M/s Durga Dal Sewa Samiti, Patran V. CIT (Exemptions), Chandigarh

ITA 106/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6514 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2016-2017
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G.K. DHALL
• Keywords: Charitable institution; Set aside
• Section: 12; 11; 12A; 12AA; 13; 10(23C); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.106/CHD/2017 (U/S 12AA OF THE ACT) M/S DURGA DAL SEWA SAMITI, VS. THE CIT (EXEMPTIONS), NEW ANAJ MANDI, PATRAN. CHANDIGARH. PAN: AALTS1484M (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI RAKESH CAJLA RESPONDENT BY : SHRI G.K. DHALL, CIT DR DATE OF HEARING : 27.09.2017 DATE OF PRONOUNCEMENT : 21.12.2017 ORDER PER ANNAPURNA GUPTA, A.M.: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. CIT (EXEMPTION), CHANDIGARH [HEREI NAFTER REFERRED TO AS CIT(E)], DATED 30-07-2016, DENYING GRANT OF REGISTRATION U/S 12A TO THE ASSESSEE SOCIETY. 2. BRIEF FACTS RELATING TO THE CASE ARE THAT AN APP LICATION IN FORM 10A WAS FILED BY THE ASSESSEE ON 29.01.2016 SEEKING REGISTRATION U/S 12A. THE APPLICATION REVE ALED THAT THE ASSESSEE SOCIETY WAS AN ONGOING ENTITY IN OPERA TION SINCE 12-03-1996. THE PRIMARY STATED AIMS AND OBJEC T OF THE SOCIETY WERE FOUND TO BE TO MAINTAIN BROTHERHOO D IN THE SOCIETY THROUGH PEACE AND SOCIAL SERVICES, PROVIDE FREE OR AT SUBSIDIZED RATE MEDICAL SERVICE TO THE SOCIETY, ORG ANIZE SPECIAL AWARENESS PROGRAMME REGARDING HEALTH, ORGAN IZE SPECIAL AWARENESS PROGRAMME TO SAVE GIRLS. DU RING THE 2 PROCEEDING BEFORE THE LD. CIT(E) NECESSARY INFORMAT ION WAS CALLED FOR AND DUE REPLY FILED BY THE APPLICANT, AF TER CONSIDERING WHICH LD. CIT(E) DENIED REGISTRATION TO THE ASSESSEE FOR THE FOLLOWING REASONS:- A) THE DISSOLUTION CLAUSE OF THE APPLICANT SOCIETY WAS RESTRICTIVE AS THE PRESIDENT OF THE SOCIETY, TH ROUGH A RESOLUTION DULY PASSED BY 3/4 TH MEMBERS OF THE SOCIETY, COULD DISSOLVE THE SOCIETY. LD. CIT(E) POI NTED OUT THAT THE SAID CLAUSE MENTIONED THAT A FRESH SOC IETY WOULD BE FORMED THEREAFTER BY THE PRESIDENT TO LOOK AFTER THE INTERESTS OF THE SOCIETY AND THE ASSETS A ND LIABILITIES WOULD BE TRANSFERRED TO THE PRESIDENT O F THE NEWLY FORMED SOCIETY . LD. CIT(E) INTERPRETED THE S AID CLAUSE AS ENABLING THE DISTRIBUTION OF ASSETS AND LIABILITY OF THE SOCIETY AMONGST THE MEMBERS OF THE SOCIETY ON DISSOLUTION, THUS ATTRACTING PROVISIONS OF SECTION 13(1)(C) OF THE ACT WHICH PROHIBITED GIVING BENEFIT TO CERTAIN SPECIFIED PERSONS BY TRUSTS ENJO YING EXEMPTION U/S 11 OF THE ACT. THE RELEVANT FINDING O F THE LD. CIT( E) IN PARA-9 OF HIS ORDER IS AS UNDER: - DISSOLUTION CLAUSE IN THE INSTANT CASE IS RESTRICTIVE AS THE PRESIDENT OF THE SOCIETY THROUGH A RESOLUTION DULY PASSED BY 3 /4 TH THE MEMBERS OF THE TRUST CAN DISSOLVE THE SOCIETY. THERE AFTER A FRESH SOCIETY SHALL BE FORMED BY THE PRESIDENT FOR LOOKING AFTER THE INTERESTS OF THE SOCIETY. IN CASE THE SOCIETY IS DISSOLVED, ITS ASSETS, LIABILITIES W ILL BE TRANSFERRED TO THE PRESIDENT OF THE NEWLY FORMED SOCIETY. THE PROVISIONS OF SECTION 13(1)(C) OF THE IT ACT STATES THAT 'IN CASE OF A TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOME THEREOF- IF SUCH TRUST OR INSTITUTION HAS BEEN CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT 3 AND UNDER THE TERMS OF THE TRUST OR THE RULES GOVERNING THE INSTITUTION, ANY PART OF SUCH INCOME ENURES, OR (II) IF ANY PART OF INCOME OR ANY PROPERTY OF THE T RUST OR THE INSTITUTION (WHENEVER CREATED OR ESTABLISHED) IS DURING THE PREVIOUS USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB-SECTION (3):' AMBIT IN CASE OF A RESTRICTIVE DISSOLUTION CLAUSE, THE PRESUMPTION OF THE LAW IS THAT THE ASSETS AND LIABILITIES OF THE SOCIETY WILL BE DISTRIBUTED AMONGST THE MEMBERS OF THE SOCIETY/TRUST IN CASE THE TRUST CLOSES ITS OPERATIONS OR IS DISBANDE D. THE PROVISIONS OF SECTION 13(1 )(C) OF THE ACT ARE CLEA RLY ATTRACTED IF THE DISSOLUTION CLAUSE IS RESTRICTIVE. FURTHER IN THIS CASE THE DISTRIBUTION OF ASSETS IN THE EVENT OF DISSOLUTION HAS BEEN RESTRICTED ONLY TO ANOTHER SOCIETY FORMED BY THE PRESIDENT AND TO THAT EXTENT OTHER SOCIETIES HAVE BEEN PRECLUDED. 3. IT WAS FURTHER FOUND BY THE LD. CIT(E) THERE WAS JUST ONE DOCTOR SHOWN TO HAVE BEEN WORKING IN THE HOSPIT AL AND SINCE EXEMPTION U/S 10(23)(C)(IIIAE) HAD BEEN CLAIM ED BY THE ASSESSEE SOCIETY IN EARLIER YEARS, WHICH HAD BEEN D ENIED TO IT AND THE SAID CLAIM HAD NOT BEEN FORGONE SINCE T HE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER, LD . CIT(E) STATED THAT IT WAS NOT CLEAR AS TO HOW SINGLE DOCTO R WAS PROVIDING ALL SERVICES WHICH WERE REQUIRED TO BE PR OVIDED BY HOSPITALS AND INSTITUTIONS WHO WERE ELIGIBLE FOR EX EMPTION U/S 10(23C). THE RELEVANT FINDING OF LD. CIT(E) OF PARA-10 AS UNDER:- IT IS SEEN FROM THE DETAILS THAT THERE IS JUST ONE DOCTOR WHO HAS BEEN SHOWN AS WORKING FOR THE HOSPITAL. IT'S ALSO THE CASE THAT DURING THE PREVIO US YEARS THE APPLICANT HAS BEEN CLAIMING EXEMPTION U/S 10(23C) (IIIAE), WHICH HAS BEEN REJECTED BY THE ASSESSING OFFICER. THE APPLICANT, SELF PROFESSEDLY, IS IN APPEAL AGAINST THE SAID ORDER AND TO THAT EXTENT HASN'T FOREGONE ITS CLAIMS FOR EXEMPTION 4 UNDER SECTION 10(23C).IT IS AT THIS JUNCTURE ALSO RELEVANT TO QUOTE THE PROVISIONS OF 10(23C)(IIIAE). (IIIAE) 'ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM ILLNESS OR MENTAL DEFECTIVENESS OR FOR THE RECEPTIO N AND TREATMENT OF PERSONS DURING CONVALESCENCE OR OF PERSONS REQUIRING MEDICAL ATTENTION OR REHABILITATION, EXISTING SOLELY FOR PHILANTHROPIC PURPOSES AND NOT FOR PURPOSES OF PROFIT, IF THE AGGREGATE ANNUAL RECEIPTS OF SUCH HOSPITAL OR INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECEIPTS AS MAY BE PRESCRIBED' IT IS CLEAR THAT THAT EXEMPTION IS APPLICABLE TO HOSPITALS AND INSTITUTIONS FOR PROVIDING A HOST OF SERVICES. IT IS UNCLEAR HOW WITH A SINGLE DOCTOR AL L THE REQUIRED SERVICES ARE BEING PROVIDED. FURTHER, IN SUCH CASES SECTION 10(23C) (VIA) WOULD BE THE MORE APPROPRIATE AND RELEVANT SECTION IF AT ALL THE GROSS RECEIPTS EXCEED THE PRESCRIBED LIMIT. IT MAY WELL BE THE CASE MAT THE APPLICANT SOCIETY HAS COME UP WITH THE APPLICATION FOR GRANT OF REGISTRATION U/S 12AA OF THE ACT JUST TO COVER UP THE ESCAPEMENT OF TAXES ONCE THE SAME HAS BEEN POINTED OUT BY THE ASSESSING OFFICER. 4. FOR THE ABOVE STATED REASONS THE ASSESSEE WAS DE NIED REGISTRATION U/S 12AA. 5. AGGRIEVED AGAINST THE SAME THE ASSESSEE SOCIETY HAS COME UP IN APPEAL BEFORE US RAISING THE FOLLOWING G ROUNDS:- 1. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH IS BAD IN LAW AND AGAINST FACTS OF THE CASE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH IS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR REGISTRATION SUBMITTED BY THE ASSESSEE, COMPLETE IN ALL RESPECT WITHOUT GOING INTO THE FACTS & MERITS OF THE CASE. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH IS ERRED IN REJECTING THE APPLICATION FOR REGISTRATION WITH THE OBSERVATIONS THAT PROVISIONS OF SECTION 13 (1) (C) OF THE ACT ARE ATTRACTED IN THE CASE OF ASSESSEE. WHILE DOING SO, HE FAILED TO APPRECIATE THE FACT THE PROVISIONS ARE NOT AT ALL APPLICABLE. 5 4. THAT THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH IS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR REGISTRATION ON IRRELEVANT CONSIDERATIONS. 5. THE ASSESSEE CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE GROUND (S) OF APPEAL BEFORE IT IS FINALLY HEARD. 6. DURING THE COURSE OF HEARING BEFORE US, LD. COUN SEL FOR THE ASSESSEE COUNTERED BOTH THE ALLEGATIONS OF THE LD. CIT(E). VIS A VIS THE DISSOLUTION CLAUSE, WHICH WAS REFERRED TO BY THE LD.CIT(E) AND STATED TO BE RESTRICTIVE AN D THUS IN VIOLATION OF PROVISION OF SECTION 13(1)(C) OF THE A CT, LD. COUNSEL FOR THE ASSESSEE STATED THAT IT WAS POINTED OUT TO THE LD.CIT(E),THAT THE SAID CLAUSE HAD BEEN SUBSEQ UENTLY AMENDED REQUIRING ALL ASSETS AND LIABILITIES OF T HE SOCIETY WOULD BE TRANSFERRED TO A NEW SOCIETY FOR DISSOLUTI ON, WHICH WOULD THEREAFTER LOOK AFTER THE INTEREST OF THE SOC IETY AND WAS NOT RESTRICTIVE AT ALL. OUR ATTENTION WAS DRAWN TO THE RELEVANT CLAUSE REPRODUCED AT PAGE NO. 11, WHICH ST ATED AS UNDER:- WHEREAS SH. DURGA DAL SEWA SAMITTI CHARITABLE (REG D) PATRAN MANDI TEHSIL PATRAN DISTT. PATIALA HAS BEEN D ULY REGISTERED AND SHRI MADAN LAI IS ITS PRESIDENT AND UNDER HIS PRESIDENT SHIP, A RESOLUTION HAS BEEN PASSED ON THIS DAY 20 LH DAY OF JULY 2016 IN WHICH IT HAS BEEN DECIDED THAT IN CASE THE SH. DURGA DAL SEWA SAMITTI CHARITABLE (REGD) PATRAN MANDI IS DISBANDED IN ANY MANNER, THE PROPERTY KEPT AND MAINT AINED BY SH. DURGA DAL SEWA SAMITTI CHARITABLE (REGD) PATRA N MANDI WILL BE HANDED OVER TO SOME SOCIETY DOING THE WORK FOR THE WELFARE OF THE PUBLIC WHICH WILL BE DECIDED W ITH THE CONSENT OF ALL THE MEMBERS AND PRESIDENT. 7. LD. COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THAT EVEN AS PER THE SOCIETY REGISTRATION ACT, 1860, WHI CH APPLIED TO IT, IT COULD NOT HAVE DISTRIBUTED PROFI TS AMONGST 6 ITS MEMBERS AS WAS THE APPREHENSION OF THE LD.CIT(E ). LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO C LAUSE 13 & 14 OF THE SAID ACT WHICH STATED THAT ANY SOCIETY COULD BE DISSOLVED BY THE CONSENT OF THREE-FIFTH OF THE MEMB ERS AND THAT NO MEMBER WAS TO RECEIVE ANY PROFIT ON SUCH DISSOLUTION. THE RELEVANT CLAUSES OF THE SOCIETY RE GISTRATION ACT, WAS PLACED BEFORE US WHICH STATED AS UNDER:- 13. PROVISION FOR DISSOLUTION OF SOCIETIES AND ADJUS TMENT OF THEIR AFFAIRS. ANY NUMBER NOT LESS THAN THREE-FIFTHS OF THE MEMBER S OF ANY SOCIETY MAY DETERMINE THAT IT SHALL BE DISSOL VED, AND THEREUPON IT SHALL BE DISSOLVED FORTHWITH, OR AT THE TIME THEN AGREED UPON, AND ALL NECESSARY STEPS SHAL L BE TAKEN FOR THE DISPOSAL AND SETTLEMENT OF THE PROPER TY OF THE SOCIETY, ITS CLAIMS AND LIABILITIES, ACCORDING T O THE RULES OF THE SAID SOCIETY APPLICABLE THERETO, IF ANY, AND, IF NOT, THEN AS THE GOVERNING BODY SHALL FIND EXPEDIENT, PR OVIDED THAT, IN THE EVENT OF ANY DISPUTE ARISING AMONG THE SAID GOVERNING BODY OR THE MEMBERS OF THE SOCIETY, THE ADJUSTMENT OF ITS AFFAIRS SHALL BE REFERRED TO THE PRINCIPAL COURT OF ORIGINAL CIVIL JURISDICTION OF THE DISTRICT IN WHICH THE CHIEF BUILDING OF THE SOCIETY IS SITUATE; AND THE CO URT SHALL MAKE SUCH ORDER IN THE MATTER AS IT SHALL DEEM REQU ISITE; ASSENT REQUIRED. PROVIDED THAT NO SOCIETY SHALL BE DISSOLVED UNLESS THREE-FIFTHS OF THE MEMBERS SHALL HAV E EXPRESSED A WISH FOR SUCH DISSOLUTION BY THEIR VOLE S DELIVERED IN PERSON, OR BY PROXY, AT A GENERAL CONVE NED MEETING FOR THE PURPOSE: GOVERNMENT CONSENT PROVIDED THAT WHENEVER ANY GOVERNMENT IS A MEMBER OF OR A CONTRIBUTOR TO OR OTH ERWISE INTERESTED IN, ANY SOCIETY REGISTERED UNDER THISACT , SUCH SOCIETY SHALL NOT BE DISSOLVED WITHOUT THE CONSENT O F THE GOVERNMENT OF THE STATE OF REGISTRATION. 14. UPON A DISSOLUTION NO MEMBER TO RECEIVE PROFIT.--- IF UPON THE DISSOLUTION OF ANY SOCIETY REGISTERED UNDER THIS ACT THERE SHALL REMAIN, AFTER THE SATISF ACTION OF ALL ITS DEBTS AND LIABILITIES, ANY PROPERTY WHATSOEV ER, THE SAME SHALL NOT BE PAID TO OR DISTRIBUTED AMONG THE MEMBERS OF THE SAID SOCIETY OR ANY OF THEM, BUT SHA LL BE GIVEN TO SOME OTHER SOCIETY, TO BE DETERMINED BY TH E VOTES OF NOT LESS THAN THREE-FIFTHS OF THE MEMBERS PRESEN T 7 PERSONALLY OR BY PROXY AT THE TIME OF THE DISSOLUTI ON, OR, IN DEFAULT THEREOF, BY SUCH COURT AS AFORESAID: CLAUSE NOT TO APPLY TO JOINT-STOCK COMPANIES. PROVIDED, HOWEVER, THAT THIS CLAUSE SHALL NOT APPLY TO ANY SOCIETY WHICH SHALL HAVE BEEN FOUNDED OR ESTABLISHE D BY THE CONTRIBUTIONS OF SHAREHOLDERS IN THE NATURE OF JOINT- STOCK COMPANY. 8. THUS, LD. COUNSEL FOR THE ASSESSEE STATED THAT T HERE WAS NO MERIT IN CONTENTION OF THE LD. CIT(E) THAT B Y VIRTUE OF THE DISSOLUTION CLAUSE BENEFIT WOULD ACCRUE TO T HE MEMBERS AND THEREFORE THE DISSOLUTION CLAUSE COULD NOT BE TERMED TO BE RESTRICTIVE OR IN VIOLATION OF THE PRO VISIONS OF SECTION 13(1)(C) OF THE ACT AND THUS COULD NOT HAVE FORMED THE BASIS FOR REJECTING THE APPLICATION FOR REGISTR ATION U/S 12A FILED BY THE ASSESSEE. 9. VIS A VIS ISSUE OF APPOINTMENT ONLY ONE DOCTOR O UR ATTENTION WAS DRAWN TO THE SUBMISSION MADE DURING T HE IMPUGNED PROCEEDINGS BEFORE THE LD. CIT(E) IN THIS REGARD VIDE LETTER DATED 20-07-2016 PLACED IN PAPER BOOK A T PAGE- 7, AS PER WHICH THE ASSESSEE HAD SUBMITTED THAT TH E SOCIETY HAD ENGAGED THE SERVICES OF ONLY ONE DOCTOR WHO WAS AN MBBS DOCTOR AND WAS BEING PAID A SALARY OF RS.75 ,000/- P.M. AND FURTHER THAT THE SOCIETY WAS RUNNING A HO SPITAL WITH THE MAIN OBJECT OF PROVIDING SERVICES TO NEEDY PEOPLE AT SUBSIDIZED RATE AND ALSO AMBULANCE SERVICES TO T HE PUBLIC AT SUBSIDIZED RATE. THE RELEVANT SUBMISSIONS OF THE ASSESSEE ARE AS UNDER:- ONLY ONE DOCTOR NAMED SH. KARAN BHATNAGAR (MBBS) RESIDENT AT HOUSE NO. 70, HIRA BAGH, RAJPURA ROAD, PATIALA IS WORKING WITH THE HOSPITAL. THE SALARY OF RS. 75,000/- PER MONTH IS BEING PAID TO HIM. 8 AS STATED EARLIER THE SOCIETY IS RUNNING A HOSPITAL WITH THE MAIN OBJECT, OF PROVIDING SERVICES TO THE NEEDY PEOPLE AT SUBSIDIZED RATE. HOWEVER, THE DETAILS OF SOME CHARITABLE ACTIVITIES CARRIED OUT B Y THE SOCIETY IS AS UNDER:- SR. NO. DATE ACTIVITIES 1. 11.07.2014 BLOOD DONATION CAMP 2. 