ITO, Alappuzha V. District Medi Bank, Alappuzha

ITA 469/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52267 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 03-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-08-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: MOHAMMED SHAFEEQ A
• Keywords: Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NOS. 468 & 469 /COCH/2009 ASSESSMENT YEARS: 2005-06 & 2006-07 INCOME-TAX OFFICER, WARD-2, ALAPPUZHA. VS. DISTRICT MEDI BANK, T.D. MEDICAL COLLEGE HOSPITAL, ALAPPUZHA. [PAN: AAAAD 0810A] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA, JR.DR ASSESSEE BY SHRI MOHAMMED SHAFEEQ.A FCA, DATE OF HEARING 04/10/2011 DATE OF PRONOUNCEMENT 21/10/2011 O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF TWO APPEALS BY THE REVENUE, ARI SING OUT OF THE COMMON ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI (CIT(A) FOR SHORT) DATED 07.5.2009 IN THE ASSESSEES CASE FOR ASSESSMENT YEA RS (A.YS.) 2005-06 AND 2006-07. 2. THE APPEALS ARE DELAYED BY A PERIOD OF ONE DAY A ND, ACCORDINGLY, STAND ACCOMPANIED BY A CONDONATION PETITION IN THE FORM O F TWO AFFIDAVITS BY ITO, WARD-2, ALAPPUZHA, THE ASSESSING OFFICER (A.O.) DATED 10.9. 2009. THE DELAY BEING SUITABLY EXPLAINED, THE HEARING OF THE APPEALS, CONCERNING C OMMON ISSUES, WAS PROCEEDED WITH. 3. THE ONLY ISSUE ARISING IN THE INSTANT APPEALS IS THE EXTENT OF APPLICATION OF ITS ELIGIBLE INCOME BY THE ASSESSEE, A REGISTERED TRUST U/S. 12A OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER). THIS IS AS WHERE IT IS TO THE EXTENT OF AT LEAST 85%, THE BALANCE, NOT I.T.A. NOS. 468 & 469/COCH/2009 ( FOR A.Y. 2005-06 & 2006-07) 2 EXCEEDING 15% OF THE SAID INCOME, IS IN TERMS OF 11 (1)(A) OF THE ACT ALLOWED TO BE CARRIED FORWARD FOR FUTURE APPLICATION TOWARD CHARITABLE AC TIVITIES. WE FIND THAT THERE IS NO SPECIFIC FINDING IN THE MATTER BY THE LD. CIT(A), W HO HAS ISSUED A GENERAL FINDING, NOT ARISING OUT OF THE GROUNDS BEFORE HER, OR WITHOUT I SSUING RELEVANT FINDINGS OF FACT, TO THE EFFECT THAT THERE HAS BEEN NO CONTRAVENTION OR VIOL ATION OF ANY THE PROVISIONS OF SS. 11 TO 13 OF THE ACT. IN FACT, EXEMPTION U/S. 11 HAD BEEN DENIED BY THE AO AS HE FOUND NO CHARGE OR DEBIT TO THE ASSESSEES OPERATING STATEME NT/S QUA SUPPLY OF FREE MEDICINES OR OTHER ACTIVITIES OF CHARITABLE NATURE, SO THAT HE B ROUGHT THE ENTIRE REPORTED PROFIT OF ` 12,18,885/- AND ` 16,25,910/- FOR THE TWO CONSECUTIVE YEARS TO TAX. I N APPEAL, THE ASSESSEE FURNISHED EVIDENCES AND EXPLANATIONS, ON A CONSIDERATION OF WHICH, AS WELL AS THE REMAND REPORT CALLED FOR ON ITS BASIS FROM THE AO BY THE FIRST APPELLATE AUTHORITY, THE ASSESSEE WAS FOUND BY HER TO HAVE UNDERTAKEN CHARIT ABLE ACTIVITIES. THE SAME, WE FIND, HAS NOT BEEN DISPUTED BY THE REVENUE, SO THAT THE E LIGIBILITY FOR EXEMPTION OF ITS INCOME TO THE EXTENT APPLIED FOR CHARITABLE PURPOSES, WHIC H THE LD. DR WAS AT PAINS TO ARGUE BEFORE US, STANDS CONFIRMED AND IS NO LONGER AN ISS UE. IT IS THE QUANTUM, HOWEVER, WHICH IS THE ISSUE, AND WHICH WE FIND HAS NEITHER BEEN EX AMINED BY THE ASSESSING AUTHORITY NOR BY THE LD. FIRST APPELLATE AUTHORITY. 4.1 BEFORE US, WHILE THE ASSESSEE CLAIMS TO HAVE SP ENT MORE THAN 85%, SO THAT THE PROVISION OF S. 11(2) IS NOT APPLICABLE TO IT FOR T HE RELEVANT YEARS, THE REVENUE DISPUTES IT, CONTENDING THE SAME, I.E., THE SAID APPLICATION, TO BE AT 14% AND 20% FOR THE TWO CONSECUTIVE YEARS RESPECTIVELY. ON BEING QUESTIONE D QUA THIS SIGNIFICANT VARIATION, WHICH WOULD, IN VIEW OF THE FACTUAL INDETERMINATION, BE R EQUIRED TO BE EXAMINED AND ADJUDICATED BY THE AUTHORITIES BELOW, IT WAS EXPLAI NED BY THE LD. AR THAT THE ASSESSEE HAS, IN ADDITION TO THE SUPPLY OF MEDICINES TO POOR PATI ENTS FREE OF COST OR AT SUBSIDISED RATES, ALSO SUPPLIED MEDICAL EQUIPMENT AS WELL AS UNDERTAK EN CONSTRUCTION OF A HOSPITAL. AS AFORE-STATED, THE ISSUE OF QUANTIFICATION HAS NOT B EEN EXAMINED, AND FOR WHICH PURPOSE, THEREFORE, THE MATTER IS BEING RESTORED BACK TO THE FILE OF THE AO FOR ADJUDICATION ON MERITS, IN ACCORDANCE WITH LAW AND AFTER AFFORDING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. I.T.A. NOS. 468 & 469/COCH/2009 ( FOR A.Y. 2005-06 & 2006-07) 3 4.2 WE MAY CLARIFY THAT THE ISSUE OF THE GENU INENESS OF THE ASSESSEES ACTIVITIES OR OF THEIR BEING CHARITABLE IN NATURE FOR THE RELEVANT Y EARS IS NOT IN DISPUTE, AND THE REMISSION, AS AFORE-STATED, IS ONLY FOR THE PURPOSE OF QUANTIF ICATION OF THE EXEMPTION THE ASSESSEE IS ENTITLED TO IN TERMS OF THE APPLICABLE PROVISIONS O F LAW. ALSO, THE REVENUE HAVING NOT CLARIFIED THE BASIS OF ITS WORKING, WE MAY FURTHER CLARIFY THAT FOR RECKONING THE EXTENT OF APPLICATION OF INCOME, THE AO SHALL FOLLOW THE SETT LED PRINCIPLES OF LAW IN THE MATTER, INCLUDING BY THE HONBLE JURISDICTIONAL HIGH COURT. FURTHER, THE QUANTUM OF ACCUMULATION UNDER THE HEAD `SUNDRY DEBTORS WOULD ALSO BE CONSI DERED AS STANDS CLARIFIED BY THE LD. CIT(A), TREATING THE ACCRETION TO THE SAID ACCOUNT AS EXPENDED TOWARD CHARITABLE PURPOSES. APART FROM THE FACT THAT THE SAME IS NOT IN DISPUTE, IT IS APPARENT THAT THE SAME DOES NOT REPRESENT A RECEIVABLE, BUT ONLY AMOUNT/S ACCUMULATED THUS IMPENDING WRITE OFF BY FOLLOWING THE ENVISAGED ADMINISTRATIVE PROCESS, THE DELAY IN THE EXECUTION OF WHICH, SO THAT THE REQUIRED APPROVAL BY THE COMPETENT COMM ITTEE WAS NOT OBTAINED, RESULTED IN THE NON-WRITE OFF. IT IS NOT THE CASE OF THE AMOUN T BEING NOT SPENT OR NOT ACCOUNTED, BUT ONE OF PRESENTATION. THE SAME CANNOT LEAD TO THE IN FERENCE OF THE AMOUNTS ALREADY SPENT AS NOT APPLIED, UNLESS, OF COURSE, THERE IS SOMETHI NG TO HOLD TO THE CONTRARY, I.E., WHERE THE SAID ACCOUNT BEARS ENTRIES WHICH DO NOT REPRESENT A CHARITABLE ACTIVITY, OR WHERE SOME EXPENDITURE DEBITED THERETO STANDS NOT ACCORDED SAN CTION SUBSEQUENTLY BY ITS RELEVANT COMMITTEE FOR BEING NOT ELIGIBLE, ETC. IN THIS REGA RD WE CONSIDER THAT IT IS PREFERABLE THAT THE ASSESSEE PREPARES A MEMORANDA ACCOUNT, RECONCIL ING THE OUTSTANDING AMOUNT AS AT EACH YEAR-END IN ITS ACCOUNTS WITH THE SUBSEQUENT A PPROVALS, SO THAT THERE IS NO MISMATCH BETWEEN ITS ACCOUNTS AND THE INCOME FOR WHICH IT CL AIMS EXEMPTION ON THE BASIS OF BEING EXPENDED THUS FOR ANY YEAR. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE REVENUES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. . SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 21ST OCTOBER, 2011 I.T.A. NOS. 468 & 469/COCH/2009 ( FOR A.Y. 2005-06 & 2006-07) 4 GJ COPY TO: 1. DISTRICT MEDI BANK, T.D.MEDICAL COLLEGE HOSPITAL , ALAPPUZHA. 2. THE INCOME-TAX, OFFICER, WARD-2, ALAPPUZHA. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .