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Income Tax Appellate Tribunal, DIVISION BENCH ‘SMD’, CHANDIGARH
Before: MS. DIVA SINGH & MS. ANNAPURNA GUPTA
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘SMD’, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1042/CHD/2017 Assessment year: 2010-11 Rogi Kalyan Samiti, Vs. The ITO, PHC Rakkar Tehsil-Baijnath, Palampur. Distt. – Kangra (HP). PAN No. : AABAR0440H (Appellant) (Respondent)
Assessee by : Shri Y.K.Sud,CA Respondent by : Smt. Chanderkanta, Addl. CIT
Date of hearing : 05.04.2018 Date of Pronouncement : 22.05.2018 ORDER PER DIVA SINGH
The present appeal has been filed by the assessee assailing the correctness of the order dated 21.01.2014 of CIT(A) Shimla pertaining to 2010- 11 assessment year on the following grounds : 1. That the CIT(A) was not justified in sustaining the action of the ITO in assessing the income of Rs. 1,71,890/- against the nil income declared by the assessee. 2. That the CIT(A) has wrongly upheld the action of the ITO of denial of the exemption claimed by the assessee u/s 10(23C) (iiiae) amounting to Rs. 1,71,890/-. 3. That CIT(A) failed to appreciate that the assessee had fulfilled all the conditions prescribed u/s 10(23C)(iiiae) therefore the exemption ought to have been allowed by her which was wrongly denied by the ITO. 4. That without prejudice to the grounds raised in 2 & 3 both AO and CIT(A) failed to appreciate that the grants received by the society from the Govt. for specific purpose could not be treated as income of the assessee and therefore no tax could be levied on the same. 2. The ld. AR inviting attention to the consolidated order dated 17.09.2015 in the case of the assessee submitted that the ITAT in the year under consideration had restored the issue back to the AO and the AO pursuant to the said order had granted relief to the assessee. Copy of the order dated 28.10.2016 in the case of the identical assessee different Branches was filed. Time was given to the ld. Sr.DR to go through the said order. When the appeal came up for hearing after the pass over, ld. Sr.DR considering the record submitted that in terms of the view taken by the AO, the prayer of the assessee may be allowed.
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We have heard the submissions and seen the record. It is seen that in the case of the assessee, the issue in FRU Nagrota Bhagwan, Tehsil & Distt. Kangra; in PHC Gopalpur, Tehsil – Palampur; and in PHC Banuri, Tehsil Palampur Benches on similar set of facts and circumstances had travelled to the ITAT. The co-ordinate Bench considering identical issues vide consolidated order dated 17.09.2015 in ITA 555, 556 and 557/CHD/2015 for 2010-11 assessment year, had restored the issues to the AO to examine the entitlement of exemption u/s 10(23C)(iiiae) or 10(23C)(iiiac). The Ld. AR has placed the separate orders dated 28.10.2016 in the respective cases wherein the AO considering the scheme where the society was engaged in providing medical facility to the patients; the salaries of the doctors was being paid by H.P. Govt and not by the Rogi Kalyan Samiti; the management of society included government persons who were paid by the government and local persons were engaged in the society for local management only; the AO took the view that the society is exempted u/s l0(23C(iiiae). Taking note of the fact that the aggregate annual receipts of such hospital did not exceed the prescribed limit in the case of these three different branches, the AO passed identical orders the same is reproduced hereunder:
"It is humbly submitted that Rogi Kalyan Samiti Societies are being managed financially by the H.P.Government wholly and substantially. Our society is engaged in providing medical facility to the patients. The salary of the doctors is being paid by H.P. Govt and not by the Rogi Kalyan Samiti, The management of society includes government persons which are paid by the government and local person are engaged in the society for local management only. Therefore our society is exempted u/s lQ(23C(iiiae) as mentioned in the Income Tax Act, 1961, that "any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring mental attention or rehabilitation existing solely for philanthropic purposes and not for purposes of profit, it the aggregate annual receipts of such hospital1 or: 4nstltut'mn do not exceed the amount of annual receipts [Amount .prescribed is Rs. I Crore vide rule 2BC] as may be prescribed or] From the perusal, of the assessment record reveals that the assessee had claimed exemption u/s 10(23C) ……..specific section u/s 10(23C)(iiiae) not mentioned in the return of Income filed on 30.10.2010. - After going through the details submitted and discussion held on this specific issue no adverse inference is being drawn, claim of the assessee is accepted and the income is assessed at Nil as shown in the return of income. 4. We find that the claim of facts being identical is not disputed by the Ld. Sr. DR also. The Ld. AR has canvassed that on account of these findings of the AO himself consistently on the same issue instead of remanding the issue back, necessary relief may be granted. The said request on consideration has not been opposed by the Sr. DR.
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Adverting to the facts of the case it is seen that the claim of the assessee has been rejected by the AO on the specific reasoning that the return has not been filed on time; and the fact that the assessee does not have approval from the prescribed authority etc. The claim accordingly on these grounds was rejected. The issue was discussed by the CIT(A) in the following manner : I have gone through the facts of the case and the above mentioned 6.1 submissions of assessee. The assessee is a registered society and is engaged in improvement of quality and quantity of medical services rendered by various hospitals by charging medical free and the above said circular is applicable to trustees of provident fund superannuation fund etc. by the persons carrying on business or profession exclusively for the benefit of persons employed in such business. Thus the above said circular is not applicable to facts of assessee's case. The case laws relied upon by the assessee also has different facts than assessee's case as in the case of lGIPS there was no element of profit and the issue of applicability provision of section 13 were examined. Keeping in view the facts that assessee is a registered society where the shares of members in AOP is not known, total income has to be charged at maximum marginal rate u/s 167B of the I.T.Act, 1961. Hence this ground of appeal is dismissed and action of the A.O. is upheld. In the result, the appeal is dismissed. 5.1 A perusal of the aforesaid consolidated order of the ITAT shows that identical issue came up for consideration before the Co-ordinate Bench. The Co-ordinate Bench took note of the fact that “the assessee society is a registered society under the Societies Act, 1860 and was constituted with the objectives to act as an autonomous and independent body in the Hospital for strengthening of existing facilities for treatment, to decide the purchase of equipment raising resources in addition to the grants given by the Government as it can levy user charges on various services and facilities provided at the hospital. The society is empowered to retain the Revenue so collected and utilize it for bringing improvement in quality and quantity of services required by the hospital and improving the infrastructure, repair and new construction in the hospital and attached building.” This fact was taken note of by the co-ordinate Bench while considering the facts of ITA 556/CHD/2015, it was also noticed that the claim of the tax authorities was that “there was no approval of competent authority with respect to Section 10(23C)(iv) of the Act”. Similarly the fact that return was not filed within time was also taken note of in para 14 of the aforesaid decision by the ITAT. Considering and relying upon CBDT circular No. 14 dated 11.04.1955 the co-ordinate Bench specifically takes note of the mandate of para 3 of the aforesaid Circular and relying upon the decision of the Apex Court in Mahalaxmi Sugar Mills wherein it had been clearly held that the AO was duty bound to consider and decide the issues in accordance with law these shortcomings noted by the tax authorities were not
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upheld by the Court. The relevant para 3 of the aforesaid Circular considered reads as under: “3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiate in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assesses on whom it is imposed by law, officer should :- (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 5.2 Following proposition of law laid down by the Apex Court in the case of CIT v Mahalaxmi Sugar Mills Co. Ltd 160 ITR 920 was also relied upon by the coordinate Bench where the Hon'ble Supreme Court held in unambiguous terms that: “There is a duty cast on the Income-tax officer to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessee’s taxable income and the consequential tax liability. That the assessee fails to claim the benefit of a set-off cannot relieve Income-tax officer of his duty to apply section 24 in an appropriate case. 5.3 Considering this legal position the Coordinate Bench held that it was the duty of the AO to consider and decide the contention of the assessee and consequently set aside the issue with the following observation : 16. After considering the relevant facts of the present case and the submissions made on behalf of the assessee I think it proper to set aside the order of CIT(A) in toto on this issue and remand the matter to the Assessing officer with a direction to examine the claim of the assessee in accordance with law. If the assessee is found to be entitled to exemption u/s 10(23C)(iiiae) or 10(23C)(iiiac), the same may be allowed to the assessee. I direct the Assessing officer to provide a reasonable opportunity of being heard to the assessee before deciding the issues. 17. Vide ground No.4 of the appeal, the assessee has alternatively submitted that grants received by the Society from the Government for specified purposes could not be treated as income of the assessee and, therefore, no tax can be levied on the same. Since I have restored the main issue to the file of the Assessing officer and, therefore, I think it appropriate to remand this issue also to the Assessing officer for examination and fresh adjudication in accordance with law. Ground No. 4 of the appeal is also allowed for statistical purposes.
5.4. The issue as we now see stands considered and accepted by the AO which position is accepted by the Ld. Sr. DR also. Accordingly, in the said background considering the view taken by the AO pursuant to the direction of
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the ITAT where the position of facts and circumstances and position of law remains identical the appeal of the assessee in the present proceedings is allowed. The assessee’s stand that remand is not warranted in the peculiar facts where the issue stands considered in identical cases is taken note of which has not been opposed by the Revenue. Said order was pronounced in the open court at the time of hearing itself. 6. In the result, appeal of the assessee is allowed. Order pronounced in the Open Court on 22/05/2018.
Sd/- Sd/- (ANNAPURNA GUPTA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ‘Poonam’/AG Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR Asstt. Registrar ITAT,Chandigarh