M/s Virat Hare Krishna Education Society, Bhopal V. The ACIT 1(2), Bhopal

ITSSA 59/IND/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2268 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA S
• Keywords: Charitable institution
• Section: 12A; 132; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.(SS)A.NOS. 56 TO 60/IND/2013 A.Y. : 2002-03 TO 2006-07 M/S.VIRAT HARE KRISHNA EDUCATION SOCIETY, ACIT, 1(2), BHOPAL VS BHOPAL APPELLANT RESPONDENT PAN NO. AAAJV03525J APPELLANT BY : SHRI ASHISH GOYAL AND SHRI N. D. PATWA, ADVOCATES RESPONDENT BY : SHRI R.A.VERMA, DR O R D E R ALL THESE FIVE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF CIT(A)-I, BHOPAL, DATED 0 3.01.2013. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARITABLE SOCIETY IMPARTING AYURVEDIC EDUCATION AN D HENCE RUNNING A HOSPITAL. THE SOCIETY WAS FORMED ON 14.12. 1999. DATE OF HEARING : 9.06.2016 DATE OF PRONOUNCEMENT : 9.06.2016 M/S.VIRAT HAREKRISHNA EDUCATION SOCIETY ,BHOPAL VS. ACIT, 1(2), BHOPAL I.T.(SS)A.NOS. 56 TO 60/IND/2013 A.YS.. 2002-03 T O 2006-07 2 2 THE ASSESSEE INTENDED TO OPEN A AYURVEDIC MEDICAL C OLLEGE. SINCE THE REQUIREMENT FOR RUNNING MEDICAL COLLEGE I S TO HAVE A HOSPITAL IN PLACE, THE ASSESSEE INITIALLY STARTED WI TH AN AYURVEDIC HOSPITAL ON 01.01.2003. THE ASSESSEE COUL D NEVER OPEN THE COLLEGE AS APPROVAL OF THE VARIOUS GOVERNM ENT DEPARTMENTS COULD NOT BE OBTAINED. THE ASSESSEE , T HEREFORE, CLOSED THE HOSPITAL IN THE A.Y. 2007-08. THERE WAS A SEARCH U/S. 132 ON 16.09.2005 ON THE RESIDENTIAL PREMISES OF SHRI SHAMBHUNATH SHARMA, SHRI RAMNATH SHARMA, SHRI ASHWININATH SHARMA AND SMT. KRISHNA SHARMA. FURTHER, SEARCH ALSO TOOK PLACE AT THE OFFICE PREMISES OF M/ S. HARE KIRSHNA COLONISERS P LTD, WHICH WAS BELONGING TO THIS GROUP. IT IS IMPORTANT TO NOTE THAT NO SEARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE. HOWEVER, AFTER SEARCH ON THE SAID PERSONS, NOTICE U/S. 153C WAS ISSUED ON THE ASSESSEE ON 22.03.2006, REQUIRING THE ASSESSEE TO FILE THE RETU RN OF INCOME. THE ASSESSEE FILED THE RETURN ON 19.02.2007 SHOWING NIL INCOME FOR THE A.Y. 2000-01 TO 2006-07. THE RETURNS ARE PLACED AT PB 2-43 OF THE PAPER BOOK. IT IS FURTHER IMPORTANT TO SUBMIT THAT THE RETURN WAS FILED IN FORM NO. 3A, WHIC H IS FOR M/S.VIRAT HAREKRISHNA EDUCATION SOCIETY ,BHOPAL VS. ACIT, 1(2), BHOPAL I.T.(SS)A.NOS. 56 TO 60/IND/2013 A.YS.. 2002-03 T O 2006-07 3 3 NON-CORPORATE ASSESSEES CLAIMING EXEMPTION U/S. 10 OR 11. THE RETURNS WERE SUPPORTED BY A CERTIFICATE OF CA IN FORM NO. 10B. FURTHER, THE ASSESSEE HAS NOT APPLIED U/S. 1 2AA. THE ASSESSING OFFICER TOOK THE STATUS OF THE ASSESSEE A S ASSOCIATION OF PERSONS (AOP), WHICH WAS FORMED NOT FO R THE AFORESAID PURPOSES BUT TO PURCHASE LANDS IN THE GUI SE OF CHARITABLE PURPOSE. LD. CIT(A) TREATED IT AS A SOC IETY AND HELD THAT THE ASSESSEE WAS RUNNING A HOSPITAL AS CLAIMED BY ASSESSEE. THE DEPARTMENT HAS NOT CHALLENGED THIS FI NDING OF LD. CIT(A). THE RELEVANT FINDINGS OF THE LD CIT(A) ARE AS UNDER : - 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. AS MENTIONED H EREIN ABOVE, THE APPELLANT SOCIETY WAS NOT REGISTERED U/S . 12A AND, THUS, WAS NOT ELIGIBLE FOR TAKING BENEFITS OF SECTION 11 & 12 OF THE ACT. THEREFORE, THE INCOME O F THE AYURVEDIC HOSPITAL RUN BY THE SOCIETY WAS TO BE COMPUTED AS PER NORMAL PROVISIONS OF COMPUTATION OF INCOME FROM BUSINESS AND PROFESSION. M/S.VIRAT HAREKRISHNA EDUCATION SOCIETY ,BHOPAL VS. ACIT, 1(2), BHOPAL I.T.(SS)A.NOS. 56 TO 60/IND/2013 A.YS.. 2002-03 T O 2006-07 4 4 3. THE ASSESSEE BEFORE THIS HON'BLE BENCH HAS RAISED ADDITIONAL GROUNDS OF APPEAL IN ALL THE YEARS, WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE EXEMPTION U/S 10(23C)(IIIAE) SHALL BE ALLOWABLE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIA(A) ERRED, THE APPELLANT IS NOT LIABLE FOR T AX BEING RUNNING A HOSPITAL. 4. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IT IS A LEGAL GROUND AND GOES TO THE ROOT OF THE MATTER. THEREFORE, THIS GROUND MAY BE ALLOWED TO BE RAISED. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE R ELIED ON THE JUDGMENT IN NTPC 229 ITR 383 (SC). FURTHER RELIANCE WAS PLACED ON LUCKNOW PUBLIC EDUCATIONAL SOCIETY ,231 CTR 407 (ALL). 5. WHEN ASKED FOR, IT WAS FAIRLY CONTENDED THAT THIS GROUND WAS NOT BEFORE THE LOWER AUTHORITIES. M/S.VIRAT HAREKRISHNA EDUCATION SOCIETY ,BHOPAL VS. ACIT, 1(2), BHOPAL I.T.(SS)A.NOS. 56 TO 60/IND/2013 A.YS.. 2002-03 T O 2006-07 5 5 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE RIV AL CONTENTIONS OF THE PARTIES. I ADMIT THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE. THE ASSESSEE HAS RAISED ADDITION AL GROUND REGARDING ALLOWABILITY OF EXEMPTION U/S 10(23C)(IIIA C). THE ASSESSEE NOW CLAIMS THAT THE EXEMPTION SHOULD BE GRA NTED U/S. 10(23C)(IIIAC). THIS GROUND WAS NOT TAKEN BEFOR E THE AO AND CIT(A). THE LD. CIT(A) DENIED TO ALLOW THE CLAIM U/S 11 AS THE ASSESSEE SOCIETY WAS NOT REGISTERED U/S 12A. HOWE VER, HE HELD THAT THE SOCIETY IS RUNNING A HOSPITAL. THIS F INDING OF FACT WAS NOT CHALLENGED BY THE DEPARTMENT IN THEIR APPEAL S. SINCE THE ADDITIONAL GROUND WAS NOT RAISED BEFORE THE LOWE R AUTHORITIES, THE MATTER IS REMANDED BACK TO THE FIL E OF AO. IN THE INTEREST OF JUSTICE, I RESTORE THE MATTER BACK TO THE FILE OF AO TO VERIFY THE CONDITIONS OF SECTION 10(23C)(IIIA C) AS APPLICABLE TO THE ASSESSEE AND ALLOW THE CLAIM IN AC CORDANCE WITH LAW. SINCE I HAVE ALLOWED THE ADDITIONAL GROUND, OTHER GROUNDS TAKEN BY THE ASSESSEE HAVE BECOME INFRUCTUO US AND ARE NOT DECIDED. M/S.VIRAT HAREKRISHNA EDUCATION SOCIETY ,BHOPAL VS. ACIT, 1(2), BHOPAL I.T.(SS)A.NOS. 56 TO 60/IND/2013 A.YS.. 2002-03 T O 2006-07 6 6 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLO WED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 9 TH JUNE, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 9 TH JUNE, 2016. CPU*