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TMI Blog2018 (3) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with objects mentioned in the trust deed and accordingly there is no violation under the provisions of Section 11 / 12 - Decided in favour of assessee - ITA No. 126/Del/2016 - - - Dated:- 9-3-2018 - Mr. BHAVNESH SAINI, JUDICIAL MEMBER AND Mr. WASEEM AHMED, ACCOUNTANT MEMBER For The Department : Smt. Shefali Swaroop, CIT DR For The Respondent : Sh. R.S. Singhvi, CA ORDER PER WASEEM AHMED, AM.: The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), has erred in allowing the emption u/s 11 12 of the Act to the assessee disregarding the fact that the benefit of Section 11 12 can be denied while registration u/s 12A is still in force, in case it is established that the assessee is not doing any charitable work and is engaged in business. 2. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 2. The only issue raised by the Revenue in this appeal is that the learned CIT(A) erred in allowing the exemption to the assessee under Section 11 12 of the Act. 3. Briefly stated the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has violated the provisions of Section 13 (3) by giving its office spaces to the settler of the trust being the specified person. As per the AO, the office spaces were rented out to M/s DLF Limited at a price less than the prevailing market rate. Therefore, there is a violation of the provisions of Section 13(3) of the Act. Accordingly, the assessee was show caused vide notice dated 28.2.2014 by the AO to justify the above stated facts. The assessee, in compliance thereto submitted that the trustees of the trust have been duly authorized in terms of the Clause 3 and 5 of the trust deed to sale the immovable property for medical facilities. Thus the act of sale of the property is incidental to the attainment of its main objective in pursuance to sub Clause XVII of Clause 7 of the trust deed. 9. Similarly, it was contended that no benefit has been extended to the persons specified under Section 13(3) of the Act. The rent was charged from the persons specified under Section 13(3) of the Act by the assessee more than the prevailing rate. 10. The assessee also submitted that it has incurred a total cost of ₹ 22,13,27,044/- till 31st March, 2011 on the construction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A), after considering the submissions of the assessee granted exemption under Section 11 and 12 to the trust by observing as under:- Decision :-1 have perused and considered the Assessment Order u/s 143(3), the observations of the Assessing Officer therein, arguments and submissions during appellate proceedings as well as inwriting filed by the AR, facts of the case and provisions of law. At theoutset, it is imperative to state the primary object of trust, though at the cost of repetition, as under: 3.The Trustees may construct the buildings required for the provision of medical facilities themselves and run the hospitals/nursing homes/health centres themselves or have it done through other persons, trust, societies or institutions by giving the plots or any one or more of them or buildings constructed thereon on lease or by outright transfer or in any other manner and on such terms and conditions as they may consider appropriate 5. The income of the Trust from whatever source derived shall be applied or accumulated for future application solely for the purpose of promoting medical facilities and all its assets shall also be held for the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in CBDT Circular No. 11/2008 dated 19-12-2008, it has been observed that First and Second proviso of subsection (15) of Section 2 of the Act and are not applicable to the appellant Medical Trust as the amendment has to be looked in its right perspective. The proviso is applicable only to an institution, which is providing charitable services in the field of the advancement of any other object of general public utility. The CBDT has clarified the position vide board circular no -11/2008 dated 19-12- 2008-that the amendment made by Finance Act 2008 will not apply in respect of first three limbs of section 2(15), i.e., where the purpose of the trust or institution is relief of the poor, education or medical relief it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities. I agree with the appellant's submission that the judicial decision relied upon by the Ld. Assessing Officer, do not on facts apply to the appellant's case. On the other hand, the judicial decision relied upon by the appellant i.e. i. Addl. CIT vs. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC) ii. Sole Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the Assessing Officer seemed to be that deposit in a time deposit did not constitute a capital asset. The expression capital asset is defined in section 2(14) . It means property of any kind held by an assessee. Certain categories of assets have been specifically excluded from the meaning of 'capital asset'. Deposits in scheduled banks are not one of these enumerated categories excluded from the meaning of 'capital asset' as given in section 2(14) . Investment for a fixed term in a scheduled bank fulfils the conditions provided in section 11(1A) as fixed term deposit is a capital asset. That being the position, the Commissioner (Appeals) and the Tribunal were justified in their conclusions. Hence, no question of law, much less a substantial question of law, required to be adjudicated. The appeal, being without merit, was dismissed. The learned AR in support of assessee s claim also relied on the judgment of Hon ble Delhi High Court in the case of DIT(E) vs. Abul Kalam Azad Awakening in ITA No. 80/2013 vide order dated 20.6.2013 wherein it was held as under:- We are of the view that the Tribunal had correctly appreciated the law and has come to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has allowed the exemption under Section 11 / 12 of the Act in ITA No. 808/Del/2007 pertaining to the assessment year 2002-03, the relevant extract of the order is reproduced below:- We have heard both the parties and gone through the material available on record. The trust was created for the purpose of providing medical facilities by way of construction of hospitals / dispensaries for the residents of DLF City. The assessee had been accumulating the income for the purpose of construction of hospital and some amount has been applied towards the construction of hospital. This fact has been specifically noted by the ld. CIT(Appeals). Hon ble Delhi High Court in assessee s own case for assessment year 1994-95 reported as 248 ITR 41 (Del). on accumulation of funds for the objects of the trust has held that the Tribunal was right in allowing exemption to the trust. Since the issue is covered by the decision of Hon ble Delhi High Court, respectfully following the decision of the jurisdictional High Court, it is held that the assessee is entitled to exemption under section 11 of the Act. 21. We also note that the Hon ble ITAT in the group case of the assessee has decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he grounds of appeal taken by the revenue and reject the same. In the result, the appeal of the revenue is dismissed. The aforesaid view was reiterated in the case of the assessee for 2002-03 by an order dated 10th July 2009 and it was held as under:- We have heard both the parties. We find that this issue is covered by the decision of ITAT in assessee s own case for assessment year 1994-95 in ITA No. 1386/Del of 1998 dated 28th July, 2006 wherein it has been held that the assessee trust was justified letting out the school building to other educational trust and, therefore, it can be said that leasing activity as well as income earned through such activity was in furtherance of objects and ideals of the trust. The leasing activity was also aimed at providing assistance imparting education, which undisputedly a charitable object. It was also noted by the Bedi the accumulation was allowed under section 11 (2) to the assessee in earlier years and in subsequent years. Therefore, the assessee was entitled for benefit of section 11 of the Act. Since the issue is covered by the decision of ITAT in assessee s own case respectfully following the same it is held that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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