Appeal Details
Counselvise Citation
[2018] 119 COUNSELVISE.COM (IT) 2565 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 6 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-11-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
I
Assessment Year
2011-2012
Appeal Filed On
05-05-2015
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO.2649/DEL/2015 ASSESSMENT YEAR: 2011-12 DY. COMMISSIONER OF INCOME-TAX, VS FLT. LT. RAJAN DHALL CHARITABLE TRUST, CIRCLE 1(1), NEW DELHI. (REGD), B-1, ARUNA ASAF ALI MARG, VASANT KUNJ, NEW DELHI. (PAN:AAATF0185H) (APPELLANT) (RESPONDENT) APPELLANT BY: MS ASHIMA NEB, SR. DR RESPONDENT BY: SHRI R.M. MEHTA, FCA DATE OF HEARING: 31.10.2018 DATE OF PRONOUNCEMENT: 05.11.2018 ORDER PER K. NARASIMHA CHARY, JM CHALLENGING THE ORDER DATED 09.2.2015 IN APPEAL NO.568/2013-14 BY LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-40, NEW DELHI {FOR SHORT LD.CIT(A)} FOR ASSTT. YEAR 2011-12, REVENUE PREFERRED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARITABLE SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 VIDE ORDER DATED 2 23.9.1971. ASSESSEE HAS ALSO REGISTERED U/S 12AA(1) OF THE INCOME-TAX ACT, 1961 (THE ACT) ON 12.2.1997. THE ASSESSEE IS RUNNING A CHARITABLE HOSPITAL AT VASANT KUNJ, NEW DELHI IN THE NAME OF FLT. LT. RAJAN DHALL CHARITABLE TRUST, WHICH PROVIDES MEDICAL RELIEF TO THE GENERAL PUBLIC. 3. ASSESSEE FILED THEIR RETURN OF INCOME ON 23.9.2011 DECLARING NIL INCOME BUT THE ASSESSMENT WAS COMPLETED BY AN ORDER DATED 12.2.2014 AT RS.12,84,20,473/- BY MAKING CERTAIN ADDITIONS WHILE DISALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11(1) OF THE ACT BY TREATING THE ASSESSES CONTRACT WITH THE FORTIS HOSPITAL FOR RUNNING HOSPITAL AS COMMERCIAL ACTIVITY. 4. LEARNED CIT(A) CONSIDERED THE PLEA OF THE ASSESSEE THAT THE ASSESSEE HAS BEEN RUNNING A CHARITABLE HOSPITAL PROVIDING MEDICAL RELIEF TO THE GENERAL PUBLIC AND FOR BOTH EARLIER AND SUBSEQUENT YEARS, THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11(1) OF THE ACT IS ALLOWED BY AO FOR SOME YEARS AND FIRST APPELLATE AUTHORITY FOR SOME YEARS CONFIRMED BY THE TRIBUNAL, AND ALLOWED THE APPEAL DIRECTING THE LEARNED AO TO ALLOW EXEMPTION U/S 11(1) OF THE ACT TO THE ASSESSEE. 5. REVENUE IS, THEREFORE, IN THIS APPEAL STATING THAT THE LEARNED CIT(A) ERRED IN IGNORING THE ACTIVITIES OF THE ASSESSEE TRUST AND ALLOWING THE BENEFITS OF SECTION 11 & 12 OF THE INCOME-TAX ACT, 1961 (THE ACT). IT IS FURTHER CONTENDED BY THE REVENUE THAT AS PER VARIOUS CLAUSES OF OPERATIONAL AND MANAGEMENT AGREEMENT, IT IS ESTABLISHED THAT RAJAN DHALL CHARITABLE TRUST, VASANT KUNJ, NEW DELHI HAS BEEN TRANSFERRED TO M/S FORTIS HOSPITAL PVT. LTD. AND THE SOCIETY HAS NO CONCERN WITH THE ACTIVITIES OF THE HOSPITAL AND IN VIEW 3 OF THE JUDGMENT OF A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S DEVKI DEVI FOUNDATION, ITA NO.1027/DEL/2012 DATED 31.3.2015, THE BENEFIT OF SECTION 11 & 12 SHOULD NOT HAVE BEEN ALLOWED TO THE ASSESSEE. 