DCIT (Exemption), New Delhi V. Flt. Lt. Ranjan Dhall Charitable Trust (Regd.), New Delhi

ITA 4257/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3355 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB SENIOR
• Assessee Lawyers: R M MEHTA
• Keywords: Charitable institution; Rule of consistency; Set aside
• Section: 143(3); 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI) BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.4257/DEL./2016 ASSESSMENT YEAR : 2012-13 DY. COMMISSIONER OF INCOME-TAX (E), VS. FLT. LT. R AJAN DHALL CHARITABLE (REGD.) CIRCLE 1 (1), NEW DELHI. B 1, ARUNA ASAF ALI MA RG, VASANT KUNJ, NEW DELHI 110 070. (PAN : AAATF0185H) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. ASHIMA NEB, SENIOR DR RESPONDENT BY : SHRI R.M. MEHTA, CA DATE OF HEARING : 14.08.2019 DATE OF ORDER : 28.08.2019 O R D E R PER K. NARASIMHA CHARY, JM : CHALLENGING THE ORDER DATED 18.05.2016 IN APPEAL NO .53/2015-16 PASSED BY LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS)-40, NEW DELHI {FOR SHORT LD.CIT(A)} FOR ASSESSMENT YEAR 2012-13, REV ENUE PREFERRED THIS APPEAL ON THE FOLLOWING GROUND :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY IGNORING THE FACT THAT THOUGH THE OBJECTS OF THE AS SESSEE SEEMS TO BE CHARITABLE IN NATURE BUT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE, WHICH RESULTED IN INCOME, ARE COMMERCIAL IN NATURE. ITA NO.4257/DEL./2016 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CHARITABLE SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 18 60 VIDE ORDER DATED 23.09.1971. ASSESSEE HAS ALSO REGISTERED U/S 12AA(1 ) OF THE INCOME-TAX ACT, 1961 (THE ACT) ON 12.02.1997. THE ASSESSEE IS RUN NING A CHARITABLE HOSPITAL AT VASANT KUNJ, NEW DELHI IN THE NAME OF FLT. LT. R AJAN DHALL CHARITABLE TRUST, WHICH PROVIDES MEDICAL RELIEF TO THE GENERAL PUBLIC. 3. ASSESSEE FILED THEIR RETURN OF INCOME ON 29.09. 2012 DECLARING NIL INCOME AND BY ORDER DATED 12.03.2015, LD. AO WHILE DENYING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11(1) OF THE ACT TREATED THE ASSESSEES CONTRACT WITH FORTIS HOSPITAL FOR RUNNING HOSPITAL AS COMMERCIAL ACTIVITY AND ASSESSED THE INCOME AT RS.8,56,98,070/-. 4. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND CONTENDED THAT THE ASSESSEE HAS BEEN RUNNING A CHARITABLE HOSPITAL PROVIDING MEDICAL RELIEF TO THE GENERAL PUBLIC AND FOR BOTH EARLIER AND SUBSEQU ENT YEARS, THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11(1) OF THE ACT WAS ALL OWED BY AO, FOR SOME YEARS THE FIRST APPELLATE AUTHORITY GRANTED RELIEF WHEREAS, FOR CERTAIN YEARS, THE TRIBUNAL ALLOWED THE RELIEF. LD. CIT (A) CONSIDERE D THE FACT OF CONSISTENT ALLOWING OF THE EXEMPTION U/S 11 (1) OF THE ACT AND FOLLOWING THE RULE OF CONSISTENCY, GRANTED RELIEF TO THE ASSESSEE. REVEN UE IS, THEREFORE, IN THIS APPEAL. 5. IT IS THE ARGUMENT OF THE LD. DR THAT THE ACTIV ITIES OF THE ASSESSEE TRUST ARE COMMERCIAL IN NATURE DISENTITLING THE ASSESSEE THE BENEFIT OF SECTIONS 11 AND 12 OF 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 DELH I HAS BEEN TRANSFERRED TO ITA NO.4257/DEL./2016 3 M/S FORTIS HOSPITAL PVT. LTD. AND THE SOCIETY HAS N O CONCERN WITH THE ACTIVITIES OF THE HOSPITAL AND IN VIEW OF THE JUDGMENT OF A CO ORDINATE 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 SHO ULD NOT HAVE BEEN ALLOWED TO THE ASSESSEE. 