ADIT (E) I(2), MUMBAI V. FELLOWSHIP OF THE PHYSICALLY HANDICAPPED, MUMBAI

ITA 5280/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75784 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 12A; 148; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.5280/MUM/2012 (ASSESSMENT YEAR: 2006-07) ADIT (EXEMPTION) 1(2) FELLOWSHIP OF PHYSICALLY HAND ICAPPED ROOM NO. 504, 5TH FLOOR FPH BUILDING, LALA LAJAPT R AI MARG PIRAMAL CHAMBERS VS. HAJI ALI, MUMBAI 400034 PAREL, MUMBAI 400012 PAN - AAATF0551D APPELLANT RESPONDENT APPELLANT BY: SHRI RAVI PRAKASH RESPONDENT BY: SHRI NISHIT GANDHI DATE OF HEARING: 26.02.2014 DATE OF PRONOUNCEMENT: 26.02.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-I, MUMBAI AND IT PERTAINS TO A.Y. 2006-07. 2. THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE: - WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DIRECTING THE AO TO ALLOW T HE CLAIM OF EXEMPTION U/S 11, WHEN THE SAME WAS NOT CLAIMED IN THE RETURN OF INCOME FILED U/S 139(1) OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DIRECTING THE AO TO ALL OW THE CLAIM OF EXEMPTION U/S 11, WITHOUT CONSIDERING THE FACT THA T THE ASSESSEE HAD REVISED ITS CLAIM IN THE RETURN OF INCOME IN RESPON SE TO NOTICE U/S 148 WHICH IS NOT IN CONFORMITY WITH THE RATIO HELD BY T HE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS P LTD. (1 992) 198 ITR 297, 320 SC). 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) FAILED TO CONSIDER THE FACT THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 10(23C) (IIIAD) & (IIIAE) AS THE BASIC CONDITIONS PRESCRIBED IN THE ACT ARE NOT SATISFIED I.E. IT IS NEITHER A UNIVERSITY OR OTHER EDUCATION INSTITUTION EXISTING SOLELY FOR EDU CATION PURPOSES NOR A HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS, ITA NO.5280/MUM/2012 FELLOWSHIP OF PHYSICALLY HANDICAPPED 2 DURING CONVALESCENCE OR OF PERSONS REQUIRING MEDICA L OR REHABILITATION, EXISTING SOLELY FOR PHILANTHROPIC PURPOSES. 3. THE FACTS IN BRIEF ARE THAT THE AO REOPENED THE ASS ESSMENT ON THE GROUND THAT THE ASSESSEE IS NOT AN EDUCATIONAL INST ITUTION SOLELY FOR EDUCATIONAL PURPOSES BUT IT WAS RUNNING FOR PROFIT AND, THEREFORE, IT IS NOT ENTITLED TO EXEMPTION UNDER SECTION 10(23C) OF THE ACT. THE AO FURTHER OBSERVED THAT THE ASSESSEE CANNOT ALSO BE TREATED A S A HOSPITAL OR OTHER INSTITUTION FOR TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENTAL DEFORMITIES. ACCORDINGLY ASSESSMENT WAS COMPLETED B Y DENYING THE CLAIM OF EXEMPTION. 4. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT( A) NOTICED THAT ON AN IDENTICAL ISSUE HIS PREDECESSOR, FOR A.Y. 2008-0 9, GRANTED EXEMPTION UNDER SECTION 11 OF THE ACT BY OBSERVING AS UNDER: - I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT S AR. I FIND THAT THE APPELLANT HAS DULY CLAIMED EXEMPTION U/S. 11 IN THE RETURN OF INCOME FILED IN ITR 7. FROM THE XEROX COPY OF THE ITR 7, I T IS SEEN THAT THE APPELLANT HAS CLAIMED DEDUCTION U/S. 10 AT NIL AS T HE APPELLANT HAS CLAIMED EXEMPTION U/S. 11 IN ITR 7. THIS FACT WAS B ROUGHT TO THE NOTICE OF THE AO DURING THE ASSESSMENT PROCEEDINGS. HOWEVE R, THE AO HAS IGNORED THIS FACT. THE APPELLANT TRUST IS IMPARTING EDUCATION AND MEDICAL HELP AND EVEN FINANCIAL AID TO PHYSICALLY H ANDICAPPED TRAINEES, THE APPELLANT IS ENTITLED TO EXEMPTION U/ S. 11. THE APPELLANTS AR FURTHER CONTENDED THAT THE APPELLANT IS RECEIVIN G GRANT FROM STATE GOVERNMENT THROUGH DIRECTOR OF SOCIAL WELFARE, MAHA RASHTRA STATE. ALTHOUGH THE APPELLANT HAS AMENDED THE OBJECTS OF T HE TRUST, HOWEVER, THE AMENDMENTS WERE IN THE RULES AND REGULATIONS, V IZ., CHANGE IN FINANCIAL YEAR FROM JANUARY TO DECEMBER TO APRIL TO MARCH OR FOR AMENDING THE PERIOD OF HOLDING THE OFFICE BY MEMBER OF THE COMMITTEE OR FOR REVISING MEMBERSHIP FEES AND SO ON. FOR MAKI NG SUCH AMENDMENTS, THE MAIN OBJECT OF THE TRUST HAS NOT BE EN AMENDED. THEREFORE, THE REGISTRATION GRANTED BY DIT(E) U/S. 12A NEED NOT BE REMOVED. IN FACT, THE APPELLANT HAS BEEN FILING AME NDED CLAUSES OF MEMORANDUMS OF ASSOCIATION ALONG WITH RETURN OF INC OME. AS SUCH IT CAN NOT BE SAID THAT THE APPELLANT TRUST HAS NOT IN FORMED THE INCOME TAX AUTHORITIES REGARDING THE CHANGE IN MEMORANDUM OF ASSOCIATION. IN VIEW OF THIS FACT, THE AO IS DIRECTED TO ALLOW EXEM PTION U/S. 11 AS CLAIMED BY THE APPELLANT TRUST. THIS GROUND OF APPE AL IS ALLOWED. SINCE THE ASSESSEE HAS BEEN GRANTED REGISTRATION U NDER SECTION 12A AND THE ORIGINAL OBJECTS CONTINUED TO EXIST APART FROM THE FACT THAT THE AMENDED OBJECTS REMAIN CHARITABLE, THE LEARNED CIT(A) WAS O F THE VIEW THAT THE ITA NO.5280/MUM/2012 FELLOWSHIP OF PHYSICALLY HANDICAPPED 3 ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 12A AND DIRECTED ACCORDINGLY. 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. THE LEAR NED COUNSEL FOR THE ASSESSEE PLACED BEFORE US A COPY OF THE ORDER OF TH E ITAT F BENCH, MUMBAI IN ASSESSEES OWN CASE FOR A.Y. 2008-09 (ITA NO. 58 02/MUM/2011 DATED 19 TH OCTOBER, 2012) WHEREIN THE BENCH CONSIDERED THIS V ERY ISSUE TO HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION UN DER SECTION 11 OF THE ACT. 6. THE LEARNED D.R. FAIRLY ADMITTED THAT THE ISSUE STA NDS COVERED BY THE AFORECITED DECISION BUT, HOWEVER, STRONGLY RELIED U PON THE ORDER PASSED BY THE AO. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. CONSISTENT WITH THE VIEW TAKEN BY THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2008-09 WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE AND, THER EFORE WE AFFIRM THE ORDER PASSED BY THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY, 2014. SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 26 TH FEBRUARY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) I, MUMBAI 4. THE CIT DIRECTOR OF INCOME TAX (E), MUMBAI CITY 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.