ADDL DIT (E)-II, MUMBAI V. KHIMJI BHAGWANDAS CHARITY TRUST, MUMBAI

ITA 5309/MUM/2009

• Counselvise Citation: 530919914 RSA 2009
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B SENTHIL KUMAR
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Charitable institution; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI R.S.SYAL, AM AN D SHRI R.S.PADVEKAR, JM ITA NO.5309/MUM/2009 : ASST.YEAR 2006-2007 THE INCOME TAX OFFICER (E)-II(1) MUMBAI. VS. M/S.KHIMJI BHAGWANDAS CHARITY TRUST LOHANA BHAVAN, PALTON ROAD ANDHERI (WEST), MUMBAI PAN : AAATK3037D. (APPELLANT) (RESPONDENT) APPELLANT BY : DR.B.SENTHILKUMAR (CIT-DR) RESPONDENT BY : DR.K.SHIVARAM O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS) ON 10.06.2009 ALLOWING EXEMPTION U/S.11 OF THE ACT IN RELATION TO TH E ASSESSMENT YEAR 2006-2007. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN DECLARING TOTAL INCOME AT RS.NIL BY CLAIMI NG IT TO BE CHARITAB LE INSTITUTION ENGAGED IN CHARITABLE ACTIVITIES. THE ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE-TRUST CAME INTO EXISTENCE ON 05.03.1958. DURING THE YEAR IN QUESTI ON IT WAS NOTICED THAT THE ASSESSEE SPENT A SUM OF RS.2 ,42,300 TOWARDS MEDICAL RELI EF OUT OF TOTAL EXPENSES OF RS.8,66,146 TOWARDS THE OBJECTS OF THE TR UST. BY CONSIDERING THE OBJECTS OF THE TRUST, IT WAS ASCERTAINED THAT MEDICAL RE LIEF WAS NOT ONE OF THE SPECIFIED OBJECTS. IT WAS, THEREFORE, HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U/S.11. PROCEEDING ON THIS BASIS, THE ASSESSING OFFICER COM PUTED TOTAL INCOME OF RS.6,00,57,380. IN THE FIRST APPEAL THE LEARNED CIT(A) HELD THE ASSESSEE TO BE ENTITLED TO EXEMPTION U/S.11. IN VIEW OF THIS FINDING, HE HELD THAT THE SEPARATE ITA NO.5309/MUM/2009 M/S.KHIMJI BHAGWANDAS CHARITY TRUST. 2 ADDITIONS MADE BY THE ASSESSING OFFICER BY TAXING CORPUS DONATION AS WELL AS ADDITION ON ACCOUNT OF CAPITAL GAINS WERE NOT SUSTAINABLE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. THE ONLY GRIEVANCE OF THE ASSESSING OFFICER IN DENIAL OF EXEMPTION U/S.11 IS THAT THE ASSESSEE SPENT A SUM OF RS.2,42,300 TOWARDS M EDICAL RELIEF OUT OF TOTAL EXPENSES OF RS.8.66 LAKHS AND SINCE MEDICAL RELIEF WAS NOT COVERED WITHIN THE OBJECTS OF THE TRUST HENCE THE BE NEFIT OF EXEMPTION WAS LOST. 4. SECTION 2(15) DEFINES CHARITABLE PURPOSES AS INTER ALIA INCLUDING MEDICAL RELIEF. WHEN THE VERY OBJECT WHICH TH E ASSESSING OFFICER IS NOT APPROVING AS CHARGEABLE IS SO AS PER THE DEFINITION OF CHARITABLE PURPOSES U/S.2(15), THERE CANNOT BE ANY QUESTION OF DENIAL OF EXEMPTION U/S.11 ON THAT COUNT ALONE. BE THAT AS IT MAY CLAUSE NO.20 OF THE TRUST DEED HAS BEEN REPRODUCED IN PARA 4.3 OF THE IMPUGNED ORDER. SUB-CLAUSE 4 WHICH IS RELE VANT FOR OUR PURPOSE IS AS UNDER:- THE BALANCE OF THE NET IN COME OF THE TRUST FUND SH ALL BE UTILIZED FOR THE MAINTENANCE , SUPPORT AND UPKEEP OF THE DHARMSHALA AT NASIK FOR THE GHOGHARI LOHANA CASTE OF HINDUS AND OTHER HINDUS AND FOR HOLDING ANNUALLY SADAVARAT IN TH E NAME OF THE DECEASED KHIMJI BHAGWANDAS AT THE SAID DHARMSHALA AT NASIK. 5. AS CAN BE NOTICED FROM THE ABOVE CLAUSE THAT THE NET INCOME OF THE TRUST CAN BE UTILIZED FOR THE MAINTENANCE OF DHARMSHALA AT NASIK FOR GHOGHARI LOHANA CASTE OF HINDUS AND OTHER HINDUS. THE TERM `M AINTENANCE DOES NOT INCLUDE ONLY FOOD AND SHELTER BUT INCLUDES MEDICAL CARE AS WELL. WHEN WE SAY THAT A POOR IS TO BE MAINTAINED AND SUPPORTED IT MEANS THAT HE IS TO BE PROVIDED WI TH FOOD AND SHELTER AND ALSO MEDICAL HELP, IF REQUIRED. AS ADMITTEDLY THE AMOUNT OF RS.2,42,300 HAS BEEN SPENT BY THE ASSESSEE ON MEDICAL RELIEF TO THE UN-RELATED POOR PEOPLE, IN OUR CONSIDERED OPINION, NO OBJECTI ON CAN BE RAISED TO THE DOING OF THIS ACTIVITY BY THE ITA NO.5309/MUM/2009 M/S.KHIMJI BHAGWANDAS CHARITY TRUST. 3 ASSESSEE. THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS STRONGLY RELIED ON THE JUDGEMENT IN THE CASE OF ADDL.CIT VS. VICT OR TECHNICAL INSTITUTE [(1979) 120 ITR 358 (MAD.)] FOR BOLSTERING HIS SUBMISSI ON THAT THE EXEMPTION SHOULD NOT BE ALLOWED. IN THAT CASE THE ASSESSEE-SOCIETY WAS ESTABLIS HED FOR IMPARTING TRAINING AND KNOWLEDGE IN THE DISCIPLINE OF ARTI STIC WORK, HANDICRAFT AND OTHER MANUAL OCCUPATION AND TO ASSIST AND HELP PERSONS ENGAGED IN SUCH ACTIVITIES. THE ASSESSEE- SOCIETY ALSO BOUGHT AND SOLD ARTICLES PR ODUCED BY THE SAID PERSON. INCOME OF SOCIETY WAS HELD TO BE NOT EXEMPT BY TH E HONBLE HIGH COURT ON THE GROUND THAT THE ACTIVITIES INVOLVED CARRYIN G ON AN ACTIVITY FOR PROFIT . OBVIOUSLY THIS JUDGEMENT HAS NO APPLICATION TO THE FACTS OF THE IN STANT CASE INASMUCH AS THE ASSESSEE HAS NOT EARNED ANY PROFIT BY PURSUING THE ACTIVITY OF EXTENDING MEDICAL HELP TO THE POOR PEOPLE. WE, THEREFORE, APPROVE THE VIEW TAKEN BY THE LEARNED CIT(A). 6. IN VIEW OF OUR DECISION ON THE GRANT OF EXEMPTION TO THE ASSESSEE U/S.11 IN THE OPEN COURT, THE LD. DR DID NOT ARGUE THE OTHER GROU NDS RAISED BY THE REVENUE ABOUT CAPITAL GAIN AND CORPUS DONATION AS HAVING BECOME A CADEMIC. THE IMPUGNED ORDER IS UPHELD ON THES E GROUNDS AS WELL. 7. BEFORE PARTING WITH THIS APPEAL IT WOULD BE RELEVANT TO MENTION THAT THE ASSESSING OFFICER IN PARA 3 OF THE ASSESSMENT ORDER NOTED THAT THE ASSESSEE SPENT A SUM OF RS.2,42,300 TOWARDS MEDICAL RELIEF WHICH IN HIS OPINION WAS NOT THE OBJECT AS PER TRUST DEED. HE MADE A RECOMMENDA TION TO THE DIRECTOR OF INCOME-TAX (EXEMPTION) MUMBAI FOR CANCELLATION OF REGI STRATION U/S.12A AS PER THE PROVISIONS OF SECTION 12AA(3). THE SAID REGISTRATI ON WAS CANCELLED BY THE COMPETENT AUTHORITY AGAINST WHICH THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. THE SAID APPEAL HAS BEEN DISPOSED OFF ON 27.04.2011 IN ITA NO.5949/MUM/2009 BY SETTING ASIDE THE ORDER CANCELLI NG REGISTRATION. ITA NO.5309/MUM/2009 M/S.KHIMJI BHAGWANDAS CHARITY TRUST. 4 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF JUNE, 2011. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 24 TH JUNE, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) -XXX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.