The ACIT(E), Circle-1, Ahmedabad V. Adarsh Foundation, Ahmedabad

ITA 352/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4006 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 05-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.S. SHUKLA
• Keywords: Diversion of income
• Section: 11; 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 352/AHD/2019 (ASSESSMENT YEAR: 2015-16) THE ACIT(E), CIRCLE-1, AHMEDABAD VS. ADARSH FOUNDATION C/O. SAL HOSPITAL AND MEDICAL INSTITUTION, OPP. DOORDARSHAN TOWER, DRIVE-IN- ROAD, THALTEJ, AHMEDABAD-380054 [PAN NO. AAATA2111J] ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY : SHRI S. S. SHUKLA, SR. DR ASSESSEE BY : SHRI S. N. SOPARKAR, SR. ADV., WITH SHRI BANDISH SOPARKAR, AR DATE OF HEARING 06.10.2021 DATE OF PRONOUNCEMENT 07.10.2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 17.12.2018 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS)-9, AHMEDABAD ARISING OUT OF THE ORDER DATED 22.12.2017 PASSED BY THE DCIT(E), CIRCLE 1, AHMEDABAD UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FO R THE ASSESSMENT YEAR (A.Y.) 2015-16 WITH THE FOLLOWING GROUNDS: 1. WHETHER, THE LD. CIT(A) HAS ERRED IN THE LAW AN D ON FACTS IN ALLOWING THE EXEMPTION U/S. 11 OF THE ACT AND DIRECTING TO RE-CO MPUTE THE INCOME. 2. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO, WHEN THE AO HAS CLEARLY BROUGHT OUT THE FACTS THAT THE ASSESSEE HAS VIOLATED THE PROVISIOS OF SECTION 13(1)(C), 13(2)(B), 13(2)(D) AND 13(2)(G) OF THE AC T. ITA NO.352/AHD/2019 THE ACIT(E) VS. ADARSH FOUNDATION ASST.YEAR 2015-16 - 2 - 2. AT THE TIME OF HEARING OF THE INSTANT APPEAL LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT BOTH THE ISSU ES MENTIONED ABOVE ARE SQUARELY COVERED IN ITA NO. 1858/AHD/2013 FOR A.Y. 2009-10 A COPY WHEREOF HAS ALSO BEEN SUBMITTED BEFORE US. SUCH SU BMISSIONS MADE BY THE LD. AR HAS NOT BEEN CONTROVERTED BY THE LD. DR. 3. WE HEARD THE PARTIES AND ALSO PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD AND CONSIDERED THE ORDER PASSED BY THE CO ORDINATE BENCH IN ITA NO. 1858/AHD/2013 FOR A.Y. 2009-10. WHILE DEALING WITH THE IDENTICAL ISSUES THE COORDINATE BENCH HAS BEEN PLEASED TO OBS ERVE AS FOLLOWS: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE GONE THROUGH THE FINDINGS OF THE A O AS WELL AS CIT(A) PART OF WHICH ARE REPRODUCED ABOVE IN THIS PART OF THE ORDE R. WE FIND THAT THE CIT(A) HAS ARRIVED ON THE BASIC FACT THAT AGREEMENT WAS ENTERE D WITH THE COMPANY WAS TO SECURE TRUST IS INTEREST AND NOR TO INDULGE IN THE LOSSES AND FOR THE PURPOSE OF REIMBURSE THE EXPENDITURE OF KESAR SAL HOSPITAL. THE OBJECT OF T HE TRANSFER AGREEMENT WITH SCPL WAS TO ENSURE THAT THE HOSPITAL IS MANAGED PROFESSI ONAL, AND IN DOING SO THE PURPOSE OF CHARITY IS NOT VIOLATED AS A REPUTED HOSPITAL OF SUCH HUGE SIZE REQUIRES PROFESSIONALLY HANDLING. WE ARE ALSO OBSERVED THAT THE AGREEMENT WAS NOT ENTERED INTO TO DERIVE PROFIT FROM TRANSFER OF MOVABLE TO S CPL BUT TO COUNTER THE HUGE LOSSES INCURRED IN RUNNING TWO BIG HOSPITALS. THEREFORE, THE CIT(A) HAS CORRECTLY HELD THAT THE ACTIVITY OF THE TRUST TO CARRIED ON IN ACCORDAN CE WITH ITS OBJECTS AND IN THE BEST INTEREST OF CHARITY, THEREFORE, THE EXEMPTION U/S. 11(1)(A) HAS RIGHTLY ALLOWED BY THE LD. CIT(A). SIMILARLY, THE CIT(A) HAS CLEARLY HELD THAT THE SEC. 13(1)(C)(II) CAN APPLY ONLY IF ANY PART OF THE CHARITABLE INCOME OF THE TRUST HAS BEEN USED OR APPLIED FOR THE BENEFITS OF THE SAID PERSONS DURING THE PRE VIOUS YEAR. BUT, SINCE NO PORTION OF THE INCOME OF THE ASSESSEE HAS BEEN APPLIED FOR SAI D PERSON, THEREFORE, THE CASE OF THE ASSESSEE FALLS OUTSIDE THE SCOPE OF THIS SECTION. FURTHER, THE TRUST IS IN RECEIPT OF INCOME BY WAY OF MANAGEMENT CHARGES FROM SCPL AND A LSO ALL OF ITS LIABILITIES HAVE BEEN TAKEN OVER BY THE SAME THEREFORE THERE IS A FA CT THAT THERE IS NO UNDUE BENEFITS OF THE USE OF TRUST PROPERTY HAVE BEEN TAKEN BY ANY OT HER PERSONS. SIMILARLY, THERE IS NO DIVERSION OF INCOME OF THE TRUST AS PER EXPLANATION OF SEC. 13(2)(D) AND 13(2)(G) OF THE ACT AS THE TRUST HAS BEEN BENEFITTED GREATLY AN D ITS DEFICIT OF TRUST DULY REDUCED TO A GREAT EXTENT. WE ALSO OBSERVED THAT SOME ERRONEO US PRESENTATION OF FORM NO. 10B REPORT DOES NOT DISENTITLE THE TRUST FOR CLAIMING E XEMPTION U/S. 11 OF THE ACT. SIMILARLY, THE AMOUNT OF ADVANCE OF RS. 54,35,71,98 0/- IN FAVOUR OF SCPL APPEARING IN THE BALANCE SHEET WAS NOT ADVANCE BUT THE REIMBU RSEMENT OF THE EXPENSES. IN THE LIGHT OF THE AFORESAID FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) HAS ANALYZED THE FACTS CORRECTLY AND GIV EN A JUDICIOUS FINDING WHICH DOES ITA NO.352/AHD/2019 THE ACIT(E) VS. ADARSH FOUNDATION ASST.YEAR 2015-16 - 3 - NOT CALL FOR ANY INTERFERENCE FROM OUTSIDE. ACCORD INGLY, THE SAME IS UPHELD. CONSEQUENTLY, GROUND NO. (I) TO (III) OF THE APPEAL OF THE REVENUE ARE THEREFORE DISMISSED. 4. IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES WE F IND NO REASON TO DEVIATE FROM THE OBSERVATION MADE BY THE COORDINATE BENCH THE ORDER IMPUGNED PASSED BY THE LD. CIT(A) GRANTING RELIEF T O THE APPELLANT IS ACCORDING TO US JUST AND PROPER AND WITHOUT ANY AMB IGUITY SO AS TO WARRANT INTERFERENCE. HENCE, REVENUES APPEAL IS FOUND TO BE DEVOID OF ANY MERIT AND, THUS, DISMISSED. 5. IN THE RESULT, THE APPEAL PREFERRED BY THE REVEN UE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT O N 07 / 10 /20 2 1 SD/- SD/- (PRADIP KUMAR KEDIA) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 07/10/2021 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 06.10.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06.10.2021 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S .10.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .10.2021 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 07 .10.2021 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 07 .10.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER