DCIT (E) 2(1), MUMBAI V. KIKABHAI PREMCHAND SETTLEMENT TRUST NO. XI, MUMBAI

ITA 779/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7862 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Charitable institution; Difference of opinion
• Section: 143(3); 80G; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 779/MUM/2017 ASSESSMENT YEAR: 2012 - 13 DCIT - 2(1) ROOM NO. 519, 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, LOWER PAREL, MUMBAI - 400012 VS. SHRI KIKABHAI P REMCHAND SETTLEMENT TRUST NO. XI PLOT NO. 96, KIKABHAI BUILDING SION MATUNGA ESTATE, SION, MUMBAI - 400022 PAN NO. AABTS7221E APPELLANT RESPONDENT REVENUE BY : MR. V. JUSTIN, DR ASSESSEE BY : MR. ANUJ KISNADWALA , AR DATE OF HEARING : 13/11/2017 DATE OF PRONOUNCEMENT : 27/12/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2012 - 13 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , MUMBAI AND ARISES OUT OF THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), MUMBAI HAS ERRED IN ALLOWING THE EXEMPTION U/S 11 OF THE I.T. ACT , THAT THE ASSESSEE TRUST WHILE CALCU LATING 2% OF THE GROSS BILLING HAS EXCLUDED THE DOCTORS FEES OF RS.11,90,04,614/ - AND THE SAME HAS SHRI KIKABHAI ITA NO. 779/MUM/2017 2 RESULTED IN SHORTFALL OF RS.23,80,092/ - IN THE TRANSFER TO INDIGENT PATIENT FUND (IPF ACCOUNT). 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD. CIT(A), MUMBAI HAS ERRED IN ALLOWING THE EXEMPTION U/S 11 OF THE I.T. ACT AND ALLOWED THE APPEAL OF ASSESSEE BY NOT CONSIDERING THE FACT THAT THE ASSESSEE HAS VIOLATED THE DIRECTIONS GIVEN BY THE BOMBAY HIGH COURT, IN REGARD TO CREATE A IPF ACCO UNT AND TRANSFER THE AMOUNT TO IPF ACCOUNT FOR THE BETTERMENT OF POOR AND INDIGENT PATIENTS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE - TRUST IS REGISTERED WITH THE DIRECTOR OF INCOME TAX (EXEMPTION), MUMBAI U/S 12A AND 80G OF THE ACT. IT IS ALSO REGISTERED WITH THE CHARITY COMMISSIONER, MUMBAI. THE ASSESSING OFFICER (AO) OBSERVED THAT AS PER THE INDIGENT PATIENT AND WEAKER SECTIONS SCHEME FRAMED BY THE HIGH COURT, THE ASSESSEE - TRUST IS SUPPOSED TO TRANSFER AN AMOUNT OF 2% OF GROSS BI LLING TO THE INDIGENT PATIENT FUND ACCOUNT . HOWEVER, THE ASSESSEE WHILE CALCULATING 2% OF THE GROSS BILLING HAS EXCLUDED THE DOCTORS FEES OF RS.11,90,04,614/ - AND THE SAME HAS BEEN STATED BY THE ASSESSEE IN ITS NOTES TO ACCOUNTS. AS A RESULT , THERE WAS A SHORTFALL OF RS.23,80,092/ - IN THE TRANSFER TO THE INDIGENT PATIENT FUND ACCOUNT . THEREFORE, THE AO DENIED EXEMPTION TO THE ASSESSEE - TRUST U/S 11 AND BROUGHT TO TAX THE SURPLUS AMOUNT OF RS.6,81,70,680/ - . 4. AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) . WE FIND THAT THE LD. CIT(A) HAS FOLLOWED HIS ORDER FOR THE IMMEDIATE PRECEDING ASSESSMENT YEAR 2011 - 12 AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. DR RELIES ON THE ORDER OF THE AO. ON THE OTHER HAND , THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE LD. CIT(A). ALSO RELIANCE IS PLACED BY HIM ON THE ORDER OF THE ITAT J SHRI KIKABHAI ITA NO. 779/MUM/2017 3 BENCH, MUMBAI IN THE CASE OF THE ASSESSEE FOR THE AY 2010 - 11 AND AY 2011 - 12. 6. WE HAVE HEARD THE RIVA L SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE SAME ISSUE AROSE BEFORE THE CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2010 - 11 (ITA NO. 3141/MUM/2015) AND AY 2011 - 12 (ITA NO. 5441/MUM/2015). THE TRIBUNAL HELD AS UNDER: 10. SIMILAR TO THE ABOVE, EVEN IN THE CASE OF THE ASSESSEE, NON - COMPLIANCE OF ONE OF THE STATUTORY STIPULATIONS SHOULD NOT NULLIFY ITS EFFORTS MADE TOWARDS ACHIEVING ITS CHARITABLE OBJECTIVES. THE SAME CAN BE OBSERVED FROM THE FACT THAT IT HAS APPROPRIATE D 88% OF ITS INCOME TOWARDS ACHIEVING THE OBJECTIVES OF THE TRUST. FURTHER, THE ASSESSEE HAS NOT ALTOGETHER SHRUGGED OFF ITS RESPONSIBILITY TOWARDS THE INDIGENT AND WEAKER SECTION PATIENTS. THERE IS A DIFFERENCE OF OPINION W.R.T THE AMOUNT OF FUNDS TO BE T RANSFERRED TO THE INDIGENT PATIENT'S FUND (IPF). IT IS NOTEWORTHY, THAT THE ASSESSEE HAS NOT SIMPLY WAITED FOR THE CLARIFICATION AND STALLED THE APPROPRIATION OF FUNDS TO THE IPF AND ITS UTILIZATION TOWARDS THE REQUISITE PURPOSE. RATHER, UNTIL CLARIFICATIO N ON SUCH MATTER, THE ASSESSEE HAS CHOSEN TO TRANSFER 2% OF THE TOTAL HOSPITAL BILLING NET OF DOCTORS' FEES TO THE IPF AND HAS UTILIZED THE SAME TOWARDS THE MEDICAL TREATMENT OF THE INDIGENT AND WEAKER SECTION PATIENTS. THERE IS NO SINGLE EVIDENCE WHICH W OULD SUGGEST OTHERWISE. THE RATIONALE BEHIND THE SAME BEING THAT THE DOCTORS FEES IS NOT A PART OF THE HOSPITAL'S EARNINGS, BUT RATHER A REIMBURSEMENT TO THE HOSPITAL. THE HOSPITAL MERELY ACTS AS A COLLECTING AGENT BETWEEN THE TWO FOR THIS PARTICULAR ASPE CT. NEITHER IS THERE ANY EVIDENCE WHICH WOULD SUGGEST THE ASSESSEES STATUS OF THAT OF A 'CHARITABLE TRUST REGISTERED UNDER THE BOMBAY PUBLIC TRUSTS ACT, 1950' BEING REVOKED BY THE CHARITY COMMISSIONER. IN SUCH A SCENARIO, WE ARE OF THE VIEW THAT THE AO HA S NO ROLE IN LAW BY USURPING THE ROLE OF THE CHARITY COMMISSIONER AND DECLARING THAT THE ASSESSEE HAS BREACHED THE COVENANTS OF THE SCHEME. HENCE, IN LIGHT OF THE SHRI KIKABHAI ITA NO. 779/MUM/2017 4 ABOVE, WE CONFIRM THE ORDER OF CIT(A) AND THE APPEAL OF REVENUE IS DISMISSED. 6.1 FACTS BEI NG SIMILAR, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND UPHOLD THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/12/2017. SD/ - SD/ - (D.T. GARASIA) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 27/12/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI