ITO (E), Delhi V. Escorts Cardiac Diseases Hospital Society, New Delhi

ITA 4789/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0310 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 08-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: R M MEHTA
• Keywords: Depreciation; Charitable institution; TDS
• Section: 80G; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND SH. KULDIP SINGH, JUDICIAL MEMBER ITA NO.4789/DEL/2016 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER (EXEMPTION), WARD 1 (1), NEW DELHI VS ESCORTS CARDIAC DISEASES HOSPITAL SOCIETY, C/O. ESCORTS HEARD INTT. & RESEARCH CENTRE, OKHLA ROAD, NEW DELHI-110025 PAN NO.AAAE0049G (APPELLANT) (RESPONDENT) APPELLANT BY SMT. NIDHI SRIVASTAVA, CIT DR RESPONDENT BY SH. R. M. MEHTA, ADVOCATE DATE OF HEARING: 24/04/2019 DATE OF PRONOUNCEMENT: 01/07/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30.06.2016 OF THE CIT(A)-40 (EXEMPTION), NEW DELHI RELATING TO A. Y. 2012-13. 2. THE GROUND OF APPEAL NO.1 BY THE REVENUE READS A S UNDER :- 1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE PAGE | 2 CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THE FACT THAT AO HA S MADE ADDITION ON ACCOUNT OF DONATION GIVEN TO M/S SUBROS EDUCATION SOCIETY ON THE BASIS OF NON- AVAILABILITY OF INFORMATION ON THE PART OF ASSESSEE SUCH AS PURPOSE OF DONATION , BASIS OF SELECTION OF DONE A ND REASONS FOR UTILIZATION OF FUND THAT HAVE BEEN ACCUMULATED FOR THE PURPOSE AND OBJECTIVES OF THE ASSESSEE'S TRUST, TO A DONE WHOSE OBJECTIVES ARE ON ALTOGETHER DIFFERENT TRACK. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER SECTION 12A OF THE ACT AND ALSO U/ S. 80 G OF THE ACT. IT FILED ITS RETURN OF INCOME ON 30.03.2013 D ECLARING NIL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE COM PLETE DETAILS OF DONATION PAID FOR RS.2,05,02,400/- WHICH INCLUDE S AMOUNT GIVEN TO M/S. SUBROS EDUCATIONAL SOCIETY (REGISTERE D) RS. 2 CRORES. THE ASSESSEE FILED THE DETAILS OF PAYMENT M ADE AS DONATION ALONGWITH A CERTIFICATE FROM M/S. SUBROS E DUCATIONAL SOCIETY (REGISTERED) CONFIRMING THAT THEY HAVE RECE IVED DONATION OF RS.2 CRORES. 4. THE ASSESSING OFFICER, HOWEVER, WAS NOT SATISFIE D WITH THE ABOVE SUBMISSION ON THE GROUND THAT THE PURPOSE OF THE DONATION AND THE BASIS OF SELECTION OF THE DONEE IS NOT SATI SFACTORILY SUBSTANTIATED. ACCORDING TO HIM MERE CONFIRMATION OF THE DONEE IS NOT SUFFICIENT TO SUBSTANTIATE THE ALLOWABLITY. HE OBSERVED THAT PAGE | 3 THE DONATION TO AN EDUCATIONAL SOCIETY IS NOT IN CO NSONENCE WITH THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY AND TH E ASSESSEE DID NOT FURNISH THE DETAILS OF PAST ACCUMULATION U/S. 1 1(2) OF THE IT ACT. HE, THEREFORE, MADE ADDITION OF THE ABOVE AMO UNT OF RS. 2 CRORES. 5. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT COMPLE TE DETAILS OF THE DONATION OF RS.2.00 CR. WAS FILED INCLUDING A R ESOLUTION OF THE BOARD OF GOVERNORS APPROVING THE DONATION AND THE C ONFIRMATION OF THE DONEE. THE AO COULD NOT ENQUIRE INTO THE SEL ECTION OF THE DONEE OR THE PURPOSE OF THE DONATION UNLESS THE GEN UINENESS WAS UNDER DOUBT MORE SO WHEN IT IS SETTLED LAW THAT DON ATION BY ONE CHARITABLE INSTITUTION TO ANOTHER SUCH INSTITUTION WAS PERMISSIBLE IN LAW AND WOULD BE TREATED AS APPLICATION OF INCOM E. THE FACT THAT THE DONEE IS A CHARITABLE INSTITUTION IS EVIDE NCED BY THE ORDER DATED 31.03.2011 PASSED BY THE DIT(E) U/S 80G OF TH E ACT COVERING THE PERIOD A.Y. 2011-12 ONWARDS. THE ALLEG ATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAD NOT FURNISHED DETAILS OF PAST YEARS ACCUMULATIONS E TC. WAS STATED TO BE FACTUALLY INCORRECT AS THE REQUISITE INFORMAT ION HAD BEEN FILED VIDE LETTER DATED 05.02.2015 ADDRESSED TO THE AO. IT WAS ARGUED THAT THE DONATION TO SUBROS EDUCATIONAL SOCI ETY WAS SUPPORTED BY THE CONFIRMATION OF THE DONEE, RESOLUT ION OF THE BOARD OF GOVERNORS AND THE ORDER PASSED U/S 80G OF THE ACT BY THE DIT(E). VARIOUS DECISIONS WERE RELIED UPON TO S UPPORT THE PROPOSITION THAT DONATION TO ANOTHER CHARITABLE INS TITUTION OR PAGE | 4 SOCIETY IS PERMISSIBLE IN LAW AND TREATED AS APPLIC ATION OF INCOME. THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS :- 1) CIT VS. SHRI RAM MEMORIAL FOUNDATION (2004) 269 ITR 35 (DEL.) 2) CIT VS. SARLADEVI SARABHAI TRUST (1988) 172 ITR 698 (GUJ.) 3) CIT VS. HINDUSTAN CHARITY TRUST (1983) 139 ITR 9 13 (CAL.) 4) CIT VS. TRUSTEES OF THE JADI TRUST (1982) 133 IT R 393 (BOM.) 6. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD. CIT(A) DELETED THE ADDITION. WHILE DOING SO HE NOT ED THAT THE ASSESSEE HAD FILED SUBMISSIONS ON VARIOUS OCCASIONS ALONGWITH DETAILS AS CALLED FOR ALTHOUGH PARTIAL AND NOT IN O NE GO. THE DETAILS FILED WERE IN CONFORMITY WITH PAST ASSESSME NTS WHICH HAD ACCORDED THE STATUS OF A CHARITABLE INSTITUTION TO THE ASSESSEE. HE NOTED THAT ASKING THE ASSESSEE TO JUSTIFY THE SE LECTION OF THE DONOR AND PURPOSE IN RESPECT OF THE SUM OF RS. 2 CR ORES IS UNCALLED FOR WHEN THE GENUINENESS WAS NOT DOUBTED A ND THE ASSESSING OFFICER COULD HAVE MADE ENQUIRIES FROM TH E DONEE WHICH HE DID NOT DO. SO FAR AS THE OBSERVATION OF THE ASSESSING OFFICER THAT ASSESSEE HAS NOT FILED THE DETAILS OF PAST ACCUMULATION AND THEIR UTILIZATION IS CONCERNED, HE NOTED THAT THE ASSESSEE HAS FILED ALL THOSE DETAILS. HE FURTHER N OTED THAT THE VARIOUS ADVERSE INFERENCES DRAWN BY THE ASSESSING O FFICER ARE UNCALLED FOR. HE ACCORDINGLY DELETED THE ADDITION. PAGE | 5 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE VARIOUS DETAILS FILED IN THE PAPER BOOK WE FIND THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FIL ED COMPLETE DETAILS OF DONATION OF RS. 2 CRORES INCLUDING A RES OLUTION OF THE BOARD OF GOVERNORS APPROVING THE DONATION AND THE C ONFIRMATION OF THE DONEE. WE FIND MERIT IN THE ARGUMENTS OF TH E LD. COUNSEL FOR THE ASSESEE THAT THE ASSESSING OFFICER COULD NO T ENQUIRE INTO THE SELECTION OF THE DONEE OR THE PURPOSE OF THE DO NATION UNLESS THE GENUINENESS IS DOUBTED. IT HAS BEEN HELD IN VA RIOUS DECISIONS THAT DONATION BY ONE CHARITABLE INSTITUTION TO ANOT HER SUCH INSTITUTION IS PERMISSIBLE IN LAW AND WOULD BE TREA TED AS APPLICATION OF INCOME. THE DONEE IN THE INSTANT CAS E IS A CHARITABLE INSTITUTION WHICH IS EVIDENCED BY THE OR DER PASSED BY THE DIT (EXEMPTION) U/S. 80G ON 31.03.2011 WHICH CO VERS THE PERIOD FOR A. Y. 2011-12 ONWARDS. THE OBSERVATION O F THE ASSESSING OFFICER THAT THE ASSESSEE HAD NOT FURNISH ED DETAILS OF PAST YEARS ACCUMULATIONS ETC IS ALSO FACTUALLY INCO RRECT SINCE SUCH INFORMATION WAS FILED BY THE ASSESSE VIDE LETT ER DATED 05.02.2005 ADDRESSED TO THE ASSESSING OFFICER, COPY OF WHICH IS PLACED AT PAGE NO. 87 TO 90 OF THE PAPER BOOK. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION T HAT THE LD. CIT(A) IS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE PAGE | 6 ASSESSING OFFICER ON ACCOUNT OF DONATION GIVEN TO M /S. SUBROS EDUCATIONAL SOCIETY (REGISTERED). THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 9. GROUND OF APPEAL NO. 2 BY THE REVENUE READS AS U NDER :- 2. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY IGNORING THE FACT THAT ALLOWANCE OF DEPRECIATION WILL LEAD TO DOUBLE DEDUCTION AS ASSESSEE HAS ALREADY CLAIMED GROSS AMOUNT OF SUCH ASSETS AS APPLICATION OF INCOME IN T HE YEAR IN WHICH SUCH ASSESTS WERE PURCHASED. 10. FACTS OF THE CASE, IN BRIEF ARE THAT THE ASSESS ING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVE D THAT A SUM OF RS. 1,50,00,000/- HAD BEEN CLAIMED AS SPONSORSHI P FEE PAYABLE TO M/S ESCORTS HEART INSTITUTE & RESEARCH CENTRE LT D. FOR ORGANIZING SEMINARS AND CONTINUING MEDICAL EDUCATIO N (CMES) EVENTS BY EMINENT CARDIO SURGEONS/CARDIOLOGISTS AND THE ASSESSEE HAD FURNISHED ONLY TWO VOUCHERS FOR RS. 11,16,000/- . ACCORDING TO THE ASSESSING OFFICER THE DETAILS FURNISHED BY T HE ASSESSEE WERE BRIEF AND IT WAS NOT POSSIBLE TO EXAMINE THE ALLOWA BILITY OF SAID EXPENDITURE. HE OBSERVED THAT THE REPORTS OF ACTIVI TIES UNDERTAKEN ALONG WITH RELEVANT BILLS AND VOUCHERS WERE NOT PLA CED ON RECORD AND THE CO-RELATION OF THE EXPENDITURE WITH THE AIM S AND OBJECTS OF THE ASSESSEE WAS NOT ESTABLISHED. IN VIEW OF THE ABOVE AND IN ABSENCE OF SUPPORTING DOCUMENTS THE ASSESSING OFFIC ER MADE ADDITION OF RS.1,38,84000/- TO THE TOTAL INCOME OF THE ASSESSEE. PAGE | 7 11. BEFORE CIT(A) IT WAS SUBMITTED THAT THE PAYMENT OF RS.1.50 CORES TO EHIRC LTD. WAS SUBSTANTIATED BY DETAILS AN D EVIDENCE INCLUDING A REQUEST LETTER AND THERE WAS NO REQUIRE MENT IN LAW TO PROVIDE COPIES OF VOUCHERS EVIDENCING EXPENSES INCU RRED BY THE DONEE. THE SUM OF RS.1.50 CRORES WAS PAID BY CHEQU E MINUS TDS AND RELATED TO THE AREA OF CHARITY IN WHICH THE ASSESSEE WAS ENGAGED I.E. MEDICAL RELIEF. AS IT WAS A ROUTINE I TEM OF EXPENDITURE INCURRED EVEN IN EARLIER YEARS, A RESOL UTION OF GOVERNING BODY AS SOUGHT BY THE ASSESSING OFFICER W AS NOT REQUIRED. 12. BASED ON THE ARGUMENTS ADVANCED BY THE LD. CIT( A) DELETED THE ADDITION BY OBSERVING AS UNDER :- AS REGARDS GROUND NO.4 THE SOLITARY GROUND ON WHI CH THE DISALLOWANCE HAS BEEN MADE IS THE NON-PRODUCTION OF THE RELEVANT VOUCHERS PERTAINING TO THE EXPENSES INCURRED BY EHI RC LTD. OUT OF THE SPONSORSHIP FEE OF RS.1.5 CRORES PAID TO THE SA ID INSTITUTION. IN MY VIEW THE ASSESSEE WAS NOT EXPECTED TO PRODUC E VOUCHERS OF EXPENSES INCURRED BY EHIRC LTD. AND THE EVIDENCE PRODUCED NAMELY THE REQUEST LETTER FROM EHIRC LTD. WHICH RAN A MEDICAL FACILITY OF INTERNATIONAL REPUTE, THE NEXUS OF THE AMOUNT PAID WITH THE CATEGORY OF CHARITY IN WHICH THE ASSESSEE WAS ENGAGED I.E. MEDICAL RELIEF AND THE ALLOWANCE OF A PART OF THE E XPENDITURE FOR WHICH VOUCHERS WERE PRODUCED ON SAMPLE BASIS COLLEC TIVELY PROVED THE BONAFIDES OF THE CLAIM. BEING OF THE VIEW THAT THE PARTIAL DISALLOWANCE OF RS.1,38,84,000/- WAS NOT CALLED FOR I DELETE THE SAME. PAGE | 8 13. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL. 14. AFTER HEARING BOTH THE SIDES WE FIND THE ASSESS ING OFFICER MADE AN ADDITION OF RS.1,38,84,000/- OUT OF THE SPO NSORSHIP EXPENSES OF RS.1,50,000/-PAYABLE TO M/S. ESCORT HEA RT INSTITUTE AND RESEARCH CENTRE ON THE GROUND THAT ASSESSEE DID NOT PRODUCE THE NECESSARY DETAILS. WE FIND THE LD. CIT (A) ALLOWED THE DEDUCTION SO CLAIMED, THE REASONS OF WHICH HAVE ALR EADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPH. ALTHOUGH THE AMOUNT OF RS.1.50 CRORES HAS BEEN CLAIMED AS SPONSORSHIP FEE PAYABLE FOR ORGANIZING SEMINARS AND CONTINUING MEDICAL EDUCATIO N EVENTS, HOWEVER, THE ASSESSEE FURNISHED ONLY 2 VOUCHERS FOR RS.11,16,000/- WHICH THE ASSESSING OFFICER HAS ALLO WED. IN OUR OPINION THE ASSESSEE IS DUTY BOUND TO FURNISH ALL T HE REQUISITE DETAILS FOR THE EXAMINATION OF THE ASSESSING OFFICE R ESPECIALLY WHEN AN AMOUNT HAS BEEN CLAIMED AS DEDUCTION ON THE BASIS OF THE CLAIM MADE BY ANOTHER INSTITUTION AS SPONSORSHI P FEES. ASSESSEE CANNOT BE ABSOLVED OF ITS RESPONSIBILITY B Y NOT PRODUCING REQUISITE DETAILS FOR THE EXAMINATION/ VERIFICATION OF THE ASSESSING OFFICER. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTORE TH E ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE O NE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EV IDENCE TO HIS SATISFACTION REGARDING THE ALLOWABILITY OF THE BALA NCE AMOUNT OF PAGE | 9 RS.1,38,84,000/- BY FILING THE DETAILS OF BILLS AND VOUCHERS. THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. 15. GROUND OF APPEAL NO.3 READS AS UNDER :- 3. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY IGNORING THE FACT THAT ALLOWANCE OF DEPRECIATION WILL LEAD TO DOUBLE DEDUCTION AS ASSESSEE HAS ALREADY CLAIMED GROSS AMOUNT OF SUCH ASSETS AS APPLICATION OF INCOME IN T HE YEAR IN WHICH SUCH ASSESTS WERE PURCHASED. 16. AFTER HEARING BOTH THE SIDES WE FIND THE ASSESS ING OFFICER DISALLOWED DEPRECIATION OF RS.3,82,216/- CLAIMED IN THE INCOME AND EXPENDITURE ACCOUNT ON THE GROUND THAT THE ASSE SSEE HAS ALREADY CLAIMED GROSS OF AMOUNT OF SUCH ASSETS AS A PPLICATION OF INCOME IN THE YEAR IN WHICH IT WAS PURCHASED. HE, THEREFORE, HELD THAT THE SAME IS NOT ALLOWABLE AND ACCORDINGLY MADE THE ADDITION. WE FIND THE CIT(A) RELYING ON VARIOUS DECISIONS HEL D THAT ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION EVEN IF THE VALUE OF THE ASSET HAS BEEN CLAIMED AS APPLICATION OF INCOME IN THE YEAR O F PURCHASE IN THE LIGHT OF VARIOUS DECISION AND IN CONFORMITY WIT H THE PAST ASSESSMENT. ACCORDING TO THE CIT(A) THE ACT WAS AM ENDED W.E.F. 01.04.2015 TO DENY DEDUCTION ON ACCOUNT OF DEPRECIA TION AND NOT FOR THE EARLIER YEARS. WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE F OUNDATION POONA IN CIVIL APPEAL NO.7186/2014 ORDER DATED 13.1 2.2017 HAS PAGE | 10 ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT DEPRECIATION IS ALLOWABLE ON THE ASSETS, THE C OST OF WHICH IS FULLY ALLOWED AS APPLICATION OF INCOME U/S. 11 IN T HE PAST YEARS. THE GROUND RAISED BY THE REVENUE IS, THEREFORE, DIS MISSED. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 01.07.2019. SD/- SD/- (KULDIP SINGH) (R.K PAND A) JUDICIAL MEMBER ACCOUNTANT MEMB ER *NEHA* DATE:- 01.07.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 01.07.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER