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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 ..... ny other persons. 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. 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 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 - Decided in favour of assessee. - Smt. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Appellant : Shri S. N. Soparkar, Sr. Adv. And Shri Parin Shah, A.R. For the Respondent : Shri Rignesh Das, Sr. DR ORDER PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short Ld. CIT(A) ), National Faceless Appeal Centre (in short NFAC ), Delhi vide or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation before the Assessing Officer, defending the agreement. The assessee submitted that the agreement was made in the best interest of the Trust, considering its dire financial situation. The Trust submitted the necessity of transferring the liabilities and assets to SCPL in order to prevent the closure of its institutions and to continue fulfilling its charitable objectives. The Trust also pointed out that the agreement was structured to ensure reasonable compensation, with SCPL agreeing to cover all expenses of Kesar SAL Medical College and provide technical and financial support for running the Kesar SAL Hospital. The Trust further argued that the transfer of assets and liabilities was legitimate and was not intended to provide undue benefit to related parties, as SCPL was a separate corporate entity formed specifically to take over the hospital's operations. The Trust also placed reliance on the favorable decisions by the Commissioner of Income Tax (Appeals) for the assessment years 2009-10, 2011-12, 2012-13, and 2013-14, which held that the Trust had not violated section 13 of the Income Tax Act. Additionally, the assessee placed reliance on a ruling from the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, which aligned with the charitable purpose of the trust. Furthermore, in the earlier orders it was held that provisions of Section 13(1)(c)(ii) of the Act were not applicable as no part of the charitable income was used for the benefit of any specific individuals, as no such income was applied for that purpose during the relevant period. Ld. CIT(Appeals) observed that the earlier orders of the CIT(A) for AY 2015-16 and AY 2016-17, including appeal before the ITAT for AY 2015-16, indicated that similar issues had been dealt with in favour of the assessee in prior years. The CIT(A) had earlier ruled that the provisions of Sections 13(1)(c)(ii), 13(2)(b), 13(2)(d), and 13(2)(g) were not violated by the assessee, and thus, the AO s decision to assess the trust s income under the provisions of Sections 28-44 of the Act was unjustified. In line with these prior rulings, the appeal for the assessment year, AY 2017-18, was decided by applying the same principles and following the ITAT Ahmedabad s order in the assessee s own case for AY 2009-10 and the decision of the Hon ble Bombay High Court in the case of Thana Electricity, the appeal was decided in favor of the assessee by Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The ld. Counsel for the assessee submitted a copy of the order passed by the Co-ordinate Bench in assessee s own case wherein the Department appeal filed in ITA No. 1858/Ahd/2013 held as follows: 6. Being, aggrieved the assessee filed this appeal before the Tribunal. The Ld. Sr. DR has took as per the assessment order and findings of the AO. The Ld. Sr. DR contended that as per agreement, the SCPL will pay management fees amounting to Rs. 1 crore or 40% of the net profit before tax (which is higher) in lieu of takeover of the trust. However, there is no rational has been provided for arriving at such a funding. The assessee has failed to furnish any reasonable justification whatsoever. Therefore, the agreement entered into by the assessee violate the provisions of Sec. 13(3) of the Act. In view of these facts the Ld. CIT(A) was not justified in deleting the disallowance of deduction u/s. 11(1)(a) of the Act. 7. Per contra, the ld. Counsel for the assessee submitted that the assessee trust was continued to run the Kesar Sal Medical College and Research Institute (KSMC) as reflected in the balance sheet as on 31.03.2009 placed at Paper Book Page 20 and the assessee was ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant material on record. We have gone through the findings of the AO as well as CIT(A) part of which are reproduced above in this part of the order. We find that the CIT(A) has arrived on the basic fact that agreement was entered with the company was to secure trust is interest and nor to indulge in the losses and for the purpose of reimburse the expenditure of Kesar Sal Hospital. The object of the transfer agreement with SCPL was to ensure that the hospital is managed professional, and in doing so the purpose of charity is not violated as a reputed hospital of such huge size requires professionally handling. We are also observed that the agreement was not entered into to derive profit from transfer of movable to SCPL but to counter the huge losses incurred in running two big hospitals. Therefore, the CIT(A) has correctly held that the activity of the trust to carried on in accordance with its objects and in the best interest of charity, therefore, the exemption u/s. 11(1)(a) has rightly allowed by the Ld. CIT(A). Similarly, the CIT(A) has clearly held that the Sec. 13((1)(c)(ii) can apply only if any part of the charitable income of the trust has been used or applied for the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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