TaxTMI 
TaxTMI 
2022 (8) TMI 19
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....name and style of "Deendayal Memorial Hospital which is also a charitable Trust registered u/s. 12A of the Act, the Trust Deed of which is at Page Nos. 31 to 64 of the paper book. We note that "DMH" agreed to arrange all the team of doctors, physician, medical equipment, furniture and fixtures etc. According to the ld. AR, these two charitable institutions thought it advisable to achieve their common objective of providing the medical facility/relief and the assessee decided to allow DMH to use its building for running the hospital and DMH is to manage and run such hospital. In pursuance of the same, we note that the said two charitable institutions entered into memorandum of Understanding dated 04-12-1995 which is at Page Nos. 86 to 89 of the paper book. 4. During the course of assessment proceedings, the AO observed that the DMH made donation Rs.65,00,000/- towards corpus to assessee. The AO of the view that the said DMH is a contributory within the meaning of section 13(3)(b) 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 contr....
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....thin the meaning of section 13(3)(b) of the Act. Further, there is a clear violation of section 13(1)(c) of the Act and the CIT(A) discussed every aspect of the assessee's submissions and justified in holding the "DMH" as prohibited person and referred to Para Nos. 8, 9 and 10 of the impugned order. He supported the order of CIT(A) and drew our attention to the case law paper book containing 1 to 38 pages in the case of Champa Charitable Trust (supra) by the Hon'ble High Court of Bombay, in the case of Agappa Child Centre reported in 92 Taxman 327 (Kerala) of Hon'ble High Court of Kerala and on order of ITAT, Ahmedabad in the case of Give Foundation in ITA No. 1465/Ahd/2013 vide order dated 13-05-2015. 8. Heard both the parties and perused the material available on record. We note that the assessee, Dwaraka Charitable Trust ("DCT") and Deendayal Memorial trust have been granted 12A registration under the Act. The activities of both the institutions are charitable in nature 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 provi....
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....ection 24 of the Act. Admittedly, the assessee received donation from prohibited person in terms of section 13(3)(b) of the Act, that being so, the arguments of ld. AR is not accepted. We find the CIT(A) discussed the same in Para No. 16 of the impugned order and rightly held that the said explanation could have been accepted, that if the donation could have been received from a person other than prohibited person. Further, there is no dispute about the fact that "DMH" had made a substantial contribution to the assessee and the said contribution so made up to the end of the previous year relevant to the assessment year under consideration being Rs.65,00,000/- far exceeding Rs.50,000/-. There is also not disputed about the fact that "DMH" applied the said sum for the benefit of assessee. Therefore, the provisions under Sub-section (3) of section 13 is attracted as rightly held by the AO by placing reliance on the decision of Hon'ble High Court of Bombay in the case of 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) i....
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....tutions (supra), dealt with the very issue herein viz. the denial of exemption of entire income under Section 11 of the Act, or is the denial restricted only to the quantum of diverted funds. This, as it is hit by Section 13 of the Act. The Court held that the benefit of Section 11 of the Act will not be available only in respect of the diverted income. The above decision of Karnataka High Court was the basis for the view in the impugned order of the Tribunal. Moreover, we note that the order of Karnataka High Court in case of Fr. Mullers Charitable Institutions (supra) inter alia, places reliance upon the decision of this Court in DIT v/s. Sheth Mafatlal Gagalbahai Foundation Trust 249 ITR 533 and the Delhi High Court in the case of IT (Exemption) v/s. Agrim Charan Foundation 253 ITR 593. Moreover, on a plain reading of Sections 11 and 13 of the Act, it is clear that the legislature did not contemplate the denial the benefit of Section 11 of the Act to the entire 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 c....