The Deputy Commissioner of Income Tax (Exemption) circle-1, Mangalore V. M/s Fr.Mullers Charitable Institutions , Mangalore

ITA 783/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5576 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12; 11

Judgement Text

ITA.783/BANG/2017 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.783/BANG/2017 (ASSESSMENT YEAR : 2012-13) DEPUTY COMMISSIONER OF INCOME-TAX (EX), CIRCLE -1, MANGALURU .. APPELLANT V. M/S. FR. MULLERS CHARITABLE INSTITUTIONS, FR. MULLER ROAD, KANKANADY, MANGALURU .. RESPONDENT PAN : AAATF0345D ASSESSEE BY : NONE REVENUE BY : SMT. PADMAMEENAKSHI, JCIT HEARD ON : 16.01.2018 PRONOUNCED ON : 02.02.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE CIT (A), DT.20.01.2017, FOR THE ASSESSMENT YEAR 2012-13, ON THE FOLLOWING EFFECTIVE GROUND : 2. THE LD. CIT (A) ERRED IN ALLOWING THE MANUFACTUR ING ACTIVITY AS CHARITABLE AND ALLOWING THE EXEMPTIONS. ITA.783/BANG/2017 PAGE - 2 02. THE ASSESSEE IS A CHARITABLE TRUST REGISTERED U /S.12AA OF THE INCOME- TAX ACT, 1961, RUNNING HOSPITALS AND EDUCATIONAL IN STITUTIONS. FOR THE ASSESSMENT YEAR 2012-13, ASSESSEE FILED ITS RETURN OF INCOME ON 01.10.2012 DECLARING NIL INCOME AFTER CLAIMING APPLICATION OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THA T ALONG WITH HOSPITALS AND COLLEGES THE ASSESSEE-TRUST WAS ALSO OPERATING A MANUFACTURING UNIT UNDER THE NAME OF FR. MULLER HOMEOPATHIC DIVISION W HICH MANUFACTURES GENERIC HOMEOPATHY MEDICINE. FOR THE AY 2012-13 TH E SAID UNIT GENERATED SURPLUS TO THE EXTENT OF RS.41,03,140/-. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE RELIED UPON THE CIRCULAR N O.11/2008 TO BUTTRESS ITS ARGUMENT THAT THE INCOME GENERATED IS TO BE CONSIDE RED AS APPLICATION OF INCOME AND NOT AS BUSINESS ACTIVITY FOR THE ADVANCE MENT OF GENERAL PUBLIC UTILITY. HOWEVER, THE AO WAS NOT CONVINCED AND THE REFORE HAS BROUGHT TO TAX THE SURPLUS INCOME OF RS.41,03,140/-. BEING AG GRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT (A). 03. THE CIT (A) CONSIDERED THE WRITTEN SUBMISSIONS OF THE ASSESSEE AND ALSO THE ASSESSMENT ORDER AND DELETED THE ADDITIONS MADE BY THE AO. FEELING AGGRIEVED THE REVENUE IS IN APPEAL BEFORE T HIS TRIBUNAL. 04. IT WAS THE CASE OF THE ASSESSEE BEFORE US THAT IN THE ASSESSEES OWN CASE FOR AYS.2009-10, 2010-11 AND 2011-12, THE CIT (A) HAD ALLOWED THE APPEALS OF THE ASSESSEE BY HOLDING THAT THE DISALLO WANCE OF SURPLUS INCOME FROM HOMEOPATHY DIVISION TAXED BY THE AO AS BUSIN ESS INCOME WAS NOT CORRECT AND IT IS TO BE TAKEN AS CHARITABLE INCOME AND ELIGIBLE FOR EXEMPTION. THE ORDER OF THE CIT (A) WAS ACCEPTED A ND NO APPEALS WERE PREFERRED BEFORE THE ITAT. IN PARA 5.3 OF THE CIT (A)S IMPUGNED ORDER CIT (A) MENTIONED THAT FOR THE AYS.2013-14 AND 2014 -15 AO HAS ITA.783/BANG/2017 PAGE - 3 CONSIDERED THE SIMILAR ASPECT AND HAS TREATED THE S URPLUS AS APPLICATION OF INCOME AND HAS NOT TREATED AS BUSINESS ACTIVITY. 05. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IT IS AN UNDISPUTED STATEMENT OF FACT BEFORE US THAT SAME AC TIVITIES OF THE ASSESSEE FOR AYS 2009-10 TO 2011-12, 2013-14 AND 2014-15 WER E CONSIDERED TO BE CHARITABLE ACTIVITIES AND THE SURPLUS INCOME GENERA TED WAS CONSIDERED AS INCOME OF TRUST I.E CHARITABLE IN NATURE. IN OUR VI EW THE LAW IS SETTLED , ONCE THERE IS NO CHANGE IN FACTS AND ACTIVITIES OF THE A SSESSEE, THEN THE REVENUE IS BOUND TO TAKE A CONSISTENT, AND COHERENT STAND. THERE SHOULD NOT BE ANY DEVIATION IN THE STATED POSITION OF THE REVENUE ON THE SAME SET OF FACTS . LAW ABHOR UNPREDICTABILITY IN THE DECISION MAKING O F THE REVENUE AND THEREFORE THE REVENUE IS BOUND TO TAKE CONSISTENT S TAND YEAR AFTER YEAR AND SHOULD NOT DEVIATE FROM THE STAND TAKEN IN THE EARL IER / SUBSEQUENT YEAR UNLESS THERE IS A CHANGE IN FACTS . WE MAY RELY ON HONBLE SUPREME COURT IN THE CASE OF RADHASOMI SATSANG 193 ITR321 HELD TH AT. WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. AGAIN, EACH AS SESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERME ATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT AL L APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YE AR. ON THESE REASONINGS, IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER AND, IF THERE WAS NO CHANGE, IT WAS IN SUPPORT OF THE ASSES SEE-WE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CO NTRARY TO WHAT HAD BEEN DECIDED BY THE COMMISSIONER OF INCOME -TAX IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THA T THESE APPEALS ITA.783/BANG/2017 PAGE - 4 SHOULD BE ALLOWED AND THE QUESTION SHOULD BE ANSWER ED IN THE AFFIRMATIVE, NAMELY, THAT THE TRIBUNAL WAS JUSTIFIE D IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG WAS EN TITLED TO EXEMPTION UNDER SECTIONS 11 AND 12 OF THE INCOME-TA X ACT OF 1961. AS THERE IS NO CHANGE IN FACTS BROUGHT TO OUR NOTIC E, THEREFORE REVENUE APPEAL FAILS . WE UPHOLD THE ORDER OF LD CIT(A). 06. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND DAY OF FEBRUARY, 2018. SD/- SD/- (JASON P. BOAZ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL M EMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.