TMI Blog2019 (11) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2008-09 wherein while dealing with this issue in detail, the Ld. CIT(A) reached a conclusion that on the date of the observations of the learned Assessing Officer that there is no mechanism with the Department to determine valuation of rents imperative the adjudicatory authorities to look further corroborative evidence in the absence of which it is not desirable to disturb the consistent view taken over a period of more than two decades. We are in agreement with the CIT(A) that not only on the basis of the rule of consistency but also on the basis of the facts relating to the rent received by the assessee from HLI vis- -vis the rent under the Delhi Rent Control Act. Without vouchsafing the correctness of the information received from the website and without correlating the information furnished by the property dealers without realities on ground with a specific reference to the property in dispute, it is not open for the AO to proceed to make addition, that disturbing the accepted position for about more than two decades. No change of facts and circumstances are brought on record and no independent evidence with a specific relation to the property in dispute is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al relief and relief to the poor and no evidence is available on record to say that the assessee has been providing services in the nature of business. We, therefore, are of the considered opinion that the corpus donation is a capital receipt irrespective of whether the institution enjoys the benefit of Section 11 or not, but particularly in this case, it is consistently held in the preceding paragraphs that the assessee is entitled to exemption under section 11 of the Act and, therefore, the question of subjecting the corpus donations to tax does not arise. Section 2(15) of the Act has no application to the facts of the case, so also in view of our factual finding that the scholarship benefit is extended to all the eligible persons irrespective of a particular community, section 13(1)(b) of the Act also cannot be invoked. - I.T.A. No.5411/Del/2012, I.T.A. Nos.1640 & 1642/Del/2019, I.T.A. No.4789/Del/2012, I.T.A. No.3403/Del/2014, I.T.A. Nos.1845 & 4260/Del/2016, Cross Objection No.464/Del/2012 (In I.T.A. No.4789/Del/2012) - - - Dated:- 1-11-2019 - Shri Prashant Maharishi, Accountant Member And Shri K. Narasimha Chary, Judicial Member For the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. In the appeals preferred by the assessee, Ld. CIT(A) reversed the assessment orders for the assessment years 2007-08, 2008-09 and 2010- 11 whereas confirmed the same for the assessment year 2009-10. For assessment years 2010-11 and 2011-12, the Ld. CIT(A) had allowed exemption under section 11 of the Act. 4. Learned Assessing Officer also invoked the proviso to section 2 (15) of the Act in respect of the royalty income earned by the assessee pursuant to an agreement entered into between the assessee and HLI for the use of the brand names/patent rights (owned by HNF) for its medical preparations. According to the learned Assessing Officer, the said royalty represented a commercial receipt as it assisted HLI in furthering its business activity. 5. Besides this, learned Assessing Officer recorded that the assessee paid a major portion of the scholarship amount to the students of a particular religious community and therefore there is violation of section 13(1)(b) of the Act. We shall deal with these aspects hereunder. ITA No. 1640/Del/2019 (AY 2007-08). 6. Coming to the issue covered by grounds No. 1 to 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g vacant prior thereto; and that there had to be uniformity in treatment and consistency of approach when the facts and circumstances were identical and the learned Assessing Officer cannot change his view by examining the same set of facts in a different light, more so when the question is one of an exemption enjoyed over a few decades and the case of the Department sans evidence. Ld. CIT(A), therefore, for the assessment year 2008-09 had taken a view that such an addition is not sustainable. However a different view was taken for few other years. 8. It is the submission on behalf of the assessee that right from 1981- 82 for about a period of 26 years, on the same set of facts, the rents received by the assessee in respect of the property at Asaf Ali Road, New Delhi has been accepted by the Revenue, that the rent between the parties had been increased from time to time, beginning from ₹ 20,000/- per month from 1981-82 and going up to ₹ 2 Lacs per month in the period under consideration, that the rent received is higher than the annual lease value fixed by the Municipal Corporation of Delhi for the purpose of house tax, that the HLI to whom the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange the views by looking at the same set of facts in a different manner more so when the question is of exemption enjoyed by an assessee for the last few decades and case of Revenue sans evidence and based entirely on surmises and conjectures. 12. It could be seen from the letters issued by HSA reality services and CB Richard Ellis South Asia private limited, they have given information available with them and to the best of their knowledge and belief whereas CB Richard Ellis South Asia Private limited is clear in their observation that there is no verified market referral rate and the information furnished by them and make no guarantee, warranty or representation about it, requested the learned Assessing Officer to independently verify and confirm its accuracy and completeness. They are also specific in their statement that the information furnished by them does not represent the current or future performance of the market. Even on the face of the caveat mentioned above, it does not seen from the record that the Assessing Officer did any independent exercise to verify the correctness or applicability of the information furnished by those two persons vis- -vis th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the submissions made on either side which are conclusive that the law requires the Revenue to bring on record cogent evidence to justify the invocation of section 13 of the Act and the material collected by the learned Assessing Officer from the Internet as well as the estate agents cannot be termed as the collaborative piece of evidence to any facts which is established substantively first; that the actual rent received by the assessee from HLI far exceeds the valuation adopted by the MCD for the purpose of levying house tax as could be seen from the information furnished by the assessee and also that unless and until the learned Assessing Officer brings on record some credible information, the burden to rebut does not shift to the assessee. 16. We are, therefore, convinced with the reasoning given by the Ld. CIT(A) in his order for the Assessment Year 2008-09 wherein while dealing with this issue in detail, the Ld. CIT(A) reached a conclusion that on the date of the observations of the learned Assessing Officer that there is no mechanism with the Department to determine valuation of rents imperative the adjudicatory authorities to look further corroborati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted by the Ld. AR that from a reading of section 12(1) of the Act and Section 2(24)(iia) of the Act, it clearly emerges that the position would change in case an institution is not treated as a charitable being denied the benefit of section 11, then the sums received as voluntary contributions would not be treated as income . He placed reliance on the decision of the Hon ble Andhra Pradesh High Court in the case of CIT vs. SRMT staff Association (1996) 221 ITR 234 (AP). 20. On grounds No.1 to 5, it is held that the assessee cannot be denied exemption under section 11 and 12 of the Act by invoking the provisions under section 13(2)(b) of the Act read with section 13(3) of the Act. On the face of the findings returned on grounds No. 1 to 5, the question of alternative plea does not arise and any discussion on this issue is only an academic one. We therefore dismiss this ground. 21. I.T.A. No. 1640 of 2019 is, accordingly, allowed in part. ITA No. 4789/Del/2012 and C0 464/Del/2012. 22. Ground No. 1 of ITA 4789/Del/2012 is substantially the same as is dealt with in the immediately preceding paragraphs whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11 of the Act to the assessee by invoking the provisions under section 13(2)(b) of the Act read with section 13(3) of the Act and such an issue has been dealt with in extenso in ITA No. 1640/Del/2019 and it was held in favour of the assessee. Following the same, we allow this appeal. ITA No. 3403/Del/2014 (2010-11). 28. There are three issues involved in this appeal. First issue is relating to the finding of the Assessing Officer that the assessee has been carrying out activity in the nature of trade, commerce or business and thus, is covered by the proviso to section 2(15) of the Act inasmuch as the assessee received a sum of ₹ 36,66,91,558/- as royalty from the Hamdard Dawakhana on account of patent rights of the products manufactured by it. According to the learned Assessing Officer, the said royalty amount represented a commercial receipt as it assisted HLI in furthering its business activity. 29. Ld. CIT(A) in his order observed that there is no dispute that the assessee is a charitable trust and is involved in relief to the poor, education and medical relief; that the assessee is not involved in any trade, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . objects‟ and functions‟ is immaterial, as it is only a matter of form and does not alter the manner of application of donations received by HNF. 63. The DGIT(E) in the impugned order dated 21.08.2013 as well as in the affidavit on record admits that HNF‟s main activity is donation to Jamia Hamdard University - which qualifies under education‟ in Section 2(15). Further, it was noted that HNF is making relatively small donations‟ to HES, BEB and AIUTC. It was held that HES is carrying out charitable activities falling in the first three categories as well as the residual category, whereas BEB and AIUTC are carrying out charitable activities under the residual category. This Court does not deem it necessary to examine the activities of HES, BEB and AIUTC in detail, for it has already found that Hamdard‟s and HNF‟s objects fall within the first three categories of charitable purpose‟ under Section 2(15), and the fact that HNF‟s charitable activity carried out through Jamia Hamdard University - admittedly comprising of bulk of HNF‟s charity - also falls under one of the first three categories ( education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither side. Facts of this case are quite similar to the facts involved in the case of Patanjali Yogpeeth (Nyas) (supra) wherein it is held that in the absence of any allegation or proof as to the assessee undertaking any activities in the nature of trade, commerce or business, donations received by the assessee forms part of the corpus of trust and thus capital receipt are not liable to tax. The objects of the assessee as discussed above clearly established that they are in the nature of providing education, medical relief and relief to the poor and no evidence is available on record to say that the assessee has been providing services in the nature of business. We, therefore, are of the considered opinion that the corpus donation is a capital receipt irrespective of whether the institution enjoys the benefit of Section 11 or not, but particularly in this case, it is consistently held in the preceding paragraphs that the assessee is entitled to exemption under section 11 of the Act and, therefore, the question of subjecting the corpus donations to tax does not arise. We accordingly direct the assessing officer to delete the addition made on this account. ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority for some years. Further, Revenue failed to establish before us as to how the findings of the Ld. CIT(A) on this factual aspect are incorrect for this Assessment Year 2011-12 by placing the material that was available before the Assessing Officer to reach a conclusion that the provisions under section 13(1)(b) of the Act are applicable to the facts of the case. In the absence of any such collaborative piece of material, we find it difficult to disturb the factual finding written by the Ld. CIT(A). We, therefore, while confirming the findings of the Ld. CIT(A), dismiss this ground of appeal. 40. Insofar as third ground of this appeal is concerned it relates to the interest under section 234B, 234C and 234D, which is consequential to the result of the other grounds. Since the benefit of section 11 being accorded to the assessee, this ground does not survive and is dismissed. ITA 4260/Del/ 2016 (2012-13). 41. Insofar as the first ground of appeal is concerned, it relates to the denial of the exemption under section 11 of the Act to the assessee by invoking the provisions under section 13(2)(b) of the Act read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these grounds of appeal. 45. Ground No. 6 relates to the issue of taxing the corpus donations. This issue is covered by ground No. 3 in ITA No. 3403/Del/2014 (supra) and ground No. 3 in ITA No.4260 /Del/ 2016 (supra), wherein by placing reliance on the decision of a coordinate Bench of this Tribunal in the case of Patanjali Yogapeeth (supra), we held that the corpus donations cannot be brought to tax because they are in the nature of capital receipts. Since the facts and questions of law are similar, we follow the same and allow this ground of appeal of the assessee. 46. Ground No. 7 relating to the non-adjudication of grounds No. 2 and 4 by the Ld. CIT(A) and such grounds related to exemption under section 11 and the applicability of the proviso to section 2 (15) of the Act and the invocation of the proviso to section 13(1)(b) of the Act. However, we dealt with such issues in the preceding paragraphs and held them in favour of the assessee. Following the same, we hold that the proviso to section 2(15) of the Act has no application to the facts of the case, so also in view of our factual finding that the scholarship benefit is ext ..... X X X X Extracts X X X X X X X X Extracts X X X X
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