Nursing Tree, New Delhi V. CIT (E), New Delhi

ITA 5590/DEL/2019

AI Insights

The case involves Nursing Tree, a trust, appealing against the decision of the CIT (Exemptions) which denied their applications for registration under sections 12A/12AA and for approval under section 80G of the Income Tax Act. The primary contention was that the CIT (Exemptions) erroneously classified the trust's objectives as commercial in nature, contrary to the trust deed, and did not provide adequate opportunity for the trust to defend its position. The Tribunal found merit in the assessee's arguments, particularly in light of a recent Supreme Court ruling, and thus remanded the matter back to the CIT (Exemptions) for a fresh evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130842 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: E
• Next Hearing Date: 07-02-2023
• Assessment Year: misc
• Appeal Filed On: 25-06-2019
• Other Referred Cases: ACIT vs. Ahmedabad Urban Development Authority [2022] 449 ITR 01 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 80G; 12A

Judgement Text

Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’: NEW DELHI BEFORE, SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No.5589/Del/2019 ITA No.5590/Del/2019 (ASSESSMENT YEAR -NIL) Nursing Tree 163, First Floor Pocket-2 Near Living Style Mall Jasola Vihar New Delhi-110 025 PAN-AACTN 8355P Vs. CIT (Exemption) New Delhi (Appellant) (Respondent) Appellant by Mr. K.V.S.Gupta, Advocate Respondent by Ms. Sarita Kumari, Commissioner of Income Tax, Departmental Representative (“CIT- DR” for short) ORDER PER ANADEE NATH MISSHRA, AM: (A) These appeals by Assessee are filed against the common order of Learned Commissioner of Income Tax (Exemptions), New Delhi [Ld. CIT(E)”, for short], dated 27.05.2019. Grounds taken in these appeals are as under: ITA Nos.5589 and 5590/Del/2019 Nursing Tree vs. CIT (E) Page 2 of 6 ITA No.5589/Del/2019 “1. The action of the Ld. CIT(E) in not granting approval u/s 80G of the Income Tax act, 1961 is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 2. The action of the Ld. CIT(E) in not granting approval u/s 80G of the Income Tax Act, 1961 without giving any opportunity under rule 11AA(5) proviso thereof of the Income Tax Rules is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 3. The action of the Ld. CIT(E) in coming to a finding that the objects of the Trust are commercial in nature ignoring the objects enlisted in the Trust Deed is perverse on the facts and is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 4. The order of the Ld. CIT(E) in restricting the definition of beneficiaries to be members of the Trust without there being any definition of “Beneficiaries” or “Members” in the Trust Deed is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 5. The action of the Ld. CIT(E) in coming to the conclusion of objects being commercial in nature, relying on periodic contribution from beneficiaries and mandatory charging of interest on financial assistance is illegal, arbitrary, unwarranted, uncalled for & against the fact & circumstances of the case. 6. The appellant trust reserves the right to add/alter/modify/amend or withdraws any ground of appeal. 7. The above grounds of appeal are without prejudice to each other.” ITA No.5590/Del/2019 “1. The action of the Ld. CIT(E) in not granting registration U/s 12A by holding the objectives of the Trust to be commercial in nature ignoring the fact that the objects are charitable in nature and not hit by section 2(15) of ITA Nos.5589 and 5590/Del/2019 Nursing Tree vs. CIT (E) Page 3 of 6 the Income Tax Act 1961 is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 2. The action of the Ld. CIT(E) in coming to a finding that the objects of the Trust are commercial in nature ignoring the objects enlisted in the Trust Deed is perverse on the facts and is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 3. The order of the Ld. CIT(E) in restricting the definition of beneficiaries to be members of the Trust without there being any definition of “Beneficiaries” or “Members” in the Trust Deed is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 4. The action of the Ld. CIT(E) in coming to the conclusion of objects being commercial in nature, relying on periodic contribution from beneficiaries and mandatory charging of interest on financial assistance is illegal, arbitrary, unwarranted, uncalled for & against the facts & circumstances of the case. 5. The action of the Ld. CIT(E) in rejecting the application to grant registration U/s 12A without giving any opportunity of being heard U/s 12AA(1)(b)(ii) proviso thereof, to the appellant trust is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 6. The appellant trust reserves the right to add/alter/modify/amend or withdraws any ground of appeal. 7. The above ground of appeal are without prejudice to each other.” (A.1) For the sake of convenience, these two appeals are being disposed off by this consolidated order. (B) The assessee filed Form No.10A for registration u/s 12A/12AA of Income Tax Act (‘IT Act’, for short). The assessee also filed Form No.10G for approval under section 80G(5) of IT Act. Vide ITA Nos.5589 and 5590/Del/2019 Nursing Tree vs. CIT (E) Page 4 of 6 common order dated 27/05/2019, the Ld. CIT(E) rejected the assessee’s aforesaid applications in Form No.10A and Form No.10G for registration under section 12A/12AA of IT Act and for approval under section 80G of IT Act. These two appeals before us have been filed by the assessee against the aforesaid order dated 27/05/2019. In the course of appellate proceedings in Income Tax Appellate Tribunal (“ITAT” for short) a paper book containing the following particulars were filed from the assesee’s side: 1. Annexure ‘A’ Written Submission vide letter Dt.28/12/2018 2. Annexure ‘B’ Document filed with letter dt. 28/12/2018 3. Annexure ‘C’ Written Submission vide letter Dt. 14/05/2019 4. Annexure ‘D’ Documents filed with letter dt. 14/05/2019 5. Annexure ‘E’ Written Submission vide letter Dt. 16/05/2019 6. Annexure ‘F’ Documents filed with letter dt. 16.05.2019 7. Annexure ‘G’ Written submission vide letter dt. 20/05/2019 8. Annexure ‘H’ Copy of minutes of meeting of trustee dt. 15/07/2021 for modification in trust deed 9. Annexure ‘I’ Copy of audited financials for the year 2018-19 10. Annexure ‘J’ Copy of Audited Financials for the year 2019-20 11. Annexure ‘K’ Copy of Audited Financials for the year 2020-21 12. Annexure ‘L’ objects and activities of the trust ITA Nos.5589 and 5590/Del/2019 Nursing Tree vs. CIT (E) Page 5 of 6 (B.2) At the time of hearing before us, the Ld. Counsel for the assessee drew our attention to the recent order of Hon’ble Supreme Court, dated 19/10/2022 in the case of ACIT vs. Ahmedabad Urban Development Authority [2022] 449 ITR 01 (SC). He further submitted that the aforesaid order of Hon’ble Supreme Court was not available before Ld. CIT(E) at the time when the impugned order dated 27/05/2019 was passed. He furthermore submitted that the issues in dispute in the present two appeals should be restored back to the file of the Ld. CIT(E) to pass denovo order after giving due consideration to aforesaid order of Hon’ble Supreme Court in the case of ACIT vs. Ahmedabad Urban Development Authority (supra). The Ld. CIT-DR for Revenue expressed no objection to this. (B.2.1) In view of the foregoing; we set aside the impugned order each dated 27/05/2019 passed by the Ld. CIT(E) with the direction to pass denovo order(s) in accordance with law after giving due consideration to aforesaid order of Hon’ble Supreme Court in the case of ACIT vs. Ahmedabad Urban Development Authority (supra), and after providing reasonable opportunity to the assessee, for deciding afresh, the issues regarding the assessee’s applications for ITA Nos.5589 and 5590/Del/2019 Nursing Tree vs. CIT (E) Page 6 of 6 registration u/s 12A/12AA of IT Act and for approval under section 80G(5) of IT Act. (C) For statistical purposes, both appeals are treated as partly allowed. (D) This order was already pronounced on 08/02/2023 in Open Court, in the presence of representatives of both sides, after conclusion of the hearing and is signed today on 08/02/2023. S Sd/- Sd/- D (KUL BHARAT) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08/02/2023 Pk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI