Income Tax Appellate Tribunal - Mumbai
Habib Ismail Hospital & Medical Trust, ... vs Department Of Income Tax on 4 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "H", MUMBAI
BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DURGA RAO, J.M.
ITA No. 5603/Mum/2009
Assessment Year: 2006-07
Dy. Director of Income-tax(E)-II(1), ... Appellant
R.No. 507, Piramal Chambers,
Lalbaug, Parel,
Mumbai - 12.
Vs.
Habib Ismail Hospital & Medical Trust, ...Respondent
Haji Mohammed Building,
Ground Floor, 115, Shayda Marg,
Dongri, Mumbai - 400 007.
(PAN - AAATH0927P)
ITA No. 5604/Mum/2009
Assessment Year: 2006-07
Dy. Director of Income-tax(E)-II(1), ... Appellant
R.No. 507, Piramal Chambers,
Lalbaug, Parel,
Mumbai - 12.
Vs.
Habib Ismail Education Trust, ...Respondent
Haji Mohammed Building,
Ground Floor, 115, Shayda Marg,
Dongri, Mumbai - 400 007.
(PAN - AAATH0927P)
Appellant by : Mr. V.V. Shastri
Respondent by : Mr. Firoz Andaryojeena &
Mr. S.A. Kanji
Date of Hearing : 04/01/2012
Date of Pronouncement : 21/03/2012
ORDER
PER V. DURGA RAO, J.M.:
Both these appeals filed by the Revenue are directed against the order of CIT(A)-XXX, Mumbai, passed on 16/07//2009 for the 2 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust assessment year 2006-07. Since the identical issue is involved in both these appeals, they were heard together and, therefore, a common order is passed for the sake of convenience.
ITA NO. 5603/Mum/09
2. The grounds raised by the revenue are directed against the action of the CIT(A) in holding that provisions of section 13(1)(b) are not applicable in the case of the assessee trust on the ground that the trust came into existence in 1934 and also that provisions of section 11(4A) are not applicable in the case of the assessee, since no business was carried on by the assessee during previous year.
3. Briefly the facts of the case are that the assessee is a Charitable Trust engaged in the propagation of medical help education to the general public. The assessee runs the Habib Hospital which is open to the general public. The return of income was filed claiming benefits of section 11 showing 'NIL' income. The assessment was completed u/s 143(3) of the IT Act on 29/12/2008 determining total income at Rs. 41,55,830/- after disallowing exemption u/s 11 of the Act. During the course of assessment proceedings, the AO observed that the assessee trust came into existence with effect from 09/02/1977 by way of order of Civil Court, Mumbai in suit No. 6712 of 1976 wherein the old trust i.e. Habib Esmail Memorial Trust constituted vide deed of settlement dated 03/04/1934 was trifurcated into three tursts one of them being the assessee in question. The AO also observed that although the assessee claiming to be charitable in nature, is exclusively working for the benefit of Khoja Muslim Citizen of India and, therefore, the assessee is prima-facie not eligible for exemption u/s 11 of the Act as the same is covered by the provisions of section 13(1)(b) of the Act.
3 ITA NO. 5603 & 5604/Mum/09M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust The AO observed that in the computation of income, the trust had shown rental income of Rs. 25,77,143/- received from M/s Vembly Hotels on account of property of the trust known as Darul Habib which is a hotel. On being asked by the AO to explain the nature of these receipts which were claimed to be rent, the assessee filed a copy of agreement dated 05/03/1992 between the trustees of Habib Esmail Memorial Trust, Habib Education Trust and Habib Esmail Hospital and Medical Trust and M/s Vembly Hotels to whom the said property was given to run as a hotel. The AO after referring to the respective clauses of the Act, came t the conclusion that the assessee Trust is running a business by way of running a hotel which apparently prior to 05/03/1992 was being run by the three trust on their own by way of agreement dated 05/03/1992 the same has been assigned to conductors i.e. M/s Vembly Hotels. Accordingly, the AO concluded that the income of Rs. 25,77,143/- is from business of running hotel at property Darul Habib which is not being incidental to the objects of the assessee trust and the trust does not fulfill the statutory requirements of section 11(4A) of the Act, and, therefore, taxed as business income. Aggrieved by the order of the DDIT(E), the assessee carried the matter in appeal before the CIT(A).
4. Before the CIT(A), the assessee submitted that the assessee is not a new trust which has been established or created or after 01/04/1962, as it is an entity which has been trifurcated from the original trust established in 1934. He, therefore, submitted that section 13(1)(b) of the Act cannot apply to the assessee trust. He pointed out that under this provision, exemption u/s 11 is denied in the case of a charitable trust which is created or established after the commencement of the Act. The important words are 'created' or 'established'. To create or establish, you need a settler, a Trust Deeed and a new administrative set up. It was submitted that no person has 4 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust settled any trust on or after 01/04/1962 there is no settler and there is no trust deed. The original settlor who settled the Habib Esmail Memorial Trust in 1934 has not settled a new trust in 1977 when the city civil court passed its order of trifurcation. The assessee, therefore, submitted that the fundamental requirement of section 13(1)(b) that a new trust had been created or established is not fulfilled, hence, the learned ADIT(E) was wrong in applying the provisions of section 13(1)(b) as the object of this section is to deny to a new trust which have been created or established after 01/04/1962 and cannot be invoked in the case of an old trust which has merely been trifurcated for administrative reasons and to effectuate its objects in a more convenient and focussed manner. It was further submitted that the purpose of the trifurcation was to conduct the educational institution and medical institution in a professonal manner in view of the fact that both these objects require different operational and professional skills and it is for the very reason that the Hon'ble City Civil Court readily agreed to the application for trifurcation in order to promote effectively the objects of the original trust. The assessee, therefore, submitted that it is beyond doubt that section 13(1)(b) is not applicable in the case of the assessee trust and it continues to enjoy the exemption u/s 11 as the original Habib Memorial Trust was granted right from 1934. It is for this very reason that even the income tax department continued with the granting of exemption u/s 11 to the assessee trust even after the city civil court passed its order in 1977. The assessee further submitted that this established position of more than 29 years after the trifurcation took place is sought to be disturbed by the learned ADIT(E) for the first time with effect from assessment year 2006-07. It is well established that though the AO is not bound by the rule of res judicata or estoppel by record, the AO cannot arbitrarily depart from the stand 5 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust taken by his predecessor officers. For this proposition, the assessee relied upon the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs. CIT, 193 ITR 321, 329. The assessee pointed out that the assessee trust does not apply its income for any particular religious community or caste. While the original trust deed mentiones that the beneficiaries will be the members of Khopa community, in fact the income of the trust is applied to members of all communities because the assessee trust admits non khota students also in its educational institution. He contended that these facts had been in fact brought to the notice of the ADIT(E) and a list of non-khoja persons who were given the benefit by the appellant trust is on the record of the tax department. A separate list of non- muslims was given to ADIT(E) at his own request. Despite this fact being on record, the ADIT(E) had wrongly applied the provisions of section 13(1)(b). The assessee finally submitted that the assessee trust is not liable to pay any income tax as it is clearly exempt from tax u/s 11 of the Act, as the income-tax department itself had granted exemption right from 1934 up to assessment year 2004-05. The exemption has been granted for 29 years after the city civil court passed the order of trifurcation. This stand of the income tax department which is legally correct is binding on the present ADIT(E) for the assessment year 2006-07 and all subsequent years. After considering the submissions of the assessee, the CIT(A) held as under:-
"10. I have gone through the f acts of the case, conclusion drawn by the Assessing Off icer and the submissions made by the assessee's representatives. The moot question to be decided is whether on trif urcation of the Main Tru i.e. Habib Esmail Memorial Trust pursuant to the Schemes f ramed b the Bo y City Civil Court, results in creation and establishment 9f New Trust w.e.f . 09.02.1977 and consequently whether such Trusts based on its objects f p prescribed benef iciaries (Khoja community) attract the provisions of section 13(1)(b) of the Income Tax Act, 1961. Further, whether the Trust, based on the nature of income and the terms and conditions of the agreement dated 6 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust 05/03/1 992 entered into with M/s Vembly Hotels can be deemed to carry on the business of running Hotel and accordingly the income received f rom the said MIs. Vembly Hotels can be treated as Business Income, and whether it is mandatory f or the Trust to maintain separate books of accounts f or the said business as envisaged in section 11(4A) of the Income TaxAct,1961.
10.1 On going through the order of the Bombay City Civil Court ref erred to in e assessment proceedings it is observed that the combined objects of education, medical help, welf are etc. of the Main Trust i.e. Habib Esmail Memorial Trust are separated and f or execution of each such object a separate branch, f orum or set up is f ormed under the same umbrella of Main Trust and with same set of Trustees to manage. Besides there is no variation, modif ication or amendment is aff ected in the original object and other substantive provisions of the Trust Deed of April 1934. By the said Court order only a separate distinct (object wise) management scheme is f ramed to carry out the objects of the Main Trust.
10.2 Since separate object wise set-up is carved out f rom main set-up f or management and administration thereof , it is essential that it should have a separate identity. There is no separate Trust Deed f or creation of this bif urcated set-up. The Court order has repeatedly ref erred to the bif urcated Trusts i.e. Habib Esmail Education Trust and Habib Esmail Hospital and Medical Trust as divided parts of the original Trust. Besides, the properties settled under the divided Trusts are only transf erred/divested f rom the original Trust and there is no ne w settlement of any property.
10.3 Besides, the trif urcation_of the Trust exercise does not amou nt closer/dissolution or merger of original entity into ne w entities. On the contrary, the original entity (Trust) with its original constitution (Trust Deed) same set of Trustees very much continue and it exists with its original registration number. simultaneously with the bif urcated Trusts with same set of Trustees, and the objects, though carved out in substance and material f rom original trust objects and incorporated in separate scheme of management f ormed under the said Court order, without any change or dilution.
10.4 The Separate registration numbers under the provisions of Bombay Public Trust Act, under the provisions of section 12A of Income Tax Act, 1961 separate PAN, separate assessable entities under the Income Tax Act, 1961 are in my opinion procedural necessities and conveniences f or identif ications, and such things do not adversely aff ect or destroy the substantive base/existence of an original entity, and theref ore cannot be f atal to its exemption status.7 ITA NO. 5603 & 5604/Mum/09
M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust 10.5 I am, theref ore inclined to accept and agree with the contentions of the Assessee Trust's submissions and interpretations of Trust Deed, order of the Bombay City Civil Court. I f eel the Assessing off icer erred in interpreting the facts of the matter and arriving at erroneous conclusions that the two bif urcated Trust are establishment and creation of new Trust w.e.f f rom 09.02.1977 pursuant to the order of the Bombay City Civil court and that since by its objects, the said ne w Trusts are f or benef it of Khoa Muslim Community citizens of India, it is disabled and not eligible f or exemption under section 11A of the Income Tax Act, 1961 in view of application of section 13(1)(b) of the Income Tax Act, 1961.
10.6 I theref ore, hold that the Assessee Trust i.e. Habib Esmail Hospital and Medical Trust is a divided part of the original Trust i.e. Habib Esmail Memorial Trust of April 1934 and not a ne w Trust established or created pursuant to the order of the Bombay City Civil Court of 1977. Since the said Trust is established and created prior to the commencement of the Income Tax Act, 1961, it does not incur any disability of section 13(1)(b) of the Income Tax Act, 1961 and theref ore is entitled to exemption under section 11 of the Income Tax Act, 1961. This ground of appeal is allowed in f avour of the Assess.
10.7 The Assessing Off icer has giving an alternative f inding that in vie w of the terms and conditions of the conducting agreement dated 05/03/1992 ref erred to in his assessment order particularly various clauses reproduced in the assessment order, that the assessee Trust is carrying a business of running a hotel on their o wn prior to 05/03/1992 and thereaf ter assigned it to the conductors i.e. S. Vembly Hotels. In vie w of this f inding he issued a sho w cause notice to deny exemption under section 11 in respect of the relevant income and proposed to charge the same as business income as per the provisions of the Income Tax Act, 1961.
10.8 I have already decided the main ground regarding exemption under section 11 of the Income Tax Act, 1961 in f avour of the assessee. In this connection the assessee Trust contended that the appellant Trust has never carried on any business activity and the ADIT (E) is f actually in error in taking the stand that the appellant Trust is carrying on the business of the MARINE PLAZA Hotel. Even though the ADIT(E) has reproduced certain paragraphs of the conducting agreement in his assessment order, he has f ailed to reproduce the most relevant clause of the agreement viz. Clause 41, though it was brought to his notice at the time of assessment proceedings. As pointed above, clause 41 clearly prohibits the appellant Trust f rom doing any business activity with the conductor of MARINE PLAZA Hotel (by the owners M/s. Vembly Hotels) This clause vests all the powers of _conducting the hotel business wholly, solely and exclusively with the conductor. The conductor is merely required to pay a monthly compensation by way of rent to the appellant trust. Theref ore, it is very clear and beyond the 8 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust shado w of doubt that the appellant trust is not running any business.__- Hence, the question of maintaining separate books of account as required u/s 11(4A) does not arise in the case of the appellant trust.
10.9 Further, the benef it of exemption under section 11 cannot be denied under section 11 (4A) by taking the stand that separate books of accounts were not maintained f or the alleged business of running a hotel by the appellant Trust. The appellant Trust is not involved in running the MARINE PLAZA HOTEL because this is being done solely, wholly and exclusively by the conductor under the conducting agreement. Clause 41 of this conducting agreement prevents that appellant Trust f rom interf ering or doing any activity of running the hotel business. Theref ore, the appellant trust is not required to maintain separate books of account. Hence, section 11 (4A) is not applicable at all because the income of the appellant Trust is taxable ur respect of the monthly rent which it receives, if at all, such Act.
10.10 On going through the f acts narrated in the assessment order, it is noticed that Vembly Hotels is an hLLsi1#Qc of hotçI, and holds all licences and there is no involvement of the trust whatsoever in running the business of hotels and there is no responsibility or any kind of liability in running the said business for the Trust. Theref ore to construe that the said business was is not established and theref ore the conclusion drawn by the Assessing Officer as mentioned above is unsustainable. The assessee Trust is merely entitled to a f ixed sum of money with prescribed escalation over the tenure of the agreement by whatever name called cannot be treated as business income. In my opinion it is merely an income f rom property of the Trust which is treated by the said M/s. Vembly Hotel as rent.
10.11 In view of the above f acts, I accept the contention of the appellant Trust that the said income is not in the nature of business income and thatjb1rjstst cannot be deemed or construed to carry on the hotel business as held by the Assessing Off icer. Even assuming that the assessee Trust carried on business of hotels, in light of the judgement of the Hon'ble Supreme Court in the case of ACIT vis Thanti Trust (2001) 247 ITR 785 the said business is incidenta tci, achieving the object of the Trust and that the sai,JQ.mis utilized towards the objects of the Trust and accordingly it does not f orf eit the exemption under section 11 of the Income Tax Act, 1961 to the assessee Trust. In vie w of the above set of f acts, the action of the assessing off icer does not appear to be justif ied. Theref ore, the appellant succeeds in this ground of appeal also."
Aggrieved by the order of the CIT(A), the revenue is in appeal before us.
9 ITA NO. 5603 & 5604/Mum/09M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust
5. Before us, the learned DR submitted that the assessee trust came into existence with effect from 09/02/1977 by way of order of City Civil Court, Mumbai in suit No. 6712 of 1976 wherein the old trust i.e. Habib Esmail Memorial Trust constituted vide deed of settlement dated 03/04/1934 was trifurcated into three trusts one of them being the assessee in question. The learned DR further submitted that though the assessee claiming to be charitable in nature, is exclusively working for the benefit of Khota Muslim Citizen of India, therefore, the assessee is not eligible for exemption u/s 11 of the Act and is covered by the provisions of section 13(1)(b) of the Act. He, therefore, pleaded that the order of the CIT(A) may be set aside and that of the AO be restored.
6. On the other hand, the learned counsel for the assessee has submitted that the original trust namely Habib Esmail Memorial Trust established on 3 r d April, 1934 and subsequently the same was registered with Charity Commissioner in the year 1952. He further submitted that the main object of the trust is maintenance, education and advancement of life of poor and deserving Khojas, maintaining hospitals and giving medical relief, establishing, maintaining, or aiding the schools, etc. It is submitted that after the trifurcation of the main trust, i.e. Habib Esmail Memorial Trust, Habib Esmail Education Trust and Habib Esmail Hospital and Medical Trust, came into existence. It is pointed out that the object of the main trust remains unchanged and the original trust deed is continued to be in existence even today, therefore, section 13(1)(b) is not applicable to the case of the assessee. It is submitted that there is only trust deed which was executed in the year 1934 and there is no change in the original objects, no transfer of assets, and the new trusts are same as 10 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust the original trust and the entire trust runs as one unit. In so far as income relating to hotel is concerned, the learned counsel for the assessee submitted that assessee has given the premises to the Conductor on the basis of the agreement and the assessee is nothing to do with the business of the hotel as the conductor is responsible for running the business. The learned counsel for the assessee pointed out from the page no. 15 of the order of the AO clauses 26 & 27 and also page No. 16 para 3.4 of the assessment order and submitted that assessee is receiving purely rental income and is receiving a fixed income irrespective of profit and loss, therefore, it is not necessary to main books of account by the assessee. The learned counsel submitted that no TDS is being deduced as income of the assessee is exempted. Finally, the learned counsel for the assessee submitted that only during the year under consideration i.e. 2006-07, the revenue has raised the objection and in all earlier years and in subsequent years no such objection raised with regard to application section 13(1)(b) of the Act. He, therefore, submitted that principles of consistency has to be followed during the year under consideration. He strongly relied upon the order of the CIT(A) in support of assessee's case.
7. We have heard both the parties and perused the record as well as gone through the orders of the authorities below. The question to be decided is whether on trifurcation of the Main Trust i.e. Habib Esmail Memorial Trust, pursuant to the schemes framed by the Bombay City Civil Court, results in creation and establishment of New Trust with effect from 09/02/1977 and consequently whether such trusts based on its objects for prescribed beneficiaries (Khoja Community) attract the provisions of section 13(1)(b) of the Act. Further whether the trust, based on the nature of income and in the 11 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust terms and conditions of the agreement dated 05/03/1992 entered in to with M/s Vembly Hotels can be deemed to cdarry on the business of running hotel and accordingly the income received from the said M/s Vembly Hotels can be treated as business income, and whether it is mandatory for the trust to maintain separate books of accounts for the said business as envisaged in section 11(4A) o the Act. The AO held that the assessee trust came into existence with effect from 09/02/1977 by way of a order of City Civil Court of Bombay in suit No. 6112 of 1976 which was subsequently registered with the Charity Commissioner and also under section 12A of the Act in 1977 and, therefore, the main purpose of the trust being exclusively for the benefit of Khoja Muslims in India, which is clearly covered under the provisions of section 13(1)(b) and hence not eligible for exemptions u/s 11 of the Act. Accordingly, the AO treated the rental income of Rs. 25,77,143/- received from M/s Vembly Hotels, as business income. The CIT(A) held that the assessee trust i.e. Habib Esmail Hospital and Medical Trust is dividend part of the original trust i.e. Habib Esmail Memorial Trust of April 1934 and not a new Trust established or created pursuant to the order of the Bombay City Civil Court of 1977. He further held that since the said Trust is established and created prior to the commencement of the income-tax Act, 1961, it does not incur any disability of section 13(1)(b) of the Act, and, therefore, is entitled to exemption u/s 11 of the Act. As regards the rental income treated by the AO as business income, the CIT(A) held that the rental income received by the assessee is not in the nature of business income and that the trust cannot be deemed or construed to carry on the hotel business as held by the AO. Following the judgment of the Hon'ble Supreme Court in the case of ACIT V/s Thanti Trust [2001] 247 ITR 785, the CIT(A) held that the said business is incidental to achieving the object of the Trust and that the said income is utilized 12 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust towards the objects of the Trust and accordingly it does not forfeit the exemption u/s 11 of the Act.
8. From the facts of the case, it is seen that the assessee is a public charitable trust established on 3 r d April, 1934 under the name Habib Memorial Trust. This trust was registered with the Charity Commissioner in 1952. The main objects of the said trust is maintenance, education and advancement of life of poor and deserving khojas, maintaining or aiding hospitals and giving medical relief, establishing, maintaining or aiding schools, orphanages, giving of scholarships, providing residential quarters for khojas at cheap or nominal rents either in the buildings forming part of the trust properties or by entering into necessary arrangements with other property owners, relief of poor and distressed relief in the event of great riots, etc. as mentioned in the trust deep dated 3 r d April, 1934. The main trust trifurcated vide order of City Civil Court, Mumbai in suit No. 6712 of 1976 with effect from 09/02/1977 into Habib Esmail Memorial Trust, Habib Esmail Education Trust, and Habib Esmail Hospital and Medical Trust, the assessee and separately assessed under the income-tax Act as separate assessees. The case of the AO is that as per the order of the Hon'ble Bombay City Civil Court Suit No. 6712 two trusts came into existence, namely, i.e. Habib Esmail Education Trust and Habib Esmail Hospital and Medical Trust. The relevant portion of the order of the City Civil Court Bombay is extracted as under:-
"And this court doth f urther order that two separate new schemes be framed for the purpose of carrying out the objects which are deleted from the main trust, namely, one for carrying out the object of establishing and conducting educational institutions otherwise than for prof it and the other for carrying out the object of maintaining, establishing and conducting hospital or other institution for the reception and treatment of persons suffering from ailments or natural defectiveness or for the reception or 13 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust treatment of persons during convalsence or persons requiring medical attention or rehabilitation and carrying out clinical research in medicine existing solely for philanthropic purposes and not f or the purpose of prof it and this court doth further order that the said new scheme be and the same are hereby allowed to be framed and sanctioned as per draf ts annexed and marked Exhibit "E" and "F" to the plaint and as Schedules III and IV hereto and this court doth further order that the trusts comprised in the said two new schemes be treated as divided parts of the main trust and be registered as such at the office of the Charity Commissioner, Maharashtra State, Bombay, under the provisions for the Bombay Public Trusts Act, under such numbers as may be assigned to them by the Charity Commissioner in accordance with the provisions of the Bombay Public Trust Act and the rules framed there under and this court doth further order that the plaintiffs be and they are hereby appointed as the f irst trustees of the said divided trusts under the said two new schemes relating thereto".
9. From the above, it is very clear that the new trust be treated as a divided parts of the main trust and be registered with the Charity Commissioner. In our opinion, the AO has failed to understand the judgment of the City Civil Court, Bombay in proper perspective. Apart from the above, the AO has not doubted the charitable character of the assessee and the only objection raised by the AO is the assessee is only existed for the purpose of Khoja Muslim community and, therefore, the assessee is hit by section 13(1)(b) of the Act. After careful consideration of the assessment order and the order passed by the CIT(A) as well as the material on record, the same trust deed which is executed in 1934 is existed even to-date and except the order of the Court, the object of the Trust is remaining the same. The other two trusts emerged by an order of the Court only for the purpose fo effective management, therefore, section 13(1)(b) is not applicable to the case of the assessee. All the said three units being public charitable trusts, the income of the trust were exempt under section 11 of the Income-tax Act, and are registered u/s 12A of the Act. The 14 ITA NO. 5603 & 5604/Mum/09 M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust income-tax department continued with the granting of exemption u/s 11 to the assessee trust even after the City Civil Court passed its order in 1977. This established position of more than 29 years after the trifurcation took place is sought to be disturbed and overruled by the learned ADIT(E) for the first time with effect from AY 2006-07. We are of the view that though the AO is not bound by the rule of res- judicata or estoppel by record, the AO cannot arbitrarily depart from the stand taken by his predecessor officers. In view of the above findings, the CIT(A) is right in holding that provisions of section 13(1)(b) are not applicable in the case of the assessee trust on the ground that the trust came into existence in 1934 and the provisions of section 13(1)(b) are applicable only in the case of a trust created or established after commencement of the Act, i.e. after 1961 and also holding that provisions of section 11(4A) are not applicable in the case of the assessee's case, since no business was carried out by the assessee during the previous year. In so far as the income from hotel is concerned, there is nothing on record to show that the assessee is running the hotel. Even as per the assessment order vide page no. 15 para 26 & 27 of the order, it shows that the conductor is responsible for running the hotel and settle the disputes. Even the CIT(A) gave a specific finding that as per clause 41 assessee trust prohibited from doing the business and all the powers are vested with the conductor conducting hotel business and the conductor is merely required to pay monthly compensation by way of rent to the assessee trust. In view of the specific findings given by the CIT(A), it cannot be said that the assessee is running hotel business. Assessee being a trust no separate books of account are required to maintain u/s 11(4A) of the Act. Therefore, we do not find any infirmity in the order of the CIT(A) and do not find any reason to interfere with the order of the CIT(A).
15 ITA NO. 5603 & 5604/Mum/09M/s Habib Ismail Hospital & Medical Trust M/s Habib Ismail Education Trust Accordingly, we confirm the order of the CIT(A) and dismiss the grounds raised by the revenue.
ITA NO. 5604/Mum/09
9. Since the issue in this appeal is material identical to that of ITA No. 5603/Mum/09 (supra), respectfully following the conclusions drawn therein, we confirm the order of the CIT(A) and dismiss the grounds raised in this appeal.
10. In the result, both the appeals of the revenue are dismissed.
Pronounced in the open court on this 21 s t day of
March, 2012.
Sd/- Sd/-
(J. SUDHAKAR REDDY) (V. DURGA RAO)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: March, 2012
kv
Copy to:-
1) The Appellant.
2) The Respondent.
3) The CIT (A) concerned.
4) The CIT concerned.
5) The Departmental Representative, "H" Bench, I.T.A.T., Mumbai.
By Order //true copy// Asst. Registrar, I.T.A.T., Mumbai.