TMI Blog2022 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Bombay in the case of Champa Charitable Trust [ 1994 (12) TMI 56 - BOMBAY HIGH COURT] Therefore, taking into consideration the submissions of ld. AR and ld. DR and our discussion made hereinabove paras, we find no infirmity in the order of CIT(A) in holding the DMH is a prohibited person u/s. 13(3)(b) and consequently denying exemption u/s. 11 of the Act for violation of provision u/s. 13(1)(c) of the Act to the assessee. Thus, ground Nos. 1 to 6 raised by the assessee are dismissed. Denying exemption u/s. 11 of the Act in the light of provisions u/s. 13(6) - As decided in AUDYOGIK SHIKSHAN MANDAL, PUNE [ 2018 (12) TMI 1344 - BOMBAY HIGH COURT] observed that the law laid down by the Hon ble High Court of Karnataka FR MULLERS CHARITABLE INSTITUTIONS [ 2014 (2) TMI 1033 - KARNATAKA HIGH COURT] in holding the benefit of section 11 of the Act will not be available to diverted income and also observed that in order to come to such conclusion, the Hon ble High Court of Karnataka placed reliance on the decisions of High Courts of Bombay and Delhi in the cases of Sheth Mafatlal Gagalbahai Foundation Trust [ 2000 (10) TMI 26 - BOMBAY HIGH COURT] and Agrim Charan Foundat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act i.e. a prohibited person, thereby, meaning the donation towards corpus is a contribution inconsideration to the hospital run by the DMH which is owned by the assessee. The AO held there is contravention of provision of section 13(1)(c) r.w.s. 13(3)(b) of the Act and denied exemption u/s. 11 of the Act to the assessee. The CIT(A) confirmed the same. 5. Before us, the ld. AR, Shri Pratik Sandbhor refers to the provisions u/s. 13(3)(b) of the Act and submits that the contribution means something contributed with condition or expectation of some benefit in return. He refers to section 11(1)(d) and submits that voluntary contribution made with specific direction that should form the corpus of the Trust shall not be included in the total income. Voluntary contribution means a contribution made unconditionally without any expectation and specific direction for own use of funds contributed. He argued that the contribution is different from voluntary contribution and precisely for that reason the word voluntary is prefixed. He vehemently opposed the order of CIT(A) in confirming the order of AO and argued that the DMH has made a voluntary contribution for specific purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure vide their objects. The charitable object of assessee i.e. DCT is a building constructed on its own property given to DMH to run hospital. Further, charitable object for the DMH is to run hospital by providing medical relief. We note that the assessee is not charging anything from DMH for using its building. Therefore, it is clear, both DCT and DMH are interested parties to each other. The CIT(A) confirmed the view of AO in holding that the donation of Rs.65,00,000/- made by the DMH towards corpus is a consideration in lieu of benefit in running the hospital in the building owned by the assessee, meaning thereby, said DMH is the prohibited person within meaning of section 13(3)(b) of the Act. The CIT(A) confirmed the action of the AO in denying exemption to the assessee u/s. 11 of the Act for contravention of provision u/s. 13(1)(c) r.w.s. 13(3)(b) of the Act. 9. Section 11 of the Act explains, that income of a Trust held wholly for charitable or religious purpose is exempt, which means, that the Trust should use its funds only for the charitable objects for which they have been set up only and not for anything else. 10. Section 13(3)(b) explains nothing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Champa Charitable Trust reported in 214 ITR 764 (Bom.). Therefore, taking into consideration the submissions of ld. AR and ld. DR and our discussion made hereinabove paras, we find no infirmity in the order of CIT(A) in holding the DMH is a prohibited person u/s. 13(3)(b) and consequently denying exemption u/s. 11 of the Act for violation of provision u/s. 13(1)(c) of the Act to the assessee. Thus, ground Nos. 1 to 6 raised by the assessee are dismissed. 11. Ground No. 7 raised by the assessee challenging the action of CIT(A) in denying exemption u/s. 11 of the Act in the light of provisions u/s. 13(6) of the Act. 12. The ld. AR submits that the exemption u/s. 11 and 12 need not be denied by sole reason that the charitable trust has provided medical facilities to a prohibited person. He argued that the said section refer to words medical facilities which in all fairness shall include hospital infrastructure and the assessee has provided a hospital infrastructure to DMH, at most, the value of such medical facilities may be brought to taxation. He placed reliance on the decision of Hon ble High Court of Bombay in the case of Audyogik Shikshan Mandal reported in 101 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire income of the Trust. If the interpretation sought to be advanced by the Revenue is accepted, it would lead to grave injustice as any mistake minor and/or misdemnour involving a small amount takes place by the Trust, the consequence would be denial of the benefit of exemption to the entire income otherwise admittedly used for charitable purposes. It is pointed out to us that the decision of the Karnataka High Court in Fr. Mullers Charitable Institutions (supra) was carried by the Revenue to the Supreme Court and its SLP was dismissed on 19th September, 2014 Fr. Mullers Charitable Institutions (supra). 13. On careful reading of the decision of Hon ble High Court of Bombay in the case of Audyogik Shikshan Mandal (supra), we note that the Hon ble High Court of Bombay was pleased to dismiss the substantial question of law by the Revenue which is as under : Whether on the facts and in the circumstance of the case and in law, the Tribunal was correct in law in holding that the denial of benefit under section 11 of the IT Act will be restricted only to that income of the Trust which was used/applied directly or indirectly for the benefit of the prohibited persons? 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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