6. IT IS THE ARGUMENT OF THE LEARNED DR THAT IN THE ASSESSMENT ORDER LD. AO ENUMERATED THE REASONS FOR DISALLOWING THE CLAIM OF THE ASSESSEE U/S 11(1) OF THE ACT AND MORE PARTICULARLY, THE FACT THAT THE ASSESSEE IS GETTING RENTAL INCOME AND FORTIS HOSPITAL HAS PAID AN AMOUNT OF RS.35 CRORES TO VAITALIK ON BEHALF OF THE ASSESSEE SOCIETY. SHE SPECIFICALLY BROUGHT TO OUR ATTENTION PARA 7 (III) OF THE ASSESSMENT ORDER WHICH STATES THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT BY WHICH IF THE PLAN OF SHARE OF SURPLUS HAS NOT BEEN FULFILLED, ASSESSEE WILL BE LIABLE TO PAY ENTIRE MONEY SPENT BY OBPL INCLUDING THE AMOUNT PAID TO VAITALIK ALONG WITH INTEREST @ 12% P.A WITHIN 30 DAYS OF SUCH BREACH OF AGREEMENT TO FORTIS PVT. LTD. ACCORDING TO THE LEARNED AO, THIS CLAUSE HAS TOTALLY ENDED THE BASIC CHARITABLE NATURE OF THE TRUST AND MADE IT IN FULL CONTROL OF THE PRIVATE COMPANY WHICH IS PURELY WORKING ON COMMERCIAL LINES AND EARNING THE MAJOR SHARE OF INCOME OF THE CHARITABLE ORGANIZATION. LIKEWISE, THE ASSESSEE IS EARNING RENTAL INCOME FROM ERECTING AIRTEL, HUTCHISON TOWERS, IDEA CELLULAR IN ITS HOSPITAL, WHICH IS NOT AT ALL INCIDENTAL TO ANY ACTIVITIES OF THE ASSESSEE SOCIETY. FURTHER, LEARNED DR SUBMITTED THAT THE AO RECORDED THAT THE ASSESSEE HAS EARNED INCOME FROM BOOK CAF AND VISITOR CAF, BUSINESS CENTERS, PARKING AREA, WHICH ARE ALL PURELY ON COMMERCIAL LINES AND NOT RELATED OR INCIDENTAL TO THE ACTIVITIES OF THE ASSESSEE. LEARNED DR SUBMITTING THAT IN VIEW OF THIS BUSINESS AND COMMERCIAL ACTIVITIES, AO IS JUSTIFIED IN DENYING THE EXEMPTION U/S 11(1) OF 4 THE ACT AND INASMUCH AS THE LEARNED CIT(A) DID NOT CONSIDER THESE FACTORS, THE IMPUGNED ORDER CANNOT BE SUSTAINED. LEARNED DR PLACED RELIANCE ON A DECISION OF A COORDINATE BENCH IN THE CASE OF M/S DEVKI FOUNDATION, ITA NO.1027/DEL/2012 DATED 31.3.2015, TO SHOW THAT THE CONTRACT OF THE TRUST WITH MAX GROUP OF HOSPITALS IS A COMMERCIAL ACTIVITY. 7. PER CONTRA, IT IS THE ARGUMENT OF THE LEARNED AR THAT ALL THE ACTIVITIES ENUMERATED BY THE LEARNED AO IN PARA 7 OF THE ASSESSMENT ORDER ARE NOTHING NEW BUT HAVE BEEN IN PLACE SINCE ITS INCEPTION, AS SUCH, MERELY BECAUSE SOME ACTIVITIES ARE RECORDED IN THE ASSESSMENT ORDER FOR SOME YEARS AND SOME ACTIVITIES ARE RECORDED IN SOME OTHER YEAR, DOES NOT CONVERT THE CHARITABLE NATURE OF THE ASSESSEE INTO A COMMERCIAL ENTITY AND AS A MATTER OF FACT, CONSIDERING ALL THESE FACTORS ONLY BOTH THE AO AND THE FIRST APPELLATE AUTHORITY HAVE ALLOWED EXEMPTION U/S 11(1) OF THE ACT OF WHICH ASSESSEE RIGHT FROM THE YEAR 2007-08 TO 2014-15. LEARNED AR SUBMITTED THAT LEARNED CIT(A) HAS RIGHTLY FOLLOWED THE RULE OF CONSISTENCY AND THE APPEAL OF THE REVENUE IS DEVOID OF MERITS. HE FURTHER SUBMITTED THAT THE ORDER OF THE TRIBUNAL IN M/S DEVKI FOUNDATION, ITA NO.1027/DEL/2012 DATED 31.3.2015 WAS SET ASIDE BY THE HONBLE DELHI HIGH COURT AND THE MATTER IS RESTORED TO THE TRIBUNAL FOR DECIDING AFRESH, AND HENCE, SUCH A DECISION CANNOT BE A PRECEDENT. 