The ITO, (E)- Ward-1, RAJKOT-GUJARAT V. Ashok Gondhia Memorial Trust, RAJKOT-GUJARAT

ITA 354/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2267 (ITAT-RAJKOT)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 07-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: DM RINDANI
• Section: 143(3); 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - C OURT AT AHMEDABAD] ITO(E) - I, RAJKOT (APPELLANT) VS ASHOK GONDHIYA MEMORIAL TRUST, KALAWAR ROAD, ROJKOT, PAN: AAATA2739G (RESPONDENT) REVENUE BY : S H RI C.S. ANJARIA , D . R . ASSESSEE BY: S H RI D.M. RINDANI , A.R. DATE OF HEARING : 18 - 01 - 2 016 DATE OF PRONOUNCEMENT : 01 - 03 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL ME MBER : - THI S REVENUE S APPEAL FOR A.Y. 2011 - 12 , AR ISES FROM ORDER OF THE CIT(A) - 1, RAJKOT DATED 11 - 05 - 2015 IN APPEAL NO. CIT(A) - I / RJT/0026/14 - 15 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 354 / RJT /20 15 A SSESSMENT YEAR 2011 - 12 I.T.A NO. 354 /RJT /20 15 A.Y. 2011 - 12 PAGE NO ITO(E) VS. ASHOK GONDHIYA MEMORIAL TRUST 2 2. THE REVENUE S SOLE S UBSTANTIVE GROUND CHALLENGES THE LOWER APPELLATE ORDER HOLDING THE ASSESSEE TO BE ELIGIBLE FOR SECTION 11 EXEMPTION THEREBY TREATING THE IMPUGNED HOSPITAL MANAGEMENT FEE OF RS. 2,29,98,904/ - TO HAVE BEEN DERIVED FROM CARRYING OUT CHARITABLE ACTIVITIES. WE COME TO FACTS OF THE CASE. THERE IS NO DISPUTE THAT THE ASSESSEE ENJOYS SECTION 12AA REGISTRATION. IT RAN NM VIRANI HOSPITAL UP TO 31 - 07 - 2006. THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S WOCKHARDT HOSPITALS LTD ON 30 - 03 - 2006. THIS ENTITY UNDERTOOK ALL LIABILITIES FOR RUNNING/MANAGING OF THE HOSPITAL ACTIVITIES AT ITS RISK AND COST THEREBY USING ALL EQUIPMENTS, UTILITIES AND ANCILLARY FAC IL ITIES. THE ASSESSEE RECEIVED REFUNDABLE AMOUNT OF RS. 250 LACS OVER A PERIOD OF 10 YEARS WITHOUT ANY INTEREST. THE LATTER ENTITY FURTHER PAID THE IMPUGNED SUM OF RS. 2,29,98,904/ - AS HOSPITAL MANAGEMENT FEE. THE ASSESSEE CLAIMED THIS FEE AND EXEMPT SINCE DERIVED FROM CARRYING OUT CHARITABLE ACTIVITIES U/S. 2(15) OF THE ACT. IT HIGHLIGHTED THE FACT THAT THE CIT( A) IN ASSESSMENT YEAR 2009 - 10 HAD ALREADY DECI D ED THE VERY ISSUE IN ITS FAVOUR. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER DATED 30 - 03 - 2014 OBSERVED THAT THE ASSESSEE S ACTIVITIES GIVING RISE TO THE IMPUGNED HOSPITAL MANAGEMENT FEE WERE COMMERCIAL IN N ATURE. AND THAT THE REVENUE HAD PREFERRED APPEAL AGAINST THE ABOVE STATED ORDER BEFORE THE TRIBUNAL. THIS RESULTED IN THE IMPUGNED DISALLOWANCE/ ADDITION OF RS. 2,29,98,904/ - . 3. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) FOLLOWED HIS PREDECESSOR S ORD ER (SUPRA) TO HOLD THAT THE ASSESSEE IS NOT ENGAGED IN ANY BUSINESS/COMMERCIAL ACTIVITIES IN RUNNING THE HOSPITAL IN I.T.A NO. 354 /RJT /20 15 A.Y. 2011 - 12 PAGE NO ITO(E) VS. ASHOK GONDHIYA MEMORIAL TRUST 3 QUESTION SO FAR ITS HOSPITAL MANAGEMENT FEE IS CONCERNED. HE IS OF THE VIEW THAT THE TERM MEDICAL RELIEF USED IN SECTION 2(15) OF THE ACT HAS TO BE INTERPRETED IN COMMON PARLANCE. THIS LEAVES THE REVENUE AGGRIEVED. 4 HEARD BOTH SIDES. CASE FILE PERUSED. THERE IS NO DISPUTE THAT THE ASSESSEE HAS HANDED OVER ALL ITS HOSPITAL RELATED FUNCTIONS TO THE OTHER ENTITY WHO HAS PAID THE IMPUGNED H OSPITAL MANAGEMENT FEE. IT HAS COME ON RECORD THAT THE VERY ISSUE STANDS ADJUDICATED IN ASSESSEE S FAVOUR RIGHT UP TO THE TRIBUNAL. IT EMERGES THAT THE REVENUE HAS FILED TAX APPEAL NOS. 496, 871 TO 872/2015. THE HON BLE JURISDICTIONAL HIGH COURT HAD AD MITTED THE SAME IN ITS ORDER DATED 11/ 08 & 01 - 12 - 2015. WE ARE OF THE VIEW THAT MERE PENDENCY OF TH ESE APPEALS FILED AT REVENUE S BEH EST DOES NOT FORM A VALID GROUND TO ADOPT A DIFFERENT APPROACH IN THE IMPUGNED ASSESSMENT YE AR IN ABSENCE OF ANY DISTINCTIO N ON FACTS OR LAW BEING POINTED OUT. WE AFFIRMS THE CIT(A) S ORDER IN THESE FACTS AND CIRCUMSTANCES . 5. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 01 - 03 - 201 6 SD/ - SD/ - (PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 01 /03 /2016 AK I.T.A NO. 354 /RJT /20 15 A.Y. 2011 - 12 PAGE NO ITO(E) VS. ASHOK GONDHIYA MEMORIAL TRUST 4 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT