ADDL DIT (E)-II, MUMBAI V. HABIB ISMAIL HOSPITAL & MEDICAL TRUST, MUMBAI

ITA 5603/MUM/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7579 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 04-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 14-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: S A KANJI; FIROZ ANDARYOJEENA
• Keywords: Business income; Charitable institution; Benefit of exemption
• Section: 143(3); 11A; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DUR GA RAO, J.M. ITA NO. 5603/MUM/2009 ASSESSMENT YEAR: 2006-07 DY. DIRECTOR OF INCOME-TAX(E)-II(1), APP ELLANT R.NO. 507, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 12. VS. HABIB ISMAIL HOSPITAL & MEDICAL TRUST, RESPON DENT HAJI MOHAMMED BUILDING, GROUND FLOOR, 115, SHAYDA MARG, DONGRI, MUMBAI 400 007. (PAN - AAATH0927P) ITA NO. 5604/MUM/2009 ASSESSMENT YEAR: 2006-07 DY. DIRECTOR OF INCOME-TAX(E)-II(1), APP ELLANT R.NO. 507, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 12. VS. HABIB ISMAIL EDUCATION TRUST, RESPONDENT HAJI MOHAMMED BUILDING, GROUND FLOOR, 115, SHAYDA MARG, DONGRI, MUMBAI 400 007. (PAN - AAATH0927P) APPELLANT BY : MR. V.V. SHASTRI RESPONDENT BY : MR. FIROZ ANDARYOJEENA & MR. S.A. KANJI DATE OF HEARING : 04/01/2012 DATE OF PRONOUNCEMENT : 21/03/2012 ORDER PER V. DURGA RAO, J.M.: BOTH THESE APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE ORDER OF CIT(A)-XXX, MUMBAI, PASSED ON 16/07//2 009 FOR THE ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 2 ASSESSMENT YEAR 2006-07. SINCE THE IDENTICAL ISSUE IS INVOLVED IN BOTH THESE APPEALS, THEY WERE HEARD TOGETHER AND, THEREF ORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. ITA NO. 5603/MUM/09 2. THE GROUNDS RAISED BY THE REVENUE ARE DIRECTED A GAINST THE ACTION OF THE CIT(A) IN HOLDING THAT PROVISIONS OF SECTION 13(1)(B) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE TRUST ON THE GROUND THAT THE TRUST CAME INTO EXISTENCE IN 1934 AND ALSO THAT PRO VISIONS OF SECTION 11(4A) ARE NOT APPLICABLE IN THE CASE OF THE ASSESS EE, SINCE NO BUSINESS WAS CARRIED ON BY THE ASSESSEE DURING PREV IOUS YEAR. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A CHARITABLE TRUST ENGAGED IN THE PROPAGATION OF MEDICAL HELP ED UCATION TO THE GENERAL PUBLIC. THE ASSESSEE RUNS THE HABIB HOSPITA L WHICH IS OPEN TO THE GENERAL PUBLIC. THE RETURN OF INCOME WAS FILED CLAIMING BENEFITS OF SECTION 11 SHOWING 'NIL' INCOME. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE IT ACT ON 29/12/2008 DETERMINING TOTA L INCOME AT RS. 41,55,830/- AFTER DISALLOWING EXEMPTION U/S 11 OF T HE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED T HAT THE ASSESSEE TRUST CAME INTO EXISTENCE WITH EFFECT FROM 09/02/19 77 BY WAY OF ORDER OF CIVIL COURT, MUMBAI IN SUIT NO. 6712 OF 1976 WH EREIN THE OLD TRUST I.E. HABIB ESMAIL MEMORIAL TRUST CONSTITUTED VIDE D EED OF SETTLEMENT DATED 03/04/1934 WAS TRIFURCATED INTO THREE TURSTS ONE OF THEM BEING THE ASSESSEE IN QUESTION. THE AO ALSO OBSERVED THAT ALTHOUGH THE ASSESSEE CLAIMING TO BE CHARITABLE IN NATURE, IS EX CLUSIVELY WORKING FOR THE BENEFIT OF KHOJA MUSLIM CITIZEN OF INDIA A ND, THEREFORE, THE ASSESSEE IS PRIMA-FACIE NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT AS THE SAME IS COVERED BY THE PROVISIONS OF SECTION 13 (1)(B) OF THE ACT. ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 3 THE AO OBSERVED THAT IN THE COMPUTATION OF INCOME, THE TRUST HAD SHOWN RENTAL INCOME OF RS. 25,77,143/- RECEIVED FRO M M/S VEMBLY HOTELS ON ACCOUNT OF PROPERTY OF THE TRUST KNOWN AS DARUL HABIB WHICH IS A HOTEL. ON BEING ASKED BY THE AO TO EXPL AIN THE NATURE OF THESE RECEIPTS WHICH WERE CLAIMED TO BE RENT, THE A SSESSEE FILED A COPY OF AGREEMENT DATED 05/03/1992 BETWEEN THE TRUSTEES OF HABIB ESMAIL MEMORIAL TRUST, HABIB EDUCATION TRUST AND HABIB ESM AIL HOSPITAL AND MEDICAL TRUST AND M/S VEMBLY HOTELS TO WHOM THE SAID PROPERTY WAS GIVEN TO RUN AS A HOTEL. THE AO AFTER REFERRING TO THE RESPECTIVE CLAUSES OF THE ACT, CAME T THE CONCLUSION THAT THE ASSESSEE TRUST IS RUNNING A BUSINESS BY WAY OF RUNNING A HOTEL WHICH APPARENTLY PRIOR TO 05/03/1992 WAS BEING RUN BY THE THREE TRUST ON T HEIR OWN BY WAY OF AGREEMENT DATED 05/03/1992 THE SAME HAS BEEN ASS IGNED TO CONDUCTORS I.E. M/S VEMBLY HOTELS. ACCORDINGLY, THE AO CONCLUDED THAT THE INCOME OF RS. 25,77,143/- IS FROM BUSINESS OF RUNNING HOTEL AT PROPERTY DARUL HABIB WHICH IS NOT BEING INCIDENT AL TO THE OBJECTS OF THE ASSESSEE TRUST AND THE TRUST DOES NOT FULFILL T HE STATUTORY REQUIREMENTS OF SECTION 11(4A) OF THE ACT, AND, THE REFORE, TAXED AS BUSINESS INCOME. AGGRIEVED BY THE ORDER OF THE DDIT (E), THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT T HE ASSESSEE IS NOT A NEW TRUST WHICH HAS BEEN ESTABLISHED OR CREAT ED OR AFTER 01/04/1962, AS IT IS AN ENTITY WHICH HAS BEEN TRIFU RCATED FROM THE ORIGINAL TRUST ESTABLISHED IN 1934. HE, THEREFORE, SUBMITTED THAT SECTION 13(1)(B) OF THE ACT CANNOT APPLY TO THE ASS ESSEE TRUST. HE POINTED OUT THAT UNDER THIS PROVISION, EXEMPTION U/ S 11 IS DENIED IN THE CASE OF A CHARITABLE TRUST WHICH IS CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THE ACT. THE IMPORTANT WORDS ARE 'C REATED' OR 'ESTABLISHED'. TO CREATE OR ESTABLISH, YOU NEED A S ETTLER, A TRUST DEEED AND A NEW ADMINISTRATIVE SET UP. IT WAS SUBMITTED T HAT NO PERSON HAS ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 4 SETTLED ANY TRUST ON OR AFTER 01/04/1962 THERE IS N O SETTLER AND THERE IS NO TRUST DEED. THE ORIGINAL SETTLOR WHO SETTLED THE HABIB ESMAIL MEMORIAL TRUST IN 1934 HAS NOT SETTLED A NEW TRUST IN 1977 WHEN THE CITY CIVIL COURT PASSED ITS ORDER OF TRIFURCATION. THE ASSESSEE, THEREFORE, SUBMITTED THAT THE FUNDAMENTAL REQUIREME NT OF SECTION 13(1)(B) THAT A NEW TRUST HAD BEEN CREATED OR ESTAB LISHED IS NOT FULFILLED, HENCE, THE LEARNED ADIT(E) WAS WRONG IN APPLYING THE PROVISIONS OF SECTION 13(1)(B) AS THE OBJECT OF THI S SECTION IS TO DENY TO A NEW TRUST WHICH HAVE BEEN CREATED OR ESTABLISHED AFTER 01/04/1962 AND CANNOT BE INVOKED IN THE CASE OF AN OLD TRUST W HICH HAS MERELY BEEN TRIFURCATED FOR ADMINISTRATIVE REASONS AND TO EFFECTUATE ITS OBJECTS IN A MORE CONVENIENT AND FOCUSSED MANNER. I T WAS FURTHER SUBMITTED THAT THE PURPOSE OF THE TRIFURCATION WAS TO CONDUCT THE EDUCATIONAL INSTITUTION AND MEDICAL INSTITUTION IN A PROFESSONAL MANNER IN VIEW OF THE FACT THAT BOTH THESE OBJECTS REQUIRE DIFFERENT OPERATIONAL AND PROFESSIONAL SKILLS AND IT IS FOR T HE VERY REASON THAT THE HON'BLE CITY CIVIL COURT READILY AGREED TO THE APPLICATION FOR TRIFURCATION IN ORDER TO PROMOTE EFFECTIVELY THE OB JECTS OF THE ORIGINAL TRUST. THE ASSESSEE, THEREFORE, SUBMITTED THAT IT I S BEYOND DOUBT THAT SECTION 13(1)(B) IS NOT APPLICABLE IN THE CASE OF T HE ASSESSEE TRUST AND IT CONTINUES TO ENJOY THE EXEMPTION U/S 11 AS THE O RIGINAL HABIB MEMORIAL TRUST WAS GRANTED RIGHT FROM 1934. IT IS F OR THIS VERY REASON THAT EVEN THE INCOME TAX DEPARTMENT CONTINUED WITH THE GRANTING OF EXEMPTION U/S 11 TO THE ASSESSEE TRUST EVEN AFTER T HE CITY CIVIL COURT PASSED ITS ORDER IN 1977. THE ASSESSEE FURTHER SUBM ITTED THAT THIS ESTABLISHED POSITION OF MORE THAN 29 YEARS AFTER TH E TRIFURCATION TOOK PLACE IS SOUGHT TO BE DISTURBED BY THE LEARNED ADIT (E) FOR THE FIRST TIME WITH EFFECT FROM ASSESSMENT YEAR 2006-07. IT I S WELL ESTABLISHED THAT THOUGH THE AO IS NOT BOUND BY THE RULE OF RES JUDICATA OR ESTOPPEL BY RECORD, THE AO CANNOT ARBITRARILY DEPAR T FROM THE STAND ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 5 TAKEN BY HIS PREDECESSOR OFFICERS. FOR THIS PROPOSI TION, THE ASSESSEE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF RADHASOAMI SATSANG VS. CIT, 193 ITR 321, 329. THE A SSESSEE POINTED OUT THAT THE ASSESSEE TRUST DOES NOT APPLY ITS INCO ME FOR ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. WHILE THE ORIGINAL TRUST DEED MENTIONES THAT THE BENEFICIARIES WILL BE THE MEMBER S OF KHOPA COMMUNITY, IN FACT THE INCOME OF THE TRUST IS APPLI ED TO MEMBERS OF ALL COMMUNITIES BECAUSE THE ASSESSEE TRUST ADMITS N ON KHOTA STUDENTS ALSO IN ITS EDUCATIONAL INSTITUTION. HE CO NTENDED THAT THESE FACTS HAD BEEN IN FACT BROUGHT TO THE NOTICE OF THE ADIT(E) AND A LIST OF NON-KHOJA PERSONS WHO WERE GIVEN THE BENEFIT BY THE APPELLANT TRUST IS ON THE RECORD OF THE TAX DEPARTMENT. A SEP ARATE LIST OF NON- MUSLIMS WAS GIVEN TO ADIT(E) AT HIS OWN REQUEST. DE SPITE THIS FACT BEING ON RECORD, THE ADIT(E) HAD WRONGLY APPLIED TH E PROVISIONS OF SECTION 13(1)(B). THE ASSESSEE FINALLY SUBMITTED TH AT THE ASSESSEE TRUST IS NOT LIABLE TO PAY ANY INCOME TAX AS IT IS CLEARLY EXEMPT FROM TAX U/S 11 OF THE ACT, AS THE INCOME-TAX DEPARTMENT ITSELF HAD GRANTED EXEMPTION RIGHT FROM 1934 UP TO ASSESSMENT YEAR 200 4-05. THE EXEMPTION HAS BEEN GRANTED FOR 29 YEARS AFTER THE C ITY CIVIL COURT PASSED THE ORDER OF TRIFURCATION. THIS STAND OF THE INCOME TAX DEPARTMENT WHICH IS LEGALLY CORRECT IS BINDING ON T HE PRESENT ADIT(E) FOR THE ASSESSMENT YEAR 2006-07 AND ALL SUBSEQUENT YEARS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CI T(A) HELD AS UNDER:- 10. I HAVE GONE THROUGH THE FACTS OF THE CASE, CON CLUSION DRAWN BY THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE A SSESSEES REPRESENTATIVES. THE MOOT QUESTION TO BE DECIDED IS WHETHER ON TRIFURCATION OF THE MAIN TRU I.E. HABIB ESMAIL MEMO RIAL TRUST PURSUANT TO THE SCHEMES FRAMED B THE BO Y CITY CIVIL COURT, RESULTS IN CREATION AND ESTABLISHMENT 9F NEW TRUST W.E.F. 09.02.1977 AN D CONSEQUENTLY WHETHER SUCH TRUSTS BASED ON ITS OBJECTS FP PRESCRI BED BENEFICIARIES (KHOJA COMMUNITY) ATTRACT THE PROVISIONS OF SECTION 13(1)(B) OF THE INCOME TAX ACT, 1961. FURTHER, WHETHER THE TRUST, B ASED ON THE NATURE OF INCOME AND THE TERMS AND CONDITIONS OF THE AGREE MENT DATED ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 6 05/03/1 992 ENTERED INTO WITH M/S VEMBLY HOTELS CAN BE DEEMED TO CARRY ON THE BUSINESS OF RUNNING HOTEL AND ACCORDIN GLY THE INCOME RECEIVED FROM THE SAID MIS. VEMBLY HOTELS CAN BE TR EATED AS BUSINESS INCOME, AND WHETHER IT IS MANDATORY FOR THE TRUST T O MAINTAIN SEPARATE BOOKS OF ACCOUNTS FOR THE SAID BUSINESS AS ENVISAGE D IN SECTION 11(4A) OF THE INCOME TAXACT,1961. 10.1 ON GOING THROUGH THE ORDER OF THE BOMBAY CITY CIVIL COURT REFERRED TO IN E ASSESSMENT PROCEEDINGS IT IS OBSER VED THAT THE COMBINED OBJECTS OF EDUCATION, MEDICAL HELP, WELFAR E ETC. OF THE MAIN TRUST I.E. HABIB ESMAIL MEMORIAL TRUST ARE SEPARATE D AND FOR EXECUTION OF EACH SUCH OBJECT A SEPARATE BRANCH, FORUM OR SET UP IS FORMED UNDER THE SAME UMBRELLA OF MAIN TRUST AND WITH SAME SET O F TRUSTEES TO MANAGE. BESIDES THERE IS NO VARIATION, MODIFICATION OR AMENDMENT IS AFFECTED IN THE ORIGINAL OBJECT AND OTHER SUBSTANTI VE PROVISIONS OF THE TRUST DEED OF APRIL 1934. BY THE SAID COURT ORDER O NLY A SEPARATE DISTINCT (OBJECT WISE) MANAGEMENT SCHEME IS FRAMED TO CARRY OUT THE OBJECTS OF THE MAIN TRUST. 10.2 SINCE SEPARATE OBJECT WISE SET-UP IS CARVED O UT FROM MAIN SET-UP FOR MANAGEMENT AND ADMINISTRATION THEREOF, IT IS ES SENTIAL THAT IT SHOULD HAVE A SEPARATE IDENTITY. THERE IS NO SEPARA TE TRUST DEED FOR CREATION OF THIS BIFURCATED SET-UP. THE COURT ORDER HAS REPEATEDLY REFERRED TO THE BIFURCATED TRUSTS I.E. HABIB ESMAIL EDUCATION TRUST AND HABIB ESMAIL HOSPITAL AND MEDICAL TRUST AS DIVIDED PARTS OF THE ORIGINAL TRUST. BESIDES, THE PROPERTIES SETTLED UND ER THE DIVIDED TRUSTS ARE ONLY TRANSFERRED/DIVESTED FROM THE ORIGINAL TRU ST AND THERE IS NO NEW SETTLEMENT OF ANY PROPERTY. 10.3 BESIDES, THE TRIFURCATION_OF THE TRUST EXERCIS E DOES NOT AMOU NT CLOSER/DISSOLUTION OR MERGER OF ORIGINAL ENTITY INTO NEW ENTITIES. ON THE CONTRARY, THE ORIGINAL ENTITY (TR UST) WITH ITS ORIGINAL CONSTITUTION (TRUST DEED) SAME SET OF TRUSTEES VERY MUCH CONTINUE AND IT EXISTS WITH ITS ORIGINAL REGISTRATION NUMBER. SI MULTANEOUSLY WITH THE BIFURCATED TRUSTS WITH SAME SET OF TRUSTEES, AND T HE OBJECTS, THOUGH CARVED OUT IN SUBSTANCE AND MATERIAL FROM ORIGINAL TRUST OBJECTS AND INCORPORATED IN SEPARATE SCHEME OF MANAGEMENT FORME D UNDER THE SAID COURT ORDER, WITHOUT ANY CHANGE OR DILUTION. 