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TMI Blog2015 (6) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the record, are that the assessee i.e. Clara Swain Hospital was established in 1870 in Bareilly to provide treatment to the society without any distinction. This hospital has been an institution of the succession of Methodist Churches of United States and of India. In 1940, this hospital was expanded into a general hospital. As per the constitution of Clara Swain Hospital executed on 24th August, 1989, the movable and immovable property in Clara Swain Hospital is the property of Methodist Church in India held in trust by the executive Board of Methodist Church in India, registered under the Societies Registration Act 1860, bearing No. 1155 of 1942-43 at Bombay, successor in interest of Methodist Church in Southern Asia. As per the constitution, the said property shall be managed, maintained and protected by the Board of Governors of Clara Swain Hospital. 4. A joint venture agreement was executed between Executive Board of Methodist Church in India and M/s Ritam Charitable & Education Society. As per this agreement, a joint venture was formed to expand the hospital facilities to at least 300 beds and at the same time open medical college also for imparting the education in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for imparting education in the entire field of medicine. Through this joint venture agreement they have decided to name the medical college as Clara Swain Methodist Medical College & Research Institute. Therefore, whatever transaction was undertaken or exchanged, it was between the Methodist Church in India and M/s Ritam Charitable & Education Society. Though the assessee has filed its return of income in individual status but has no concern with the handing over the possession of the land to M/s Ritam Charitable & Education Society against the receipt of Rs. 10 crore. If any capital gain is accrued, it is accrued in the hands of Methodist Church in India and not in the hands of the assessee. Therefore, the Revenue has wrongly assessed the capital gain in the hands of the assessee. The CIT(A) reexamined the issue in the light of the evidence placed before him but was not convinced with it and confirmed the assessment order. 5. Aggrieved, the assessee has preferred an appeal before the Tribunal. During the course of hearing, the learned counsel for the assessee invited our attention to the order of CIT(A) with the submission that though the CIT(A) has recorded certain clauses of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to provide holistic health care and also to construct a Clara Swain Methodist Medical College and Research Institute for imparting education in all the branches of medical science. It was further agreed that the aforesaid institute shall be managed by the second party i.e. M/s Ritam Charitable & Education Society with the overall supervision of the Board and the Board shall be known as Clara Swain Board. 5.1 The composition of Board has also been specified in this agreement. As per this agreement, the first party would hand over the possession of the land in Clara Swain Hospital to second party for construction and development. It was also agreed that the management seats in the medical college would be shared equally between both the parties. The learned counsel for the assessee further contended that it is abundantly clear from this joint venture agreement that Methodist Church in India owns the Clara Swain Hospital. The first party has handed over the possession of the land in Clara Swain Hospital to M/s Ritam Charitable & Education Society against receipt of Rs. 10 crore with certain understanding. Therefore, whatever transaction has been done, it was between the Methodist C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital popularly known as Mission Hospital. Since the first party desired to expand the hospital facilities and also to open medical college for imparting education in the entire field of medicine, it approached the second party i.e. M/s Ritam Charitable & Education Society who has agreed to provide necessary finance, management and other inputs on the basis of their experience, which may be required to implement the project. As per joint venture agreement, the name of the hospital and medical college would be Clara Swain Methodist Medical College and Research Institute and this hospital will be run by both the parties to provide holistic health care. It was also agreed upon between the parties that the aforesaid institute shall be managed by the second party with overall supervision of the Board and the name of the Board shall be Clara Swain Board to be formed by the members of both the parties. The first party will provide use of land and available infrastructure, movable and immovable property with the consent of the Board to the second party for joint venture project and in lieu thereof, the second party has agreed to pay Rs. 10 crore to the first party. It is also clarified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the education in the entire field of Medicine. However, due to paucity of funds, and other reasons, the First Party is not in a position to start its ambitious project. AND WHEREAS, the Second Party has agreed to provide necessary finances, management and other inputs on the basis of their experience which may be required to implement the said project of the First Party. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx NOW THIS AGREEMENT WITNESSESS AS UNDER: 1. The agreement between parties hereunder is for running of aforesaid hospital and starting and running of the Medical College in the Name and Style of 'Clara Swain Methodist "Hospital' and Clara Swain School of Nursing and Clara Swain Methodist Medical College & Research Institute. 2. The Clara Swain Methodist Hospital will be run by the First Party and the Second Party jointly as a Joint- Venture to provide holistic health care, and establish, manage, run and construct 'Clara Swain Methodist Medical Colleges and Research Institute' for imparting education in all the branches of medical sciences (Allopathic, Ayurvedic, Homeopathic, Naturopathy) and to act as consultants and advisors and provide technical know-how fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting as well as future additions) and the ownership of the said property will always vest with the First Party. It is understood that during the tenure of this joint venture Agreement, the First Party will not sell/ lease/alinate the said Property/land building including new super structure. The Second Party shall be solely responsible for any violation due to non-performance on the part of the Second Party such as unsettled liabilities, creditors, vendors, lenders etc. The property of the First Party shall at no point of time be attached for settlement of dues of any Third Party (Creditor, vendors, lenders etc) or such dues evolving out of such non-performance/ unsettled dues. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 12. The first party shall provide in the joint venture plant & machinery, equipments, vehicles and other assets related to the hospital to the second party and they can be used/altered for the hospital, school of Nursing and Medical college and Research Institute purposes only in consultation with the 'Board'. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 14. The first party has agreed to permit uses of the land and building including 150 bedded existing hospital more partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritable & Education Society. 7.2 Moreover, onetime payment of Rs. 10 crore was also not made to the assessee. The payment was made to Methodist Church in India through DD issued in favour of Executive Board of Methodist Church in India. Since the assessee has not received any consideration in lieu of any transfer of the capital asset, there is no question of any capital gain in the hands of the assessee. Whatever capital gain has arisen, it is only in the hands of Methodist Church in India and not in the hands of the assessee. Therefore, we are of the view that the Revenue has wrongly assessed the capital gain in the hands of the assessee on transfer of any right in movable or immovable property or land in favour of the M/s Ritam Charitable & Education Society. So far issue of invocation of section 50C is concerned, we find that since the capital gain cannot be taxed in the hands of the assessee, the issue remains academic only and we therefore, decline to adjudicate the same. Accordingly, we set aside the order of CIT(A) and delete the additions of capital gain made in the hands of the assessee. 8. In the result, the appeal of the assessee stands allowed. (Order was pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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