Commissioner Of Income Tax ... vs Contai Rotary Community Welfare ...
2021 Latest Caselaw 1514 Cal/2

                                            1



                        IN THE HIGH COURT AT CALCUTTA
                          Special Jurisdiction (Income Tax)
                                   ORIGINAL SIDE

                    IA No.GA/1/2017 (Old No. GA/2832/2017)
                                      In
                               ITAT 304 of 2017


            COMMISSIONER OF INCOME TAX (EXEMPTION) KOLKATA
                                 Vs
               CONTAI ROTARY COMMUNITY WELFARE TRUST


BEFORE:
The Hon'ble JUSTICE T. S. SIVAGNANAM
               AND
The Hon'ble JUSTICE HIRANMAY BHATTACHARYYA




For the appellant: Mr. P.K. Bhowmik, Adv.

For the respondent: Mr. Subash Agarwal, Adv.

Heard on: 2nd December, 2021.

Judgment on: 2nd December, 2021.

T. S. SIVAGNANAM, J. : This appeal has been filed by the Revenue under

Section 260A of the Income Tax Act, 1961 (the 'Act', in brevity) questioning the

correctness of the order dated 22nd March, 2017 passed by the Income Tax

Appellate Tribunal, "C" Bench, Kolkata (the Tribunal) in ITA No.340 and 341

(Kol) of 2016.

The Revenue has raised the following substantial questions of law for

consideration:

A) Whether on the facts and circumstances of the case as well as

interpretation of law, the Learned Tribunal was justified in law in

holding that activities like sale/purchase of medicine, running of

pathological clinic, x-ray clinic, polyclinic etc. are comes within the

purview of medical relief within the meaning of charitable purpose as

defined in Sub-section 15 of Section 2 of the Income Tax Act, 1961?

B) Whether on the facts and circumstances of the case, the Learned

Tribunal has arrived at a finding based on no evidence or its

inconsistent with the evidence on record or it has acted on material

partly relevant and partly irrelevant or it draws upon its own

imagination and import facts and not apparent from the record or it

bears its conclusion on mere conjectures or surmises or no person

judicially acting or properly instructed as to the relevant law could

have come to the determination reached by the tribunal?

Heard Mr. P.K. Bhowmik, learned senior standing counsel for the

appellant/Revenue and Mr. Subash Agarwal, learned counsel for the

respondent/assessee.

The respondent/assessee is a Trust which came into existence under a

Deed of Trust dated 19.03.2003 and the Trust filed an application in Form 10A

on 01.06.2015. On receipt of the application, the Commissioner of Income Tax

(Exemption), Kolkata [CIT(E)] issued notice under Section 12AA (I)(a) dated

12.08.2015 calling upon the respondent/assessee for a hearing. After the case

was heard, the CIT(E) by order dated 15.12.2015 rejected the application for

grant of registration under Section 12AA of the Act on the ground that the

activities of the Trust are purely commercial and the Trust is primarily

engaged in sale/purchase of medicine, pathological tests, x-ray etc., which are

in the nature of a business. The assessee challenged the correctness of the

said order before the Tribunal. The assessee contended that Trust has been

established for general charitable objective as specified in Section 2(15) of the

Act, which provides medical services to the public at large without

discrimination of caste, creed and religion. The polyclinic which the assessee

Trust has established and being administered undertakes pathological tests,

x-ray and render other medical services. The assessee further contended that

in the process of carrying on the charitable activity a marginal/negligible profit

is generated which is required to sustain the activities of the Trust. Therefore,

the assessee contended that they are not engaged in any business activity and

medical relief is one of the charitable activities as defined under Section 2(15)

of the Act. The said contention was examined by the Tribunal and it was

found that the respondent/assessee would qualify for grant of registration

under Section 12AA of the Act and their activity is undoubtedly a charitable

activity.

Mr. Subash Agarwal, learned counsel for the respondent/assessee relied

upon the decision of the High Court of Allahabad in Oxford Academy For

Career Development -versus- Chief Commissioner of Income Tax reported in

(2009) 315 ITR 382 (Allahabad) wherein the Court relied on the decision of the

Hon'ble Supreme Court in the case of American Hotel and Lodging Association

Educational Institute -versus- CBDT, (2008) 301 ITR 86 wherein it was held that

the prescribed authority while examining an application for grant of

registration is only required to examine the nature, activities and genuineness

of the institution and mere existence of profit/surplus did not disqualify the

institution. Reliance was also placed on the decision of the High Court of

Delhi in the case of St. Lawrence Educational Society (Regd.) -versus-

Commissioner of Income Tax reported in (2011) 197 Taxman 504 (Delhi) wherein

the decision in the case of American Hotel and Lodging Association Educational

Institute was referred as well as the decision in the case of Aditanars

Educational Institution -versus- Addl. CIT (1997) 224 ITR 310 and held that the

institution seeking exemption under the provisions of the Act should not

generate a quantitative surplus was a condition which was legally untenable.

In the light of the above discussion, we hold that the order passed by the

Tribunal does not call for any interference. In the result, the appeal is

dismissed and the substantial questions are answered against the Revenue.

The stay application being IA No. GA 1 of 2017 (Old No. GA 2832 of

2017) also stands dismissed.

(T. S. SIVAGNANAM, J.)

I Agree,

(HIRANMAY BHATTACHARYYA, J.)

s.pal/pkd