AYKAI ACADEMIC AND RESEARCH TRUST,LUDHIANA V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

ITA 304/ASR/2024

AI Insights

The case involves the Aykai Academic and Research Trust, which appealed against the rejection of its registration application under section 12AB and the approval application under section 80G by the Commissioner of Income Tax (Exemptions), Chandigarh. The Trust argued that its activities, such as organizing medical workshops and seminars, serve the general public by enhancing medical knowledge and treatment awareness, thus qualifying as charitable purposes under the Income Tax Act. The Tribunal noted the Trust's activities could fall under 'general public utility' and remanded the case for further examination of the Trust's financial documents and activities.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31110 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2024
• Assessment Year: 2024-2025
• Appeal Filed On: 18-05-2024
• Other Referred Cases: State Chapter vs. CIT(E), ITA 2199/Hyd/2018, CIT (E) vs Anesthesia Society 101 taxmann.com227 (2019), Ahmedabad Rana Caste Association vs. CIT, CIT vs. Jodhpur Chartered Accountants Society
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH CHANDRA MOHANTY
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Set aside; Question of law; Charitable institution
• Section: 12A; 12; 80G; 101

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 Aykai Academic and Research Trust, 53-E, Rishi Nagar, Ludhiana, Punjab. [PAN: AAJTA9189M] (Appellant) Vs. CIT(Exemptions) Chandigarh. (Respondent) Appellant by Sh. Ashwani Kumar, CA. Respondent by Sh. Ashish Chandra Mohanty, CIT. DR Date of Hearing 28.08.2024 Date of Pronouncement 16.10.2024 ORDER Per: Udayan Das Gupta, JM: This appeal has been filed by the assessee against the order of ld. Commissioner of Income (Exemptions), Chandigarh, dated 21.03.2024, rejecting the application for registration filed by the appellant trust u/s 12AB of the Act 1961. I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 2 2. The grounds of appeal preferred by the assessee as contained in the memorandum of appeal in Form No. 36 are as follows: “1. That order passed under section 12 AB of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Exemptions), Chandigarh is against law and facts on the file in as much as Learned CIT (Exemptions) was not justified to reject the application for registration u/s 12AB of the Act filed by the appellant. 2. That the Learned CIT(Exemptions) was not justified to hold that the activities performed by the Appellant Trust were not for general public utility and such activities do not fall under the definition of charitable purpose as defined in Section 2(15) of the Income Tax Act, 1961.” 3. Brief fact of the case are that the assessee is a trust formed on 15.02.2023, vide e memorandum of trust, as a public charitable trust, for the benefit of general public and for rendering of assistance for all kinds as stated in the objects clause of the memorandum. The main object of the trust is to spread the awareness of latest medical development, treatments, and procedures by organising seminars, workshops, amongst the general public, doctors, medical fraternity and medical associations. The trust is also establishing for providing medical relief to the general public by opening dispensaries and clinics and also giving stipends for imparting medical education. I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 3 4. The assessee filed application for registration in Form 10AB on 30.09.2023 seeking registration under section 12A (1) (ac) (iii) of the Income Tax Act 1961. During the course of proceedings before the ld. CIT(E) copies of bank statement were furnished where there was total credits of Rs.58,13,826/- against total debits of Rs.51,72,063/- which showed that the major portion of the total receipt has been spend on various activities. It was also noted by the registration authority that the entire collection of funds has been received from pharmaceuticals companies who are engaged in the manufacturing activity of production of drugs and medicines/ or engaged in production of medical and surgical equipments. It is also observed that out of the four trustee of the trust two of them are doctors and Dr. Baldev Singh Aulakh is the settler and trustee who also happens to be the chairman of Aykai hospital. 4.1 It has been further observed by the ld. CIT(E) from the photographs of activities submitted by the assessee that the assessee has organised only one charitable activity which was a Live academic workshop on surgery during the financial year 2022-23. This workshop was organised by the department of urology and renal transplant Aykai Hospital, Ludhiana in collaboration with the assessee. The exact role or performance of the assessee trust in this entire event was not I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 4 understood because the entire procedure has been conducted by the Aykai hospital authorities. 4.2 It has been further observed that the payment has been received from pharmaceutical companies by the trust a few days before the event and the total expenses as per books of accounts was only Rs.73,801/- which has been incurred on conveyance on OT machinery repairs, travelling expenses and payment to technician, which according to the ld. Commissioner is not connected with the charitable activities of the trust because the assessee does not own any operation theatre. 