Bank. It is registered with Charity Commissioner, Mumbai. It applied for registration under Section 12A of the Act, which was rejected by learned DIT (Exemption) vide its order dated 22 nd February, 2011. However, when assessee preferred an appeal against that order, the co- ordinate Bench vide order dated 3 rd January, 2018, in ITA No. 6844/Mum/2013, directed the learned DIT to grant registration to the assessee. Thus, Assessee was registered u/s 12 A of the Act. Therefore, assessee is eligible for claiming benefit under Section 11 and 12 of the Income-tax Act, 1961 (the Act). 06. For this Assessment year assessee filed its return of income on 26 th October 2010, at a total income of ₹3,73,429/-. The return of income was accepted as it is. 07. Later on, on 30 th March 2017, the notice under Section 148 of the Act was issued for the reason that by that time assessee was not found to be registered under Section 12AA of the Act, though in the return of income it claimed benefit of Section 11 and 12 of the Act. 08. Accordingly, on reopening of the case, the assessment was framed under Section 143(3) of the Act on 27/11/2017 assessing total income at ₹3,22,74,579/-. In nutshell, the assessee was denied benefit of Section 11 and 12 of the Act. 09. Assessee preferred the appeal before the National Faceless e- Assessment Centre. The appellate order was passed on 2 nd May, 2023. The learned CIT (A) though accepted that now because of the order of ITAT, assessee is eligible for benefit under Section 11 and 12 Page | 5 ITA No.2190, 2320, 2319, 2186/Mum/2023 Bank of India, Retired Employees Medical Assistance Scheme; A.Y.10-11 & 13-14 of the Act, as ITAT has directed the DIT to grant registration under Section 12AA of the Act. Accordingly, he held that the corpus donation of ₹2 crores and bank interest of ₹1,22,74,579/-, assessee is eligible for exemption under Section 11 of the Act. However, with respect to the deduction of certain expenses, which are application of income for the object of the trust , he held that as there is no whisper in the assessment order about such disallowances, issue does not arise in the appeal, he dismissed these grounds. Therefore, in nutshell, he granted the exemption of the income but did not allow certain expenditure incurred for the purpose of charitable objects. Therefore, both the parties are aggrieved and have preferred this appeal. 010. At the time of hearing, the learned Authorized Representative submitted that the issue in the appeal of the Revenue is covered against the learned Assessing Officer by the order of the co-ordinate Bench as it was has held that when the registration under Section 12A of the Act is now available to the assessee, the benefit of Section 11 and 12 of the Act cannot be denied. With respect to the appeal of the assessee, assessee submitted that the expenditure incurred on the object of the trust is necessary to be allowed to the assessee as application as assessee is now registered under Section 12A of the Act. 011. The learned Departmental Representative submitted that the learned Assessing Officer has not accepted the order of the ITAT granting registration to the assessee under Section 12A of the Act, it is challenged at higher judicial forum and therefore, assessee is correctly denied the benefit of Section 12A of the Act. 012. We have carefully considered the rival contentions and perused the orders of the lower authorities. After the order of the ITAT in ITA No.6844/Mum/2013, dated 3 rd January, 2018, the assessee has been granted registration under Section 12A of the Act. As soon as the assessee is registered under Section 12A of the Act, there is no Page | 6 ITA No.2190, 2320, 2319, 2186/Mum/2023 Bank of India, Retired Employees Medical Assistance Scheme; A.Y.10-11 & 13-14 reason that why assessee should not be allowed benefit of Section 11 and 12 of the Act. This benefit has been conferred by the learned CIT (A). We do not find any infirmity in the order of the learned CIT (A) and therefore, we hold that assessee is eligible for benefit under Section 11 and 12 of the Act as it is a registered trust under Section 12A of the Act. Therefore, we dismiss the appeal filed by the learned Assessing Officer. 013. Coming to the appeal of the assessee, we find that when the assessee is entitled to the benefit of section 11 and 12 of the Act, application of such income by incurring the expenses for the object of the trust are necessary to be allowed to the assessee. The learned CIT (A) is not correct in holding that same does not arise from the assessment order. The assessment order has completely denied the benefit of Section 11 and 12 of the Act. Therefore, the application of the income of the trust is also part of Section 11 and 12 of the Act. Therefore, to that extent, the order of the learned CIT (A) is reversed and learned Assessing Officer is directed to grant the deduction of application of income being expenses incurred on the object of the trust. In the result, the appeal of the assessee is allowed. 014. In the result, the appeal filed by the learned Assessing Officer is dismissed and the appeal filed by the assessee is allowed. 015. Coming to A.Y. 2013-14, the learned Assessing Officer in ITA No.2320/Mum/2023 and assessee in ITA No.2190/Mum/2023, has preferred the appeal against the order of the learned CIT (A) dated 2 nd May, 2023, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) read with section 147 of the Act dated 30 th November, 2017, was partly allowed. Therefore, both the parties are aggrieved with the appellate order and are in appeal before us, raising identical grounds as were raised in A.Y. 2010-11. 016. The assessee filed its return of income on 28 th September, 2020, at ₹ nil. The return was accepted as it is. However, as the assessee was Page | 7 ITA No.2190, 2320, 2319, 2186/Mum/2023 Bank of India, Retired Employees Medical Assistance Scheme; A.Y.10-11 & 13-14 not found to be registered under Section 12AA of the Act, notice under Section 148 of the Act were issued on 8 th March, 2018, which culminated into the assessment dated 30 th November, 2017, determining the total income of the assessee of ₹3,05,91,760/-, being interest income of the assessee as total income. 017. On appeal before the learned CIT (A), the assessee was allowed benefit of Section 11 and 12 of the Act, however, the learned CIT (A) did not direct the learned Assessing Officer to allow the application of income by way of various expenditures, holding that the application of income does not arise from the assessment order. Thus, identical orders of assessment and appeal were passed in this year also as compared to A.Y. 2010-11. Therefore, both the parties are in appeal before us. 018. Both the parties confirmed that facts and circumstances of the case and the issue involved in this appeal are identical to the appeals of both the parties for A.Y. 2010-11. 019. On careful consideration, we find that the issues are identical in this year also as compared to the facts and circumstances for A.Y. 2010- 11. The assessee is entitled to benefit under Section 11 and 12 of the Act, as it is now registered under Section 12AA of the Act. Further, the amounts applied by way of expenditure towards the object of the trust are necessarily to be granted to the assessee as deduction from the income under Section 11 of the Act. The only reason the learned Assessing Officer is contesting this appeal is that the learned Assessing Officer has not accepted the order of the ITAT for registration to the assessee under Section 12A of the Act. It was stated that same is challenged before the Hon'ble High Court. However, at present, the assessee is entitled to benefit to section 11 and 12 of the Act, consequently, necessarily deduction of expenditure incurred as application of the income is allowable . In view of this, we do not find any merit in the appeal of the learned Assessing Officer and hence, we dismiss the same. The appeal of the assessee Page | 8 ITA No.2190, 2320, 2319, 2186/Mum/2023 Bank of India, Retired Employees Medical Assistance Scheme; A.Y.10-11 & 13-14 is allowed directing the learned Assessing Officer to grant the deduction of expenditure incurred for the object of the Trust as its application u/s 11 and 12 of the Act. 020. In view of this all these four appeals are disposed off. Order pronounced in the open court on 28.09. 2023. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 28.09. 2023 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai