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2022 (8) TMI 733 - AT - Income TaxExemption u/s. 11 - assessee has violated the provisions of section 13(l)(c), 13(2)(b), 13(2)(d) and 13(2)(g) - assessment made on the income of the assessee as AOP - HELD THAT -CIT(A) following the order passed by the Co-ordinate Bench of this Tribunal in assessee s own case for the Assessment Year 2009-10 in 2019 (9) TMI 909 - ITAT AHMEDABAD allowed the appeal filed by the assessee in cancelling the assessment made on the income of the assessee as AOP and directed to grant exemption u/s. 11 12 of the Act. CIT(A) has correctly held that the activity of the trust to carried on in accordance with its objects and in the best interest of charity, therefore, the exemption u/s. 11(1)(a) has rightly allowed by the Ld. CIT(A). Similarly, the CIT(A) has clearly held that the Sec. 13((1)(c)(ii) can apply only if any part of the charitable income of the trust has been used or applied for the benefits of the said persons during the previous year - since no portion of the income of the assessee has been applied for said person, therefore, the case of the assessee falls outside the scope of this section - trust is in receipt of income by way of management charges from SCPL and also all of its liabilities have been taken over by the same therefore there is a fact that there is no undue benefits of the use of trust property have been taken by any other persons. Similarly, there is no diversion of income of the trust as per Explanation of Sec. 13(2)(d) and 13(2)(g) of the Act as the trust has been benefitted greatly and its deficit of trust duly reduced to a great extent. Some erroneous presentation of Form No. 10B report does not disentitle the trust for claiming exemption u/s. 11 of the Act. Similarly, the amount of advance in favour of SCPL appearing in the balance sheet was not advance but the reimbursement of the expenses. In the light of the aforesaid facts and circumstances, we are of the considered opinion that the CIT(A) has analyzed the facts correctly and given a judicious finding which does not call for any interference from outside. - Decided against revenue.
Issues Involved:
1. Delay in filing appeals by the assessee before the Tribunal during the COVID-Pandemic situation. 2. Allowance of exemption u/s. 11 of the Income Tax Act and violation of provisions of section 13(1)(c), 13(2)(b), 13(2)(d), and 13(2)(g) of the Act by the assessee trust. 3. Challenge against the order passed by the Commissioner of Income Tax (Appeals)-9, Ahmedabad. 4. Interpretation of the agreement between the trust and SCPL regarding the management of SAL Hospital. 5. Adjudication on merit based on the arguments presented by both sides. Analysis: 1. Delay in filing appeals during COVID-Pandemic: The Registry noted a delay of 24 days in filing the appeals by the assessee before the Tribunal due to the COVID-Pandemic situation. Referring to a judgment of the Hon'ble Supreme Court, the time limit for filing appeals was extended from 15.3.2020. Consequently, the delay was condoned, and the appeals were accepted for adjudication on merit. 2. Allowance of exemption u/s. 11 and violation of provisions: The Revenue challenged the order of the Commissioner of Income Tax (Appeals)-9, Ahmedabad, regarding the exemption u/s. 11 of the Act. The Revenue contended that the assessee violated provisions of section 13(1)(c), 13(2)(b), 13(2)(d), and 13(2)(g) of the Act. However, the Tribunal upheld the appeal filed by the assessee, citing previous judgments and detailed arguments presented by both sides. The Tribunal found that the agreement between the trust and SCPL was entered to secure the trust's interests and manage the hospital professionally to prevent losses. The Tribunal concluded that the CIT(A) rightly allowed the exemption u/s. 11(1)(a) as the trust's activities were in line with its charitable objectives. 3. Interpretation of the agreement with SCPL: The agreement between the trust and SCPL for the management of SAL Hospital was a focal point of the case. The Revenue argued that the agreement violated Sec. 13(3) of the Act, while the assessee presented justifications for the agreement, emphasizing the need to safeguard trust activities and assets. The Tribunal analyzed the agreement, the financial transactions, and the objectives behind the agreement. Ultimately, the Tribunal upheld the CIT(A)'s decision, stating that the trust's actions were in the best interest of charity and did not lead to any undue benefits or diversion of income as per the provisions of the Act. 4. Adjudication on merit: After considering the submissions from both sides and referring to a Coordinate Bench decision in the assessee's own case, the Tribunal rejected the grounds of appeal raised by the Revenue and dismissed the appeal. The ld. D.R. for the Revenue accepted that the Tribunal's decision was covered for the present Assessment Year as well, leading to the final dismissal of the appeal filed by the Revenue. This comprehensive analysis covers the issues involved in the legal judgment, detailing the arguments, interpretations, and conclusions reached by the Tribunal in the case.
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