ADIT (E), New Delhi V. Flt. Lt. Ranjan Dhall Charitable Trust, New Delhi

ITA 3073/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4806 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 18-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENU AMITABH
• Assessee Lawyers: R M MEHTA
• Keywords: Depreciation; Charitable institution; Additional evidence; Question of law
• Section: 143(3); 12; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BEN CH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI K.N. CHARY, JUDICIAL MEMBER. ITA NO. 3073/DEL/2012 [A.Y. 2008-09] ITA NO. 5873/DEL/2013 [ A.Y. 2009-10] THE ADIT[E] VS. FLT. LT RANJAN DHALL CHA RITABLE TRUST INV. CIRCLE II BLOCK B, POCKET I, ARUNA ASAL ALI MARG, NEW DELHI VASANT KUNJ, NEW DELHI PAN : AAATF 0185 H ITA NO. 3495/DEL/2012 [ASSESSMENT YEAR: 2008-09] FLT. LT RANJAN DHALL CHARITABLE TRUST VS. THE D DIT[E] BLOCK B, POCKET - I INV CIRCLEII ARUNA ASAL ALI MARG, NEW DELHI VASANT KUNJ, NEW DELHI CO NO. 125/DEL/2017 A/O ITA NO. 5873 /DEL/2013 [ASSESSMENT YEAR: 2009-10] FLT. LT RANJAN DHALL CHARITABLE TRUST VS. THE DDIT[E] BLOCK B, POCKET - I INV CIRCLEII ARUNA ASAL ALI MARG, NEW DELHI VASANT KUNJ, NEW DELHI PAN : AAACF 488 5D [APPELLANT] [RESPONDENT] DATE OF HEARING : 03.08.2017 DATE OF PRONOUNCEMENT : 21 .08.2017 ASSESSEE BY : SHRI R.M. M EHTA, ADV REVENUE BY : MS. RENU AMITABH, CIT-DR - 2- ORDER PER B.P. JAIN, ACCOUNTANT MEMBER: THE ABOVE APPEALS FILED BY THE REVENUE AND APPEAL F ILED BY THE ASSESSEE AND CROSS OBJECTION FILED BY THE ASSESSEE PERTAIN TO A.YS. 2008-09 AND A.Y. 2009-10. SINCE THE APPEALS PERTAI N TO SAME ASSESSEE AND WERE HEARD TOGETHER INVOLVING IDENTICAL ISSUES, THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NOS. 3073 & 3495 /DEL/2012 2. THESE TWO APPEALS FILED BY THE REVENUE ARISE FRO M THE ORDER OF THE LD. CIT(A) XXII, NEW DELHI VIDE ORDER DATED 6.0 3.2012 AND OUT OF ORDER OF LD. CIT(A), XX1, NEW DELHI VIDE ORDER DATE D 26.08.2013 FOR ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ASSESSMENT YEAR 2008-09: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING EXEMPTI ON U/S 11 OF THE ACT TO THE ASSESSEE TRUST WHEREAS THE ACTIVITIE S OF THE ASSESSEE TRUST ARE NOT CHARITABLE WITHIN SECTION 2( 15) OF THE ACT. - 3- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADD ITION MADE ON THE GROUND OF DISALLOWANCE OF 25% EXPENDITURE AND R ESTRICTING IT TO 10% OF THE TOTAL EXPENDITURE. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ASSESSMENT YEAR 2009-10: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING EXEMPTI ON U/S 11 OF THE ACT TO THE ASSESSEE TRUST WHEREAS THE ACTIVITIE S OF THE ASSESSEE TRUST ARE NOT CHARITABLE WITHIN SECTION 2( 15) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON THE GROUND OF DISALLOWANCE OF FINANCIAL EXPENSES OF RS. 3,26,88,639/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADD ITION MADE OF RS. 8,91,171/- ON ACCOUNT OF DEPRECIATION AND AMORT IZATION. 