TMI Blog2015 (6) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... hodist Church in India. The assessee is nowhere a party to the joint venture agreement. It was simply a hospital managing the affairs of the hospital only. It did not own the property of the hospital including the land therein as per its constitution as it was owned by Methodist Church in India. Therefore, from any angle, if the joint venture agreement and constitution of Clara Swain Hospital is seen, it would be abundantly clear that assessee has not transferred any land or any right in the capital asset in favour of M/s Ritam Charitable & Education Society. Moreover, onetime payment of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entire field of medicine. As per the joint venture agreement, the second party i.e. M/s Ritam Charitable Education Society has paid a sum of ₹ 10 crore to the Methodist Church in India through DD issued in favour of the Executive Board of Methodist Church in India. This agreement was examined by the Assessing Officer and formed a view that through this joint venture agreement, the assessee Clara Swain Hospital has given the possession of the land to M/s Ritam Charitable Education Society against receipt of ₹ 10 crore therefore, there is transfer of land in favour of the second party i.e. M/s Ritam Charitable Education Society. Since this is a transfer of a capital asset as per the provisions of section 2(47)(v) of the Act, the Assessing Officer has computed the capital gain in the hands of the assessee. He accordingly, while cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht 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 the joint venture agreement but has finally concluded that the capital gain has accrued in the hands of the assessee having overlooked the fact that the agreement was executed between the Methodist Church in India and M/s Ritam Charitable Education Society and the consideration of ₹ 10 crore was received by the Executive Board of Methodist Church in India. The learned counsel for the assessee further invited our attention to the constitution of Clara Swain Hospital, which is available at page No. 21 to 43 of the compilation of the assessee filed along with the stay application with the submission that as per Article I(3), Clara Swain Hospital belongs to Methodist Church in India, successor in interest of the Methodist Church in Southern Asia within the jurisdiction of North India Regional Conference and as per Artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antly 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 ₹ 10 crore with certain understanding. Therefore, whatever transaction has been done, it was between the Methodist Church in India and M/s Ritam Charitable Education Society and if any capital gain is accrued on account of transfer of land by virtue of section 2(47)(v) of the Act, it is in the hands of Methodist Church in India. The assessee was simply a hospital which was being managed and controlled by the Methodist Church in India and it does not own any land therein. It was simply an entity which is running a hospital. Though the return has been filed by the assessee in individual capacity but it does not mean that it owned the land and the property in the hospital. Therefore, no capital gain has accrued in the hands of the assessee. 6. The learned D. R., on the other hand, has submitted that the assessee has filed the return of income and also got the exemption u/s 12A of the Act. The hospital was managed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame 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 ₹ 10 crore to the first party. It is also clarified in this agreement that the management seats in the medical college will be shared equally by both the parties. The relevant clause, necessary to adjudicate the nature of issue of transfer, are extracted hereunder for the sake of reference: This agreement is made on this 11th day of August 2009 between the Executive Board of the Methodist Church in India (formerly known as the Executive Board of the Methodist Church in Southern Asia and successor in the interest of the American Mission, Methodist Episcopal Church of United States of America, Methodist Episcopal Church South) having its office at 21, YMCA Road, Mumbai) represented by its Secretary and constituted Attorney Rev. Subodh C. Mondal S/o Late Mr. Gurucharan Modal, R/o Methodist Centre, 21, YMCA Road, Mumbai Central, Mumbai- 400 008, and thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst 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 for the establishment, operation and improvement of Hospitals School of Nursing, Medical Centers, Medical Colleges, Research Institute and Laboratories in India and abroad. xxxxxxxxxxxxxxxxxxxxxxxxxxxx 4. The aforesaid institutions shall be managed by the Second Party with the overall supervision by the Board . The 'Board' shall be known as Clara Swain Board . The composition of the 'Board' shall be as follows: Methodist Church in India shall have Eleven (11) members. And Eleven (1) other members of the Second Party. The other details of the 'Board' will be as per Clauses -33- 51. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 6. The Second Party will provide the funds for the aforesaid in accordance with the needs of the project and the First Party will provide use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 particularly described hereunder the annexed map to the second party for a period of 30 (thirty) years. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 17. As and when the medical college is set up, it is agreed that both parties will equally share the management seats (50% - 50% as provided in clause No. 28). Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 20. The second party shall provide co-sponsorship management expertise, manpower and manage the functioning of the medical college and research institute and shall run the college in association with the first party. The second party shall mobilize manpower and also required financial resources and provide necessary management expertise to run and will run and build all required infrastructure in full for the establishment and running ..... X X X X Extracts X X X X X X X X Extracts X X X X
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