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TMI Blog2022 (8) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... office for examination a fresh and to record a specific finding in this regard as to why he believes that a position accepted by the Revenue in the earlier years should not be followed and the reasons for arriving at such a finding. Objects fall under the category of medical relief, relief of the poor and yoga and doesn't fall under the category of advancement of any other object of general public utility - If we look at the definition of the charitable purpose as defined in section 2(15) of the Act, it defines charitable purpose to include relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility. In our understanding, prima facie reading of the aforesaid provisions require to identify objects which are falling under individual category of relief to the poor , education , yoga , medical relief , etc and in cases, where it is falling under more than one category, then apply the dominant purpose test to identify a suitable category rather than clubbin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER Per Vikram Singh Yadav , Accountant Member This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 30.04.2021 and pertains to assessment year 2016-17, wherein the assessee has taken the following grounds of appeal: 1. That the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC) Delhi has erred in law and facts by confirming the orders of AO in commenting that the assessee is not carrying on activity for charitable purposes instead its purpose involves carrying on activity in the nature of business and is thus covered by proviso to section 2(15) read with section 13(8) and by subjecting the entire surplus of Rs. 62,55,092/- to tax by ignoring the departmental circular No. 11/2008 dated 19.12.2008 which is binding on the department. 2. That the Ld. CIT (Appeals)-National Faceless Appeal Centre (NFAC) Delhi has erred in law and facts by confirming the orders of AO for not considering addition made to fixed assets amounting to Rs. 26,58,327/- as application of income for charitable purposes for the purposes of calculating application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t object of the assessee's society is to earn profit. It was further held by the AO that the building from which the assessee has earned rent has not been shown in its fixed assets and the same has been shown in another trust namely M/s. Sood Sewa Bhawan Trust, which is registered under separate PAN and assessed to tax separately. Thereafter, a show cause notice dated 17.11.2018 was issued to the assessee, as to why exemption u/s. 11 of the Act, may not be disallowed and the surplus amounting to Rs. 62,99,306/- be not brought to tax in the hands of the assessee's society as the activity of letting out rooms/halls are in the nature of commercial activity and covered by the proviso to Sec. 2(15) of the Act. 4. In response to show cause notice, the assessee's society submitted that it is undertaking various kind of charitable activities which mainly constitute/fall under medical field and relief to the poor and does not undertake any activity in the nature of general public utility. It was submitted that charging of room rent does not make it a commercial activity. Even PGI and other government hospitals are charging room rent on concessional rates and that does not cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om booking of letting out rooms/halls is worked out at Rs. 1,41,73,710/- which constitute 93% of the total receipts which clearly shown the primary activity undertaken by the assessee's society is booking of rooms/halls etc., and the assessee is claiming to be acting as a charitable entity which has indulged into business venture and commercially exploited the building for enhancing the business prospects. It was held by the AO that on perusal of the objects, the assessee is to provide various kinds of facilities but once we go deeper about the nature of the activities, it is found that the assessee has converted itself into commercial entity and hence, no more doing any charitable activities. It was held by the AO that the assessee has been earning profit year after year from the activity of letting out rooms/halls and further, there is no activity of the Trust which qualifies it as a charitable trust for claiming exemption u/s. 11 of the Act. On the basis of the activities undertaken by the assessee's society, it cannot be taken as a charitable trust within the meaning of Sec. 2(15) of the Act, and the income earned therefore, cannot be treated as exempt. It was further h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2, however, the AO has failed to consider the same. It was submitted that in pursuance of the charitable objects of the assessee's society, it has regularly undertaken the following charitable activities which constitute relief to the poor, yoga and medical welfare scheme as per the details below: 1) PTC (Physiotherapy Centre). 2) Medical testing lab and counseling by retired PGI doctor. 3) Allopathic doctors with free medicines. 4) Homeopathic doctor with free medicines. 5) Free eye centre. 6) Free daily yoga camps morning and evening. 7) Free meditation camps daily. 8) Free medical conferences, talks and consultations. 9) Free library. 10) Music classes morning and evening. 11) Free blood donation camps. 12) Free Riki Classes Monday and Tuesday. 13) Free motivational talks. 14) Social functions like Kirya Ceremonies, social welfare schemes (Aadhar centre), lectures, talks against social evils, awareness camps etc. 15) Stay at concessional rates for all such facilities and people in need than the market and further concessions for the needy, deserving and poor. 16) Providing medical facilities to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for scrutiny. It was further submitted that the case of the assessee is directly covered by the CBDT Circular No. 11/08 dated 19.12.2018 which clarified that proviso to Sec. 2(15) of the Act applies to entities whose purpose is advancement of any other object of general public utility and does not apply for the first three limbs of Sec. 2(15) of the Act. 10. It has been further submitted that the assessee has been granted fresh registration by the ld. Pr. CIT vide order dated 15.10.2021 u/s. 12AA of the Act, for A.Y. 2022-23 to A.Y. 2026-2027 with the same objects of relief of the poor, education, medical relief and yoga and in this regard, a copy of Form 10A dated 7.10.2021 and Form 10AC dated 15.10.2021 has been placed on record. 11. Further, the ld. AR has filed a detailed paper book containing documentary evidences of various charitable activities undertaken by the assessee as well as the corresponding expenditure incurred during the year while undertaking such activities. It was accordingly submitted that the order of the ld. CIT(A) be set-aside and the assessee be granted necessary relief. 12. Per contra, the CIT/DR relied on the findings of the AO as well as the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities each year and whether the same are in pursuance of its stated objectives. At the same time, it is a settled legal proposition as has been reiterated by the Courts and this Tribunal from time to time that where there are no material changes in the facts and circumstances of the case and same nature of activities have been carried on in the past years and in the year under consideration and there is no change in law, a view once taken by the Revenue authorities in the past years should not ordinarily be disturbed or varied in the year under consideration. In other words, the principle of consistency has been well enshrined in tax jurisprudence which should be respected and adhered to by the authorities. Therefore, the contention of the assessee regarding consistency in approach by the Revenue authorities need to be appropriately addressed and for that reasons, we believe that the matter deserve to be said set-aside to the file of the Assessing office for examination a fresh and to record a specific finding in this regard as to why he believes that a position accepted by the Revenue in the earlier years should not be followed and the reasons for arriving at such a finding. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r A.Y. 2022-23 to A.Y. 2026-2027 with the objects of relief of the poor, education, medical relief and yoga to the assessee society. The AO is therefore directed to take the same into consideration and decide the matter afresh and record his specific finding and the basis of arriving at such finding. 15. The third contention which has been raised by the assessee is that applying the dominant purpose test, it is carrying on charitable activities in the medical field and relief to poor, and the activities of running of guest house/renting of halls for social and other functions are activities through which it generate funds besides receiving charity/donations and membership fees and such funds are used for undertaking aforesaid charitable activities. In support, the assessee has submitted documentary evidence in support of undertaking the charitable activities. On the other hand, the contention of the Revenue is that looking at the assessee society's income and expenditure account, the assessee has shown receipts of Rs. 1.41 cr from booking of halls and rooms which amounts to 93% of total receipts and it has generate net profit of 41.13% and further, it is generating huge prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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