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ASSESSMENT YEAR 2008-09: 1. THAT THE LEARNED CIT(A) ERRED BOTH ON FACTS AND IN LAW IN SUSTAINING DISALLOWANCE TO THE EXTENT OF 10% AS AGA INST 25% BY THE ASSESSING OFFICER OUT OF THE TOTAL EXPENDITURE OF - 4- RS.81,50,92,376/- INCURRED BONAFIDELY BY THE APPELL ANT TOWARDS LEASE RENT, MANAGEMENT FEES AND OTHER EXPENSES FOR RUNNING THE HOSPITAL. 2. WITHOUT PREJUDICE TO THE AFORESAID GROUND, THE C IT(A) AFTER ALLOWING THE MAIN GROUND OF APPEAL OF THE APP ELLANT PERTAINING TO THE GRANT OF EXEMPTION U/S 11 OF THE I.T. ACT, 1961 WAS NOT REQUIRED TO GO INTO THE ALTERNATIVE GROUND RAISED AFORESAID. THIS WOULD UNNECESSARILY CREATE PRECEDEN CE FOR SUBSEQUENT ASSESSMENT YEARS ALTHOUGH NO SUCH DISALL OWANCE WAS MADE IN PAST ASSESSMENTS. 6. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDIT IONAL GROUND OF APPEAL IN ASSESSMENT YEAR 2008-09: THAT THE DEFICIT ARISING AS A RESULT OF THE APPLIC ATION OF THE FUNDS TOWARDS CHARITABLE PURPOSES BEING IN EXCESS O F THE INCOME EARNED IS REQUIRED TO BE CARRIED FORWARD TO THE SUB SEQUENT YEARS TO BE ADJUSTED IN CASE OF SHORTFALL IN THE APPLICAT ION. 7. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDON ATION OF DELAY. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN TH E PRESENT CASE, WE FIND THAT THE HON'BLE APEX COURT I N THE CASE OF VEDABAI ALIAS VAIJAYANATABAI VS SHANTARAM BABURA O PATIL AND ORS REPORTED AT 253 ITR 798 HELD AS UNDER: - 5- A DISTINCTION MUST BE MADE BETWEEN A CASE WHERE TH E DELAY IS INORDINATE AND A CASE WHERE THE DELAY IS OF A FEW D AYS. WHEREAS IN THE FORMER CASE THE CONSIDERATION OF PREJUDICE T O THE OTHER SIDE WILL BE A RELEVANT FACTOR SO THE CASE CALLS FO R A MORE CAUTIOUS APPROACH BUT IN THE LATTER CASE NO SUCH CO NSIDERATION MAY ARISE AND SUCH A CASE DESERVES A LIBERAL APPROA CH. 9. WE, THEREFORE, CONSIDERING THE GENUINE AND VALID REASONS STATED BY THE LD. COUNSEL FOR THE ASSESSEE AND THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT AND BY TAKING A LIBERAL APPROACH OF FEW DAYS DELAY, CONDONE THE DEL AY. 10. THE LD. COUNSEL FOR THE ASSESSEE, SHRI R.M. MEH TA, VEHEMENTLY ARGUED THAT THE SAID GROUND RAISES A QUESTION OF LA W WHICH GOES TO THE ROOT OF THE MATTER AND DOES NOT ENTAIL ANY VERIFICA TION OF FACTS OR BRINING ON RECORD ANY FRESH MATERIAL OR ADDITIONAL EVIDENCE. HE RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW IN THIS REGARD. 11. ON THE OTHER HAND, THE LD. DR OPPOSED THE ADMIS SION OF ADDITIONAL GROUND. - 6- 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AN D THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONS IDERED THE VARIOUS DECISIONS RELIED UPON BY BOTH THE SIDES. WE FIND TH AT SAID GROUND RAISES A QUESTION OF LAW WHICH GOES TO THE ROOT OF THE MAT TER AND DOES NOT ENTAIL ANY VERIFICATION OF FACTS OR BRINGING ON REC ORD ANY FRESH MATERIAL OR ADDITIONAL EVIDENCE. RELIANCE WAS PLACED ON THE FOLLOWING JUDGEMENTS IN SUPPORT OF THE ADMISSION OF THE ADDIT IONAL GROUND: 1. NATIONAL THERMAL POWER CORPORATION LTD. VS CIT ( 1998) 229 ITR 383(SC). 