10.4 THE SEPARATE REGISTRATION NUMBERS UNDER THE P ROVISIONS OF BOMBAY PUBLIC TRUST ACT, UNDER THE PROVISIONS OF SE CTION 12A OF INCOME TAX ACT, 1961 SEPARATE PAN, SEPARATE ASSESSABLE ENT ITIES UNDER THE INCOME TAX ACT, 1961 ARE IN MY OPINION PROCEDURAL N ECESSITIES AND CONVENIENCES FOR IDENTIFICATIONS, AND SUCH THINGS D O NOT ADVERSELY AFFECT OR DESTROY THE SUBSTANTIVE BASE/EXISTENCE OF AN ORIGINAL ENTITY, AND THEREFORE CANNOT BE FATAL TO ITS EXEMPTION STAT US. ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 7 10.5 I AM, THEREFORE INCLINED TO ACCEPT AND AGREE W ITH THE CONTENTIONS OF THE ASSESSEE TRUSTS SUBMISSIONS AND INTERPRETAT IONS OF TRUST DEED, ORDER OF THE BOMBAY CITY CIVIL COURT. I FEEL THE AS SESSING OFFICER ERRED IN INTERPRETING THE FACTS OF THE MATTER AND ARRIVIN G AT ERRONEOUS CONCLUSIONS THAT THE TWO BIFURCATED TRUST ARE ESTAB LISHMENT AND CREATION OF NEW TRUST W.E.F FROM 09.02.1977 PURSUAN T TO THE ORDER OF THE BOMBAY CITY CIVIL COURT AND THAT SINCE BY ITS O BJECTS, THE SAID NEW TRUSTS ARE FOR BENEFIT OF KHOA MUSLIM COMMUNITY CIT IZENS OF INDIA, IT IS DISABLED AND NOT ELIGIBLE FOR EXEMPTION UNDER SECTI ON 11A OF THE INCOME TAX ACT, 1961 IN VIEW OF APPLICATION OF SECTION 13( 1)(B) OF THE INCOME TAX ACT, 1961. 10.6 I THEREFORE, HOLD THAT THE ASSESSEE TRUST I.E . HABIB ESMAIL HOSPITAL AND MEDICAL TRUST IS A DIVIDED PART OF THE ORIGINAL TRUST I.E. HABIB ESMAIL MEMORIAL TRUST OF APRIL 1934 AND NOT A NEW TRUST ESTABLISHED OR CREATED PURSUANT TO THE ORDER OF THE BOMBAY CITY CIVIL COURT OF 1977. SINCE THE SAID TRUST IS ESTABLISHED AND CREATED PRIOR TO THE COMMENCEMENT OF THE INCOME TAX ACT, 1961, IT DO ES NOT INCUR ANY DISABILITY OF SECTION 13(1)(B) OF THE INCOME TAX AC T, 1961 AND THEREFORE IS ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE IN COME TAX ACT, 1961. THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE A SSESS. 10.7 THE ASSESSING OFFICER HAS GIVING AN ALTERNATIV E FINDING THAT IN VIEW OF THE TERMS AND CONDITIONS OF THE CONDUCTING AGREEMENT DATED 05/03/1992 REFERRED TO IN HIS ASSESSMENT ORDER PART ICULARLY VARIOUS CLAUSES REPRODUCED IN THE ASSESSMENT ORDER, THAT TH E ASSESSEE TRUST IS CARRYING A BUSINESS OF RUNNING A HOTEL ON THEIR OWN PRIOR TO 05/03/1992 AND THEREAFTER ASSIGNED IT TO THE CONDUC TORS I.E. S. VEMBLY HOTELS. IN VIEW OF THIS FINDING HE ISSUED A SHOW CA USE NOTICE TO DENY EXEMPTION UNDER SECTION 11 IN RESPECT OF THE RELEVA NT INCOME AND PROPOSED TO CHARGE THE SAME AS BUSINESS INCOME AS P ER THE PROVISIONS OF THE INCOME TAX ACT, 1961. 10.8 I HAVE ALREADY DECIDED THE MAIN GROUND REGARDI NG EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT, 1961 IN FAV OUR OF THE ASSESSEE. IN THIS CONNECTION THE ASSESSEE TRUST CONTENDED THA T THE APPELLANT TRUST HAS NEVER CARRIED ON ANY BUSINESS ACTIVITY AN D THE ADIT (E) IS FACTUALLY IN ERROR IN TAKING THE STAND THAT THE APP ELLANT TRUST IS CARRYING ON THE BUSINESS OF THE MARINE PLAZA HOTEL. EVEN THOUGH THE ADIT(E) HAS REPRODUCED CERTAIN PARAGRAPHS OF THE CO NDUCTING AGREEMENT IN HIS ASSESSMENT ORDER, HE HAS FAILED TO REPRODUCE THE MOST RELEVANT CLAUSE OF THE AGREEMENT VIZ. CLAUSE 41, TH OUGH IT WAS BROUGHT TO HIS NOTICE AT THE TIME OF ASSESSMENT PROCEEDINGS . AS POINTED ABOVE, CLAUSE 41 CLEARLY PROHIBITS THE APPELLANT TRUST FRO M DOING ANY BUSINESS ACTIVITY WITH THE CONDUCTOR OF MARINE PLAZA HOTEL ( BY THE OWNERS M/S. VEMBLY HOTELS) THIS CLAUSE VESTS ALL THE POWERS OF_ CONDUCTING THE HOTEL BUSINESS WHOLLY, SOLELY AND EXCLUSIVELY WITH THE CO NDUCTOR. THE CONDUCTOR IS MERELY REQUIRED TO PAY A MONTHLY COMPE NSATION BY WAY OF RENT TO THE APPELLANT TRUST. THEREFORE, IT IS VERY CLEAR AND BEYOND THE ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 8 SHADOW OF DOUBT THAT THE APPELLANT TRUST IS NOT RUN NING ANY BUSINESS.__- HENCE, THE QUESTION OF MAINTAINING SEP ARATE BOOKS OF ACCOUNT AS REQUIRED U/S 11(4A) DOES NOT ARISE IN TH E CASE OF THE APPELLANT TRUST. 10.9 FURTHER, THE BENEFIT OF EXEMPTION UNDER SECTI ON 11 CANNOT BE DENIED UNDER SECTION 11 (4A) BY TAKING THE STAND TH AT SEPARATE BOOKS OF ACCOUNTS WERE NOT MAINTAINED FOR THE ALLEGED BUS INESS OF RUNNING A HOTEL BY THE APPELLANT TRUST. THE APPELLANT TRUST I S NOT INVOLVED IN RUNNING THE MARINE PLAZA HOTEL BECAUSE THIS IS BEIN G DONE SOLELY, WHOLLY AND EXCLUSIVELY BY THE CONDUCTOR UNDER THE C ONDUCTING AGREEMENT. CLAUSE 41 OF THIS CONDUCTING AGREEMENT P REVENTS THAT APPELLANT TRUST FROM INTERFERING OR DOING ANY ACTIV ITY OF RUNNING THE HOTEL BUSINESS. THEREFORE, THE APPELLANT TRUST IS N OT REQUIRED TO MAINTAIN SEPARATE BOOKS OF ACCOUNT. HENCE, SECTION 11 (4A) IS NOT APPLICABLE AT ALL BECAUSE THE INCOME OF THE APPELLA NT TRUST IS TAXABLE UR RESPECT OF THE MONTHLY RENT WHICH IT RECEIVES, I F AT ALL, SUCH ACT. 10.10 ON GOING THROUGH THE FACTS NARRATED IN THE A SSESSMENT ORDER, IT IS NOTICED THAT VEMBLY HOTELS IS AN HLLSI1#QC OF HO TI, AND HOLDS ALL LICENCES AND THERE IS NO INVOLVEMENT OF THE TRUST W HATSOEVER IN RUNNING THE BUSINESS OF HOTELS AND THERE IS NO RESPONSIBILI TY OR ANY KIND OF LIABILITY IN RUNNING THE SAID BUSINESS FOR THE TRUS T. THEREFORE TO CONSTRUE THAT THE SAID BUSINESS WAS IS NOT ESTABLIS HED AND THEREFORE THE CONCLUSION DRAWN BY THE ASSESSING OFFICER AS ME NTIONED ABOVE IS UNSUSTAINABLE. THE ASSESSEE TRUST IS MERELY ENTITLE D TO A FIXED SUM OF MONEY WITH PRESCRIBED ESCALATION OVER THE TENURE OF THE AGREEMENT BY WHATEVER NAME CALLED CANNOT BE TREATED AS BUSINESS INCOME. IN MY OPINION IT IS MERELY AN INCOME FROM PROPERTY OF THE TRUST WHICH IS TREATED BY THE SAID M/S. VEMBLY HOTEL AS RENT. 10.11 IN VIEW OF THE ABOVE FACTS, I ACCEPT THE CONT ENTION OF THE APPELLANT TRUST THAT THE SAID INCOME IS NOT IN THE NATURE OF BUSINESS INCOME AND THATJB1RJSTST CANNOT BE DEEMED OR CONSTR UED TO CARRY ON THE HOTEL BUSINESS AS HELD BY THE ASSESSING OFFICER. EV EN ASSUMING THAT THE ASSESSEE TRUST CARRIED ON BUSINESS OF HOTELS, I N LIGHT OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VIS THANTI TRUST (2001) 247 ITR 785 THE SAID BUSINESS IS INCID ENTA TCI, ACHIEVING THE OBJECT OF THE TRUST AND THAT THE SAI,JQ.MIS UTI LIZED TOWARDS THE OBJECTS OF THE TRUST AND ACCORDINGLY IT DOES NOT FO RFEIT THE EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE TRUST. IN VIEW OF THE ABOVE SET OF FACTS, THE ACTION OF THE A SSESSING OFFICER DOES NOT APPEAR TO BE JUSTIFIED. THEREFORE, THE APPELLAN T SUCCEEDS IN THIS GROUND OF APPEAL ALSO. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 9 5. BEFORE US, THE LEARNED DR SUBMITTED THAT THE ASS ESSEE TRUST CAME INTO EXISTENCE WITH EFFECT FROM 09/02/1977 BY WAY OF ORDER OF CITY CIVIL COURT, MUMBAI IN SUIT NO. 6712 OF 1976 W HEREIN THE OLD TRUST I.E. HABIB ESMAIL MEMORIAL TRUST CONSTITUTED VIDE DEED OF SETTLEMENT DATED 03/04/1934 WAS TRIFURCATED INTO TH REE TRUSTS ONE OF THEM BEING THE ASSESSEE IN QUESTION. THE LEARNED DR FURTHER SUBMITTED THAT THOUGH THE ASSESSEE CLAIMING TO BE C HARITABLE IN NATURE, IS EXCLUSIVELY WORKING FOR THE BENEFIT OF K HOTA MUSLIM CITIZEN OF INDIA, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE F OR EXEMPTION U/S 11 OF THE ACT AND IS COVERED BY THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT. HE, THEREFORE, PLEADED THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE HAS SUBMITTED THAT THE ORIGINAL TRUST NAMELY HABIB ESMA IL MEMORIAL TRUST ESTABLISHED ON 3 RD APRIL, 1934 AND SUBSEQUENTLY THE SAME WAS REGISTERED WITH CHARITY COMMISSIONER IN THE YEAR 19 52. HE FURTHER SUBMITTED THAT THE MAIN OBJECT OF THE TRUST IS MAIN TENANCE, EDUCATION AND ADVANCEMENT OF LIFE OF POOR AND DESERVING KHOJA S, MAINTAINING HOSPITALS AND GIVING MEDICAL RELIEF, ESTABLISHING, MAINTAINING, OR AIDING THE SCHOOLS, ETC. IT IS SUBMITTED THAT AFTER THE TRIFURCATION OF THE MAIN TRUST, I.E. HABIB ESMAIL MEMORIAL TRUST, H ABIB ESMAIL EDUCATION TRUST AND HABIB ESMAIL HOSPITAL AND MEDI CAL TRUST, CAME INTO EXISTENCE. IT IS POINTED OUT THAT THE OBJECT O F THE MAIN TRUST REMAINS UNCHANGED AND THE ORIGINAL TRUST DEED IS CO NTINUED TO BE IN EXISTENCE EVEN TODAY, THEREFORE, SECTION 13(1)(B) I S NOT APPLICABLE TO THE CASE OF THE ASSESSEE. IT IS SUBMITTED THAT THER E IS ONLY TRUST DEED WHICH WAS EXECUTED IN THE YEAR 1934 AND THERE IS NO CHANGE IN THE ORIGINAL OBJECTS, NO TRANSFER OF ASSETS, AND THE NE W TRUSTS ARE SAME AS ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 10 THE ORIGINAL TRUST AND THE ENTIRE TRUST RUNS AS ONE UNIT. IN SO FAR AS INCOME RELATING TO HOTEL IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS GIVEN THE PREM ISES TO THE CONDUCTOR ON THE BASIS OF THE AGREEMENT AND THE ASS ESSEE IS NOTHING TO DO WITH THE BUSINESS OF THE HOTEL AS THE CONDUCT OR IS RESPONSIBLE FOR RUNNING THE BUSINESS. THE LEARNED COUNSEL FOR T HE ASSESSEE POINTED OUT FROM THE PAGE NO. 15 OF THE ORDER OF TH E AO CLAUSES 26 & 27 AND ALSO PAGE NO. 16 PARA 3.4 OF THE ASSESSMENT ORDER AND SUBMITTED THAT ASSESSEE IS RECEIVING PURELY RENTAL INCOME AND IS RECEIVING A FIXED INCOME IRRESPECTIVE OF PROFIT AND LOSS, THEREFORE, IT IS NOT NECESSARY TO MAIN BOOKS OF ACCOUNT BY THE ASSES SEE. THE LEARNED COUNSEL SUBMITTED THAT NO TDS IS BEING DEDUCED AS I NCOME OF THE ASSESSEE IS EXEMPTED. FINALLY, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONLY DURING THE YEAR UNDER CONSIDERA TION I.E. 2006-07, THE REVENUE HAS RAISED THE OBJECTION AND IN ALL EAR LIER YEARS AND IN SUBSEQUENT YEARS NO SUCH OBJECTION RAISED WITH REGA RD TO APPLICATION SECTION 13(1)(B) OF THE ACT. HE, THEREFORE, SUBMITT ED THAT PRINCIPLES OF CONSISTENCY HAS TO BE FOLLOWED DURING THE YEAR UNDE R CONSIDERATION. HE STRONGLY RELIED UPON THE ORDER OF THE CIT(A) IN SUPPORT OF ASSESSEES CASE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . THE QUESTION TO BE DECIDED IS WHETHER ON TRIFURCATION OF THE MAIN T RUST I.E. HABIB ESMAIL MEMORIAL TRUST, PURSUANT TO THE SCHEMES FRAM ED BY THE BOMBAY CITY CIVIL COURT, RESULTS IN CREATION AND ES TABLISHMENT OF NEW TRUST WITH EFFECT FROM 09/02/1977 AND CONSEQUENTLY WHETHER SUCH TRUSTS BASED ON ITS OBJECTS FOR PRESCRIBED BENEFICI ARIES (KHOJA COMMUNITY) ATTRACT THE PROVISIONS OF SECTION 13(1)( B) OF THE ACT. FURTHER WHETHER THE TRUST, BASED ON THE NATURE OF I NCOME AND IN THE ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 11 TERMS AND CONDITIONS OF THE AGREEMENT DATED 05/03/1 992 ENTERED IN TO WITH M/S VEMBLY HOTELS CAN BE DEEMED TO CDARRY O N THE BUSINESS OF RUNNING HOTEL AND ACCORDINGLY THE INCOME RECEIVE D FROM THE SAID M/S VEMBLY HOTELS CAN BE TREATED AS BUSINESS INCOME , AND WHETHER IT IS MANDATORY FOR THE TRUST TO MAINTAIN SEPARATE BOO KS OF ACCOUNTS FOR THE SAID BUSINESS AS ENVISAGED IN SECTION 11(4A) O THE ACT. THE AO HELD THAT THE ASSESSEE TRUST CAME INTO EXISTENCE WI TH EFFECT FROM 09/02/1977 BY WAY OF A ORDER OF CITY CIVIL COURT OF BOMBAY IN SUIT NO. 6112 OF 1976 WHICH WAS SUBSEQUENTLY REGISTERED WITH THE CHARITY COMMISSIONER AND ALSO UNDER SECTION 12A OF THE ACT IN 1977 AND, THEREFORE, THE MAIN PURPOSE OF THE TRUST BEING EXCL USIVELY FOR THE BENEFIT OF KHOJA MUSLIMS IN INDIA, WHICH IS CLEARLY COVERED UNDER THE PROVISIONS OF SECTION 13(1)(B) AND HENCE NOT ELIGIB LE FOR EXEMPTIONS U/S 11 OF THE ACT. ACCORDINGLY, THE AO TREATED THE RENTAL INCOME OF RS. 25,77,143/- RECEIVED FROM M/S VEMBLY HOTELS, AS BUS INESS INCOME. THE CIT(A) HELD THAT THE ASSESSEE TRUST I.E. HABIB ESMAIL HOSPITAL AND MEDICAL TRUST IS DIVIDEND PART OF THE ORIGINAL TRUS T I.E. HABIB ESMAIL MEMORIAL TRUST OF APRIL 1934 AND NOT A NEW TRUST ES TABLISHED OR CREATED PURSUANT TO THE ORDER OF THE BOMBAY CITY CI VIL COURT OF 1977. HE FURTHER HELD THAT SINCE THE SAID TRUST IS ESTABL ISHED AND CREATED PRIOR TO THE COMMENCEMENT OF THE INCOME-TAX ACT, 19 61, IT DOES NOT INCUR ANY DISABILITY OF SECTION 13(1)(B) OF THE ACT , AND, THEREFORE, IS ENTITLED TO EXEMPTION U/S 11 OF THE ACT. AS REGARDS THE RENTAL INCOME TREATED BY THE AO AS BUSINESS INCOME, THE CIT(A) HE LD THAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE IS NOT IN THE NATUR E OF BUSINESS INCOME AND THAT THE TRUST CANNOT BE DEEMED OR CONST RUED TO CARRY ON THE HOTEL BUSINESS AS HELD BY THE AO. FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT V/S THANT I TRUST [2001] 247 ITR 785, THE CIT(A) HELD THAT THE SAID BUSINESS IS INCIDENTAL TO ACHIEVING THE OBJECT OF THE TRUST AND THAT THE SAID INCOME IS UTILIZED ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 12 TOWARDS THE OBJECTS OF THE TRUST AND ACCORDINGLY IT DOES NOT FORFEIT THE EXEMPTION U/S 11 OF THE ACT. 8. FROM THE FACTS OF THE CASE, IT IS SEEN THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST ESTABLISHED ON 3 RD APRIL, 1934 UNDER THE NAME HABIB MEMORIAL TRUST. THIS TRUST WAS REGISTERED WIT H THE CHARITY COMMISSIONER IN 1952. THE MAIN OBJECTS OF THE SAID TRUST IS MAINTENANCE, EDUCATION AND ADVANCEMENT OF LIFE OF POOR AND DESERVING KHOJAS, MAINTAINING OR AIDING HOSPITALS A ND GIVING MEDICAL RELIEF, ESTABLISHING, MAINTAINING OR AIDING SCHOOLS , ORPHANAGES, GIVING OF SCHOLARSHIPS, PROVIDING RESIDENTIAL QUARTERS FOR KHOJAS AT CHEAP OR NOMINAL RENTS EITHER IN THE BUILDINGS FORMING PART OF THE TRUST PROPERTIES OR BY ENTERING INTO NECESSARY ARRANGEMEN TS WITH OTHER PROPERTY OWNERS, RELIEF OF POOR AND DISTRESSED RELI EF IN THE EVENT OF GREAT RIOTS, ETC. AS MENTIONED IN THE TRUST DEEP DA TED 3 RD APRIL, 1934. THE MAIN TRUST TRIFURCATED VIDE ORDER OF CITY CIVIL COURT, MUMBAI IN SUIT NO. 6712 OF 1976 WITH EFFECT FROM 09/02/1977 I NTO HABIB ESMAIL MEMORIAL TRUST, HABIB ESMAIL EDUCATION TRUST, AND H ABIB ESMAIL HOSPITAL AND MEDICAL TRUST, THE ASSESSEE AND SEPARA TELY ASSESSED UNDER THE INCOME-TAX ACT AS SEPARATE ASSESSEES. THE CASE OF THE AO IS THAT AS PER THE ORDER OF THE HONBLE BOMBAY CITY CI VIL COURT SUIT NO. 6712 TWO TRUSTS CAME INTO EXISTENCE, NAMELY, I.E. H ABIB ESMAIL EDUCATION TRUST AND HABIB ESMAIL HOSPITAL AND MEDIC AL TRUST. THE RELEVANT PORTION OF THE ORDER OF THE CITY CIVIL COU RT BOMBAY IS EXTRACTED AS UNDER:- AND THIS COURT DOTH FURTHER ORDER THAT TWO SEPARATE NEW SCHEMES BE FRAMED FOR THE PURPOSE OF CARRYING OUT THE OBJEC TS WHICH ARE DELETED FROM THE MAIN TRUST, NAMELY, ONE FOR CARRYI NG OUT THE OBJECT OF ESTABLISHING AND CONDUCTING EDUCATIONAL I NSTITUTIONS OTHERWISE THAN FOR PROFIT AND THE OTHER FOR CARRYIN G OUT THE OBJECT OF MAINTAINING, ESTABLISHING AND CONDUCTING HOSPITA L OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERS ONS SUFFERING FROM AILMENTS OR NATURAL DEFECTIVENESS OR FOR THE R ECEPTION OR ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 13 TREATMENT OF PERSONS DURING CONVALSENCE OR PERSONS REQUIRING MEDICAL ATTENTION OR REHABILITATION AND CARRYING OU T CLINICAL RESEARCH IN MEDICINE EXISTING SOLELY FOR PHILANTHRO PIC PURPOSES AND NOT FOR THE PURPOSE OF PROFIT AND THIS COURT DO TH FURTHER ORDER THAT THE SAID NEW SCHEME BE AND THE SAME ARE HEREBY ALLOWED TO BE FRAMED AND SANCTIONED AS PER DRAFTS ANNEXED AND MARKED EXHIBIT E AND F TO THE PLAINT AND AS SCHEDULES III AND IV HERETO AND THIS COURT DOTH FURTHER ORDER THAT THE T RUSTS COMPRISED IN THE SAID TWO NEW SCHEMES BE TREATED AS DIVIDED P ARTS OF THE MAIN TRUST AND BE REGISTERED AS SUCH AT THE OFFICE OF THE CHARITY COMMISSIONER, MAHARASHTRA STATE, BOMBAY, UNDER THE PROVISIONS FOR THE BOMBAY PUBLIC TRUSTS ACT, UNDER SUCH NUMBER S AS MAY BE ASSIGNED TO THEM BY THE CHARITY COMMISSIONER IN ACC ORDANCE WITH THE PROVISIONS OF THE BOMBAY PUBLIC TRUST ACT AND THE RULES FRAMED THERE UNDER AND THIS COURT DOTH FURTHER ORDE R THAT THE PLAINTIFFS BE AND THEY ARE HEREBY APPOINTED AS THE FIRST TRUSTEES OF THE SAID DIVIDED TRUSTS UNDER THE SAID TWO NEW S CHEMES RELATING THERETO. 9. FROM THE ABOVE, IT IS VERY CLEAR THAT THE NEW TR UST BE TREATED AS A DIVIDED PARTS OF THE MAIN TRUST AND BE REGISTERED WITH THE CHARITY COMMISSIONER. IN OUR OPINION, THE AO HAS FAILED TO UNDERSTAND THE JUDGMENT OF THE CITY CIVIL COURT, BOMBAY IN PROPER PERSPECTIVE. APART FROM THE ABOVE, THE AO HAS NOT DOUBTED THE CHARITAB LE CHARACTER OF THE ASSESSEE AND THE ONLY OBJECTION RAISED BY THE A O IS THE ASSESSEE IS ONLY EXISTED FOR THE PURPOSE OF KHOJA MUSLIM COM MUNITY AND, THEREFORE, THE ASSESSEE IS HIT BY SECTION 13(1)(B) OF THE ACT. AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT ORDER AND T HE ORDER PASSED BY THE CIT(A) AS WELL AS THE MATERIAL ON RECORD, THE S AME TRUST DEED WHICH IS EXECUTED IN 1934 IS EXISTED EVEN TO-DATE A ND EXCEPT THE ORDER OF THE COURT, THE OBJECT OF THE TRUST IS REMAINING THE SAME. THE OTHER TWO TRUSTS EMERGED BY AN ORDER OF THE COURT ONLY FO R THE PURPOSE FO EFFECTIVE MANAGEMENT, THEREFORE, SECTION 13(1)(B) I S NOT APPLICABLE TO THE CASE OF THE ASSESSEE. ALL THE SAID THREE UNITS BEING PUBLIC CHARITABLE TRUSTS, THE INCOME OF THE TRUST WERE EXE MPT UNDER SECTION 11 OF THE INCOME-TAX ACT, AND ARE REGISTERED U/S 12 A OF THE ACT. THE ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 14 INCOME-TAX DEPARTMENT CONTINUED WITH THE GRANTING O F EXEMPTION U/S 11 TO THE ASSESSEE TRUST EVEN AFTER THE CITY CIVIL COURT PASSED ITS ORDER IN 1977. THIS ESTABLISHED POSITION OF MORE TH AN 29 YEARS AFTER THE TRIFURCATION TOOK PLACE IS SOUGHT TO BE DISTURB ED AND OVERRULED BY THE LEARNED ADIT(E) FOR THE FIRST TIME WITH EFFECT FROM AY 2006-07. WE ARE OF THE VIEW THAT THOUGH THE AO IS NOT BOUND BY THE RULE OF RES- JUDICATA OR ESTOPPEL BY RECORD, THE AO CANNOT ARBIT RARILY DEPART FROM THE STAND TAKEN BY HIS PREDECESSOR OFFICERS. IN VIE W OF THE ABOVE FINDINGS, THE CIT(A) IS RIGHT IN HOLDING THAT PROVI SIONS OF SECTION 13(1)(B) ARE NOT APPLICABLE IN THE CASE OF THE ASSE SSEE TRUST ON THE GROUND THAT THE TRUST CAME INTO EXISTENCE IN 1934 A ND THE PROVISIONS OF SECTION 13(1)(B) ARE APPLICABLE ONLY IN THE CASE OF A TRUST CREATED OR ESTABLISHED AFTER COMMENCEMENT OF THE ACT, I.E. AFT ER 1961 AND ALSO HOLDING THAT PROVISIONS OF SECTION 11(4A) ARE NOT A PPLICABLE IN THE CASE OF THE ASSESSEE'S CASE, SINCE NO BUSINESS WAS CARRIED OUT BY THE ASSESSEE DURING THE PREVIOUS YEAR. IN SO FAR AS THE INCOME FROM HOTEL IS CONCERNED, THERE IS NOTHING ON RECORD TO SHOW TH AT THE ASSESSEE IS RUNNING THE HOTEL. EVEN AS PER THE ASSESSMENT ORDER VIDE PAGE NO. 15 PARA 26 & 27 OF THE ORDER, IT SHOWS THAT THE CONDUC TOR IS RESPONSIBLE FOR RUNNING THE HOTEL AND SETTLE THE DISPUTES. EVEN THE CIT(A) GAVE A SPECIFIC FINDING THAT AS PER CLAUSE 41 ASSESSEE TRU ST PROHIBITED FROM DOING THE BUSINESS AND ALL THE POWERS ARE VESTED WI TH THE CONDUCTOR CONDUCTING HOTEL BUSINESS AND THE CONDUCTOR IS MERE LY REQUIRED TO PAY MONTHLY COMPENSATION BY WAY OF RENT TO THE ASSE SSEE TRUST. IN VIEW OF THE SPECIFIC FINDINGS GIVEN BY THE CIT(A), IT CANNOT BE SAID THAT THE ASSESSEE IS RUNNING HOTEL BUSINESS. ASSESSEE BE ING A TRUST NO SEPARATE BOOKS OF ACCOUNT ARE REQUIRED TO MAINTAIN U/S 11(4A) OF THE ACT. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE CIT(A) AND DO NOT FIND ANY REASON TO INTERFERE WITH THE OR DER OF THE CIT(A). ITA NO. 5603 & 5604/MUM/09 M/S HABIB ISMAIL HOSPITAL & MEDICAL TRUST M/S HABIB ISMAIL EDUCATION TRUST 15 ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. ITA NO. 5604/MUM/09 9. SINCE THE ISSUE IN THIS APPEAL IS MATERIAL IDENT ICAL TO THAT OF ITA NO. 5603/MUM/09 (SUPRA), RESPECTFULLY FOLLOWING THE CONCLUSIONS DRAWN THEREIN, WE CONFIRM THE ORDER OF THE CIT(A) A ND DISMISS THE GROUNDS RAISED IN THIS APPEAL. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF MARCH, 2012. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: MARCH, 2012 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, H BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.