DCIT, New Delhi V. Indian Medical Association, New Delhi

ITA 6076/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4559 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN GOTRU
• Assessee Lawyers: ASHISH CHADHA
• Keywords: Charitable institution
• Section: 80G; 12A; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.6076/DEL/2015 A.Y. : 2011-12 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), ROOM NO. 2418, 24 TH FLOOR, E-2 BLOCK, PRATYAKSH KAR BHAWAN, DR. SHYAM PRASAD MUKHERJEE CIVIC CENTRE, JAWAHAR LAL NEHRU MARG, NEW DELHI 11 0002 VS. INDIAN MEDICAL ASSOCIATION, IMA, HOUSE, IP MARG, NEW DELHI 110 002 (PAN: AAATI0290G) (ASSESSEE) (RESPONDENT) REVENUE BY : SH. SHRAVAN GOTRU, SR. DR ASSESSEE BY : SH. VED JAIN, ADV. & SH. ASHISH CHADHA, CA ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMP UGNED ORDER DATED 28.8.2015 OF THE LD. CIT(A)-40, NEW DELHI RELE VANT TO ASSESSMENT YEARS 2011-12. 2. THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)HAS ERRED IN 2 ALLOWING THE BENEFIT OF SECTION 11 & 12 OF THE ACT IGNORING THAT THE ACTIVITIES OF THE SOCIETY WERE NOT WITHIN THE PURVIEW OF SECTION 2(15) OF THE ACT, 1961 DURING THE YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE SOCIETY IS A CHARITABLE ORGANIZATION DESPITE THE FACT THAT THE ASSESSEE SOCIETY HAS MADE COMMERCIAL AGREEMENTS WITH CORPORATE ENTITIES AND RECEIVING CONTRIBUTION FOR SPECIFIC ENDORSEMENT WHICH WOULD RESULT IN THE SALE OF THEIR PRODUCTS. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME AT NIL FOR AY 2011-12 ON 26.9.2011. THE R ETURN OF THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). IN RESPONSE TO TH E NOTICE U/S. 143(2) OF THE ACT, ISSUED ON 18.09.2012, THE A.R. OF TH E ASSESSEE 3 APPEARED AND ATTENDED THE PROCEEDINGS, FILED DETAILS /EVIDENCES ON RECORD. THE SOCIETY IS REGISTERED U/S. 12A OF THE A CT VIDE REGISTRATION NO. DATED 27.6.2014. THE SOCIETY IS AL SO REGISTERED U/S. 80G OF THE ACT VIDE REGISTRATION NO. 1436 DATED 31.8.2009. THE MAIN OBJECTS OF THE SOCIETY ARE TO PROMOTE AND ADVAN CE MEDICAL SCIENCE AND TO PROMOTE IMPROVEMENT OF PUBLIC HEALTH AND MEDICAL EDUCATION IN INDIA. THE ACTIVITIES OF IMA/ASSESSEE INCLUDED HOLDING OF PERIODICAL MEETINGS/ CONFERENCES OF THE MEMBERS AN D THE MEDICAL PROFESSION IN GENERAL, TO PUBLISH AND CIRCULATE OFFIC IAL JOURNALS, CONDUCT EDUCATIONAL CAMPAIGNS IN INDIA, ENCOURAGE ME DICAL RESEARCH ETC. THE ACTIVITIES CARRIED OUT BY IMA/AS SESSEE CAN BE REGARDED AS FALLING WITHIN THE SCOPE OF GENERAL PUBL IC UTILITY. AO OBSERVED THAT DURING THE ASSESSMENT YEAR 2011-12, TH E ASSESSEE IS IN RECEIPT OF INCOME OF RS. 8,11,22,690/- FROM V ARIOUS SOURCES. ON EXAMINATION OF DETAILS THEREOF, IT WAS OBSERVED THA T SOME OF THE RECEIPTS ARE ARISING OUT OF COMMERCIAL TRANSACTION W ITH OUTSIDERS WHO ARE NON-MEMBERS OF IMA/ASSESSEE AND ACCORDINGLY , DENIED THE EXEMPTION U/S. 11(1) OF THE ACT MAINLY ON THE GROUND T HAT THE ASSESEE IS INVOLVED IN COMMERCIAL ACTIVITY AS THE ASS ESSEE HAS BEEN ENDORSING THE PRODUCTS OF CONSUMER GOODS LIKE PEPSI A ND DABUR ETC. AND HAS BEEN RECEIVING ENDORSEMENT FEE INCOME. ETC. BY ASSESSING THE INCOME OF THE ASSESSEE AT RS. 1,00,58,367/- U/S 1 43(3) OF THE 4 ACT VIDE ORDER DATED 07.03.2014. AGAINST THE ASSESSM ENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A)-40, NEW DEL HI, WHO VIDE HIS IMPUGNED ORDER DATED 28.8.2015 HAS ALLOWED THE A PPEAL OF THE ASSESSEE. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A ), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED HE HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEV ANT RECORDS, ESPECIALLY THE IMPUGNED ORDER. WE FIND TH AT THE ASSESSEE IS AN ASSOCIATION OF MEDICAL DOCTORS AND THE MAIN OBJ ECT OF THE SOCIETY IS TO PROMOTE THE INTEREST OF ITS MEMBERS. THE OBJECTS OF THE SOCIETY AS PER THE MEMORANDUM READ AS UNDER:- 'OBJECTS:' III. THE OBJECTS OF THE ASSOCIATION ARE: 1. TO PROMOTE AND ADVANCE MEDICAL AND ALLIED SCIENCES IN ALL THEIR DIFFERENT BRANCHES AND TO PROMO TE THE IMPROVEMENT OF PUBLIC HEALTH AND MEDICAL EDUCATION IN INDIA. 5 2. TO MAINTAIN THE HONOUR AND DIGNITY AND TO UPHOLD THE INTEREST OF THE MEDICAL PROFESSION AND TO PROMOTE C O- OPERATION AMONGST THE MEMBERS THEREOF; 3. TO WORK FOR THE ABOLITION OF COMPARTMENTALISM IN MEDICAL EDUCATION, MEDICAL SERVICES AND REGISTRATION IN THE COUNTRY AND THUS TO ACHIEVE EQUALITY AMONG ALL MEMBERS OF THE PROFESSION.' 6.1 IT IS NOTED THAT THE INCOME TAX ACT, 1961 ALLOWS E XEMPTION OF TAX IN THE CASE OF ASSESSEES WHO ARE INVOLVED IN CHAR ITABLE AND RELIGIOUS ACTIVITIES AS PER SECTIONS 11, 12 & 13. TH E WORD CHARITABLE IS NOT DEFINED IN THE ABOVE SECTIONS OR IN THE ACT BU T IT HAS AN INCLUSIVE DEFINITION U/S 2(15) OF 'CHARITABLE PURPO SES' WHICH READS AS UNDER:- (15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POO R, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIV ITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OR RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE 6 OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] [PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM T HE ACTIVITIES REFERRED TO THEREIN IS [TWENTY-FIVE LAKH RUPEES] OR LESS IN THE PREVIOUS YEAR;] 6.2 WE FURTHER NOTE THAT THE CASE OF THE ASSESSEE IS A LSO COVERED BY THE CASE OF ITPO VS. DGIT(E) W.P.C NO. 1872/2013 DATED 22/01/2015 AND ASSESSEE'S OWN CASE OF INDIAN MEDICA L ASSOCIATION VS. ADIT IN ITA NO. 4291/DE1/2012 DATED 20/02/2015 FOR THE A.Y 2009-10 IN WHICH IT WAS HELD THAT THE ASSESSEE IS NOT I NVOLVED IN ANY TRADE, COMMERCE OR BUSINESS AND IS TOTALLY INVOLV ED IN CHARITABLE ACTIVITY AND FALLING WITHIN THE DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) UNDER THE HEAD 'MEDICAL R ELIEF'. 6.3 WE FURTHER FIND THAT RECENTLY THE HON'BLE DELHI HIG H COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANISATION VS. D GIT(E), 53 TAXMANN.COM 404 '(DELHI) 2015 (ORDER DATED 22/01/20 15) HAS READ DOWN THE STRICT AND LITERAL INTERPRETATION OF THE PROVI SO AND HAS ALLOWED THE RELIEF TO THE ITPO. 7. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE MISCHIEF OF PROVISO OF SE CTION 2(15) IS NOT ATTRACTED IN THIS CASE AND THE APPEAL OF THE ASSESSEE FOR THE A.Y. 7 2009-10 HAS ALSO BEEN ALLOWED BY THE TRIBUNAL AND F OLLOWING THE PRINCIPLE OF PRECEDENCE AND CONSISTENCY THE LD. CIT(A ) HAS RIGHTLY DIRECTED THE AO TO ALLOW THE EXEMPTION U/S. 11(1) WITH A LL THE CONSEQUENTIAL BENEFITS, WHICH DOES NOT NEED ANY INTERF ERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT( A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUNDS RAISED BY THE REVENU E. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 06/09/2017. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 06/09/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHE S