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TMI Blog2017 (8) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal in assessment year 2008-09: "1. On the facts and in the circumstances of the case as well as in law the ld. CIT(A) has erred in allowing exemption u/s 11 of the Act to the assessee trust whereas the activities of the assessee trust are not charitable within section 2(15) of the Act. 2. On the facts and in the circumstances of the case as well as in law the ld. CIT(A) has erred in deleting the addition made on the ground of disallowance of 25% expenditure and restricting it to 10% of the total expenditure." 4. The Revenue has raised the following grounds of appeal in assessment year 2009-10: "1. On the facts and in the circumstances of the case as well as in law the ld. CIT(A) has erred in allowing exemption u/s 11 of the Act to the assessee trust whereas the activities of the assessee trust are not charitable within section 2(15) of the Act. 2. "On the facts and in the circumstances of the case as well as in law the ld. CIT(A) has erred in deleting the addition made on the ground of disallowance of financial expenses of Rs. 3,26,88,639/-. 3. On the facts and in the circumstances of the case as well as in law the ld. CIT(A) has erred in deleting the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decisions of various courts of law in this regard. 11. On the other hand, the ld. DR opposed the admission of additional ground. 12. We have considered the rival arguments made by both the sides, perused the orders of the A.O and the ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied upon by both the sides. We find that said ground raises a question of law which goes to the root of the matter and does not entail any verification of facts or bringing on record any fresh material or additional evidence. Reliance was placed on the following judgements in support of the admission of the additional ground: 1. National Thermal Power Corporation Ltd. vs CIT (1998) 229 ITR 383(SC). 2. Orissa Cement Ltd. vs CIT (2001) 2o0 ITR 806 (Delhi) 3. Avery Cycle Industries Ltd. (2007) 292 ITR 493 (P&H) 4. Hukumchand Mills Ltd. vs CIT (1967) 663 ITR 232 (SC) 5. CIT vs Nelliaappan (1967) 66 ITR 727 (SC) In view of the above judicial pronouncements, we admit the additional ground of appeal. 13. At the outset, we decide the additional ground in view of the arguments made by the parties. The ld. counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) must be satisfied that the additional ground raised was bonafide and that the same could not have been raised earlier for good reasons. 3. Under Rule 11 of the Appellate Tribunal Rules 1963 the ITAT has to record reasons for admitting the additional ground. 18. Before examining the explanation of the revenue in the light of the aforestated legal position certain dates are relevant as under: 1. The appeal by the revenue was filed on 18.06.2012. 2. The additional ground was filed vide communication dated 28.09.2012. 3. The order of the CIT(A) u/s 154 on the basis of which the revenue is stated to have acted is dated 18.07.2012. 4. Assessment for Assessment year 2009-10 was completed on 23.12.2011. 19. A reference to the order of the ld. CIT(A) dated 06.03.2012 shows that the figure of Rs. 23,50,00,000/- (Rs.23.50 CR) is mentioned at 7 places spanning 11 pages whereas the figure of Rs. 23,50,000/- (Rs.23.50 Lakhs) admittedly a typographical error, is mentioned at only one place. Is it to be understood that the recommending and the approving authority for the revenue's appeal looked only at the last page of the order of the CIT(A) and did not examine the earlier pages whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO in the course of the assessment proceedings for the AY 2008-09 took the view that the activities of the appellant were not in accordance with the provisions of Section 2(15) of the Act and exemption u/s 11 was to be denied. The main grounds for arriving at the aforesaid conclusion were: (1) Consequent to the agreement dated 12/5/2005 between the assessee, Vaitalik and Oscar Biotech P. Ltd. (OBPL) whereby Vaitalik opted out of the agreement between itself and the assessee dated 7.8.1998 and OPBL stepped into the shoes of Vaitalik for setting up and running a super speciality hospital the control and management of the said hospital had gone into the hands of OBPL rather than being under the control and management of the assessee trust. (2) As a result of the facts and circumstances outlined in (1) above, the activities of the trust had become commercial in nature rather than remaining charitable for the common people of Delhi. 3. That the change in the members of the Executive committee with reference to three dates vix 23.9.71. 7.6.98 and 12..2005 confirmed the change in the character of the assessee trust. 4. That Vaitalik as per its agreement with the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent u/s 143(3) [copy of order at page 10 of paper book] 2. Assessment year 2008-09 Treated as exempt u/s 11 of the Act by the ld. CIT(A) [in appeal to the ITAT by Revenue] 3. Assessment year 2009-10 Treated as exempt u/s 11 of the Act by the ld. CIT(A) [in appeal to the ITAT by Revenue] 4. Assessment year 2010-11 Treated as exempt u/s 11 of the Act by the ld. CIT(A) [in appeal to the ITAT by Revenue] 5. Assessment year 2008-09 Treated as exempt u/s 11 of the Act by the order u/s 143(3) of the Act 26. Having taken a view in assessment years 2007-08, 2013-14 & 2014- 15 treating the assessee as exempt u/s 11 of the Act, the AO could not have taken a view to the contrary in other years there being no change in facts or the legal position. Reliance was placed on the following judgements: a). CIT vs Escorts Ltd. 338 ITR 435 (Delhi) b) Director of Income Tax (Exemption vs Apparel Export Promotion Council (No. 1) 244 ITR 734, 736 (Delhi) c) CIT vs ARJ Security Printers (2003) 264 ITR 276, 278 (Delhi) 27. By the decisions of the ITAT in the case of R B Seth Jessa Ram & Bros Charitable Hospital Trust (JESSARAM for short) for various assessment years namely 2004-05 (copy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined in the assessment order for AY 2007-08 and no disallowance was made. The AO in fact accepts in the assessment order that copies of agreements in respect of the lease rent, management fee as also the other items of expenditure have been filed. The main thrust of the argument of the AO is that since OBPL had been engaged to set up the hospital and run it, there was no requirement to incur these items of expenditure. It was contended that the aforesaid conclusion of the AO is factually and legally incorrect in as much as the items of expenditure in question are necessary to run the hospital and these have to be met out of the receipts of the hospital and not by OBPL out of their funds. According to the agreement between the assessee and OBPL already referred to earlier the latter has been contracted to set up the hospital and run it for which it is entitled to 70% of the surplus remaining after meeting the entire expenditure. The liability of OBPL does not extend to meeting the aforesaid items of expenditure, which are necessary for running the hospital. In view of the aforesaid submissions of the ld. counsel for the assessee, we find no infirmity in the order of the ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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