Dy. Commissioner of Income-tax (E), Circle 1 (1), New Delhi v. Flt. Lt. Rajan Dhall Charitable
[Citation -2019-LL-0828-51]

Citation 2019-LL-0828-51
Appellant Name Dy. Commissioner of Income-tax (E), Circle 1 (1), New Delhi
Respondent Name Flt. Lt. Rajan Dhall Charitable
Court ITAT-Delhi
Relevant Act Income-tax
Date of Order 28/08/2019
Assessment Year 2012-13
Judgment View Judgment
Keyword Tags commercial activity • charitable society • claim of exemption • medical relief • disallowance of claim • incidental activities • rule of consistency
Bot Summary: CIT(A) for Assessment Year 2012-13, Revenue preferred this appeal on the following ground- On the facts and in the circumstances of the case and in law, Ld. CIT has erred in allowing the appeal of the assessee by ignoring the fact that though the objects of the assessee seems to be charitable in nature but the activities carried out by the assessee, which resulted in income, are commercial in nature. Assessee filed their return of income on 29.09.2012 declaring nil income and by order dated 12.03.2015, Ld. AO while denying the claim of the assessee for exemption u/s 11(1) of the Act treated the assessee s contract with Fortis Hospital for running hospital as commercial activity and assessed the income at Rs.8,56,98,070/-. Assessee preferred appeal before the Ld. CIT(A) and contended that the assessee has been running a charitable hospital providing medical relief to the general public and for both earlier and subsequent years, the claim of the assessee for exemption u/s 11(1) of the Act was allowed by AO, for some years the first appellate authority granted relief whereas, for certain years, the Tribunal allowed the relief. The assessee is earning rental income from erecting Airtel, Hutchison towers, Idea cellular in its hospital, which is not at all incidental to any activities of the assessee society. Further, learned DR submitted that the AO recorded that the assessee has earned income from book caf and visitor caf , business centers, parking area, which are all purely on commercial lines and not related or incidental to the activities of the assessee. Though the learned DR brought to our notice that vide para 7 of the assessment order, the learned AO enumerated certain activities to say that they are not charitable in nature but only 5 ITA No.4257/Del./2016 commercial ones, it is not established before us that these are activities that are undertaken by the assessee in the year under consideration only, but neither earlier nor subsequently. There is nothing contrary to the submission on behalf of the assessee that as a matter of fact, all these activities have been undertaken by the assessee right from the year 2007-08 but merely because the AO has chosen to enumerate certain activities for certain years, does not render the binding precedence applicable to the facts of the case.


IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI) BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER and SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA No.4257/Del./2016 Assessment Year 2012-13 Dy. Commissioner of Income-tax (E), vs. Flt. Lt. Rajan Dhall Charitable (Regd.) Circle 1 (1), New Delhi. B 1, Aruna Asaf Ali Marg, Vasant Kunj, New Delhi 110 070. (PAN AAATF0185H) (APPELLANT) (RESPONDENT) Appellant by Ms. Ashima Neb, Senior DR Respondent by Shri R.M. Mehta, CA Date of Hearing 14.08.2019 Date of Order 28.08.2019 ORDER PER K. NARASIMHA CHARY, JM Challenging order dated 18.05.2016 in Appeal No.53/2015-16 passed by learned Commissioner of Income-tax (Appeals)-40, New Delhi {for short ld.CIT(A) } for Assessment Year 2012-13, Revenue preferred this appeal on following ground- On facts and in circumstances of case and in law, Ld. CIT (A) has erred in allowing appeal of assessee by ignoring fact that though objects of assessee seems to be charitable in nature but activities carried out by assessee, which resulted in income, are commercial in nature. 2 ITA No.4257/Del./2016 2. Brief facts of case are that assessee is charitable society registered under Societies Registration Act, 1860 vide order dated 23.09.1971. Assessee has also registered u/s 12AA(1) of Income-tax Act, 1961 ( Act ) on 12.02.1997. assessee is running charitable hospital at Vasant Kunj, New Delhi in name of Flt. Lt. Rajan Dhall Charitable Trust, which provides medical relief to general public. 3. Assessee filed their return of income on 29.09.2012 declaring nil income and by order dated 12.03.2015, Ld. AO while denying claim of assessee for exemption u/s 11(1) of Act treated assessee s contract with Fortis Hospital for running hospital as commercial activity and assessed income at Rs.8,56,98,070/-. 4. Assessee preferred appeal before Ld. CIT(A) and contended that assessee has been running charitable hospital providing medical relief to general public and for both earlier and subsequent years, claim of assessee for exemption u/s 11(1) of Act was allowed by AO, for some years first appellate authority granted relief whereas, for certain years, Tribunal allowed relief. Ld. CIT (A) considered fact of consistent allowing of exemption u/s 11 (1) of Act and following rule of consistency, granted relief to assessee. Revenue is, therefore, in this appeal. 5. It is argument of Ld. DR that activities of assessee trust are commercial in nature disentitling assessee benefit of sections 11 and 12 of Act. It is further contended by revenue that as per various clauses of Operational and Management agreement , it is established that Rajan Dhall Charitable Trust, Vasant Kunj, New Delhi has been transferred to 3 ITA No.4257/Del./2016 M/s Fortis Hospital Pvt. Ltd. and Society has no concern with activities of hospital and in view of judgment of coordinate bench of this Tribunal in case of M/s Devki Devi Foundation, ITA No.1027/Del/2012 dated 31.3.2015, benefit of Section 11 & 12 should not have been allowed to assessee. 6. It is argument of learned DR that in assessment order Ld. AO enumerated reasons for disallowing claim of assessee u/s 11(1) of Act and more particularly, fact that assessee is getting rental income and Fortis Hospital has paid amount of Rs.35 crores to Vaitalik on behalf of assessee society. She specifically brought to our attention para 7 (iii) of assessment order which states that assessee has entered into agreement by which if plan of share of surplus has not been fulfilled, assessee will be liable to pay entire money spent by OBPL including amount paid to Vaitalik along with interest @ 12% p.a within 30 days of such breach of agreement to Fortis Pvt. Ltd. According to learned AO, this clause has totally ended basic charitable nature of trust and made it in full control of private company which is purely working on commercial lines and earning major share of income of charitable organization. Likewise, assessee is earning rental income from erecting Airtel, Hutchison towers, Idea cellular in its hospital, which is not at all incidental to any activities of assessee society. Further, learned DR submitted that AO recorded that assessee has earned income from book caf and visitor caf , business centers, parking area, which are all purely on commercial lines and not related or incidental to activities of assessee. Learned DR submitting that in view of this business and commercial activities, AO is 4 ITA No.4257/Del./2016 justified in denying exemption u/s 11(1) of Act and inasmuch as learned CIT(A) did not consider these factors, impugned order cannot be sustained. Learned DR placed reliance on decision of coordinate bench in case of M/s Devki Foundation, ITA No.1027/Del/2012 dated 31.3.2015, to show that contract of trust with Max group of hospitals is commercial activity. 7. Per contra, it is argument of learned AR that all activities enumerated by learned AO in para 7 of assessment order are nothing new but have been in place since its inception, as such, merely because some activities are recorded in assessment order for some years and some activities are recorded in some other year, does not convert charitable nature of assessee into commercial entity and as matter of fact, considering all these factors only both AO and first appellate authority have allowed exemption u/s 11(1) of Act of which assessee right from year 2007-08 to 2014-15. Learned AR submitted that learned CIT(A) has rightly followed rule of consistency and appeal of revenue is devoid of merits. He further submitted that order of Tribunal in M/s Devki Foundation, ITA No.1027/Del/2012 dated 31.3.2015 was set aside by Hon ble Delhi High Court and matter is restored to Tribunal for deciding afresh, and hence, such decision cannot be precedent. Further, in ITA No.2649/Del/2015 for Assessment Year 2011-12 by order dated 05.11.2018, coordinate Bench of this Tribunal allowed relief to assessee. 8. We have gone through record. Though learned DR brought to our notice that vide para 7 of assessment order, learned AO enumerated certain activities to say that they are not charitable in nature but only 5 ITA No.4257/Del./2016 commercial ones, it is not established before us that these are activities that are undertaken by assessee in year under consideration only, but neither earlier nor subsequently. There is nothing contrary to submission on behalf of assessee that as matter of fact, all these activities have been undertaken by assessee right from year 2007-08 but merely because AO has chosen to enumerate certain activities for certain years, does not render binding precedence applicable to facts of case. 9. It is admitted fact that for Asstt. year 2007-08, AO has allowed such exemption vide order dated 31.12.2009 u/s 143(3) of Act and copy of such order is on record at page 1 & 2 of paper book. For Asstt. year 2008-09 and 2009-10, first appellate authority allowed claim of assessee and same was upheld by coordinate bench of this Tribunal in ITA No.3073/Del/2012 and batch by order dated 21.8.2017. For Asstt. years 2013-14 and 2014-15, AO himself allowed such exemption by orders dated 29.2.2016 and 22.12.2016. It is also evident that from order dated 05.11.2018 in ITA No.2649/Del/2015 for AY 2011-12, coordinate Bench of this Tribunal granted relief to assessee. 10. When facts remained identical, it is not open for us to take different view in absence of any compelling reasons to do so. Further, decision in case of Devki Devi Foundation vs DCIT (supra) rendered by coordinate bench of this Tribunal dated 31.3.2015, was in appeal before Hon ble jurisdictional High Court in ITA No.484/2015 and by order dated 15.2.2016, Hon ble jurisdictional High Court set aside order and restores ITA 1027/Del/2012 to Tribunal for fresh decision, according to law. So no reliance can be placed by revenue on this decision, which is no 6 ITA No.4257/Del./2016 longer in force. In these circumstances, we are of considered opinion that learned CIT(A) rightly followed rule of consistency and allowed claim of assessee. We find no reason to interfere with same. We accordingly uphold it. Appeal of revenue being devoid of merit, is liable to be dismissed. appeal of revenue is accordingly dismissed. 11. In result, appeal of Revenue is dismissed. Order pronounced in open court on this 28th day of August, 2019. Sd/- sd/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 28th day of August, 2019 TS Copy forwarded to 1. Appellant 2. Respondent 3. CIT 4. CIT(A)-40, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI. Dy. Commissioner of Income-tax (E), Circle 1 (1), New Delhi v. Flt. Lt. Rajan Dhall Charitable
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