DCIT (Exemption), New Delhi V. St. Stephen's Hospital, New Delhi

ITA 4982/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3569 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B RAMANJANEYULU
• Keywords: Charitable institution
• Section: 11

Judgement Text

1 ITA NO. 4980/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 4980/DEL/201 5 ( A.Y 2008-09) ITA NO. 4981/DEL/201 5 ( A.Y 2009-10) ITA NO. 4982/DEL/201 5 ( A.Y 2010-11) DCIT (EXEMPTION) CIRCLE-2(1), ROOM NO. 2408, 24 TH FLOOR, BLOCK E-2, DR. S. P. MUKHERJEE CIVIC CENTRE NEW DELHI (APPELLANT) VS ST. STEPHENS HOSPITAL TIS HAZARI NEW DELHI AAAAS0246D (RESPONDENT) APPELLANT BY SHRI K. V. S. R. KRISHNA, ADV RESPONDENT BY SH. B. RAMANJANEYULU, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER DATED 26/05/2015 PASSED BY CIT (A)- 40 (E), NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION U/S 11 DISREGAR DING THE FACTS OF THE CASE. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN LAW IN ALLOWING THE EXEMPTION U/S 11( 1) OF THE ACT BY IGNORING DATE OF HEARING 25.10.2017 DATE OF PRONOUNCEMENT 08.11.2017 2 ITA NO. 4980/DEL/2015 THE FACT THAT AS THE ASSESSEE BEING ASSESSEE AS AOP UNDER THE HEAD BUSINESS & PROFESSION AND DISCLOSED METHOD OF AC COUNTING WAS FOLLOWED BY THE ASSESSEE, SO ACCRUED INTEREST INCOME BE TREA TED AS PART OF INCOME OF THE YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN COMPLETELY RELYING ON THE FINDINGS OF HONBLE ITAT AND HON'BLE HIGH COURT THAT THE CHARITABLE STATUS OF THE ASSES SEE HAS BEEN SETTLED WITHOUT ADJUDICATING INDIVIDUAL ADDITIONS MADE BY T HE A.O WHICH WAS SUBJECT MATTER OF APPEAL BEFORE HIM. 3. THE ASSESSEE IS A CHARITABLE SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 ON 24/03/1969 AND IS ALSO RE GISTERED U/S 12AA(1) DATED 18/02/1974. THE SOCIETY IS RUNNING A HOSPITAL IN THE NAME OF ST. STEPHEN'S HOSPITAL IN TIS HAZARI, OLD DELHI. THE HO SPITAL WAS ESTABLISHED ON 31/10/1885 AND OPENED BY THE THEN LADY DAFFERIN. TH E ESTABLISHMENT OF THE PRESENT HOSPITAL WAS STARTED BY A YOUNG ENGLISH LAD Y MS. PRISCILLA WINTER AGED 22 YEARS IN THE YEAR 1864 THROUGH A SMALL DISPENSAR Y ON THE BANKS OF RIVER YAMUNA FOR THE POOR AND THE DESTITUTE AS THERE WAS LACK OF MEDICAL FACILITIES IN THOSE DAYS. THE DISPENSARY WAS SUBSEQUENTLY SHIFTED TO THE PRESENT LOCATION AT TIS HAZARI AND THE NEW BLOCK OF THE HOSPITAL WAS ES TABLISHED IN 1891. THE SOCIETY IS RUNNING THE HOSPITAL AND IS ALSO RUNNING A NURSING COLLEGE. THE ASSESSEE PROVIDES THE MEDICAL SERVICES LIKE MEDICAL TREATMENT, PATHOLOGICAL TESTS AND SURGERY ETC. AT VERY REASONABLE OR SUBSID ISED COST AND THE INCOME OF THE ASSESSEE IS MOSTLY FROM THE COLLECTION OF THE F EES FROM THE PATIENTS AS THE ASSESSEE GENERALLY DOES NOT RECEIVE ANY DONATION FO R ITS CHARITABLE ACTIVITIES. THE ASSESSEE WAS GETTING BENEFIT OF THE EXEMPTION U /S 11(1) OF THE ACT FROM THE VERY BEGINNING AND UP TO A.Y 2007-08. THERE WERE SC RUTINY ASSESSMENTS EARLIER AND THE LAST ONE WAS IN THE A.Y 2007-08 VID E ORDER DATED 07/12/2009. THE CASE FOR A.Y 2008-09 WAS ALSO TAKEN UP FOR SCRU TINY BUT THE CASE WAS FINALLY REFERRED FOR SPECIAL AUDIT U/S 142(2A) OF T HE ACT. THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER AND THE EXEMPTIO N U/S 11(1) WAS DENIED BY INVOKING THE PROVISO OF SECTION 2(15) AND THE VARIO US ADDITIONS WERE MADE 3 ITA NO. 4980/DEL/2015 MAINLY ON THE GROUND THAT THE ASSESSEE IS RUNNING T HE HOSPITAL WITH THE MOTIVE OF PROFIT. SUBSEQUENTLY THE REGISTRATION U/S 12AA(1 ) OF THE ACT WAS CANCELLED U/S 12AA(3) OF THE ACT BY THE DIT(EXEMPTION) RELYIN G ON THE ORDER OF THE AO FOR THE A.Y 2008-09. THE ASSESSEE APPEALED AGAINST THE ORDER OF THE DIT(EXEMPTION). THE TRIBUNAL RESTORED THE REGISTRAT ION VIDE THE ORDER DATED 11/05/2012 IN ITA NO. 913/DEL/2012. THE DEPARTMENT FILED THE APPEAL AGAINST THE ORDER OF THE TRIBUNAL, THE SAME WAS DIS MISSED BY THE HON'BLE HIGH COURT VIDE ORDER DATED 26/09/2013 IN ITA NO. 37/201 3. 4. THE ASSESSEE ALSO APPLIED FOR EXEMPTION U/S 10(2 3C) OF THE ACT AND THE SAME WAS REJECTED BY THE DGIT(EXEMPTION). THE ASSES SEE APPEALED AGAINST THIS ORDER AND THE HON'BLE HIGH COURT ALLOWED THE APPEAL VIDE ORDER DATED 05/03/2014 IN WP(C) 6417/2012 WITH A DIRECTION TO D EAL WITH THE MATTER AS PER ITS OWN ORDER DATED 26/09/2013 IN ITA NO. 37/20 13. THE ASSESSING OFFICER DENIED THE EXEMPTION U/S 11(1) OF THE ACT FOR THE A .Y 2009-10 ON THE SIMILAR GROUND OF A.Y 2008-09 BY INVOKING THE PROVISO OF SE CTION 2(15) MAINLY ON THE GROUND THAT THE ASSESSEE IS NOT DOING ANY CHARITABL E WORK AND THE HOSPITAL IS BEING RUN FOR PROFIT. 5. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF T HE ASSESSING OFFICER BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO DENY THE EXEMPTION U/S 11(1) OF THE ACT, AS THE ASS ESSEE IS A CHARITABLE INSTITUTION AND IS NOT INVOLVED IN ANY TRADE, COMME RCE OR BUSINESS AND THERE IS NO JUSTIFICATION TO INVOKE THE MISCHIEF OF THE PROV ISO OF SECTION 2(15) AS MERE RECEIPT OF INCOME OR FEES CANNOT BE SAID THAT THE A SSESSEE IS INVOLVED IN ANY TRADE, COMMERCE OR BUSINESS AS THERE IS NO PROFIT M OTIVE AND NO INCOME OR PROFIT WAS USED OR DIVERTED FOR ANY PERSONAL BENEFI T AND THE ASSESSEE. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 6. THE DEPARTMENT IS BEFORE US. 7. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND SUBMITTED 4 ITA NO. 4980/DEL/2015 THAT PROPER DOCUMENTS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER REJECTED THE EXEMP TION U/S 11(1) OF THE ACT AS THE ASSESSEE BEING ASSESSED AS AOP UNDER THE HEAD B USINESS AND PROFESSION. 8. THE LD. AR SUBMITTED THAT ALL THE DOCUMENTS WERE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A). IN-FACT, THE TRIBUNAL AS WELL AS THE HON'BLE HIGH COURT VIDE ORDER DATED 26.09.2013 HAS GIVEN A DETAILED FINDING THAT THERE WAS NO CHANGE IN OBJECT AND FUNCTIONS OF THE ASSESS EE. THEREFORE, REJECTION OF THE EXEMPTION U/S 11(1) OF THE ACT WAS NOT RIGHT ON PART OF ASSESSING OFFICER. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS SUBMITTED THAT IN EARLIER ASSESSMENT YEARS THE EXEMPTION WAS GRANTED BY THE DEPARTMENT WHICH WAS TAKEN INTO COGN IZANCE BY THE CIT(A) IN HIS ORDER. THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE CIT(A). AS PER THE DECISION IN ASSESSEES OWN CASE PASSED BY THE ITAT AND CONFIRMED BY THE HON'BLE HIGH COURT, THE ISSUE IS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE. THE HONBLE HIGH COURT HELD AS UNDER: (VII) ON THE QUESTION OF ALTERATION IN MEMORANDUM OF ASSOCIATION AND COMMUNICATION TO THE REVENUE AUTHORITIES, THE T RIBUNAL HAS EXAMINED THE CHANGES/AMENDMENTS AND HELD THAT THESE WERE MIN OR IN NATURE AND DID NOT DETRACT OR ALTER THE MAIN/BASIC PURPOSE WHI CH WAS TO PROVIDE MEDICAL RELIEF. THUS, THERE WAS NO CHANGE IN THE OBJECT AND PURPOSE OF THE ASSESSEE. THE CIT(A) RIGHTLY HELD AS UNDER: 5.8 RECENTLY THE HONBLE DELHI HIGH COURT IN THE C ASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DGIT(E), 53 TAXMANN.COM 404(DELHI) 2015 (ORDER DATED 22/01/2015) HAS UPHELD THE CONSTITUTIO N VALIDITY OF THE PROVISO OF SECTION 2(15) WHICH WAS UNDER CHALLENGE BEING DISCRIMINATORY IN VIEW OF THE ARTICLE 14 (EQUALITY BEFORE LAW) OF THE CONSTITUTION OF INDIA BUT THE HONBLE HIGH COURT HAS READ DOWN THE STRICT AND LITERAL INTERPRETATION 5 ITA NO. 4980/DEL/2015 OF THE PROVISO OF SECTION 2(15) AND HAS HELD THAT M ERE RECEIPT OF FEE OR CHARGE CANNOT BE SAID THAT THE ASSESSEE IS INVOLVED IN ANY TRADE, COMMERCE OR BUSINESS AND HAS ACCORDINGLY ALLOWED TH E RELIEF TO THE ITPO CASE VIDE PARA 58 AND 59 OF THE ORDER. 5.9 AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANC ES OF THE CASE, I AM OF THE VIEW THAT THE MATTER OF THE CHARITABLE ACTIVITI ES HAS BEEN EXAMINED BY THE HONBLE TRIBUNAL AND THE HONBLE HIGH COURT AND THERE IS NO ADVERSE FINDING AGAINST THE ASSESSEE ON ANY MATTERS AND AS SUCH IT IS DIFFICULT TO SUSTAIN THE ORDER OF THE AO DENYING THE EXEMPTION U /S 11(1) TO THE ASSESSEE AND ACCORDINGLY FOLLOWING THE ORDER OF THE HONBLE TRIBUNAL AND THE HONBLE HIGH COURT THE AO IS DIRECTED TO ALLOW THE EXEMPTION U/S 11(1) WITH ALL THE CONSEQUENTIAL BENEFITS AND ALL THE ADD ITIONS MADE BY THE AO ARE ALSO CONSEQUENTLY DELETED. THUS, THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE CIT(A). FOR ALL THE THREE ASSESSMENT YEARS THE ISSUES ARE IDENTICAL, TH EREFORE, ALL THE APPEALS OF THE REVENUE STANDS DISMISSED. 10. IN RESULT, ALL THE APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 08/11/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 6 ITA NO. 4980/DEL/2015 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 25/10/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 26/10/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08.11.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 0 8 .11.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.