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TMI Blog2013 (10) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Aggrieved by the order of CIT(A), Assessee is now in appeal before us and has raised the following grounds: 1. The Id. CIT(A) has erred both in law and on the facts of the case in confirming the action of Id. AO in holding that the Appellant Trust has provided undue benefit to the concern falling u/s 13(3)(c) of the Act and accordingly erred in not allowing exemption of Rs.18,63,860/- claimed u/s 11 & 12 of the Act. 2. The Id. CIT(A) has further erred both in law and on the facts of the case in holding that as a direct benefit is given as per S.13(l)(c) of the Act, no exemption as envisaged in S.ll & 12 could be granted to the Appellant, and accordingly, the Id. CIT(A) has further erred in dismissing the following grounds as raised by the Appellant in the Grounds of Appeal before Id. CIT(A) without adjudicating on merits : "2 The learned Assessing Officer has erred in disallowing depreciation of Rs. 43,99,739/- as capital expenditure has been allowed as expenditure in the earlier year as application of fund. 3. The learned Assessing Officer has erred in disallowing "net application of income by purchase of fixed assets during the year worth" Rs. 13,09,804/- claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee had supplied 15635 units of FFP to patients @Rs 600 per unit (each unit admeasuring to approx 200 ml) and Assessee had also charged Rs 80 per unit as service charges from patients which was not charged to the associate concern. He also noticed that Chudgar Family was having complete shareholding of the Assessee and Chudgar family was also indirectly having majority shareholding in Celestial Biologicals Ltd. The AO was thus of the view that since the Assessee had provided concessional benefit to its associate, the Assessee is not eligible for deduction u/s 11 considering the provisions of section 13 of the Act. The Assessee was therefore asked to justify its claim. After considering the submissions of the Assessee, AO disallowed the claim of the Assessee by holding as under: 3.9 On the basis of the facts of the case, legal provisions of the Act the assessee's reply, material placed on record and discussion in the preceding paragraphs; It is held that: The distribution of blood components (FFP) to a corporate entity (Celestial Bioiogicals Ltd), which is an associate concern of the assesses at highly subsidized/ concessional rates (as discussed in preceding paragraphs) can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as pointed as pointed by the AO and the same has not been rebutted by the appellant. Insofar as the question of benefit granted to CBL by the appellant trust goes, I find that the appellant has sold FFP @ Rs.550/- per liter (i.e. Rs.110/- per unit, each unit of 200 ml.]. On the other hand, the same FFP is sold @ Rs.600/- per unit to patients during the relevant Asst. Year, that means, this clearly implies that FFP is sold to the associate concern at about 1/6th of the total price of what is being sold to the patients in the relevant financial year. The argument of the appellant that CBL has procured FFP at almost similar price from market does not hold water as the appellant has not sold FFP @ 600/- per liter to any other concern other than CBL, its associate concern. Had the appellant sold off FFP to other concerns in open market at much lesser price as is done with CBL, the argument could have carried some weight. However, this argument cannot be considered in view of the significant observation made by the AO that the demand of various blood products including FFP is increasing over a period of time. I find it difficult to appreciate that how in the scenario of increasing dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er submitted that plasma sent for fractionation brings less revenue compared to that given directly to patients as it is considered as bye-product and not the main product. He further submitted that the purchase price of plasma of CBL from Assessee was at the same price at which it was purchasing from other blood banks. He pointed to the comparative statement of price paid by CBL to different blood banks. He further submitted that considering the charitable nature of Assessee, CBL has provided interest free unsecured loan to the tune of Rs 3.43 crore since FY 2003-04 to the Assessee which goes to prove that Assessee's activities were charitable in nature and no benefit has been passed to CBL. He further submitted that while applying provisions of s. 13 of the Act, what is material is whether the underlying transaction is at market price or not. If the transaction is at market price, there is no question of diversion of any income at all. He thus urged that Assessee is entitled to deduction and therefore it be granted the same. 8. Ld.D.R. on the other hand pointed to the various observations made by the AO in his order in support of his contentions and thus supported the order of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any period during the year without adequate security and/or interest. (b) Where any land, building or other property of the trust/institution is made available or continues to be made available to such person for any period during the previous year without charging adequate rent or other compensation. (c) Where any amount is paid by way of salary, allowances or otherwise for services rendered by such persons and the amount so paid is excessive and unreasonable. (d) Where the services of the trust/institution are made available to any such person without adequate remuneration or other compensation; (e) If any share, security or property is purchased by or on behalf of the trust/institution from any such person for more than adequate consideration during the previous year. (f) If any share, security or property is sold by or on behalf of the trust to such person for less than adequate consideration. (g) If the income or property of the trust/institution is diverted during the year in favour of any specified person, to the extent of more than rupees one thousand. (h) If any funds of the trust/institution are or continue to remain invested for any period during the previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it cannot be said that the Assessee is an educational institution and cannot be said to be a hospital or medical institution as it is not engaged in dispensing medical facility though it is engaged in running a blood bank. We are of the view that in the present case considering the totality of facts, the activity of the Assessee cannot be considered to be engaged in medical facilities so as to be entitled to exemption of income. In view of the aforesaid facts, we find no reason to interfere with the order of AO and thus this ground of the Assessee is dismissed. 16. With respect to other grounds namely disallowing depreciation, disallowing of net application of income by purchase of assets and disallowance of business loss, the Assessee has stated that the same were not adjudicated by CIT(A). 17. Before us, the Ld A.R. submitted that the aforesaid grounds have not been adjudicated by CIT(A) though the Assessee had raised the grounds before CIT(A). 18. On perusing the order of CIT(A), we find the issues raised by Assessee has not been adjudicated on merits by CIT(A). We therefore feel that the issue needs to be adjudicated on merits and therefore restore the issue to the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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