M/S. PUNJAB INSTITUTE OF MEDICAL SCIENCES ,JALANDHAR vs. DEPUTY COMMISSIONER OF INCOME TAX , JALANDHAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. Nos.303 to 306/Asr/2017: A.Ys.: 2007-08 to 2010-11 I.T.A. No.581/Asr/2015: A.Ys.: 2008-09 S.A .Nos. 08 to 11/Asr/2022: A.Ys. 2007-08 to 2010-11

M/s Punjab Institute of Medical Vs. Dy. Commissioner of Sciences, Garha Road, Income Tax, Circle-III, Jalandhar. Jalandhar. [PAN: AAABP0193P] (Respondent) (Appellant)

Appellant by Sh.Vipul Arora, CA. Respondent by Sh. HitendraBhauraojiNinawe, CIT. DR

Date of Hearing 21.12.2022 Date of Pronouncement 31.01.2023

ORDER Per: Bench:

The batch of appeals of the assessee were filed against the order ofthe ld.

Commissioner of Income Tax (Appeals)-2, Jalandhar,[in brevity the ‘CIT (A)’]for

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 2

A.Ys. 2007-08 to 2010-11, order passed u/s 250 (6) of the Income Tax Act 1961,

(in brevity the Act). It was stated at the outset that, the relevant factual backdrop as

well as the issues involved in all the casesI.T.A. Nos.303 to 306/Asr/2017 are

identical. The common issue is related to the addition by disallowing u/s 11 of the

Act. Only theITA No. 581/Asr/2015 for A.Y. 2008-09 has a different issue related

to disallowance of expenses. The Assessment Orders were framed by the ld. DCIT,

Circle-III, Jalandhar u/s 143(3)/147 of the Act. Except ITA No. 581/Asr/2015 is

framed u/s 143(3) of the Act. With the request of both assessee and revenue ITA

No. 303/Asr/2017 for A.Y. 2007-08 is taken as a lead case.

148 of the Act& assessments were completed u/s 143(3)/147. The issue is common

for all cases that is rejection of exemption u/s 11 in connection with withdrawal of

registration u/s 12A of the Act. The assessee is established under the Society Registration Act, 1860 on dated 10thOctober, 1994 and it was granted registration

u/s 12A(a) of the Act w.e.f. dated 10.10.1994. The ld. CIT had withdrawn the

registration u/s 12AA w.e.f. assessment year 2004-05 by a order dated 23.12.2013.

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 3

Aggrieved assessee had challenged the order before ITAT, Amritsar Bench. The

ITAT by the order, bearing ITA No. 740/Asr/2013, date of order 29.09.2015 had

restored the registration of the society u/s 12AA. During the withdrawal of

registration, the assessing authority had reopened the assessment years by

persuasion of notice u/s 148 of the Act, had treated the assessee as an AOPand had

disallowed the claim u/s 11. The assessee was denied the benefit claim u/s 11 of

the Act. In ITA No. 581/Asr/2015 for A.Y. 2008-09 only the expenses are

disallowed amount of Rs.4,75,269/- depreciation disallowed Rs.6744 and Rs.9189

and further adhoc disallowance Rs.10,000/- was made out of entertainment

expenses. Against the order of the ld. AO,assessee had filed an appeal before the

ld. CIT(A).But the ld. CIT(A) had accepted the observation of the ld. AO and

upheld the assessment order. Being aggrieved assessee filed an appeal before us.

ITA No-304-306/Asr/2017

in the record. First, the legal ground was adjudicated related to lead case. The ld.

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 4

counsel invited our attention in the order of the ITAT, Amritsar Bench bearing

ITA No. 740/Asr/2013 order dated 29.09.2015 held that:

“6. We have heard the rival contentions of both the parties and perused the material available on the record. The ld CIT-II, Jalandhar passed order U/s 12AA of the Act on 24/10/2013 w.e.f. A.Y. 2004-05 but in Section 12AA(3), the amendment was made by the Finance Act, 2010, which was effective prospectively as clarified by the CBDT as well as various ITATs. The case laws relied by the AR of the assessee also support the case of the assessee, therefore, from A.Y. 2004-05, the cancellation is out of jurisdiction. The Hon’ble Delhi High Court in the case of Director of Income Tax (Exemption) Vs. Mool Chand Khairati Ram Trust (2011)339 ITR 622 (Delhi) has held that power of cancellation of registration obtained U/s 12A came to be incorporated by way of amendment introduced in Section 12AA(3) by the Finance Act, 2010 w.e.f. 1st June, 2010. The Director of the Income Tax was, therefore, no justified in cancelling the registration U/s 12AA(3) w.e.f. December 2002-03 vide his order dated 30th June, 2009. Similar view has also held by the various ITATs as referred

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 5

above, therefore, we set aside the order of the ld CIT-II, Jalandhar. Hence, this appeal of the assessee is allowed. 7. In the result, the appeal of the assessee is allowed.”

3.1 The ld. counsel further argued that the disallowance of claim U/s 11 in lieu

of rejection of registration was agitated before the Coordinate Bench of the ITAT,

Amritsar Bench, in ITA No. 485/Asr/2014 for A.Y. 2011-12 order dated

18.03.2016 previously. The issue is already covered in the favour of the assessee.

The relevant part of order of ITAT is reproduced as under:

“We find that the Hon’ble Tribunal vide order dated 29.09.2015 has cancelled the order of CIT by which he had cancelled the registration u/s 12A(a) of the Act, therefore, the basis on which the exemption u/s 11 has been denied does not survive. In view of the above, we are in agreement with argument of learned AR that after restoration of registration by Hon,ble Tribual, the assessee is eligible for exemption u/s 11. 8. In view of the above, the appeal filed by assessee is allowed.” 3.2 As per argument of the counsel, the assessment was completed by treating

the assessee-trust as unregistered trust and disallowance of claim was made u/s 11

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 6

of the Act. In argument of ITA No. 581/Asr/2015, the ld. counsel placed that the

addition was made by the ld. AO total amount of Rs.5,01,200/- on account of car

repaired and maintenance expenses Rs.475269/-, depreciation amount of Rs.6744/-

and Rs.9189/- and ad hoc disallowance of entertainment expenses Rs.10,000/- has

no basis and without finding any proper lacuna in the books of accounts of

assessee.

The specific para 4.8 order of the ld. CIT(A) is extracted as below:

“4.8 I have also gone through the contentions of the appellant

on the issue of validity of the initiation of reassessment

proceedings in view of the fact that the only basis of reopening

was on account of cancellation of registration under section

12AA of the IT act. It is stated by the appellant that

subsequently this registration has been restored back by the

honourable 1TAT and therefore, the action of the AO in

reopening of the assessment cannot be sustained. I find that this

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 7

contention of the appellant is not correct as the reasons

recorded by the AO also refer to the order passed by the

honourable ITAT Amritsar bench in the case of the appellant

for AY 2006 - 07, wherein it has been categorically held that

the assessee trust is not engaged in the charitable activities and

therefore the claim of exemption under section 11 of the IT Act

was denied. This finding of the Hon’ble ITAT still holds good

and appeal filed by the appellant is pending before the

honourable Punjab and Haryana High Court. Thus,

considering all these factors. I hold that there is no merit in the

contentions of the appellant on this issue.”

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 8

“4.8 The contention of the appellant that there has been a change in the reasons recorded by the AO and two sets of the same have been provided to him has been categorically denied to by the AO in his remand report. I have gone through the copies of the same which were filed by the appellant in the course of present' proceedings and find that AO has also stated in the report filed that that the reasons have been recorded on 28. 01. 2014, which are placed on record at page is number 21- 24 and on 25- 28. There is a typographical error in the amounts noted at page number 21 and 25. The amount of Rs.3,50,02,163/- has been mentioned instead of Rs. 14,75,25,704. It is further stated that it is a clerical mistake on the part of the AO and the same was duly rectified and the reasons for the difference in the two amounts has also been explained in detail.”

record. The registration was cancelled by the ld. CIT u/s 12AA of the Act. The

registration was restored by the order of the ITAT, Amritsar Bench. After the order

of the ITAT, the assessee is registered U/s 12AA and eligible to claim deduction

u/s 11 r.w.s. 12A of the Act. The assessee was eligible for the benefit of section 11

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 9

of the Act. In no reason, the benefit can be denied by the department. The ld.

CIT(A) in the order has observed that the revenue appeal is pending before the

Hon’ble Punjab & Haryana High Court against the order of the ITAT, Amritsar.

But till the revenue has not able to submit any outcomeof the appeal, filed before

the Hon’ble High Court.We fully relied on the order of our Coordinate bench,

bearing ITA No. 485/Asr/2014 for A.Y. 2011-12, supra. The assessee is eligible to

get benefit of Section 11of the Act. The ld CIT-Dr was unable to bring any

contrary fact against the submission of the assessee. In our considered view the

order of the ld. CIT(A) is quashed. The ground of the appeal of assessee bearing

ITA No-303/Asr/2017 is allowed.The said order mutatismutandisis applicable for

ITA No-304-306/Asr/2017.We consider the factual ground in favour of assessee.

So, the legal grounds are remained only for academic purpose.

ITA No.581/Asr/2015

assessee’s claim. The ld. AO added back only on basis of the general

observation.The expenses are disallowed amount of Rs.4,75,269/- depreciation

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 10

disallowed Rs.6744 and Rs.9189 and further ad hoc disallowance Rs.10,000/- was

made out of entertainment expenses.

Going by the nature of expenses such as claim of depreciation, entertainment

expenses, it is prima facie not very clear whether these expenses can be claimed as

revenues expenses and allowable under sections 30 to 37 of the Act in relation to

Trust, registered U/s 12AA of the Act. Since there is absence of any findings of the

lower authorities, we deem it appropriate to set-aside the same to the file of the ld.

CIT(A) who shall examine the aforesaid contentions so raised besides examining

the matter from the perspective of allowability in case of Trust and genuineness of

expenses. Further, the assessee should get reasonable opportunity of hearing for

filing the evidence in relation to its claim. In the result, the ITA No. 581/Asr/2015

for A.Y. 2008-09 is allowed for statistical purposes.

Nos.08 to 11/Asr/2022 for A.Ys. 2007-08 to 2010-11are dismissed as infructuous.

I.T.A. Nos.303 to 306/Asr/2017 I.T.A. No.581/Asr/2015&S.A .Nos. 08 to 11/Asr/2022 11

In the result, the appeals of assessee ITA Nos.303-306/Asr/2017are 8.

allowed. The appeal of assessee ITA No- 581/Asr/2015 is allowed for statistical

purpose.

Order pronounced in the open court on 31.01.2023

Sd/- Sd/-

(Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member

AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.