R.M. Mehta, Sr. Adv. for the Assessee. Anupam Kant Garg, CIT DR for the Revenue.

The present appeal has been filed by the assessee against the order of ld . CIT (A)-40 , New Delhi dated 27 .12.2018.

2. Following grounds have been raised by the assessee:

“1. That the CIT(A) erred both on facts and in law in upholding the actions o f the AO in denying the benefit of the exemption under section 11 of the Income Tax Act 1961 ("the Act").

2. That the CIT(A) failed to appreciate that the AO had erred in applying the Provisions of Section 13(2) (b) read with Section 13(3) of the Act without any evidence and without discharging the onus that lay on the AO under the law.

3. That the CIT(A) failed to appreciate that the lease transactions were between two Charitable Institutions and no individual had derived any bene fit there from.

4. Without pre judice to the aforesaid grounds even i f a violation of the relevant provisions was to be presumed, the AO at the most could have denied the bene fit o f the exemption u/s 11 of the Act to the difference between the rent received and the market rent and not the entire income .

5. That the CIT(A) not only erred in by-passing the Principle of Consistency so ably followed by her predecessors, but chose not to agree with their orders for the assessment years 2008-09, 2010-11, 2011-12 & 2012-13 without adverting to any points of distinction.

6. The CIT(A) further erred in upholding the action of the AO in subjecting to tax the corpus donations which were in the nature of capital receipts irrespective o f the Act whether exemption u/s 11 of the Act was available or not.

7. That the CIT(A) erred in no t deciding on merits Ground 2 and 4 in the Appeal .

8. That the CIT(A) further erred in no t allowing the deduction on account of depreciation, donations and other outgoings which otherwise were available irrespective of the exemption u/s 11.” Lease Transactions:

3. Brief history and facts o f the case are as under: The Hamdard Laboratories (India) (“HLI”) came into existence being constituted on 28/08/1948. Partners of the business in HLI are also known as “Hamdard Dawakhana (Wakf)”. They dedicated the said business to charity. Hamdard National foundation (India) (“HNF”) (“the assessee”) was setup as a charitable trust in 1964 with the main objects of running educational and medical institutions/providing medical relief, namely, as a special purpose vehicle to e ffectuate the charitable activities of HLI in the areas of relief to the poor, education and medical relief. Hamdard Dawakhana (Wakf) as a charitable institution has been en joying the benefits of section 11 and 12 of the Income-tax Act, 1961 (“the Act”) and also exemption under section 10(23C)(iv) o f the Act. The assessee enjoyed the benefit o f sections 11 and 12 o f the Act all the while till the assessment year 2007-08, but in the year assessment year 2007-08 the learned Assessing Of ficer re jected the claim for exemption under section 11 and 12 of the Act to the assessee for the years 2007-08 , 2008-09, 2009- 10, 2010-11, 2011-12, 2012-13 and 2013-14 on the ground that there had been a violation of the provisions of section 13(2)(b) o f the Income Tax Act, 1961 (for short “the Act”) read with the provisions of section 13(3)(b) o f the Act vis-à- vis the letting o f properties at the Asi f Ali Road and Ra jdoot Marg, New Delhi owned by the assessee to another trust, namely, Hamdard Dawakhanna (Wak f) at the rents alleged to be lower than the prevailing market rates. The properties were said to have been taken by Hamdard Dawakhana (Wakf) for charitable activities only.

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. The grounds raised in the instant appeal pertaining to application of provisions o f Section 13(2)(b), lease transactions, alternate plea and the corpus donations have already been dealt by the order of the Co-ordinate Bench o f ITAT in assessee’s own case in ITA No . 1640/Del/2016 for the assessment year 2007-08 vide order dated 01.11.2019. At the outset, we find that these issues have been repetitive in nature , the fact which has not been disputed by both the parties. In the absence of any material changes in the facts of the case and in the absence of any amendments in the Income Tax Act pertaining to the issues involved, the decision of the Co-ordinate Bench apply in toto to the issues raised be fore us . For the sake of brevity, the relevant portion of the said order is reproduced as under:

“5. Besides this, learned Assessing Officer recorded that the assessee paid a ma jor 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.

6. Coming to the issue covered by grounds No. 1 to 5, namely, re jection of exemption under section 11 of the Act on the ground o f violation of provisions under section 13(2)(b) of the Act read with section 13(3) of the Act, it could be seen from the assessment order for the assessment year 2007-08 , during the scrutiny learned Assessing Officer found that the assessee received a sum of Rs.46 ,41,028/- towards rentals received in respect o f the property o f the assessee. On enquiries, learned Assessing Officer came to know that the market rent of the properties at a Chanakya Puri and Asaf Ali road was much higher than the rent at which the assessee had entered into agreement with its substantial donor Hamdard Dawakhana among other organizations . Further, we find that the learned Assessing Officer based the addition on the website information and also two letters from two estate agents under section 133(6) of the Act from one HSN Reality Services and CB Richard Ellis South Asia private limited.

7. Ld. CIT(A), on consideration of the material available on record and in the light of the submissions made on either side , observed that the onus to prove the basis for the addition was on the learned Assessing Of ficer; that the examination o f the facts reveal that such a onus was not discharged by the Revenue because the learned Assessing Of ficer was completely misdirected by placing the onus on the assessee; that the assessing officer had acted entirely on the basis o f information on the Internet without confronting the assessee with any evidence and that also under legal notion that something which was in the public domain need not be confronted to the af fected party; that the learned Assessing Officer having accepted that there was no mechanism with the Department to undertake “valuation o f rent” should not have applied the provisions under section 13 of the Act entirely on surmises and conjectures without the existence of evidence including the so-called collaborative evidence; that the property at Asaf Ali road was tenanted to HLI as far back as in the year 1981 with a periodical increase in the rent and on numerous occasions in the numerous assessments framed under section 143(3) o f the Act, learned Assessing Officer had accepted the agreement between the parties is not violative of section 13 o f the Act; that the property Chanakya Puri was not occupied till December 2009 , lying vacant prior thereto; and that there had to be uni formity in treatment and consistency of approach when the facts and circumstances were identical and the learned Assessing Of ficer 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 o f 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 behal f 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 be tween the parties had been increased from time to time , beginning from Rs.20,000/- per month from 1981-82 and going up to Rs. 2 Lacs per 6 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 has been let out is also a charitable institution and enjoying the exemption under section 10(23C)(iv) o f the Act/11 of the Act and even if the bene fit is assumed, the same is not derived by any individual but by another charitable institution, the department had accepted all these years the agreement between the HNF and HLI without drawing any adverse view in all the assessments under section 143(3) o f the Act; and that the “market rent” had to be determined with reference to the period o f tenancy, the terms of lease, the area etc and not by referring to websites which may re flect the current position, dehors the facts of the case and without any guarantee as to its accuracy .

9. Grievance o f the assessee has been that the learned Assessing Officer never confronted the assessee with any evidence that was collected behind the back o f the assessee , but the learned Assessing Officer maintained that the said information is available on Internet and can also be accessed from the Internet which is a public domain and the Department has no method to have valuation o f rent done independently by any government agency .

10. As a matter o f fact, in the order for the assessment year 2008-09, Ld. CIT(A) dealt with this aspect in detail and recorded a finding that the learned Assessing Officer cannot say that the information collected by him has already been in the public domain and not obtained behind the back of the assessee , inasmuch as the Assessing Officer is duty bound to confront the assessee with such information i f it is to be used against the assessee in any proceedings. CIT(A) further found that it is an admitted fact that the property of the assessee at Asa f Ali Road was tenanted to Hamdard Wak f as far back as in the year 1981 with a periodical increase in the rent and in numerous assessments framed under section 143(3) of the Act, the Assessing Of ficer accepted the agreement between the parties finding no ground to invoke the provisions of section 13(2)(b) o f the Act/13(3) o f the Act; whereas the property at Chanakya Puri was not even prepared during the assessment year 2008-09 and was lying vacant.

11. It has rightly been observed by the Ld. CIT(A) that there has to be uniformity in treatment and consistency in approach when the facts and circumstances are identical and the learned Assessing Officer canno t change the views by looking at the same set of facts in a different manner more so when the question is o f exemption en joyed by an assessee for the last few decades and case of Revenue sans evidence and based entirely on surmises and con jectures.

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 o f their knowledge and belie f whereas CB Richard Ellis South Asia Private limited is clear in their observation that there is no veri fied market re ferral 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 8 seen from the record that the Assessing Of ficer did any independent exercise to verify the correctness or applicability of the information furnished by those two persons vis-à- vis the extent location and suitability o f the property in dispute for its comparison to the market rates provided by those persons and also the information gathered from the website .

13. Further we have gone through the information furnished relating to the annual rent received in respect of these two properties in the light of the valuation as per the MCD and find that the rent received by the assessee is far above the valuation as per the MCD. According to section 6A of the Delhi Rent Control Act, 1958 the standard rent, or, where no standard rent is fixed under the provisions o f such an Act in respect of any premises, the rent agreed upon between the landlord and the tenant, maybe increased by 10% every 3 years . The statement clearly show that for every three years there is an enhancement o f rent received by the assessee in respect o f bo th these properties and way back in 2006- 07 the rent received by the assessee was Rs.24 Lacs whereas the valuation as per the MCD was Rs.18 ,11,619/- which was increased every three years , namely, by 2009-10 , it was Rs .20 .64 Lacs as against the valuation of MCD Rs.18,11,619 , by 2011- 12 it was Rs.63.13 lakhs and by 2014-15 it was Rs.90 .96 Lacs as against Rs.21 .47 lakhs and Rs.25.37 lakhs respectively in respect of the Asaf Ali road property. Likewise, the rent received by the assessee in respect o f Chanakya Puri property was Rs.18 Lacs, Rs.19 .8 lakhs, Rs.37 .61 Lacs, and Rs.54 .24 Lacs by 2006-07, 2010-11, 2011-12 and 2014-15 respectively as against the corresponding MCD value of Rs. 1 .80 Lacs, Rs. 1.80 Lacs, Rs. 8.74 Lacs and 10 .48 lakhs respectively for such years.

14. Moreover, the lease agreement in question was executed on 16/7/1982 in respect of Asaf Ali road property and also for this period this agreement was accepted in the same set o f facts and circumstances without raising any objection. It is submitted on behalf of the assessee that, the assessee gave property on rent to another charitable trust which perhaps has given the same to its directors so should there be anything to be charged to tax that has to be charged to tax in the hands o f such other charitable trust or the director, but in any case not in the hands of the assessee.

15. On consideration of the entire material be fore us and in the light 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 Of ficer 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 Of ficer brings on record some credible information, the burden to rebut does not shi ft 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 o f the observations o f 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 Ld. CIT(A) that not only on the basis o f the rule o f consistency but also on the basis of the facts relating to the rent received by the assessee from HLI vis-à-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 speci fic reference to the property in dispute , it is not open for the Assessing Of ficer 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 available on record. Merely because the other charitable trust guilty property for accommodation of the person covered under section 13(3) o f the Act, such a fact ipso facto does not lead to the addition in the hands o f the assessee without first clinching the issue with corroborative piece of evidence . We therefore , hold that there is no justification for addition made by the learned Assessing Officer by invoking the provisions under section 13(2)(b) of the Act read with section 13(3) of the Act and we direct him to delete the same .

17. Ground No . 6 relates to the alternative ground taken by the assessee before the Ld. CIT(A) stating that in the event that exemption is not allowed, a sum o f Rs.9 ,43 ,81,000/- has to be excluded from the taxable income .

18. Ld. CIT(A), on this aspect, observed that as per the de finition o f ‘income’ as contained in section 2(24)(iia) of the Act, income includes voluntary contributions received, and further the said voluntary contributions are not included in total income by virtue of the provisions of section 12(1) o f the Act which deems such contributions to the income derived from property held under the trust. According to him, once the provisions o f section 11 are not applicable, such contributions have to be charged to tax in terms of section 164(2) of the Act and on this premise , Ld. CIT(A) re jected the contention o f the assessee for exclusion of Rs .9 ,43 ,81 ,000/-.

19. It is 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 staf f 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) o f the Act read with section 13(3) o f the Act. On the face of the findings returned on grounds No. 1 to 5 , the question o f 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.”

Corpus Donations/ Cap ital Receipt:

5. During the year, the assessee received corpus donations of Rs.55.85 crores. The AO denied the benefit u/s 11(1D) and brought this amount to tax treating the assessee as AOP . This issue has been covered by the order o f ITAT as mentioned above:

“33. The third ground o f this appeal relates to the addition o f Rs. 24 crores being the “corpus donations” received by the assessee from HLI by subjecting the same to tax. Ld. CIT(A) deleted the same as consequent to the grant of exemption under section 11 of the Act. While placing reliance on the decision of a coordinate Bench o f this Tribunal in the case of Patan jali Yogpeeth (Nyas) vs . ADIT (2017) 185 TTJ 1, it is argued by the Ld. AR that the donations received by the assessee towards corpus fund are not liable to tax.

34. We have gone through the record in the light of the submissions made on either side . Facts of this case are quite similar to the facts involved in the case o f Patan jali Yogpeeth (Nyas) (supra) wherein it is held that in the absence o f 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 o f the considered opinion that the corpus donation is a capital receipt irrespective of whether the institution enjoys the benefit o f 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.”

6. To conclude , we hereby hold that,

a) Provisions o f Section 13(2)(B) are not applicable to the case of the assessee

b) No individual benefit has been derived with regard to the lease transactions

c) Alternate ground becomes infructuous

d) Corpus donations are in the nature o f capital receipts in the instant case and hence doesn’t constitute a part of income and expenditure statement.

7. In the result, the appeal of the assessee is allowed.

Order Pronounced in the Open Court on 03/06/2020.

Sd/- Sd/-

(Sushma Chowla) (Dr. B.R.R. Kumar)

VICE PRESIDENT ACCOUNTANT MEMBER

Dated: 03/06/2020