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From the Courts »
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Joint Director of Income Tax (E), (OSD), Inv., Circle-I, Room No. 311, Aayakar Bhavan, Laxmi Nagar, Distt. Centre, Delhi 110 092Vs. Mool Chand Kharaiti Ram Trust, Lajpat Nagar-III, New Delhi 110024
November, 21st 2015
                                                      ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                        CO No. 229/Del/2011&259/Del/2012 &
                                                                  ITA Nos. 985&1962/Del/2015



                  IN THE INCOME TAX APPELLATE TRIBUNAL
                        DELHI BENCH "E", NEW DELHI
                BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
                                        AND
             SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
                             I.T.A. No. 2850/DEL/2011
                                   A.Y. : 2007-08
Joint Director of Income Tax (E), (OSD),          Mool      Chand Kharaiti Ram
Inv., Circle-I, Room No. 311, Aayakar VS. Trust,
Bhavan, Laxmi Nagar,                              Lajpat Nagar-III,
Distt. Centre, Delhi ­ 110 092                    New Delhi ­ 110024
                                                  (PAN: AAATM0394H)
                             C.O. No. 229/DEL/2011
                             (IN ITA NO. 2850/DEL/2011)
                                      A.Y. : 2007-08
Mool Chand Kharaiti Ram Trust,                    Joint Director of Income Tax (E),
Lajpat Nagar-III,                            VS. (OSD), Inv., Circle-I, Room No.
New Delhi ­ 110024                                311, Aayakar Bhavan, Laxmi
(PAN: AAATM0394H)                                 Nagar,
                                                  Distt. Centre, Delhi ­ 110 092

                         I.T.A. No. 2127/DEL/2012
                               A.Y. : 2008-09
ADIT(E), Inv., Circle-I,                       Mool     Chand Kharaiti Ram
Delhi                                     VS. Trust, Lajpat Nagar-III,
                                               New Delhi ­ 110024
                                               (PAN: AAATM0394H)
                         C.O. No. 259/DEL/2012
                         (IN ITA NO. 2127/DEL/2012)
                                   A.Y. : 2008-09
Mool Chand Kharaiti Ram Trust,                 ADIT(E),Inv., Circle-I,
Lajpat Nagar-III,                         VS.   Delhi
New Delhi ­ 110024
(PAN: AAATM0394H)
                         I.T.A. No. 985/DEL/2015
                                A.Y. : 2009-10
Mool Chand Kharaiti Ram Trust,                Addl. Director of Income Tax (E),
Lajpat Nagar-III,                         VS. Range-1, Delhi

                                        1
                                                    ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                      CO No. 229/Del/2011&259/Del/2012 &
                                                                ITA Nos. 985&1962/Del/2015



New Delhi ­ 110024
(PAN: AAATM0394H)
                         I.T.A. NO. 1962/DEL/2015
                                    A.Y. : 2009-10
Dy. Commissioner of Income Tax (E),            Mool    Chand Kharaiti Ram
Circle 1(1), E-2, Block,                   VS. Trust,
Pratyaksh Kar Bhawan,                          Lajpat Nagar-III,
Dr. Shyama Prasad Mukherjee Civic              New Delhi ­ 110024
Centre, New Delhi ­ 2                          (PAN: AAATM0394H)
(APPELLANT)                                    (RESPONDENT)


                         Assesse by : Shri Gautam Jain, Adv.
                         Department by : Shri Dab Jyoti Das, CIT(DR)

                         Date of Hearing : 18-11-2015
                         Date of Order   : 20-11-2015

                                      ORDER

PER BENCH


      Revenue & Assessee have filed these Appeals, Cross Objections and
Cross Appeals aginst the separate Orders passed by the Ld. Commissioner of
Income Tax (Appeals) pertaining to assessment years 2007-08 to 2009-10.
Since the issue involved in these Appeals, Cross Objections and Cross Appeals is
common and identical, hence, we are consolidated these Appeals/CO/Cross
Appeals by this common order for the sake of convenience, by dealing with ITA
No. 2850/Del/2011 (AY 2007-08).

2.    The grounds raised in Revenue's Appeal No. 2850/Del/2011 (AY 2007-
08) read as under:-

      1.           On the facts and in the circumstance of the case, the Ld.
                   CIT(A) has erred in accepting the assessee's claim of

                                       2
                                                     ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                       CO No. 229/Del/2011&259/Del/2012 &
                                                                 ITA Nos. 985&1962/Del/2015



                  exemption u/s. 11 & 12 of the I.T. Act as the assessee has not
                  fulfilled the condition of section 12A according to which the
                  assessee has to carry out activities in accordance with the
                  objects of the trust.

      2.          The appellant craves leave to add, to alter or amend any
                  ground of appeal raised above at the time of hearing.

2.1   The grounds raised in Assessee's C.O. No. 229/Del/2011 (AY 2007-08)
read as under:-

      1.          That in the alternative and, without prejudice to the claim
                  that, assessee is entitled to exemption u/s. 11 & 12 of the Act,
                  the Ld. CIT(A) has failed to appreciate that, assessee was
                  also entitled to exemption u/s. 10(23C)(via) of the Act.

      2.          That even otherwise and assuming for sake of an argument
                  though the same was seriously disputed that the appellant
                  was not entitled to exemption u/s. 11 & 12 and 10(23C)(via) of
                  the Act and, was assessable as an AOP, assessee is entitled
                  to carry forward of business loss determined at Rs.
                  4,53,47,744/-.

3.    The grounds raised in Revenue's Appeal ITA No. 2127/Del/2012 (AY
2008-09) read as under:-

      1.          On the facts and in the circumstance of the case and in law,
                  the Ld. CIT(A) has erred in accepting the assessee's claim of
                  exemption u/s. 11 & 12 of the I.T. Act without appreciating the
                  fact that the      activities of the assessee's were not in
                  accordance with the trust deed.

                                          3
                                                      ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                        CO No. 229/Del/2011&259/Del/2012 &
                                                                  ITA Nos. 985&1962/Del/2015



      2.           On the facts and in the circumstances of the case and in
                   law, the Ld. CIT(A) failed to appreciate that the Hon'ble High
                   Court has held the cancellation of registration u/s. 12AA(3)
                   as invalid on technical grounds and not on merits. He has
                   also failed to take cognizance of the fact that the SLP has
                   been filed against the said order of the High Court and the
                   decision of the Apex Court is pending.

      3.           The appellant craves leave to add, to alter or amend any
                   ground of appeal raised above at the time of hearing.

3.1   The grounds raised in Assessee's C.O. No. 259/Del/2011 (AY 2008-09)
read as under:-

      1.           That in the alternative and, without prejudice to the claim
                   that, assessee is entitled to exemption u/s. 11 & 12 of the Act,
                   the Ld. CIT(A) has failed to appreciate that, assessee was
                   also entitled to exemption u/s. 10(23C)(via) of the Act.

      2.           That even otherwise and assuming for sake of an argument
                   though the same was seriously disputed that appellant was
                   not entitled to exemption u/s. 11 & 12 and 10(23C)(via) of the
                   Act and, was assessable as an AOP, assessee is entitled to
                   carry forward of business loss determined at Rs. 40,21,183/-.

4.    The grounds raised in Assessee's Appeal No. 985/Del/2015 (AY 2009-
10) read as under:-

      1.    That the learned Commissioner of Income Tax (Appeals)-40, New
      Delhi has erred in law and on facts in confirming the action of the learned
      Assessing Officer denying the claim of exemption uls 11 and 12 of the Act.

                                        4
                                                  ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                    CO No. 229/Del/2011&259/Del/2012 &
                                                              ITA Nos. 985&1962/Del/2015



2.     That in arriving at the aforesaid conclusion, the learned
Commissioner of Income Tax (Appeals) has failed to appreciate that, since
appellant is a charitable institution engaged in running hospitals (both
allopathic and, ayurvedic), which constitutes to be a charitable activity
U/S 2(15) of the Act and, therefore both in law and, on fact, the entire
receipt of the appellant institution was exempt U/S 11 and 12 of the Act.

2.1    That the learned Commissioner of Income Tax (Appeals) has further
not only failed to comprehend the facts of the case of the appellant but
also misconstrued the statutory provisions of law and therefore, denial of
claim of exemption is altogether arbitrary, illegal and therefore,
unsustainable.

2.2    That the learned Commissioner of Income Tax (Appeals) has failed
to appreciate that the appellant had not been restricted to open and run
allopathic hospital under the will of settlor and, also when the registration
was granted under section 12A of the Act. Infact the learned Assessing
Officer has overlooked that, neither the will of the settlor and, nor the
learned Commissioner of Income Tax-II had restricted or prohibited the
trust to run the trust with the help and, aid of allopathic medicines.
Moreover, while granting registration to the trust, the accounts of the
hospital had not only been placed on record but were duly considered
and, it was only on consideration of such allopathic activities that, the
appellant was held to be a charitable institution, which had not offended
the objects of the trust so as to grant a registration certificate under section
12A of the Act.

2.3    That the learned Commissioner of Income Tax (Appeals) has also
failed to
                                   5
                                                   ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                     CO No. 229/Del/2011&259/Del/2012 &
                                                               ITA Nos. 985&1962/Del/2015



appreciate that the appellant has been carrying on allopathic activities
along-with ayurvedic activities in accordance with the will of the settlor
since 1958 and,

according claim of exemption U/S 11 and, 12 of the Act or alternatively
u/s 10(22A)/10(23)©(vi) of the Act has been claimed and, allowed as
such. Hence, the conclusion of the Ld. CIT(A) to deny exemption in the
year under consideration is           arbitrary, unjustified,        misconceived,
misplaced and, not in accordance with law.

2.4      That the learned Commissioner of Income Tax (Appeals) has also
erred in

upholding that, despite the fact that the activities of the trust are charitable
within

the meaning of section 2(15) of the Act, the claim of exemption under
section 11 and 12 of the Act is not tenable since activities are not in
accordance with the

objects of the trust.

3. That in any case and, even other-wise the learned Commissioner of
Income Tax (Appeals) has failed to appreciate that, he was duty bound to
grant exemption u/s 10(23C)(via) of the Act since the application made by
the appellant had been impliedly accepted on the same terms and,
conditions hereto before.

         It is prayed it be held that, the appellant is a charitable institution
carrying on charitable activities under section 2(15) of the Act in
accordance with the objects of the trust and is therefore, is entitled to



                                     6
                                                     ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                       CO No. 229/Del/2011&259/Del/2012 &
                                                                 ITA Nos. 985&1962/Del/2015



      exemption under section 11 and 12 of the Act and, appeal of the
      appellant-trust be allowed.

4.1   The grounds raised in Revenue's Appeal No. 1962/Del/2015/Del/2015
(AY 2009-10) read as under:-

      1.    On the facts and in the circumstances of the case and in law, the Ld.
            CIT(A) has erred in allowing the claim of carry forward of losses
            disregarding the facts that the set off and carry forward of losses
            are dealt with by the provisions of section 70, 71, 72, 73 & 74 of
            the Income Tax Act.

      2.    On the facts and in the circumstances of the case and in law, the Ld.
            CIT(A) has erred in allowing the claim of carry forward of losses
            disregarding the facts that the provisions of the Act are                 not
            applicable in the cases who are claiming exemption u/s. 11 & 12 of
            the I.T. Act, 1961.

      3.    The appellant craves leave to add, to alter or amend any ground
            of appeal raised above at the time of hearing.




5.    The brief facts of the case are that the assessee filed the return of income

for the AY 2007-08 on 2.11.2007 declaring NIL Income. The case was selected

for scrutiny and notice u/s. 143(2) was issued on 8.9.2008 fixing the case for

15.9.2008. In response to the notice, assessee's Authorised Representative

alongwith its employees attended the proceedings from time to time, filed the

details and produced the Books of accounts which were examined.                       The

assessee was registered u/s. 12A(a) of the I.T. Act and also approved u/s.


                                        7
                                                         ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                           CO No. 229/Del/2011&259/Del/2012 &
                                                                     ITA Nos. 985&1962/Del/2015



80G(5)(vi) of the I.T. Act for the period 1.4.2007 to 31.3.2010. The assessee is

running a Hospital in the name of Sh. Moolchand Khairati Ram Hospital and

Ayurvedic Research Institute at Lajpat Nagar, New Delhi. During the course of

assessment proceedings, the assessee submitted a copy of the Will of Late Lala

Khairati Ram by which the Trust came into existence.


5.1   The AO observed that the claim of the assessee that the activities of the

Trust are not charitable within the meaning o section 2(15) of the I.T. Act does not

justify the claim of exemption in the facts and circumstances of the case.                The

activities of the trust may be charitable per se. But the activities are not in

accordance with the objects of the trust. Thus the trust is not eligible for benefits

u/s. 11 & 12 of the I.T. Act. AO also held that for the reasons discussed in detail

in assessment for assessment year 2006-07, the assessee is not entitled to the

benefit of u/s. 11 /12 of the I.T. Act. Further, otherwise also, since the registration

u/s. 12A has since been withdrawn by the DIT(E), the assessee is not entitled to

the benefit of section 11/12 of the I.T. Act, 1961.


6.    Aggrieved, Assessee appealed before the Ld. CIT(A), who vide impugned

order dated 11.4.2011 has partly allowed the appeal of the Assessee by holding

vide para no. 3.3 at page no. 9 of the impugned order as under:-




                                           8
                                                       ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                         CO No. 229/Del/2011&259/Del/2012 &
                                                                   ITA Nos. 985&1962/Del/2015



             "3.3. I have gone through the submission of the Trustee as well as
             reliance on various case laws. It is also a fact on record that
             Hon'ble Tribunal vide order dated 12.3.2010 has cancelled DIT(E)
             order u/s. 12AA(3). So assessee has been granted exemption u/s.
             12A. So in view of my findings in the appellate order for the A.Y.
             2006-07 and in view of the Hon'ble ITAT decision as mentioned
             above, by which assessee has been granted exemption u/s. 12A of
             the I.T. Act, ground no. 1 to 4 are allowed in favor of the
             Appellant."

7.    Against the order dated 11.4.2011 passed by the Ld. First Appellate
Authority, Revenue is in appeal before the Tribunal.

8.    Ld. DR relied upon the order passed by the AO and reiterated the
contentions raised in the grounds of appeal and requested that the order of the
Assessing Officer may be upheld.

9.    On the contrary, Ld. Counsel of the Assessee stated that the issue in
dispute was first time raised in Assessment       Year 2006-07, whereby the
Assessing Officer by an order dated 31.12.2008 denied the claim. However,
the Ld. CIT(A), by an order dated 15.10.2010 allowed the claim. The ITAT vide
its order dated 3.2.2012 reversed the conclusion of the CIT(A). Against which
the Assessee was in further appeal before the Hon'ble High Court, who set aside
the order of the Tribunal vide its Judgment dated 27.7.2015 in assessee's own
case title as Mool Chand Khairati Ram Trust vs. Director of Income                      Tax
(Exemptions) reported in [2015] 59 taxmann.com 398 (Delhi) decided vide ITA
No. 141 of 2013. He further stated that since the Hon'ble High Court                     as
aforesaid, in assessee's own case has decided the issue in dispute in favor of the


                                        9
                                                     ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                       CO No. 229/Del/2011&259/Del/2012 &
                                                                 ITA Nos. 985&1962/Del/2015



assessee for the assessment year 2006-07, the same may be respectfully
followed in the subsequent assessment years i.e. 2007-08 to 2009-10 and
accordingly, he requested that the action of the Ld. CIT(A) may be upheld of
allowing the claim in dispute by dismissing the Appeal of the Revenue. He has
filed the copy of the said judgment dated 27.7.2015 for ready reference.

10.   We have heard both the parties and perused the records, especially the
orders passed by the Revenue Authorities alongwith the judgment dated
27.7.2015 passed by the Hon'ble Jurisdictional High Court for the asstt. Year
2006-07 in assessee's own case title as Mool Chand Khairati Ram Trust vs.
Director of Income Tax (Exemptions) reported in [2015] 59 taxmann.com 398
(Delhi) decided vide ITA No. 141 of 2013. The relevant finding of the said
judgment i.e. para nos. 32 to 46 is reproduced below for the sake of
convenience.

      " 32. The only controversy that remains to be addressed is whether the
            AO and the Tribunal were justified in holding that the Assessee had
            applied itsincome for purposes other than its objects.

       33. According to the Revenue, the objects of the Trust would not permit
            running of a hospital where patients are treated under the
            Allopathic systemof medicine. The Assessee had disputed the same
            and had submitted a letter dated 9th December, 2008, inter alia,
            explaining that the institution run by the Assessee is an integrated
            institution, which has made significant advances in the field of
            Ayurvedic medicine. The Assessee further explained that the
            hospital in question integrates both the Ayurvedic system of
            medicine as well as Allopathic services, to provide the best

                                       10
                                           ITA Nos. 2850/Del/2011&2127/Del/2012;
                                             CO No. 229/Del/2011&259/Del/2012 &
                                                       ITA Nos. 985&1962/Del/2015



treatment to the patients and the Ayurvedic treatment provided by
the hospital utilizes methods of investigation used under the system
of modern medicine. The relevant extract of the said letter is quoted
below:-

      "As is evident from the name of the hospital, this hospital is
      pioneer in the field of Ayurvedic Education and improving
      Ayurvedic system of medicine by Ayurvedic Research. Over
      the past several years the hospital has developed new
      techniques of tendering services in the ayurvedic medicine; to
      name a few:

1. Scientific application of Panchkarma and medicine which includes

a. Pizhichil Treatment (Sarvang Sneh Dhara) for Deformed
Rheumatoid Arthritis (Amavata)

b. Kati Basil for Disc Prolarse (Katishula, Katistambha),

c. Virechan Kriya : Keeping in view the values of Serum Electrolytes,
Lipid Profile for Psoriasis and skin diseases.

d. Shirobasti Trreatment for Insomnia, Hypertension, Alopacoa.

2. Developed Various combination of drugs like:

a) Raj Rasayan for Prostate Enlargement

b) Gridhrasihar Churna for Sciatica

c) Mukhdushikahar Churna for acne, Hyperpigmentation

d) Shwitrahar Churna for leucoderma

                            11
                                           ITA Nos. 2850/Del/2011&2127/Del/2012;
                                             CO No. 229/Del/2011&259/Del/2012 &
                                                       ITA Nos. 985&1962/Del/2015



3. To spread awareness and educate the ayurvedic physicians, the
following work has been done;

a. Tenth Century granths have been translated into Hindi like
Ashtang Hridya, Charak Samhita, Bhashjya Ratnawali etc.

b. The following books and literature has been published;

i. Dehadhatwagni Vigyanam

ii. Panch Karma Chitiksa

iii. Chikitsa -- Kalika

iv. Compilation of Sutras from Different

"Granthas".

c. The trust is engaged in the following training and education
related activities for creating and spreading awareness about
Ayurvedic system of medicine;

i. Interns for Ayurvedic education are taken, who are not only
taught the ayurvedic medicine but also given hands on practical
experience and clinical knowledge about Ayurvedic system of
medicine.

ii. The Trust runs dedicated indoor facility on Ayurvedic and
manages 40 beds wherein the treatment is given free.

iii. Ayurvedic medicines are dispensed and provided at nominal
cost and in case of deserving patient even free.



                           12
                                              ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                CO No. 229/Del/2011&259/Del/2012 &
                                                          ITA Nos. 985&1962/Del/2015



     iv. Every third Friday of the month, trust organizes Ayurvedic
     Sambhasha Parishad and doctors from far and wide come and
     attend the event.

     v. Scholarships to the students of Shrimadhyanand Ved Arsh
     Mahavidhayala Nyas are given to encourage and promote
     Ayurveda.

     vi. On side camps are organized at various places to promote
     Ayurvedic system of medicine.

     vii. Our Ayurveda charyas are involved and engaged in giving
     talks, lecturers and holding workshops at various places like NTPC,
     TCIL, Reserve Bank of India and other places.

     viii. Panchkarma teaching and training courses have been
     developed and are modified on regular basis.

     d. As a part of pioneer ayurvedic institute the hospital provide state
     of art ayurvedic facilities as :

      I Panch Karma

     II Stri Rog

     III. Shalya Shalkya

     IV Kaya Chikitsa.

4. Ayurvedic pharmacy through which medicines are being manufactured
     and dispensed caters to the needs of patients coming for Ayurvedic




                                  13
                                              ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                CO No. 229/Del/2011&259/Del/2012 &
                                                          ITA Nos. 985&1962/Del/2015



      treatment to the hospital. Besides this, Moolchand has developed
      the following important patient medicines:

      a. Moolchand Chitrak Haritaki for bronchitis, allergic rhinitis,
      sinusitis and continuous dry cough

      b. Raj Rasayan for rejuvenation, prostate enlargement, urinary
      disorders.

      c. Chyawan Prash as general rejuvenative tonic.

      d. Abhrak Miasma for cardiac ailments, fever, bronchitis, chest
      congestion, bronchial asthma.

5. It has been clinically proven as result of continuous research that we
      have developed not only treatment but absolute care of:

      a. Diabetes

      b. O.A.

      c. Rhenatold

      d. Psoriasis

      e. Bronchial asthma

      f. Leucoderma

      g. Hepatitis

      h. Hepatitis B

      i. Hypertension



                                14
                                                    ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                      CO No. 229/Del/2011&259/Del/2012 &
                                                                ITA Nos. 985&1962/Del/2015



     j. Paralysis

     k. CVA

     l. Deadddiction programme for alcohol for drugs and smoking

     m. Psychological problems.

6. In order to promote Ayurvedic Medicine, help is taken from Modern
     Medicine system and trust runs various allopathic services both in
     medicine       and    surgery    such    as    Department         of    Medicine
     (Gastroenterology, Respiratory &               Pulmonology, Cardiology,
     Oncology and internal Medicine): Department of surgery (General
     Surgery, Uro Surgery, cosmetic and plastic surgery, paediatric
     surgery); Department of Orthopedics; Department of Anesthesia;
     Department       of    Paediatrics;     Department         of    Neonatology,
     Department of Nephrology; Department of Obs & Gynae;
     Department of Neurology; Department of Dental; Department of
     Ophthalmology;         Department       of    ENT    and        Department        of
     physiotherapy.

     This is unique hospital that integrates both Ayurvedic system of
     medicine and allopathic services to give best results to the patents
     and which helps in improving the treatment and obtain best results
     out of this. The Ayurvedic hospital utilizes various modern medicine
     method of investigation such as ;

     a. Blood Hematology

     b. Microbiology c X-ray


                                     15
                                          ITA Nos. 2850/Del/2011&2127/Del/2012;
                                            CO No. 229/Del/2011&259/Del/2012 &
                                                      ITA Nos. 985&1962/Del/2015



c. C. T. scan

d. Ultrasound

e. ECG

f. Eco

g. Angiography

The trust is also engaged in running various health check clinics, diet
service clinics in remote areas in order to augment health care
services using Ayurvedic system of medicine.

7. In order to further - spread education, awareness and help in
research in ayurvedic and Modern Medicine a fullfledged scientific
library is maintain by the hospital which has :

a. More than, one thousand hooks are available in the library
including all leading journals.

b. Besides various subscriptions available, the library is open for
student staff physicians, traiees, interns and technicians.

8. To further spread education, hospital also provides diploma in
nursing which is registered under aegis of Delhi Nursing Council
and every year 30 student enroll for this course. This duration for
this diploma course is 3-1/2 years. Through this course, hands on
training is also provided in Ayurvedic system of medicine.

It is a matter of pride that physicians from far and wide come for
Ayurvedic training to this institute. From the perusal of the above, it


                            16
                                         ITA Nos. 2850/Del/2011&2127/Del/2012;
                                           CO No. 229/Del/2011&259/Del/2012 &
                                                     ITA Nos. 985&1962/Del/2015



may be appreciated that lot of activities is being done to improve
Ayurvedic system of medicines and preaching the same. It is
respectfully submitted that your contentions/observations that 'it is
no where permitted to open and run Allopathic Hospital' is prima
facie untenable because of the fact that Trust has opened primarily
an ayurvedic Hospital and taking help from Allopathic system of
medicines or any other system of medicines is not prohibited, it
means that it is permitted. While promoting Ayurveda, the other
system of medicine also got promoted. It serves the General good
of the community while retaining its charitable nature at a all points
of time. It will be appreciated that this is permissible under the
provisions of the Trust Deed as well as under the provisions of the
Income Tax, 1961.

It will also be appreciated that the Trust has not changed its
activities/system of medicines of be it Ayurveda or be it allopathic
from the very beginning. It is submitted that Trust can only open
hospital but cannot compel the community to choose the system of
medicines. Thus while providing Ayurveda and continuously
improving the Ayurvedic system of medicines, patents wanting
allopathic treatment are being provided Allopathic treatment as
well.

This is unique Hospital where in order to improve Ayurvedic system
of medicines and create awareness about the Ayurvedic system of
medicines are being adopted.




                           17
                                                ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                  CO No. 229/Del/2011&259/Del/2012 &
                                                            ITA Nos. 985&1962/Del/2015



      The name of the Hospital is not Moolchnd Hospital but Moolchand
      Khairati Ram Hospital and Ayurvedic Research Institute."

34. The assertion made by the Assessee that it provides treatment under
      the Ayurvedic system at the hospital in question and is involved in
      the advancement of the Ayurvedic medicine is not disputed by the
      AO. It is also not disputed that the hospital run by the Assessee is an
      integrated hospital offering treatments under the Ayurvedic system
      of medicine as well as under the Allopathic system of medicine. The
      Revenue also does not dispute the Assessee's contention that the
      treatment under the Ayurvedic system of medicine draws
      significantly from investigation techniques used under modern
      medicine system. In the circumstances, the limited issue to be
      addressed is whether running of such hospitals which provides
      Allopathic as well as Ayurvedic treatment and includes investigation
      techniques of modern medicine would be contrary to the object of
      the Assessee Trust.

      35. A plain reading of the objects indicates that it includes "devising
      means for imparting education and improving Ayurvedic system of
      medicine and preaching the same". It is also expressly clarified that
      the Assessee is not prohibited to take help from the English, Unani
      or any other    system of medicine for its object. Further, it is also
      expressly provided that according to the need, one or more
      Ayurvedic hospitals may be opened. It is at once clear that the
      object does not prohibit running of an Allopathic hospital or
      drawing from any the other system of medicine for improving the
      Ayurvedic system of medicine. The Assessee's endeavour of running
                                 18
                                        ITA Nos. 2850/Del/2011&2127/Del/2012;
                                          CO No. 229/Del/2011&259/Del/2012 &
                                                    ITA Nos. 985&1962/Del/2015



a hospital providing modern techniques and treatment which would
also be a source for improving Ayurvedic system of medicine
would, plainly, be an activity towards the objects as specified.
Merely because, running of an Allopathic hospital is not specifically
mentioned, it does not necessarily mean that the same would be
ultra vires the objects, as establishment of an Allopathic hospital
does assist the Assessee in its object of improving the Ayurvedic
system and taking assistance from the Allopathic system of
medicine. Any activity reasonably incidental to the object would not
be ultra vires the objects. As explained by the Assessee, the modern
investigation techniques are equally utilized for treatment under
Ayurvedic system.

36. In Lakshmanaswami Mudaliar v. Life Insurance Corporation: AIR
1963 SC 1185, the Supreme Court had observed as under:

"(13) Power to carry out an object, undoubtedly includes power to
carry out what is incidental or conducive to the attainment of that
object, for such extension merely permits something to be done
which is connected with the objects to be attained, as being
naturally conducive thereto."

37. Although the above observations were made in the context of
interpretation of the Object Clause of a Memorandum of
Association of a Company, the principle would also be applicable
to determine whether any activity is ultra vires the purpose of a
Trust.



                          19
                                           ITA Nos. 2850/Del/2011&2127/Del/2012;
                                             CO No. 229/Del/2011&259/Del/2012 &
                                                       ITA Nos. 985&1962/Del/2015



38. Thus, in our view, the AO and the Tribunal erred in concluding
that the Assessee's activities were in excess of its objects. Running
an integrated hospital would clearly be conducive to the objects of
the Assessee. The trustees have carried out the activities of the trust
bonafide and in a manner, which according to them best subserved
the charitable objects and the intent of the Settlor. Thus the activities
of the Assessee cannot be held to be ultra vires its objects. The AO
and the Tribunal were unduly influenced by the proportion of the
receipts pertaining to the Ayurvedic Research Institute and the
hospital. In our view, the fact that the proportion of receipts
pertaining to the Ayurvedic Research Institute is significantly lower
than that pertaining to the hospital would, in the facts of the present
case, not be material. Undisputedly, significant activities are
carried out by the Assessee for advancement and improvement of
the Ayurvedic system of medicine in the institution established by the
Assessee and though the receipts from the Allopathic treatment are
larger, the same does not militate against the object for which the
institution has been set up and run.

39. The next issue to be addressed is whether it was open for the
AO to take a view different from the one that has been accepted by
the Revenue for the past several decades. It is well established that
each year is a separate assessment unit and the principles of res
judicata are not applicable. However, in this case, it would be
appropriate to note that the activities carried out by the Assessee
have been accepted as being amenable to exemption under
Section 11 of the Act for the past several decades. In the past

                            20
                                          ITA Nos. 2850/Del/2011&2127/Del/2012;
                                            CO No. 229/Del/2011&259/Del/2012 &
                                                      ITA Nos. 985&1962/Del/2015



period, the Assessee has been granted exemption under Section 11
of the Act and also under Section 10(22)/10(22A) or Section
10(23C) of the Act. Concededly, the exemptions granted to the
Assessee for past several decades would not be available if the
activities of the Assessee were considered by the concerned
AOs/Authorities to be ultra vires its objects.

40. In the circumstances, it would not be apposite to permit the
Revenue to challenge a position that has been sustained over
several decades without there being any material change. In
Radhasoami Satsang (supra), the Supreme Court observed as
under:-

       "....each assessment year being a unit, what is decided in
       one year may not apply in the following year but where a
       fundamental aspect permeating through the different
       assessment years has been found as a fact one way or the
       other and parties have allowed that position to be sustained
       by not challenging the order, it would not be at all
       appropriate to allow the position to be changed in a
       subsequent year."




41. In Parashuram Pottery Works Co. Ltd. v. ITO: (1977) 106 ITR 1
SC, the Supreme Court reiterated the principle that if the parties
have allowed a position to sustain, it would not be appropriate to
change the position in a subsequent year. The said decisions have
also been followed by the Supreme Court in its later decision in
Excel Industries Ltd. (supra).

                            21
                                          ITA Nos. 2850/Del/2011&2127/Del/2012;
                                            CO No. 229/Del/2011&259/Del/2012 &
                                                      ITA Nos. 985&1962/Del/2015



42. In Krishak Bharati Co-operative Ltd. (supra), a Division Bench of
this Court struck a note of caution that the rule of consistency is not
of a wide application and a blind adherence to this rule would lead
to anomalous results. Thus, in the circumstances, where the views
are mistaken and apparently erroneous, it would not be apposite to
compel the Revenue to follow the same on the principle of estoppel
or of consistency. However, in cases, where two views are
plausible, it would be, plainly, whimsical to frame an assessment
contrary to the position accepted in earlier years. This would render
the exercise of assessment highly subjective; clearly, an Assessee
cannot be subjected to such vagaries. Indisputably, the powers of
AO are wide but its exercise cannot be undisciplined. In cases
where there is a palpable mistake or the position accepted by the
Revenue in earlier years is apparently erroneous, the AO would not
be bound to accept the view of his predecessors. However, in
cases - such as the present case - where the Assessee's claim for
exemption has been accepted for several decades, it would not be
open for AO to think of new grounds, which at best raise
contentious issues, to cast a wider net of tax. It is trite law, that if
two views are possible, the one favoring the Assessee must be
adopted. This rule would apply a fortiori in cases where the
Assessee's claim has been consistently accepted by the Revenue in
the past. Thus, in cases where the claim of an Assessee has been
accepted in earlier years, unless the claim of an Assessee is found
to be devoid of any basis or plainly contrary to law, it would not be
open for the AO to take a view contrary to the position which has


                            22
                                           ITA Nos. 2850/Del/2011&2127/Del/2012;
                                             CO No. 229/Del/2011&259/Del/2012 &
                                                       ITA Nos. 985&1962/Del/2015



been accepted by the Revenue in earlier years and has been
permitted to sustain for a significant period of time.

43. In the facts of the present case, it is not possible to accept that

grant of exemption to the Assessee for the past several decades

was palpably erroneous and successive AOs were wrong in

accepting that the activities of the Assessee were in furtherance of

its charitable objects, entitling the Assessee to escape the levy of

income tax.


44. In view of the above, the second question is answered in

affirmative and Assessee would not be entitled to exemption under

Section 11 of the Act if its activities are outside the scope of its

objects, even if its activities are charitable in nature. However, the

first question is answered in the negative and in favour of the

Assessee and in our view, the Tribunal was not justified in allowing

the Revenue's appeal and denying the Assessee's claim under

Section 11 of the Act.


45. Insofar as the issue regarding depreciation on assets used for

providing Allopathic systems of medicine is concerned, the learned

counsel for the Revenue did not dispute that the depreciation would



                            23
                                                         ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                           CO No. 229/Del/2011&259/Del/2012 &
                                                                     ITA Nos. 985&1962/Del/2015



               be allowable if the activities of the Assessee were considered to be

               within the scope of its objects. The Tribunal had denied the claim of

               depreciation, in respect of assets used for providing medical relief

               through Allopathic system of medicine, only on the basis that the

               Assessee's activity for running the      hospital was ultra vires its

               objects. In the circumstances, the third question is to be answered in

               the negative and in favour of the Assessee.


               46. In view of the aforesaid, the impugned order of the Tribunal is
               set aside. The appeal is disposed of. No order as to costs."

10.1    After going through the aforesaid judgment of the Hon'ble High Court as

well as the impugned order passed by the Ld. First Appellate Authority, we are

of the considered view that Ld. CIT(A) has rightly decided the issue in dispute in

favor of the assessee. We further find that the Hon'ble Jurisdictional High Court

vide its judgment dated 27.7.2015 passed in the assessee's own case for the

asstt. Year 2006-07 in favour of the assessee, as referred above and therefore,

in our considered view, following the same ratio is binding precedent in respect

of     the   subsequent   assessment    years   i.e.   asstt.   Years      2007-08          to

2008-09 and accordingly, the assessee is entitled for the exemption/claim u/s.

11 & 12 of the I.T. Act, 1961 in these assessment years. In view of the above, we

do not find any infirmity in the order of the Ld. CIT(A), hence, we uphold the

                                          24
                                                      ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                        CO No. 229/Del/2011&259/Del/2012 &
                                                                  ITA Nos. 985&1962/Del/2015



impugned order on the issue in dispute and dismiss the Appeal filed by the

Revenue relevant to assessment year 2007-08. As regards assessment year

2008-09 is concerned, following the consistent view, the Appeal for the asstt.

Year 2008-09 filed by the Revenue shall also stand dismissed.


11.   As we have already dismissed both the Appeals             for the asstt. Years

2007-08 to 2008-09 filed by the Revenue, as aforesaid, the Assessee's Cross

Objections for the asstt. Year 2007-08 to 2008-09 have become infructuous

and dismissed as such.


12.   As regards the Assessee's Appeal No. 985/Del/2015 (AY 2009-10) is

concerned, since we have respectfully followed the decision of the Hon'ble

Jurisdictional High Court in assessee's own case for the asstt. Year 2006-07 in

the Revenue Appeals for the asstt. Year 2007-08 & 2008-09 and accordingly,

the Revenue appeals for these two years were dismissed, as aforesaid,

respectfully following the consistent view, the Assessee is entitled for the claim

of exemption in dispute raised in the Appeal in dispute and accordingly, the

Appeal of the Assessee relevant to assessment year 2009-10 being ITA No.

985/Del/2015 stands Allowed. Consequently, the Appeal No. 1962/Del/2015

filed by the Revenue for the assessment year 2009-10 stands dismissed.




                                       25
                                                    ITA Nos. 2850/Del/2011&2127/Del/2012;
                                                      CO No. 229/Del/2011&259/Del/2012 &
                                                                ITA Nos. 985&1962/Del/2015



13.    In the result, all the Appeals filed by the Revenue for the asstt. Years

2007-08 to 2009-10, in the aforesaid manner stands dismissed and both the

Cross Objection for the asstt year 2007-08 to 2008-09 stand dismissed as

infructuous and the Appeal filed by the Assessee relevant to assessment year

2009-10 stand allowed.


       Order pronounced in the Open Court on 20/11/2015.

       Sd/-                                                        Sd / -


          MAHARISHI]
[PRASHANT MAHARISHI]                                      [H.S. SIDHU]
ACCOUNTANT MEMBER                                      JUDICIAL MEMBER
         11-2015
Date: 20-11-
"SRBHATNAGAR"
Copy forwarded to: -
1.     Appellant   2.    Respondent 3.      CIT   4.      CIT (A) 5.        DR, ITAT


                               TRUE COPY                           By Order,




                                                                Assistant Registrar




                                      26

 
 
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