6. IT IS THE ARGUMENT OF THE LEARNED DR THAT IN TH E 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 BR OUGHT 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 B Y 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 T O THE LEARNED AO, THIS CLAUSE HAS TOTALLY ENDED THE BASIC CHARITABLE NATUR E 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 FRO M ERECTING AIRTEL, HUTCHISON TOWERS, IDEA CELLULAR IN ITS HOSPITAL, WH ICH IS NOT AT ALL INCIDENTAL TO ANY ACTIVITIES OF THE ASSESSEE SOCIETY. FURTHER, LE ARNED DR SUBMITTED THAT THE AO RECORDED THAT THE ASSESSEE HAS EARNED INCOME FRO M 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 COMMER CIAL ACTIVITIES, AO IS ITA NO.4257/DEL./2016 4 JUSTIFIED IN DENYING THE EXEMPTION U/S 11(1) OF 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/2 012 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 A R THAT ALL THE ACTIVITIES ENUMERATED BY THE LEARNED AO IN PARA 7 OF THE ASSES SMENT 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 NO T 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 WHIC H 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 AP PEAL OF THE REVENUE IS DEVOID OF MERITS. HE FURTHER SUBMITTED THAT THE ORD ER OF THE TRIBUNAL IN M/S DEVKI FOUNDATION, ITA NO.1027/DEL/2012 DATED 31.3.2 015 WAS SET ASIDE BY THE HONBLE DELHI HIGH COURT AND THE MATTER IS REST ORED TO THE TRIBUNAL FOR DECIDING AFRESH, AND HENCE, SUCH A DECISION CANNOT BE A PRECEDENT. FURTHER, IN ITA NO.2649/DEL/2015 FOR THE ASSESSMENT YEAR 2011-1 2 BY ORDER DATED 05.11.2018, COORDINATE BENCH OF THIS TRIBUNAL ALLOW ED RELIEF TO THE ASSESSEE. 8. WE HAVE GONE THROUGH THE RECORD. THOUGH THE LEA RNED 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 CHARITA BLE IN NATURE BUT ONLY ITA NO.4257/DEL./2016 5 COMMERCIAL ONES, IT IS NOT ESTABLISHED BEFORE US TH AT THESE ARE ACTIVITIES THAT ARE UNDERTAKEN BY THE ASSESSEE IN THE YEAR UNDER CONSID ERATION 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 C ERTAIN YEARS, DOES NOT RENDER THE BINDING PRECEDENCE APPLICABLE TO THE FAC TS 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 31.12.20 09 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 APPE LLATE 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 AL LOWED SUCH AN EXEMPTION BY ORDERS DATED 29.2.2016 AND 22.12.2016. IT IS AL SO EVIDENT THAT FROM THE ORDER DATED 05.11.2018 IN ITA NO.2649/DEL/2015 FOR AY 2011-12, COORDINATE BENCH OF THIS TRIBUNAL GRANTED RELIEF TO THE ASSESS EE. 10. WHEN THE FACTS REMAINED IDENTICAL, IT IS NOT O PEN FOR US TO TAKE A DIFFERENT VIEW IN THE ABSENCE OF ANY COMPELLING REA SONS TO DO SO. FURTHER, THE DECISION IN THE CASE OF DEVKI DEVI FOUNDATION VS DC IT (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.484/201 5 AND BY ORDER DATED 15.2.2016, THE HONBLE JURISDICTIONAL HIGH COURT SE T ASIDE THE ORDER AND RESTORES ITA 1027/DEL/2012 TO THE TRIBUNAL FOR FRES H DECISION, ACCORDING TO LAW. SO NO RELIANCE CAN BE PLACED BY THE REVENUE ON THIS DECISION, WHICH IS NO ITA NO.4257/DEL./2016 6 LONGER IN FORCE. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) RIGHTLY FOLLOWED THE RULE OF CON SISTENCY AND ALLOWED THE CLAIM OF THE ASSESSEE. WE FIND NO REASON TO INTERFE RE 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 ACCORDIN GLY DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF AUGUST, 2019. SD/- SD/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 28 TH DAY OF AUGUST, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-40, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.