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TMI Blog2024 (12) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(2)(g) and 13(3)(e) read with explanation 1 & 3 of the Act. 3. The revenue craves to add, alter amend modify, substitute, delete and/or rescind all or any ground of appeal on or before the final hearing, if necessary so arises." 3. The brief facts of the case are that the assessee, Adarsh Foundation Trust, is registered under section 12A(a) of the Income Tax Act and operates various charitable institutions, including SAL Hospital and Medical Institute (SHMI) and Kesar SAL Medical College and Research Institute (KSMC). In an effort to address financial difficulties faced by the assessee, particularly due to significant losses at KSMC and mounting liabilities, the assessee Trust entered into an agreement on April 1, 2008, with SAL Care Pvt. Ltd. (SCPL). The agreement involved the transfer of the operations, management, and movable assets of SHMI to SCPL. In return, the assessee Trust would receive either a fixed amount of Rs. 1 crore or 40% of SCPL's profit, whichever was higher, as management fees. The assessee Trust had incurred heavy debts, including both secured and unsecured loans, and faced a negative net worth as of 2007-08. The agreement was seen as a means to ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Tribunal had upheld the decisions of the Commissioner of Income Tax (Appeals) in favour of the assessee Trust for previous years and that there was no violation of section 13, and the income should be exempt under sections 11 and 12 of the Act. The A.O. however noted that SCPL was incorporated just two months before the agreement, which caused serious concerns about the intentions and qualifications of SCPL. Furthermore, the A.O. pointed out that the remuneration paid to the Trust under the agreement appeared disproportionate to market rates, particularly since SCPL lacked experience in the medical field at the time of the agreement. As a result, the A.O. reclassified the Trust's income as that of an Association of Persons (AOP), which would only be allowed to deduct its expenditures, and disallowed the exemptions under sections 11 and 12 of the Act. 4. In appeal, Ld. CIT(Appeals) allowed the appeal of the assessee. Before Ld.CIT(A), the assessee relied on several previous decisions in its favour, which were reviewed by Ld. CIT(Appeals) in detail. The decisions include those from the CIT(A)-9, Ahmedabad for Assessment Years (AY) 2015-16 and 2016-17, as well as the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT Ahmedabad in the assessee's own case for assessment year 2016-17 as well, wherein on identical set of facts, the ITAT for assessment year 2016-17 decided the issue in favour of the assessee in ITA No. 416/Ahd/2020, vide order dated 20-07-2022. 6. We have heard the rival contentions and perused the material on record. We observe that the issue under consideration has been decided by ITAT in favour of the assessee in earlier year's orders and also by the recent order passed by ITAT Ahmedabad in the assessee's own case for assessment year 2016-17 in ITA No. 416/Ahd/2020 vide order dated 20-07-2022. It would be useful to reproduce the relevant extracts of the order for ready reference: "3.1. The SCPL is one of the business entities of M/s. Shah Alloys Ltd., group to which the assessee trust also belongs. Shri Karan R. Shah, the key Management Personnel and Director of SCPL, is the son of Shri Rajendra V. Shah, the Managing Trustee of the Trust. By virtue of this fact, the SCPL is covered under the definition of the person as per provisions of Section 13(3)(e) read with explanation 1 & 3 of the Act. By entering into the referred agreement with SCPL, the eligibility conditions fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liabilities can be discharged adequately and income is assured for its objects at the same it is granting image and immovable property remained unaffected. The Ld. Counsel referring Page 57 of the Paper book [which is agreement between the trust and SCPL] submitted that the object of the transfer to SER Hospital for operational management on mutually agreeable terms. The Ld. Counsel referred the Clause 2 of the agreement which clearly demonstrate that the trust has granted SCPL the operational management rights to the business with effect from the transfer date. Further, it was submitted that the SCPL has taken over all immovable assets namely plant and equipments movable machinery elaborated equipments etc. on the basis of valuation done by the Government approve valuer or book value whichever is higher. The Ld. Counsel submitted that the Government valuation done at higher it is reflected at Page 78 of the Paper Book which comes to 7.30 crore. The Ld. Counsel further referred the profit sharing composition Clause 4.1 of the agreement by which it was agreed that the trust shall be paid during the terms of agreement a sum equivalent to 40% of the profit before tax or minimum profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefits of the use of trust property have been taken by any other persons. Similarly, there is no diversion of income of the trust as per Explanation of Sec. 13(2)(d) and 13(2)(g) of the Act as the trust has been benefitted greatly and its deficit of trust duly reduced to a great extent. We also observed that some erroneous presentation of Form No. 10B report does not disentitle the trust for claiming exemption u/s. 11 of the Act. Similarly, the amount of advance of Rs. 54,35,71,980/- in favour of SCPL appearing in the balance sheet was not advance but the reimbursement of the expenses. In the light of the aforesaid facts and circumstances, we are of the considered opinion that the CIT(A) has analyzed the facts correctly and given a judicious finding which does not call for any interference from outside. Accordingly, the same is upheld. Consequently, Ground No. (i) to (iii) of the appeal of the Revenue are therefore dismissed. 5. The ld. D.R. Shri V.K. Singh appearing for the Revenue could not contravent the above order passed by the Tribunal and fairly accepted that it is covered for the present Assessment Year also. 6. Considering the submissions of both sides and following C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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