4.3 It is further observed by the ld. CIT(E) that the applicant trust applied for registration classifying his activities under the heading of relief of the poor, education and medical relief but it is seen that this particular trust has been working solely for the purpose of networking between doctors and the pharma company, which is contrary to public policy instead of working for general public and it is alleged that the activity performed by the trust does not fall under the definition of charitable purpose as defined in section 2(15) of the Act 1961. As such, the application for registration has been rejected by the registration authority as not falling within the definition of charitable purpose. I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 5 5. Now, the assessee is in appeal against the said rejection order before the Tribunal on the grounds contained in memorandum of appeal in Form No. 36. 6. The ld. AR of the assessee argued that in pursuance of objects of the trust an academic activity pertaining to Live operative workshop on Uro cancers was held to educate doctors & public to make them more aware. The free live operative workshop was held in Ludhiana, Punjab, by the assessee trust in collaboration with the North Zone Urological Society of India which, took place on 22nd and 23rd July 2023 in which Surgeries were performed for Prostate, Kidney and Bladder cancers, free of cost. To perform this surgical workshop, premises, operation theatre, manpower and infra structure of Aykai Hospital was used which was also free of cost. 6.1 This live transmission was done from Aykai Hospital Ludhiana & Delhi, and as per the argument of the assessee, such conferences serve as powerful platforms for knowledge exchange, where experts from various places come together to share their insights, experiences, and research findings. The education imparted during such conferences is invaluable, especially for young urologists seeking to enhance their expertise and stay updated with the latest advancements in the field. It is through events like these that continuous professional development can be fostered, elevating the standard of urological care across the nation. Furthermore, I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 6 these type of conferences not only benefit medical professionals but also hold great importance for patients. The knowledge gained and advance treatment techniques discussed here will directly translate into better care for patients suffering from urological cancers. By bringing together the brightest minds and providing a platform for collaborative learning, they enable the dissemination of cutting-edge treatments, ensuring that patients receive the best possible care. 6.2 The workshop served as a crucial opportunity for urologists to enhance their skills, exchange ideas, and collaborate with experts in the field by witnessing live surgeries, and the attendees gained insights into the latest advancements in the treatment of kidney and prostate cancer, ultimately benefiting patients across the region. 6.3 The ld. AR of the assessee also relied on the judgment of ITAT Hyderabad Bench in the case of State Chapter vs. CIT(E), ITA 2199/Hyd/2018 dated 17.09.2020, in support of his argument. The relevant portion is reproduced: “Though the objectives of the assessee society is to encourage knowledge in a particular field of Science. Such knowledge is beneficial to the general public. Therefore, it is obvious that the object of the assessee society falls under the limb “objects of general public utility” as enshrined u/s. 2(15) of the Act.” I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 7 6.4 He submits before us, that the objects of the assessee trust is to spread the awareness about the latest medical development, treatments and procedures by organising seminars and live workshop so that it can benefit the general public by enhancement of his basic knowledge and also for sharing of knowledge in between doctors, medical students and the entire medical fraternity as a whole. 6.5 As such the Ld. AR prays that the activity carried out by the assessee as narrated above is for the benefit of the entire medical fraternity as a whole and falls under the category of “general public utility” as per provisions of section 2(15) of the Act 61, and he prays that registration of the trust as claimed, may please be allowed. 7. On the other hand the Ld. DR relied on the order of the Ld. CIT ( E ) and argued referring to the bank statement on record , that on the facts of the case , the expenditure of Rs.51,72,063/- , as evidenced by the entries in the bank statement has been expended on activities which are not related to charitable work, and it has never been satisfactorily explained as to the nature of charitable activity for which such expenditure has been incurred, even though it is admitted that inflow (source) of funds are from various pharmaceutical and medical equipment manufacturing companies. He further argued that it is not been explained as to how one single I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 8 activity carried out by the assessee trust in collaboration with AKAI HOSPITAL, which was just an academic live workshop of surgery performed free of cost relating to Prostrate, Kidney and Bladder cancers, conducted by AKAI HOSPITAL, be considered as public charitable service rendered by the trust. He submits that the trust has carried out no such activity which could be termed as charitable within the definition of section 2(15) of the Act 61, and as such the Ld. CIT (E) was fully justified in rejecting the registration of the trust. 8. We have heard the rival submissions and considered all materials on record and the copy of the trust deed filed before us and we find that one of the objects of the trust was to spread the awareness about the latest medical development, treatments, procedures by organizing seminars, workshops, and talks amongst general public, doctors, medical fraternity, and associations. 9. The case of the assessee trust is that they have conducted medical workshops, free of cost and has conducted surgical procedures in respect of patients relating to prostrate, kidney and bladder cancers, which has also been live streamed, and the said activity is for the benefit of the public as a whole and the same is covered by one of its objects as contained in the trust deed. I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 9 10. Now the pertinent question that arises is whether the said particular activity as carried out by the assessee, can be categorized under the definition of charitable purpose as per section 2(15) of the Act 61. 11. On this issue we refer to the judgment of the Hon’ble Rajasthan High Court in the case of CIT (E) vs Anesthesia Society 101 taxmann.com227 (2019), where the Hon’ble court had the occasion to examine the issue as to as to whether the education relating to medical development, procedures and organizing seminars, benefiting a section of the society can be considered to be beneficial for the public at large. 11.1 The relevant portion is reproduced below for the sake of ready reference: “Precisely, the contention of the appellant is that the assessee society has been constituted for the benefit of only one branch of medicine i.e. Anaesthesia and not for the purpose of benefiting the entire medical fraternity and therefore, the benefit of registration under Section 12A was rightly denied to the assessee (2 of 5) [ITA-170/2018] society by the CIT (Exemption) and thus, the ITAT has erred in law in extending benefit of registration under Section 12A to the assessee society. 3. The learned ITAT opined that the society might be catering to only one particular branch of doctors, but it is not the case of I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 10 the department that the benefit will be accruing to specified individuals rather, all the doctors practising Anaesthesia within the district of Sriganganagar and Hanumangarh will stand benefited by the activities of the society. Relying upon a decision of the Hon'ble Supreme Court in the matter of 'Ahmedabad Rana Caste Association vs. CIT', (1971) 82 ITR 704 and a Bench decision of this court in 'CIT vs. Jodhpur Chartered Accountants Society', 258 ITR 548 (Raj.), the ITAT held that the assessee society is eligible for the benefit of registration under Section 12A of the Act. 14. In Ahmedabad Rana Caste Association's case (supra), the Supreme Court while dealing with the issue as to whether an object of the public trust beneficial to a section of a public is an object of general public utility, observed: - \" It is well settled by now and the High Court also has rightly taken that view that an object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. This court in Commissioner of Income-tax v. Andhra Chamber of Commerce overruled the view of Beaumont C.J. in Commissioner of Income-tax v. Grain Merchants' Association of Bombay on the point. It was, I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 11 however, be sufficiently defined and identifiable by some common quality of a public or impersonal nature Where there was no common quality uniting the potential beneficiaries into a class the trust might not be regarded as valid. .....xxxxxx........\" We may usefully refer to the judgment of Lord Greene M.R. in re Complon: Powell v. Complon. The (3 of 5) [ITA-170/2018] Master of the Rolls declared that no definition of what was meant by \"a section of the public\" had, so far as he was aware, been laid down. But he indicated that the trust of a public character is one in which the beneficiaries do not enjoy the benefit when they receive it by virtue of their character as individuals but by virtue of their membership of a specified class, the common quality uniting potential beneficiaries into the class being essentially an impersonal one.\" (Emphasis supplied) 5. In Jodhpur Chartered Accountants Society's case (supra), a Bench of this court while dealing with the question as to whether the assessee association constituted to educate the members of the profession on the subject of auditing, accounting, direct or indirect taxes by holding seminars, conferences and workshops etc. falls within the purview of Section 2(15) of the Act so as to make it entitle to registration under Section 12A of the Act, relying upon inter alia the I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 12 decision of Supreme Court in Ahmedabad Rana Caste Association's case (supra), observed that the predominant object of the society is dissemination of knowledge and education of commercial law, tax laws for the benefit of general public to inculcate a sense of responsibility towards the nation and foster law abiding citizen. The court further observed that it appears that the society is not for the benefit of small group of individuals and it is also not only for the benefit of members but to promote awareness and education of commercial and tax law for general public without any profit motive. The court opined that in the situation of explosion in population, the vast changes brought by the scientific technology and other developments, more particularly, the universal concept of globalisation, new trends in the world order to meet the ever growing challenges to organising seminars, conferences and workshops to educate the people of commercial laws, tax laws, auditing, accounting, direct and indirect taxes are of great general public utility, at least to a section of people falling in the category of charitable institution. 6. In the backdrop of position of law settled by the Apex Court and this court as aforesaid, adverting to the facts of the present case, indisputably, the assessee society has been constituted to bring the 2 doctors dealing in Anaesthesia speciality entitled to be registered with the Medical Council of India together for the purpose of inter alia the development of medical science, publication of research magazine, to promote the research and I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 13 practical work and to organise the seminars etc. Thus, in the considered opinion of this court, merely because the society is primarily created for the benefit and convenience of Anesthetists, it cannot be said that the object of the society is confined to its members practising in Sriganganagar and Hanumangarh Districts. Obviously, the education programme and research work to be undertaken by the assessee society in larger perspective are going to benefit the public at large and therefore, the activities of the assessee society do fall within purview of general public utility so as to make it entitled for registration under Section 12A of the Act. 7. For the aforementioned reasons, we are firmly of the view that the issue involved in the present appeal stands squarely covered by decision of the Apex Court in Ahmedabad Rana Caste Association's case and decision of this court in Jodhpur Chartered Accountants Society's case (supra) in favour of the assessee (5 of 5) [ITA-170/2018] society and thus, no substantial question of law arises for consideration of this court in the present appeal.” 12. As such respectfully following the judgment of the Hon’ble Rajasthan High Court, we are also of the opinion that to encourage knowledge in a particular field of medicine is beneficial to the general public as a whole and the objects to spread awareness about the latest development in medical organisation, treatments, procedure by organising workshops and seminars which benefits the general public I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 14 as a whole will be covered under the objects of general public utility as per provision of section 2(15) of the Act 1961. 13. However, it is also seen that the assessee has not filed copies of financial statements, and documentary evidences and other documents necessary in arriving at a satisfaction of the ld. CIT(E) which is the preliminary requirement for grant of exemption. As such in the interest of justice we find it appropriate to remit the matter back to the file of the ld. CIT(E) to consider all the documentary evidences afresh and to proceed with the registration process as per provisions of law, in view of the legal position laid down by the decision of the Hon’ble Rajasthan High Court (supra). ITA No.304/Asr/2024 14. This appeal of the assessee relates to the rejection of application for approval u/s 80G. The ground of appeal taken by the assessee is as under: “1. That the ld. Commissioner of Income Tax (Exemptions), Chandigarh was not justified to refuse approval u/s 80G(5) of the Income Tax Act, 1961 in the case of the appellant on the sole ground that in the absence of registration u/s 12A/12AB, the approval u/s 80G cannot be decided on merits.” 15. In this case, an application for registration u/s 12AB was filed on 30.09.2023 and application in form 10AB was filed on the same date for approval u/s 80G. I.T.A. Nos.303 and 304/Asr/2024 Assessment Year: 2024-25 15 The application for registration u/s 12AB has been rejected by the registration authorities being ld. CIT(E), Chandigarh vide order dated 21.03.2024. 16. We have already set aside the matter to the file of the ld. CIT(E) in the case of ITA 303/Asr/2024 in respect of this assessee and consequently this application for approval u/s 80G is also to be decided in the light of our above observation in ITA 303/Asr/2024. 17. As such, this appeal is also set aside and allowed for statistical purposes. 18. In the result, both the appeals of the assessee bearing ITA No.303/Asr/2024 and 304/Asr/2024 are allowed for statistical purposes. Order pronounced in the open court on 16.10.2024 Sd/- Sd/- (Dr. M. L. Meena) (Udayan Das Gupta) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order "