8. WE HAVE GONE THROUGH THE RECORD. THOUGH THE LEARNED DR BROUGHT TO OUR NOTICE THAT VIDE PARA 7 OF THE ASSESSMENT ORDER, THE LEARNED AO ENUMERATED CERTAIN ACTIVITIES TO SAY THAT THEY ARE NOT CHARITABLE IN NATURE 5 BUT ONLY COMMERCIAL ONES, IT IS NOT ESTABLISHED BEFORE US THAT THESE ARE ACTIVITIES THAT ARE UNDERTAKEN BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION ONLY, BUT NEITHER EARLIER NOR SUBSEQUENTLY. THERE IS NOTHING CONTRARY TO THE SUBMISSION ON BEHALF OF THE ASSESSEE THAT AS A MATTER OF FACT, ALL THESE ACTIVITIES HAVE BEEN UNDERTAKEN BY THE ASSESSEE RIGHT FROM THE YEAR 2007-08 BUT MERELY BECAUSE THE AO HAS CHOSEN TO ENUMERATE CERTAIN ACTIVITIES FOR CERTAIN YEARS, DOES NOT RENDER THE BINDING PRECEDENCE APPLICABLE TO THE FACTS OF THE CASE. 9. IT IS AN ADMITTED FACT THAT FOR THE ASSTT. YEAR 2007-08, THE AO HAS ALLOWED SUCH AN EXEMPTION VIDE ORDER DATED 31.12.2009 U/S 143(3) OF THE ACT AND THE COPY OF SUCH ORDER IS ON RECORD AT PAGE 1 & 2 OF THE PAPER BOOK. FOR THE ASSTT. YEAR 2008-09 AND 2009-10, THE FIRST APPELLATE AUTHORITY ALLOWED THE CLAIM OF THE ASSESSEE AND THE SAME WAS UPHELD BY A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.3073/DEL/2012 AND BATCH BY ORDER DATED 21.8.2017. FOR THE ASSTT. YEARS 2013-14 AND 2014-15, AO HIMSELF ALLOWED SUCH AN EXEMPTION BY ORDERS DATED 29.2.2016 AND 22.12.2016. 10. WHEN THE FACTS REMAINED IDENTICAL, IT IS NOT OPEN FOR US TO TAKE A DIFFERENT VIEW IN THE ABSENCE OF ANY COMPELLING REASONS TO DO SO. FURTHER, THE DECISION IN THE CASE OF DEVKI DEVI FOUNDATION VS DCIT (SUPRA) RENDERED BY A COORDINATE BENCH OF THIS TRIBUNAL DATED 31.3.2015, WAS IN APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO.484/2015 AND BY ORDER DATED 15.2.2016, THE HONBLE JURISDICTIONAL HIGH COURT SET ASIDE THE ORDER AND RESTORES ITA 1027/DEL/2012 TO THE TRIBUNAL FOR FRESH DECISION, ACCORDING TO 6 LAW. SO NO RELIANCE CAN BE PLACED BY THE REVENUE ON THIS DECISION, WHICH IS NO LONGER IN FORCE. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) RIGHTLY FOLLOWED THE RULE OF CONSISTENCY AND ALLOWED THE CLAIM OF THE ASSESSEE. WE FIND NO REASON TO INTERFERE WITH THE SAME. WE ACCORDINGLY UPHOLD IT. APPEAL OF THE REVENUE BEING DEVOID OF MERIT, IS LIABLE TO BE DISMISSED. THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH NOVEMBER, 2018. SD/- SD/- (G.D. AGRAWAL) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 5 TH NOVEMBER, 2018. VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) BY ORDER 5. DR, ITAT ASSTT. REGISTRAR, ITAT 7 DRAFT DICTATED ON 2 .1 1 .2018 DRAFT PLACED BEFORE AUTHOR 2.11.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON DATE OF UPLOADING ORDER ON THE WEBSITE FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.
