Income Tax Appellate Tribunal - Jodhpur
M/S. Rajasthan Medical Relief Society, ... vs Department Of Income Tax on 22 April, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
JODHPUR BENCH, JODHPUR
BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND
SHRI N.K.SAINI, ACCOUNTANT MEMBER
ITA No. 414/JU/2013
Assessment Year: 2009-10
The Income-tax Officer Vs. M/s Rajasthan Medical Relief
Ward - 1(4) Society
Udaipur C/o M.B. Govt. Hospital
Udaipur
PAN No. AAATR 5506 L
(Appellant) (Respondent)
CO No. 33/JU /2013
A/o ITA No. 414/JU/2013
Assessment Year: 2009-10
M/s Rajasthan Medical Relief Vs. The Income-tax Officer
Society Ward - 1(4)
C/o M.B. Govt. Hospital Udaipur
Udaipur
PAN No. AAATR 5506 L
(Appellant) (Respondent)
Assessee by : Shri Rajendra Jain
Department by : Shri N.A. Joshi, DR
Date of Hearing : 22.04.2014
Date of Pronouncement : 02.05.2014
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ORDER
PER HARI OM MARATHA, J.M.
This appeal by the revenue and cross objection [CO] by the assessee are directed against the order of the CIT(A), Udaipur dated 30.04.2013 pertaining to A.Y 2009- 2010.
2. Briefly stated, the facts of the case are that the assessee is a society running a hospital and financed mainly by the State Government which is established for treating patients suffering from various diseases. The society is established as a Philanthropic Institute which is exempt from tax u/s 10(23)(iiiac) of the Income-tax Act, 1961 ['the Act', for short]. This assessee-society is also registered u/s 12AA of the Act vide letter dated 16.7.2003 w.e.f. 6.8.1997. For A.Y. 2009-10, the assessee-society filed its Return of Income [ROI] on 7.12.2009 declaring NIL income. The A.O. found that out of the total receipts of 3 Rs. 7,52,52,002/-, the assessee-society has spent only Rs. 5,22,97,678/- during the relevant year which amounts to 69.5% of the receipts and has set apart the remaining amount. In case the assessee has to set apart receipts more than 15%, it has to declare in Form No. 10 upto the last date on which the return u/s 139(1) of the Act can be filed. In this case, such a notice was given on 7.10.2011 which was beyond the permitted time. Therefore, the A.O. has not allowed the exemption qua this amount as per provisions of section 11(2) of the Act for setting apart the receipts which were not spent during the year. The A.O. has accepted capital expenditure of Rs. 73,43,708/- after depreciation. The A.O. has observed that the assessee- society is not entitled to exemption u/s 10(23C(iiiae) of the Act because its total receipts are more than Rs. 1 crore. Finally, the A.O. has assessed the income of the assessee at Rs. 43,28,820/-. Aggrieved, the assessee preferred appeal and the ld. CIT(A) has given part relief to the assessee.
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3. The revenue has filed appeal against the relief granted to the assessee-society by raising the following grounds of appeal:
"On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:
"1. allowing the deduction u/ 11(2) of the I.T. Act ignoring the fact that the assessee has not filed form No. 10 for setting apart of funds before the due date of return filing u/s 139(1) of the Act.
2. allowing the set off unabsorbed deduction of A.Y. 2008-09 of Rs. 88,26,657/- in A.Y. 2009- 10 though no any business activity is carried out and there is no income under the head 'profits and gains of business'.
3. allowing the claim of the assessee that the entire income is exempt u/s 10(23C)(iiiac) being society substantially financed by the Government ignoring the fact that as per the 5 audit report the assessee claimed exemption u/s 10(23C)(iiiae) of the Act and the A.O. disallowed the same as during the year under consideration the total receipts of the assessee exceeds Rs. 1 crore.
4. The assessee-society has raised the following grounds in its CO:
"On the facts and in the circumstances of the case, the ld. CIT(A) was fair and just in allowing the deduction u/ 11(2) of the I.T. Act as the assessee has filed Form No. 10 much before the date of completion of assessment on 20.12.2011. The same is allowable as held by the Hon'ble Rajasthan High Court in the case at 208 ITR 568 and by the Hon'ble Supreme Court in case reported at 247 ITR 201 [SC]..
2. On the facts and in the circumstances of the case, the ld. CIT(A) was fair and just in allowing the claim of unabsorbed depreciation of A.Y. 2008-09 amounting to Rs. 88,26,657/- to the extent of income available. The same deserves to be upheld.6
3. On the facts and in the circumstances of the case, the ld. CIT(A) was fair and just in allowing the exemption u/s 10(23C)(iiiac) to the society. The same deserves to be upheld."
We find that the CO filed by the assessee has simply been filed in support of the impugned finding. Therefore, the cross objection of the assessee stands dismissed.
5. Before us, both the parties have advanced similar arguments in respect of revenue's appeal which were raised before the ld. CIT(A).
6. We have found that the time limit for giving notice for accumulation is extended upto the completion of assessment order. This legal fact is found supported by the judgement of the Hon'ble Apex Court rendered in the case of CIT Vs. Nagpur Hotel Owners Association [2001] 247 ITR 201 [SC]. Further, the Hon'ble Jurisdictional High Court in the case of CIT Vs. Anjuman Moina Fakharia [1994] 208 ITR 7 568 [Raj]. In the given case, obviously the assessment was completed on 20.12.2011. The Form No. 10 was admittedly filed before the A.O. on 7.10.2011 which is much before the completion of the assessment order u/s 143(3) of the Act. Thus, in view of the above stated dictum of the Hon'ble Jurisdictional High Court and that of the Hon'ble Apex Court the A.O. cannot deny deduction u/s 11(2) of the Act to this assessee. Therefore, we confirm this finding of the ld. CIT(A). Further, the assessee-society has claimed exemption u/s 10(23C)(iiiac) of the Act and not u/s 10(23C)(iiiae) of the Act as the receipts of the assessee-society are from treatment given to the persons suffering from illness on charitable considerations. The assessee society is substantially found financed by the State Government, which fact has been verified by the A.O. and has not been rejected by him. The State Government employees are executive office bearers of the society and its doctors, nurses and other staff are paid by the State Government itself. Therefore, we do not find much substance in Ground No. 3 of revenue's appeal. 8 Further, set off of unabsorbed depreciation carried forward from earlier years could be allowed from income from other sources even if the assessee had no income falling u/s 28 of the Act. Accordingly, the entire addition made by the A.O. have been correctly deleted by the ld. CIT(A). Therefore, we do not find any force in Ground Nos. 1,2 and 3 of revenue's appeal and accordingly dismiss the same.
7. In the result, the appeal of the revenue as well as the cross objection of the assessee stand dismissed.
Order Pronounced in the Court on 02 nd May, 2014.
Sd/- Sd/-
(N.K.SAINI) [HARI OM MARATHA]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 02 n d May, 2014
VL/-
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Copy to:
The Appellant
The Respondent
The CIT By Order
The CIT(A)
The DR
Assistant Registrar
ITAT, Jodhpur