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TMI Blog2023 (10) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... as been following a view for the past several years, he cannot depart from the same when there has been no change in law or facts. We may note the facts and decision of Hamdard National Foundation (India) [ 2022 (2) TMI 931 - DELHI HIGH COURT] In this case, the facts were that the assessee-foundation had let out its properties and received rental income from H in relevant assessment years. In addition, the assessee had also received corpus donation from 11 during assessment year 2007-08. The Assessing Officer after making enquiry from various websites held that in lieu of voluntary and corpus donation received from H, properties owned by assessee were let out to H at a much lower rate as compared to the market rate. He, thus, invoked section 13(2)(b) read with section 13(3) and held that assessee was not eligible for exemption under sections 11 and 12. The Tribunal decided in favour of the assessee. Appeal of the Revenue is dismissed. - Dr. Brr Kumar, Accountant Member And Ms. Astha Chandra, Judicial Member For the Assessee : Shri R.M. Mehta, CA For the Department : Shri T James Singson, CIT, DR ORDER PER ASTHA CHANDRA, JM The appeal filed by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him. On receipt of remand report, the Ld. CIT(A) obtained counter comments of the assessee. After introduction of faceless scheme w.e.f. 25.09.2020 fresh notice under section 250 of the Act was issued to the assessee. In response thereto the assessee furnished written submissions of evidences/details vide letter dated 19.01.2021. On consideration thereof, the Ld. CIT(A) held that the assessee is a charitable institution eligible for exemption under section 10(23C)(iv) or under section 11/12 of the Act. The observations and findings of the Ld. CIT(A) are reproduced hereunder: 7. I have considered the facts of the case, assessment order/remand report, appellant's written submissions and re-joinder on AO's remand report. In the instant case, the AO after observing that in the return of income filed for the AY 2016-17, the assessee trust claimed benefits of section 11 12, rejected the same after observing that the assets held under assessee trust are not judiciously expended /used and were applied for unreasonable benefit of person specified in section 13(2)/13(3) of the Act. On the basis of detailed findings recorded in the assessment order, the AO denied the benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , legal contention or even a claim would be permissible to be raised for first time before appellate authority when facts necessary to examine such ground, contention or claim are already on record-Since facts relating to fresh claim raised by assessee, is already on record. Appellate Commissioner need not nor did they travel beyond materials already on record-Appeal filed by revenue dismissed Held: This is primarily on the premise that if a though available in law is not made either at if a claim inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the assessing officer. (Para 39) Therefore, any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. This is precisely what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-Therefore, once assessee was found eligible for exemption u/s 108, a having been allowed such exemption in past, and merely because typographical error crept in while e-filing return and it was mentioned as u/s 801B instead of Section108, this being technical mistake, should not come in way by disallowing otherwise allowable/eligible exemption. The Hon'ble Rajasthan High Court in para 13 of the order quoted from Jute Corporation of India Ltd. V/S CIT (1991) 187 ITR 688 (SC) as below:- 13 In the case of Jute Corporation of India Ltd. v. Commissioner of Income Tax: (1991) 187 ITR 688 (SC), while dealing with the powers of the Appellate Assistant Commissioner, the Supreme Court observed that An appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may ha in the matter. There is no good reason to justify curtailment of the power of the appellate Assistant Commissioner in entertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t holds good as except the change of Section from 8018 to 10B, all other supporting material remained the same including the audit report claiming such exemption. The Bombay High Court in the case of CIT VS. Prabhu Steel Industries (P) Ltd. (191 ITR 530) held that where a claim for special deduction was made by the assessee not in his return but in the course of the assessment proceedings and the AO failed to consider the same, it was open to the appellate authority to entertain the claim. The Hon'ble Apex Court in the case of CIT Vs. Kanpur Coal Syndicate (53 ITR 225) observed that the power of the CIT(A) sitting in appeal over an assessment were plenary and co-terminus with those of the AO and that he can do what the ITO can do and also direct him to do what he has failed to do and in our view, the CIT(A) indeed has powers to examine the assessee's claim on merits by virtue of Sec. 250(5), In that case, the claim was first time made under Sec.80HHC before the CIT(A) and accordingly no infirmity was found by the Hon'ble Apex Court in grant of deduction u/s 80HHC. The Punjab Haryana High Court in the case of Ramco International, reported in 332 ITR 300, where the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. They must be objects of public charity for the benefit of all persons irrespective of caste, colour or creed, such as relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity of profit and i. They must be consistent with the principles of true teaching of Islam. Provided however, that in spending the income on objects of public charity. priority shall be give to the collective needs of the country or to such needs as many benefit the largest number of persons or their generations. 45. Priority may be given to the following: 1) To establish and run an Institute for the promotion of medical education and research with emphasis on indigenous systems of medicines, 2) To establish and successfully conduct a Tibbia College in conformity with the recognized standards. 3) To establish and run charitable hospitals and clinics where poor patients are given free treatment. 46. Qaumi Income may also be spent on the following: 1) To establish and run educational institutions, and/or aid those which are already in existence. 2) To build schools, lab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the AO failed to follow the principle of consistency. Since there was no change in facts, therefore, the AO has to allow the assessee's claim following the principle of consistency as laid down by the Hon'ble Supreme Court in the case of Radhasoami Satsang v. CIT [1992] 60 Taxman 248/193 ITR 321 (SC) and various other judicial precedents referred to below:- 1. Radhasoami Satsang v. CIT (1992) 60 Taxman 248/193 ITR 321 (SC) 2. Commissioner of Income-tax vs. Gopal Purohit [2010] 188 Taxman 140 (Bombay) 3. Principal Commissioner of Income-tax-8 v. Quest Investment Advisors (P) Ltd. (2018) 96 taxmann.com 157 (Bombay) 4. Deputy Commissioner of Income Tax, Circle 17(1), New Delhi v. Moet Hennessy (1) (P) Ltd [2020] 114 taxmann.com 733 (Delhi - Trib.) 5. NIIT Ltd. v. Deputy Commissioner of Income-tax, LTU, Central Circle- 16(1), New Delhi [2019] 112 taxmann.com 66 (Delhi-Trib Moreover, in the case of Adarsh Public School vs. JCIT [2018] 90 taxmann.com 356 (Delhi - Trib), the Hon'ble Delhi ITAT Bench 'A' held that there is no disharmony between section 10(23C) and section 11 and, thus, exemption of section 11 cannot be denied even when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the appellant trust. It is seen that there were no benefit to any individual or trustees, question of using or applying any part of income or any property of the trust directly or indirectly for the benefit or any persons referred to in sub section (3) would not arise in the this case. The facts as mentioned above make it absolutely clear that the appellant trust has not provided any benefit to the trustee and there is no violation of section 13(2) of the Act. In the instant case, the AO's action in denying the exemption u/s. 11 12 was on account assessee's case being covered by the provisions of sec. 13(2)/13(3) of the Act. The AO noted that two properties i.e. 25, Kautilya Marg, New Delhi-110021 13 and Rajdoot Marg, New Delhi-110021 were provided as residential accommodation by the trust to Mr. Hammad Ahmed, Mutawalli(Trustee) and Mr. Abdul Majeed. Mutawalli for license fee of 540000/- and Rs. 540000/- respectively which in his view were far less as compared to other properties of same area. The appellant trust explained before me that Trustees in the present case function in a dual capacity vis a vis trustees as also employees and their educational, technica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of the property was in use of the family members of appellant's erstwhile chief Trustee late Abdul Mueed Sahib. It is to be noted that this property has been given on rent for the last 40 years and in case where property is rented for such a long term, its rental value tends to be on lower side and it cannot be compared with other properties which are available for rent. Thus, it cannot be said that any undue benefits have been passed on to the specified persons u/s 13(3) in the form of residence at below the market rate. As regards property at 13, Rajdoot Marg, I find that it is not owned by the assessee trust but owned by Hamdard National Foundation which is an independent trust, this property was leased to the appellant since 2007 and a part of it is occupied by Mr. Abdul Majeed since 2010-11. The rent so paid by Mr. Abdul Majeed has been duly accounted for by the Hamdard National Foundation. Therefore, it is wrong to allege that there was any violation of provisions of sec. 13(2)/13(3) in respect of this property too. There are various judicial precedents wherein it has been categorically held that merely because of difference in rental value of property, it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not chosen to realise the rent by taking any legal action The inaction on the part of the assessee in not collecting the rent could not be equated to an act of lending the income or property of the trust. Therefore, the provisions of section 13(2)(a) were not applicable to the facts of the instant case. Therefore, the assessee was entitled to the benefit of exemption under section 11. if other conditions stipulated therein were complied with. 1. The Hon'ble Allahabad High Court in the case of CIT vs. Bharat Sewa Sansthan [2013] 36 taxmann.com 539 (Allahabad) decided the similar issue in favour of the assessee trust. The head note is reproduced as under:- Section 13, read with section 12A, of the Income-tax Act, 1961 - Charitable or religious trust Denial of exemption [Benefit to members] Assessment years 1994-95 to 1998-99 Assessee, a society, was registered under section 12A Assessing Officer denied exemption to assessee and made addition to its income He observed that (i) huge amounts spent by assessee and passed on to two other organizations had no obvious link with charitable purpose and their immediate hidden purpose was to benefit members of society, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussed above and judicial precedents ches supra, it is held that the no undue benefits passed on from the assessee trust to the trustee and as such there is no violation of sec. 13(2)/13(3) as alleged by the AO. However, since I have already held that the appellant trust is eligible for exemption u/s. 10(23C)(iv), which is its main plea, therefore, grounds/plea raised by the appellant regarding this issue become academic in nature. 9. As regards the AO's action in disallowing the claim for depreciation on the property owned by the assessee amounting to Rs. 5,23,190/-,I find that in view of judgment of Rajasthan Gujarati Foundation (2018) 300 CTR (SC) 1) ratio of which held that depreciation is allowable to charitable trust even if the entire expenditure incurred for acquisition of capital assets has been treated as application of income for charitable purpose u/s. 11(1)(a). sec. 11(6) inserted by Finance (No. 2) Act, 2014 is effective for AY 2015-16, the AO is directed to consider the depreciation of Rs. 5,23.190/- as application of income while arriving at appellant's net taxable as per provisions of section 11 and 12 of the Act. However, since I have already held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 964 and which continues to enjoy exemption under section 11 since then. 7.2 It has been pointed out that the assessee has derived the benefit of tax exemption consistently over the last few decades (70 years approx.) both under the Act of 1922 and thereafter the 1961 Act, the latter under section 11 and thereafter under section 10(23C)(iv) of the Act, including the three preceding AYs i.e. 2013-14, 2014-15 and 2015-16 in assessment framed under section 143(3) of the Act. (copies placed at pages 46-49 of the Paper Book). 7.3 It is clarified that it would be obvious from the Audit Report submitted under section 12A(B) of the Act in Form No. 10B under Rule 17B and Form No. 10BB under Rule 16CC and Annexure thereto (pages 21 to 45 of Paper Book) that the Trust had sought exemption in AY 2016-17 presently under consideration under section 10(23C)(iv) of the Act. 7.4 The following points have been highlighted:- 1. That the trustees functioned in dual capacity viz trustees as also employees whose technical educational qualifications enabled the assessee to achieve a hale and hearty turnover Rs. 544.60 cr for the year under consideration and approved investments to the tun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the records. It is significant to note from the assessment order dated 07.12.2017 in the case of the assessee after scrutiny under CASS for AY 2015-16 (copy at page 49 of Paper Book) that the order specifically mentions that the assessee Trust is registered under section 12A and also notified under section 10(23C)(iv) of the Act, said Notification having been restored by the Hon ble Delhi High Court vide order dated 18.09.2015 in W.P.(C) 5711/2013 with effect from AY 2004-05 onwards. The predecessor Ld. AO has observed that the assessee claimed exemption under section 10(23C)(iv) and that the objects of the Trust being charitable within the meaning of section 2(15) the benefit of section 11 and 12 is allowed. There is no change either in facts or in law in AY 2016-17 from those in preceding years as evidenced from the orders of assessment for AY 2013-14, 2014-15 and 2015-16 appearing at pages 46-49 of Paper Book. In CIT vs. Amit Jain (2015) 374 ITR 550 (Del) and in CIT vs. Denso India Ltd. (2015) 374 ITR 62 (Del) Hon ble Delhi High Court held that where the AO has been following a view for the past several years, he cannot depart from the same when there has been no change ..... X X X X Extracts X X X X X X X X Extracts X X X X
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