2. ORISSA CEMENT LTD. VS CIT (2001) 2O0 ITR 806 (DE LHI) 3. AVERY CYCLE INDUSTRIES LTD. (2007) 292 ITR 493 ( P&H) 4. HUKUMCHAND MILLS LTD. VS CIT (1967) 663 ITR 232 (SC) 5. CIT VS NELLIAAPPAN (1967) 66 ITR 727 (SC) IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS, WE AD MIT THE ADDITIONAL GROUND OF APPEAL. 13. AT THE OUTSET, WE DECIDE THE ADDITIONAL GROUND IN VIEW OF THE ARGUMENTS MADE BY THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUN AL DATED - 7- 30.07.2015 IN THE CASE OF ACIT[E] VS. DAWAT E. HADI YAH REPORTED IN [2015] 43 ITR [TRIB] 476 WHEREIN IT HAS BEEN HELD A S UNDER: I HAVE CONSIDERED THE ARGUMENT PUT FORWARD BY BOTH THE PARTIES. THE ISSUE OF EXCESS APPLICATION OF INCOME OF EARLIER TO BE CARRIED FORWARD IS DECIDED IN FAVOUR OF THE ASSE SSEE IN THE DECISION OF THE HIGHER JUDICIAL FORM AS REFERRED TO AND RELIED ON BY THE LD. CIT(A). THEREFORE, RESPECTFULLY FOLLOWI NG THE DECISION RELIED UPON BY THE LD. CIT(A) AND APPLICABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THESE GROUNDS OF THE REV ENUE ARE DISMISSED. 14. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DECISION RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE. WE ALLOW THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE. 15. THE REVENUE HAS ALSO RAISED ADDITIONAL GROUND O F APPEAL FOR ASSESSMENT YEAR 2008-09 WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 23,50,00,000/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNSECURED LOANS. - 8- 16. WE HAVE CONSIDERED THE RIVAL ARGUMENTS AND PERU SED THE WRITTEN SUBMISSIONS FILED BY THE REVENUE. WE FIND THAT THE HON'BLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS C IT (1998) 229 ITR 383 (SC) CONSIDERING ITS EARLIER JUDGEMENT IN THE C ASE OF JUTE CORPORATION OF INDIA LTD. VS CIT 187 ITR 688 OBSERV ED AS FOLLOWS: THIS COURT FURTHER OBSERVED THAT THERE MAY BE SEVE RAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS . THE APPELLATE ASSISTANT COMMISSIONER MUST BE SATISFIED THAT THE GROUND RAISED WAS BONA FIDE AND THAT THE SAME C OULD NOT HAVE BEEN RAISED EARLIER FOR GOOD REASONS. THE APPELLATE ASSISTANT COMMISSIONER SHOULD EXERCISE HI S DISCRETION IN PERMITTING OR NOT PERMITTING THE ASSE SSEE TO RAISE AN ADDITIONAL GROUND IN ACCORDANCE WITH LAW A ND REASON. THE SAME OBSERVATIONS WOULD APPLY TO APPEAL S BEFORE THE TRIBUNAL ALSO. 17. FROM A READING OF THE AFORESAID JUDGEMENT, THE LEGAL PREPOSITIONS THAT EMERGE ARE AS UNDER : 1. ADDITIONAL GROUNDS INVOLVING QUESTIONS OF LAW CAN B E RAISED AT ANY STAGE OF THE PROCEEDINGS PROVIDED RELEVANT F ACTS ARE ALREADY ON RECORD. 2. THAT THE APPELLATE AUTHORITY (THE ITAT IN THE PRES ENT CASE) MUST BE SATISFIED THAT THE ADDITIONAL GROUND RAISED WAS - 9- BONAFIDE AND THAT THE SAME COULD NOT HAVE BEEN RAIS ED EARLIER FOR GOOD REASONS. 3. UNDER RULE 11 OF THE APPELLATE TRIBUNAL RULES 1963 THE ITAT HAS TO RECORD REASONS FOR ADMITTING THE ADDITIONAL GROUND. 18. BEFORE EXAMINING THE EXPLANATION OF THE REVENUE IN THE LIGHT OF THE AFORESTATED LEGAL POSITION CERTAIN DATES ARE RE LEVANT AS UNDER: 1. THE APPEAL BY THE REVENUE WAS FILED ON 18.06.2012. 2. THE ADDITIONAL GROUND WAS FILED VIDE COMMUNICATION DATED 28.09.2012. 3. THE ORDER OF THE CIT(A) U/S 154 ON THE BASIS OF WH ICH THE REVENUE IS STATED TO HAVE ACTED IS DATED 18.07. 2012. 4. ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WAS COMPLET ED ON 23.12.2011. 19. A REFERENCE TO THE ORDER OF THE LD. CIT(A) DATE D 06.03.2012 SHOWS THAT THE FIGURE OF RS.23,50,00,000/- (RS.23.5 0 CR) IS MENTIONED AT 7 PLACES SPANNING 11 PAGES WHEREAS THE FIGURE OF RS. 23,50,000/- (RS.23.50 LAKHS) ADMITTEDLY A TYPOGRAPHICAL ERROR, IS MENTIONED AT ONLY ONE PLACE. IS IT TO BE UNDERSTOOD THAT THE REC OMMENDING AND THE APPROVING AUTHORITY FOR THE REVENUES APPEAL LOOKED ONLY AT THE LAST PAGE OF THE ORDER OF THE CIT(A) AND DID NOT EXAMINE THE EARLIER PAGES WHERE THE FIGURE OF RS.23.50 CRORES WAS CLEARLY HIG HLIGHTED AT 7 PLACES INCLUDING IN THE GROUNDS OF APPEAL. FURTHER THE ORD ER OF ASSESSMENT - 10- INDICATED THE FIGURE OF RS.23.50 CRORES AT THREE PL ACES INCLUDING THE COMPUTATION OF INCOME. ANOTHER IMPORTANT FACT TO B E NOTED IS THAT PRIOR TO THE ORDER DATED 06.03.2012 PASSED BY THE C IT(A) THE ASSESSMENT FOR THE SUBSEQUENT ASSESSMENT YEAR I.E 2 009-10 HAD BEEN COMPLETED ON 23.12.2011 WHEREIN THE AO TOOK NOTE OF THE LOAN TAKEN BY THE ASSESSEE IN ASSESSMENT YEAR 2008-09 TO THE T UNE OF RS.23.50 CR. FROM THE AFORESAID UNDISPUTED FACTS TWO THINGS EMER GE, NAMELY: 1. EITHER THERE WAS A NON APPLICATION OF MIND ON TH E PART OF THE TAX AUTHORITIES WHEREBY THEY MISSED THE FIGURE OF R S.23.50 CR AND BECAME AWARE (AS STATED IN THEIR LETTER DATED 28.09 .2012) ONLY AFTER THE ORDER ON RECTIFICATION WAS PASSED BY THE JCIT(A) ON 18.07.2012 OR 2. THERE WAS A CONSCIOUS DECISION AT THE INITIAL S TAGE OF THE FILING OF THE APPEAL TO ACCEPT THE ORDER OF THE LD. CIT(A) IN RESPECT OF THE RELIEF GIVEN ON THE UNSECURED LOAN A DDITION AND THE FILING OF THE ADDITIONAL GROUND SUBSEQUENTLY WA S A CHANGE OF MIND TO AGITATE AN ISSUE WHICH WAS ALREADY GIVEN UP . - 11- 20. UNDER BOTH THE AFORESAID SITUATIONS THE CASE OF THE REVENUE FOR THE ADMISSION OF THE ADDITIONAL GROUND IS FARFETCHE D, AN AFTERTHOUGHT, WITHOUT MERIT AND CLEARLY, OUTSIDE THE PARAMETERS L AID DOWN BY THE COURTS. IN FACT IF A PARTY IS NEGLIGENT (AS IS THE CASE HERE) IN NOT RAISING A GROUND OF APPEAL INITIALLY THEN THE SAME CANNOT B E URGED AS AN ADDITIONAL GROUND SUBSEQUENTLY AT ITS WHIMS AND FAN CIES TO COVER UP THE SAID NEGLIGENCE. APPEALS CANNOT BE FILED PIECE MEAL AND A PARTY CANNOT GET THE BENEFIT OF ITS OWN NEGLIGENCE. 21. COMING TO THE SECOND SITUATION A CONSCIOUS DECI SION TO ACCEPT THE RELIEF GIVEN BY THE LD. CIT(A) (SUM OF RS.23.50 CR IN THE PRESENT CASE) CANNOT BE REAGITATED BY RAISING AN ADDITIONAL GROUND. ALSO THE ADDITION OF RS.23.50 CRORES ON ACCOUNT OF AN UNSECU RED LOAN AND ITS SUBSEQUENT DELETION BY THE CITA(A) DOES NOT INVOLVE A QUESTION OF LAW BEING A PURE QUESTION OF FACT. IN OTHER WORDS, AN A DDITIONAL GROUND CANNOT BE RAISED ON A FACTUAL MATTER. IN THAT VIEW OF THE MATTER, THE ADDITIONAL GROUND RAISED BY THE REVENUE IS REJECTED . 22. NOW WE TAKE UP THE MAIN GROUNDS OF APPEAL OF TH E REVENUE AS UNDER. - 12- 23. AS REGARDS GROUND NO. 1 RAISED BY THE REVENUE, THE BRIEF FACTS ARE THAT THE AO IN THE COURSE OF THE ASSESSMENT PRO CEEDINGS FOR THE AY 2008-09 TOOK THE VIEW THAT THE ACTIVITIES OF THE AP PELLANT WERE NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2(15) OF THE ACT AND EXEMPTION U/S 11 WAS TO BE DENIED. THE MAIN GROUNDS FOR ARRIVING AT THE AFORESAID CONCLUSION WERE: (1) CONSEQUENT TO THE AGREEMENT DATED 12/5/2005 BET WEEN THE ASSESSEE, VAITALIK AND OSCAR BIOTECH P. LTD. (O BPL) WHEREBY VAITALIK OPTED OUT OF THE AGREEMENT BETWEEN ITSELF AND THE ASSESSEE DATED 7.8.1998 AND OPBL STEPPED INTO THE S HOES OF VAITALIK FOR SETTING UP AND RUNNING A SUPER SPECIAL ITY HOSPITAL THE CONTROL AND MANAGEMENT OF THE SAID HOSPITAL HAD GON E INTO THE HANDS OF OBPL RATHER THAN BEING UNDER THE CONTROL A ND MANAGEMENT OF THE ASSESSEE TRUST. (2) AS A RESULT OF THE FACTS AND CIRCUMSTANCES OUT LINED IN (1) ABOVE, THE ACTIVITIES OF THE TRUST HAD BECOME COMME RCIAL IN NATURE RATHER THAN REMAINING CHARITABLE FOR THE COM MON PEOPLE OF DELHI. 3. THAT THE CHANGE IN THE MEMBERS OF THE EXECUTIVE COMMITTEE WITH REFERENCE TO THREE DATES VIX 23.9.71 . 7.6.98 AND - 13- 12..2005 CONFIRMED THE CHANGE IN THE CHARACTER OF T HE ASSESSEE TRUST. 4. THAT VAITALIK AS PER ITS AGREEMENT WITH THE ASSE SSEE WAS REQUIRED TO INVEST RS.7.6 CRORES IN THE PROJECT BUT THE BALANCE SHEETS FOR THE ASST YEARS 2003-04, 2004-05 AND 2005 -06 DID NOT REFLECT THE SAID CONDITION TO HAVE BEEN FULFILLED. 5. THAT CERTAIN CLAUSES IN THE AGREEMENT (SEE TOP O F PAGE 4 OF THE ASSESSMENT ORDER) REVEALED THAT THE ASSESSEE WA S RUNNING BUSINESS ACTIVITIES RATHER THAN CHARITABLE ACTIVITI ES. 24. THE LD. CIT(A) ACCEPTED THE ARGUMENTS OF THE AS SESSEE AND ALLOWED THE CLAIM WHOSE OBSERVATION IS REPRODUCED A S UNDER FOR THE SAKE OF CONVENIENCE: I HAVE PERUSED THE FACTS STATED IN THE ASSESSMENT ORDER AS WELL AS THE FACTS ASSESSEE IN HIS SUBMISSION. IN TH IS REGARD, SECTION 2(15) DEFINES 2(15) OF THE ACT DEFINING MEANING OF THE TERM CHA RITABLE PURPOSE, AS WAS APPLICABLE FOR THE AY 2008-09, IS REPRODUCED AS UNDER: CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF A NY OTHER OBJECT OF GENERAL PUBLIC UTILITY. - 14- FURTHER A PROVISO TO SECTION 2(15) WAS INSERTED IN THE STATUTE W.E.F. 1/4/09, I.E., APPLICABLE FROM THE AY 2009- 10 ONWARDS, AS UNDER: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IF IT INVOLVES THE CARRYING OF ANY ACTIVITY IN THE NAT URE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OF B USINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRES PECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. THERE IS NO VIOLATION OF SECTION 2(15). FURTHER THE ASSESSING OFFICER IN HIS ORDER NOWHERE CHALLENGE THE APPLICATION/UTILIZATION OF FUND RAISED BY THE APPEL LANT. HENCE THE AO SUO-MOTO CANNOT DENY THE ASSESSEE, THE BENEFIT OF SECTION 11 & 12. MOREOVER THE EXEMPTION OF SECTION 11 HAS NOT BEEN WITHDRAWN IN THE CASE OF TH E ASSESSEE AND I AM IN AGREEMENT WITH THE ASSESSEES SUBMISSION. HENCE THE ASSESSEE IS TO ENJOY THE BENE FIT OF SECTION 11 & 12 AND THE ADDITION MADE IN THIS REGAR D IS HEREBY DELETED. 25. WE HAVE CONSIDERED THE RIVAL ARGUMENTS, PERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. AS ARGUED BY THE LD. COUNSEL FOR THE ASS ESSEE, THE STATUS OF - 15- ASSESSMENT ON IDENTICAL FACTS FOR DIFFERENCE YEARS OF THE ASSESSEE ITSELF IS AS UNDER: 1. ASSESSMENT YEAR 2007-08 TREATED AS CHARITABLE U /S 11 OF THE ACT IN AN ASSESSMENT U/S 143(3) [COPY OF ORDER AT PAGE 10 OF PAPER BOOK] 2. ASSESSMENT YEAR 2008-09 TREATED AS EXEMPT U/S 1 1 OF THE ACT BY THE LD. CIT(A) [IN APPEAL TO THE ITAT BY REVENUE] 3. ASSESSMENT YEAR 2009-10 TREATED AS EXEMPT U/S 1 1 OF THE ACT BY THE LD. CIT(A) [IN APPEAL TO THE ITAT BY REVENUE] 4. ASSESSMENT YEAR 2010-11 TREATED AS EXEMPT U/S 1 1 OF THE ACT BY THE LD. CIT(A) [IN APPEAL TO THE ITAT BY REVENUE] 5. ASSESSMENT YEAR 2008-09 TREATED AS EXEMPT U/S 1 1 OF THE ACT BY THE ORDER U/S 143(3) OF THE ACT 26. HAVING TAKEN A VIEW IN ASSESSMENT YEARS 2007-08 , 2013-14 & 2014- 15 TREATING THE ASSESSEE AS EXEMPT U/S 11 OF THE ACT, THE AO COULD NOT HAVE TAKEN A VIEW TO THE CONTRARY IN OTHE R YEARS THERE BEING NO CHANGE IN FACTS OR THE LEGAL POSITION. RELIANCE WAS PLACED ON THE FOLLOWING JUDGEMENTS: A). CIT VS ESCORTS LTD. 338 ITR 435 (DELHI) B) DIRECTOR OF INCOME TAX (EXEMPTION VS APPAREL EXP ORT PROMOTION COUNCIL (NO. 1) 244 ITR 734, 736 (DELHI) C) CIT VS ARJ SECURITY PRINTERS (2003) 264 ITR 276, 278 (DELHI) - 16- 27. BY THE DECISIONS OF THE ITAT IN THE CASE OF R B SETH JESSA RAM & BROS CHARITABLE HOSPITAL TRUST (JESSARAM FOR SHORT) FOR VARIOUS ASSESSMENT YEARS NAMELY 2004-05 (COPY AT PAGE 18 OF PAPER BOOK DATED 16.04.2013) AND 2005-06 TO 2007-08 VIDE COPY OF ORDER DATED 19.07.2013JN ITA 2260, 2261/D/2010 AND 2125/D/2011 (COPY ON RECORD) WHEREIN THE ITAT HAS FOLLOWED ITS DECISION FOR ASSESSMENT YEAR 2008-09 (PARA 2.6 OF THE ORDER). COPY OF THE ORDER FOR ASSESSMENT YEAR 2008-09 IS PLACED AT PAGES 143 TO 147 OF PB II. THAT AN OPERATION AND MAINTENANCE AGREEMENT BETWE EN THE PARTIES WAS UNDER CONSIDERATION IN BOTH THE CASES I E. BETWEEN JESSARAM AND FORTIS AND BETWEEN RAJAN DHALL (FOR SH ORT) THE PRESENT ASSESSEE AND FORTIS WITH AN IDENTICAL EFFECT NAMELY : 1. PROVISION OF MEDICAL FACILITIES TO THE PUBLIC. 2. THE OVERALL CONTROL AND MANAGEMENT OF THE TRUST CONTINUED TO REMAIN WITH THE TRUSTEES. 3. THERE WAS NO MISUSE OR SIPHONING OF FUNDS FOR NO N CHARITABLE PURPOSES WHICH IS NOT EVEN ALLEGED IN THE CASE OF R AJAN DHALL. 4. ALL FUNDS WERE EXPENDED FOR THE OBJECTS OF THE T RUST WHICH WERE WELL WITHIN THE MEANING OF CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT. - 17- 5. NO MATERIAL HAD BEEN BROUGHT ON RECORD BY THE AO TO SUGGEST THAT PROVISIONS OF SECTION 11 TO 13 OF THE ACT HAD BEEN VIOLATED. (COPY OF THE AGREEMENT BETWEEN RAJAN DHALL AND FORTIS IS PLACED AT PAGES 118 TO 128 OF PB II). IT WAS ARGUED THAT THE REVENU E TOOK THE MATTER TO THE HONBLE HIGH COURT U/S 260 A OF THE ACT FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 WHERE THE SAME WAS REJECTED NOT ONLY ON THE GROUND OF DELAY IN REFILING BUT ALSO ON MERITS, (CO PY OF THE ORDER IN ITA 1021 AND 1022/2015 DATED 04.01.2016 IS PLACED ON RE CORD. THUS, GROUND NO. 1 OF THE REVENUE IS DISMISSED. 28. AS REGARDS GROUND NO. 2 OF THE REVENUE, THE ASS ESSEE IS ALSO IN APPEAL VIDE GROUND NO. 1 IN ASSESSMENT YEAR 2008-09 WHICH IS ALSO DECIDED ALONGWITH THIS GROUND RAISED BY THE REVENUE ARISING OUT OF SAME ADDITION. 29. BRIEF FACTS PERTAINING TO THESE GROUNDS ARE THA T THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE EXPENDITURE IN VA RIOUS FORMS ON ESTIMATE BASIS @ 25% TO RS. 20,37,73,094/- WHICH, I N FACT, WAS LIMITED TO 10% AT RS. 8,15,09,237/- BY THE LD. CIT(A). 30. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AN D THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IT WAS SUBMITTED, AT THE OUTSET, BY THE - 18- LD. COUNSEL FOR THE ASSESSEE THAT THE ENTIRE ISSUE IN RESPECT OF THE ITEMS OF EXPENDITURE REFERRED TO BY THE AO HAD BEEN EXAMINED IN THE ASSESSMENT ORDER FOR AY 2007-08 AND NO DISALLOWANCE WAS MADE. THE AO IN FACT ACCEPTS IN THE ASSESSMENT ORDER THAT COP IES OF AGREEMENTS IN RESPECT OF THE LEASE RENT, MANAGEMENT FEE AS ALS O THE OTHER ITEMS OF EXPENDITURE HAVE BEEN FILED. THE MAIN THRUST OF THE ARGUMENT OF THE AO IS THAT SINCE OBPL HAD BEEN ENGAGED TO SET U P THE HOSPITAL AND RUN IT, THERE WAS NO REQUIREMENT TO INCUR THESE ITE MS OF EXPENDITURE. IT WAS CONTENDED THAT THE AFORESAID CONCLUSION OF T HE AO IS FACTUALLY AND LEGALLY INCORRECT IN AS MUCH AS THE ITEMS OF EX PENDITURE IN QUESTION ARE NECESSARY TO RUN THE HOSPITAL AND THES E HAVE TO BE MET OUT OF THE RECEIPTS OF THE HOSPITAL AND NOT BY OBPL OUT OF THEIR FUNDS. ACCORDING TO THE AGREEMENT BETWEEN THE ASSESSEE AND OBPL ALREADY REFERRED TO EARLIER THE LATTER HAS BEEN CONTRACTED TO SET UP THE HOSPITAL AND RUN IT FOR WHICH IT IS ENTITLED TO 70% OF THE SURPLUS REMAINING AFTER MEETING THE ENTIRE EXPENDITURE. THE LIABILITY OF OBPL DOES NOT EXTEND TO MEETING THE AFORESAID ITEMS OF E XPENDITURE, WHICH ARE NECESSARY FOR RUNNING THE HOSPITAL. IN VIEW OF THE AFORESAID SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). WE HOLD THAT THE DISA LLOWANCE MADE BY THE AO IS NOT CALLED FOR EITHER ON FACTS OR IN LAW. ACCORDINGLY, WE - 19- DIRECT THE DELETION OF ADDITION MADE BY THE ASSESSI NG OFFICER WHICH IS ON ESTIMATE BASIS AND ON SURMISES AND CONJECTURES. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED WHEREAS T HE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 31. AS REGARDS GROUND NO. 2 OF THE ASSESSEE, WE FIN D THAT THE LD. CIT(A) WAS NOT REQUIRED TO GO INTO THE ALTERNATIVE GROUND SINCE HE HAD ALREADY ALLOWED THE EXEMPTION U/S 11 OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] A ND, THEREFORE, IN VIEW OF THE FINDINGS ON THE ALTERNATIVE GROUND SO GIVEN BY THE LD. CIT(A), THE ADDITION IS DIRECTED TO BE DELETED. 32. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 3073/DEL/2012 IS DISMISSED AND THAT OF THE ASSESSEE IN ITA NO. 3495/DEL/2012 IS ALLOWED. ITA NO. 5873/DEL/2013 [A.Y. 2009-10] & CO NO. 125/DEL/2017 [2009-10] 33. THE FACTS OF GROUND NOS. 1 AND 2 OF THE REVENUE INVOLVED IN THE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEAR 2008 -09 IN ITA NO. - 20- 3073/DEL/2012 ARE IDENTICAL TO THE FACTS INVOLVED I N ITA NO. 5873/DEL/2013 FOR THE ASSESSMENT YEAR 2009-10. THER EFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHA LL ALSO APPLY MUTATIS MUTANDIS FOR THE ASSESSMENT YEAR 2009-10. ACCORDING LY, GROUND NOS. 1 AND 2 OF THE REVENUE ARE DISMISSED. 34. APROPOS GROUND NO. 3 OF THE REVENUE, WE FIND TH AT THE LD. CIT(A) HAS NOT DECIDED THIS ISSUE SEPARATELY AND, THEREFOR E, THE GROUND RAISED BY THE REVENUE IS OUT RIGHTLY REJECTED AND, ACCORDI NGLY, GROUND NO. 3 OF THE REVENUE IS DISMISSED. 35. AS REGARDS THE SOLE GROUND OF APPEAL RAISED BY THE ASSESSEE IN THE CROSS OBJECTION, THE FACTS ARE IDENTICAL TO THE GRO UND RAISED IN ASSESSMENT YEAR 2008-09. IN THAT VIEW OF THE MATTE R, OUR FINDING ON THIS GROUND HEREINABOVE FOR ASSESSMENT YEAR 2008-09 SHALL APPLY MUTATIS MUTANDIS TO THIS GROUND. ACCORDINGLY, SOLE GROUND OF THE ASSESSEE IS ALLOWED. 36. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. - 21- 37. TO SUM UP, IN THE RESULT, REVENUE APPEAL IN ITA NO. 3073/DEL/2012 & ITA NO. 3495 /DEL/2012 ARE DISMISSE D. APPEAL OF THE ASSESSEE IN ITA NO. 5873/DEL/2013 AND CROSS OBJ ECTION STAND ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 .08.2017. SD/- SD/- [K.N. CHARY] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST AUGUST, 2017 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI