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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 ..... in dispensing medical facility though it is engaged in running a blood bank - Assessee cannot be considered to be engaged in medical facilities so as to be entitled to exemption of income – Decided against the Assessee. - I.T. A. No. 399/AHD/2013 - - - Dated:- 20-9-2013 - Shri G. C. Gupta And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri Tushar P. Hemani A.R. For the Respondent : Shri O. P. Batheja Sr. D. R. ORDER Per Shri Anil Chaturvedi, A. M. 1. This appeal is filed by the Assessee against the order of CIT(A)-XXI, Ahmedabad dated 16.01.2013 for assessment year 2009-10. 2. Facts as culled out from the orders are as under: 3. Assessee is a company registered u/s 25 of the Companies Act 1956 and also registered u/s 12AA of the Act vide No III/12AA/192/97-98 dated 20.2.1998. It filed its return of income for AY 2009-10 declaring total income of Rs Nil. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 16,12.2011 and the total income was determined and assessed at Rs 75,73,403/-. Aggreived by the order of AO, Assessee carried, the matter before CIT(A). CIT(A) vide order dated 16.1.2013 dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income for the year under consideration and balance amount of unutilized brought forward deficit may be allowed to be carried forward to the succeeding assessment year. 6. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The Id. CIT(A) has erred in law and on facts in confirming the action of Id. AO in charging interest u/s 234B/C/D of the Act. 8. The Id. CIT(A) has erred in law and on facts in confirming the action of Id. AO in initiating penalty proceedings u/s 271(l)(c) of the Act. 4. During the course of assessment proceedings Assessing Officer noticed that Assessee has entered into business transaction with Celestial Biologicals Ltd (an associate company of Assessee) for supply of 19950 units of "Fresh Frozen Plasma" (FFP) @ Rs 550 per litre aggregating to Rs 30,26;652/-. He further n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .8. By taking all the facts, legal provisions and reply of assessee into consideration, it is held that: The Celestial Biologicals Ltd is covered in the definition of person u/s 13(3)(e) read with explanation 1 and 3 (Detailed discussion in para 3.2,3.3,3.4,3.5). Undue benefits as mentioned in section 13(1)(c)(ii), 13(2)(b), 13(2)(d) and 13(2)(g) have been provided to Celestial Biologicals Ltd. The Assessee company is a tool to maximize profit, and to widen the horizon of Intas group of companies held by Chudgdar Family. The same can be established by the fact that business transactions of the assessee company with the related companies, and hence the concessional benefits have increased in the coming years (para3.4). 3.10 Based on the above discussion, the deduction u/s 11 (and section12) of the Act claimed by the assessee is disallowed. 5. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) dismissed the appeal of the Assessee and upheld the order of AO by holding as under: "4.6 I have carefully considered the order of the AO and the detailed submissions made in this regard. It is an undisputed fact that CBL is an associate concern of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Surplus platelets have no medical use and are destroyed after deactivation whereas FFP has a pharmaceutical use wherein it can be converted into different types of plasma fractionation proteins. At the beginning of Assessee's operation in year 2000, there existed only one plasma fractionation Centre at KEM Hospital Mumbai with a capacity of only 10000 ltrs p.a. plasma fractionation and therefore there was competition among blood banks to get their plasma picked by it. With great difficulty, Assessee could manage to supply plasma to it at a low rate of Rs 600/ltr and CPP at Rs 400/ltr. Last supply to plasma fractionation Centre at KEM Mumbai was made by Assessee in July 2002. Assessee with great difficulty and after legal process could recover the dues from it Rs 5 lacs and had to write off Rs 12,51373 as bad debts out of the total outstanding of Rs 20,74,725/-. Later on Reliance Life Science picked up a little plasma for trial purpose but they stopped as their plant was not functional. Later CBL picked up first lot of plasma in July 2006. In the intervening period Assessee lost lot of plasma due to lack of buyer. Thus CBL was the only option available to Assessee to supply pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13(2) by way of deeming provision narrates certain situations under which the income or property will be deemed to have been used or applied for the benefit of specified persons so that exemption is to be denied under the provisions of section 13(1). 11. Briefly stated, as per section 13(1) in the following cases the benefit of exemption under section 11 is barred (to the extent applicable to the present case) are : (a) .......... (b) .......... (bb) (c) (i)........... 12. (ii) if any part of the income or property of the trust/institution is used or applied directly or indirectly for the benefit of specified persons subject to the two provisos given under the sub-clause (c) and also subject to the Explanation given under sub-clause (d) [section 13(l)(c)(ii)]; 13. Both these sub-clauses are also subject to sub-section (4) of section 13. (d)......... 14. Sub-section (2) of section 13 specifies certain situations whereunder the property or income of the trust or institution is deemed to have been used or applied for the benefit of any of the persons specified in sub-section (3).These situations are as under: (a) Where any part of the income or property of the trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid persons has a substantial interest. As per Explanation 3 to section 13 a person is deemed to have a substantial interest in a concern if such person either by himself or alongwith any of the other specified person in case the concern is a company, owns beneficially shares (not being preference shares), carrying not less than 20% of the voting power at any time during the previous year, or in case of any other concern, is entitled , at any time during the previous year, to not less than 20% of the profits of that concern. 15. As per sub-section (6) a trust running an educational institution or a medical institution or a hospital shall not lose the benefit of exemption of any income other than the value of benefits of educational or medical facilities provided to the specified persons, solely on the ground that such benefits have been provided to specified persons. It should be noted that the sub-section covers,-(i) only those trusts running an educational institution or a medical institution or a hospital; (ii) the benefit extends only in respect of educational or medical facilities and not any other facility. In the present case, it is an undisputed fact that Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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