IN INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN, HON BLE JUDICIAL MEMBER ITA No. 158/PAN/2016 (Asst. Year : 2010-11) Totgar Seva Samiti, Vs. DCIT, Circle-1(1), Sripad Hegde Kadave Institute Hubli. of Medical Sciences, Sirsi PAN No. AAATT 8656 P (Appellant) (Respondent) Assessee by : Shri Shrikrishna Kelkar CA Department By : Shri Manjit Singh - DR Date of hearing : 05/10/2016. Date of pronouncement : 05/10/2016. ORDER This is appeal filed by assessee against order of Commissioner of Income Tax (Appeals), Hubli in appeal No. 98/CIT(A)/HBL/2012-13, dated 28/03/2016 for Assessment Year 2010-11. 2. Shri Shrikrishna Kelkar, CA represented on behalf of assessee and Shri Manjit Singh, Departmental Representative represented on behalf of Revenue. 3. It was submitted by Authorized Representative of assessee that assessee is trust, which has registration under section 12A and is running hospital at Sirsi. It was submission that assessee had received substantial donations from M/s. Totagar s Cooperative Sale Society Ltd. during relevant assessment year. It was submission that assessee-hospital had provided concessional treatment to some of members of M/s. Totagar s 2 ITA Nos. 158/PAN/2016 Cooperative Sale Society Ltd. to extent of discount of 25% on their bills. quantum of discount was 11,38,279/-. It was submission that Assessing Officer had brought to tax said amount of 11,38,279/- by invoking provisions of section 12(2) read with sec. 13(1)(c)(ii) & 13(3)(b) of Act. 4. It was submission that society and its Members, were separate and contributions were from society and was not from individual members. For this proposition, he placed reliance on decision of Hon ble Kerala High Court in case of Kunnathunad C.C. Coop. Society Vs. Regional Director, ESIC reported in (1989) IILLJ 27 Ker. It was further submission that none of members of M/s.Totagar s Cooperative Sale Society Ltd. had given any donations to assessee trust, which exceeded more than 50,000/-. It was also submission that during relevant assessment year, assessee has disclosed expenditure over income and consequently filed NIL return. Without prejudice even assuming i.e. said amount of 11,38,279/- was to be added to assessee s income only excess of expenditure over income would get reduce and there could be no taxable income that would generate in hands of assessee. It was submission that additions as made by Assessing Officer and as confirmed by Commissioner of Income Tax (Appeals) may be deleted. 5. In reply, Departmental Representative submitted that M/s.Totagar s Cooperative Sale Society Ltd. had substantially contributed to assessee trust. It was submission that out of total donations of 7,68,43,283/- received by assessee trust, nearly 90%, amounting to 6,90,93,428/- was contribution/ donation by M/s. Totagar s Cooperative Sale Society Ltd. It was submission that as it is member of M/s. Totagar s Cooperative Sale Society Ltd., which has received benefit in form of discount of 3 ITA Nos. 158/PAN/2016 25% of bills, provisions of section 13(1)(c)(ii) read with sec. 13(3)(b) applied. It was submission that order of Commissioner of Income Tax (Appeals) was liable to be upheld. 6. I have considered rival submissions. When interpreting provisions of Act relating to exemptions, strict interpretation is called for. perusal of provisions of section 13(1)(c) provides that benefit under section 11 or 12 is not to operate so as to exclude from total income receipts, if any part of such income or any property of trust or institution is during previous year used or applied directly or indirectly for benefit of any person referred to in sub-section(3). Section 13(3)(c) as referred to by Revenue talks of persons being author, founder or person is HUF, member of family. Admittedly, M/s. Totagar s Cooperative Sale Society Ltd. is not HUF, therefore, it does apply to exclude benefit. benefit has not been given nor is it case of Revenue that discount has been given to author of assessee trust or founder. In fact, perusal of record to show that M/s. Totagar s Cooperative Sale Society Ltd. has nearly 23299 Members. It is also not disputed by Revenue that none of members have in their individual capacity given any donation exceeding 50,000/- to assessee trust. Neither it is case of Revenue that any of members of M/s. Totagar s Cooperative Sale Society Ltd. were persons, who had contributed 50,000/- or more to trust received benefit. It is also not case of Revenue that when applying for membership in M/s. Totagar s Cooperative Sale Society Ltd., members are given any entitlement of any discount, if they seek treatment from assessee trust. Thus, it becomes clear that there is no violation of provisions of section 13(1)(c)(ii) nor provisions of section 13(3)(c) would apply in assessee s case. In these circumstances, addition as made by Assessing Officer and as 4 ITA Nos. 158/PAN/2016 confirmed by Commissioner of Income Tax (Appeals) stands deleted. 7. In result, appeal of assessee stands allowed. Order Pronounced in Court at close of hearing on Wednesday, 05th day of October, 2016 at Goa. (GEORGE MATHAN) Judicial Member Dated : 05 t h October, 2016. vr/- Copy to: 1. Assessee. Totgar Seva Samiti, Sripad Hegde Kadave Institute of Medical Sciences, Sirsi. 2. Revenue. DCIT, Circle-1(1), Hubli. 3. CIT (Exemptions), Bangalore. 4. CIT(A), Hubli. 5. D.R. 6. Guard file. By order Assistant Registrar I.T.A.T., Panaji. Totgar Seva Samiti v. DCIT, Circle-1(1), Hubli