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Institute of Haematology Versus ADIT (E) , Trust Circle-II, New Delhi

2016 (2) TMI 380 - ITAT DELHI

Exemption u/s 11& 12 - Held that:- As decided in ITPO V. DG IT (Exemptions) (2015 (1) TMI 928 - DELHI HIGH COURT ) is relevant in this particular case. The said judgment held that “the expression “charitable purpose” is not to be construed in a vacuum but in the specific context of Section 10(23C)(iv) which specifically deals with income received by any person on behalf of, inter ala, an institution established for charitable purposes. Therefore, the meaning of the expression “charitable purpose .....

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ct that the assessee’s main activity of providing medical facility at the subsidies rate does amount to charitable purpose.

It is admitted that the assessee has violated the provisions of Section 13(1)(d) r/w/s Section 13(3) and Section 11(5) of the Income Tax Act, 1961 and added income of ₹ 2,22,000/- has to be taxed at the maximum marginal rate of tax as per the provision of Section 164(2) of the Income Tax Act, 1961 as per the various case laws submitted separately, which hav .....

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Ld. CIT (A) 40, New Delhi. 2. The grounds of appeal are as follows:- 1. In denying the exemption u/s 11& 12 of the Income Tax Act when the assessee trust is registered u/s 12A & also registered u/s 80G of the IT Act and when there was compliance with objects of the trust by using the income for charitable purposes and the trust having been exempted in the past. 2. In not restricting the addition to ₹ 2,22,000/- being the interest on the advances given to the specified persons in v .....

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HOUT PREJUDICE TO THE ABOVE. 4. In making an addition of ₹ 2,22,000/- towards notional income of interest on amounts given out of its capital and reserves, if the exemption u/s 11 & 12 of the IT Act has been denied. 2. The assessee is a charitable trust registered u/s 12A on 29/6/1999 of the I.T Act, 1961 and also registered under Section 80G of the Act on 07.08.2009 for the A.Y. 2010-11. The assessee is involved in pathology for the test of blood and urine etc. and is doing the same a .....

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of the managing trustee (Shri Divya Bhushan Lal) and the details of loans are as under:- Sl No. Name Amount Relation 1. Mrs. Neha Lal 6,00,000/- Wife of one of the trustee 2. Mr. Anirudh Lal 5,00,000/- Son of one of the trustee 3. Mr. Anuj 5,50,000/- Son of one of the trustee 4 Mr. Narender Pal 1,89,778/- Total 18,39,778/- 3. The A.O has found that there is violation of Section 11 (5) r.w.s 13 (1) (d) and has accordingly denied the exemption u/s 11(1). The A.O has also made the addition of notio .....

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11(1) of the Income-tax Act. The CIT(A) dismissed the contention of the assessee related to exemption u/s 11(1) as provided u/s 13(1D) and confirmed the order of the Assessing Officer. The CIT(A) further held that the estimated disallowances @ 10% out of the total expenses are concerned the same has been made on estimated basis without any valid reasons and accordingly the same was deleted. 3. The Ld. AR submitted that Section 11 & 12 provides exemption from tax to the income of a charitable .....

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persons. In other words, section 11 exempts the income of the trust from taxation but Section 13 provides taxability of certain incomes of the trust if these were not applied or used for the fulfillment of the objects of the trust maybe either u/s 13(1)(c) of u/s 13 (1) (d) of IT Act, that part of the income of the trust would be brought to tax and taxed at the maximum marginal rate as per the proviso to Section 164 (2) of IT Act. 4. The Ld. AR further submitted that the assessee trust is regist .....

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ities as envisaged in its trust deed. The trustees do not get any profit or any benefit from the trust in the form of any salary, perks or any concession. The trust is providing free, concessional / subsidized rates, to the needy in the form of medical relief as per the data given at pages 16-25 of the paper book submitted. The activity of the trust falls under the first three limbs of Section 2(15) which is given under board circular no. 11/2008 dated 19.12.2008 (2009) 308 ITR (ST) 5. The Ld. A .....

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nder: Definition of Charitable Purpose in Section 2(15) - Amendment of Section 2 (15) by Finance Act, 2008 - Validity of Amendment - Amendment to be read down - Primary and dominant object of institution to advance General Public Utility - Income generated by commercial activities incidental - Charitable Institution entitled to Exemption. Exemption u/s. 11 & 12 cannot be denied to the assessee as it is carrying on medical relief in compliance with the objects of the trust for charitable purp .....

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n addition of ₹ 2,22,000/- to the returned income of the trust. On this account, the Assessing Officer, denied exemption under Section 11 & 12 for the Assessment Year 2010-11 and assessed it as an AOP. He also disallowed 10% of the expenses claimed amounting to ₹ 3,41,964/- on adhoc basis. The CIT(A) while deleting the adhoc addition of ₹ 3,41,964/- in expenses, confirmed the denial of exemption under Section 11 and 12 as done by the Assessing Officer. As regards the denial .....

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