22.02.2005 FREE EYE CHECK-UP 3. 15.07.2016 BLOOD DONATION CAMP APART FROM IT THE SOCIETY IS PROVIDING AMBULANCE SERVICES TO THE PUBLIC AT VERY SUBSIDIZED RATES. THESE ARE THE APPARENT CHARITABLE ACTIVITIES. THE PROVIDING OF MEDICAL RELIEF IS COVERED UNDER CHARITABLE PURPOSES AN ENVISAGE U/S 2(15) AND 11 OF THE INCOME TAX ACT. 10. LD.COUNSEL FOR THE ASSESSEE ,RELYING ON THE ABO VE SUBMISSIONS MADE ,CONTENDED THAT IT WAS BEYOND COMPREHENSION AS TO HOW EMPLOYMENT OF ONLY ONE DOCT OR COULD BE READ AGAINST THE ASSESSEE SOCIETY SO AS TO DENY REGISTRATION TO IT AS A CHARITABLE SOCIETY U/S 12A OF THE ACT, WHEN THE SAID FACT PROVED BEYOND ANY DOUBT THAT THE ASSESSEE WAS GENUINELY CARRYING OUT CHARITABLE ACTI VITIES. IT WAS ALSO CONTENDED THAT FOR THE PURPOSE OF GRANTIN G REGISTRATION U/S 12A THE CIT HAD TO ONLY CONSIDER W HETHER THE OBJECTS OF THE APPLICANT WERE CHARITABLE AND TH E ACTIVITIES CARRIED OUT BY IT WERE GENUINE AND IN CO NSONANCE WITH THE STATED OBJECTS. IN THE ABSENCE OF ANY SUCH FINDING AND MERELY ON THE BASIS OF SURMISES AND CONJECTURES THAT HOW COULD THE ASSESSEE RENDER MEDICAL SERVICES BY EMPLOYING ONLY ONE DOCTOR, REGISTRATION COULD NOT H AVE BEEN DENIED TO THE ASSESSEE SOCIETY. 9 11. LD. DR ON OTHER HAND RELIED UPON THE ORDER OF C IT(E). 12. WE HAVE HEARD THE CONTENTIONS OF THE BOTH THE P ARTIES AND GONE THROUGH THE ORDER OF LD. CIT(E) AND THE DO CUMENTS REFERRED TO BEFORE US. WE FIND MERIT IN THE CONTENT ION OF THE LD. COUNSEL FOR THE ASSESSEE. IT HAS BEEN DULY DEMO NSTRATED BEFORE US THAT THE DISSOLUTION CLAUSE WAS NOT RESTR ICTIVE AND THAT ON DISSOLUTION ALL THE ASSETS AND LIABILITIES OF THE ASSESSEE SOCIETY WOULD BE TRANSFERRED TO A NEW SOC IETY TO LOOK AFTER THE INTEREST OF THE SOCIETY .EVEN AS PER SECTION 13 & SECTION 14 OF THE SOCIETY REGISTRATION ACT, UNDER WHICH ASSESSEE SOCIETY WAS REGISTERED, NO PROFIT IN ANY C ASE COULD BE TRANSFERRED BY THE APPLICANT SOCIETY TO ITS TRUS TEES OR MEMBERS. THUS THE ALLEGATION AND APPREHENSION OF LD . CIT(E) THAT THE PRESIDENT OF THE SOCIETY HAD THE PO WER TO DISSOLVE THE SOCIETY AND DISTRIBUTE PROFITS AMONGST ITS MEMBERS, WE FIND, IS MISPLACED. THE CONTENTION OF T HE CIT(E) THAT SECTION 13(1)(C) OF THE ACT, WOULD BE A TTRACTED ON DISTRIBUTION OF PROFITS OF THE ASSESSEE SOCIETY ON DISSOLUTION IS THEREFORE, WE HOLD, WITHOUT ANY BASI S. MOREOVER THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SURYA EDUCATIONAL & CHARITABLE TRUS T IN ITA NO.701 OF 2010 ,DT.05/10/12, HAS HELD THAT WHILE GR ANTING REGISTRATION, THE ONLY ISSUES TO BE CONSIDERED ARE WHETHER THE OBJECT OF THE SOCIETY ARE CHARITABLE AND THE AC TIVITIES CARRIED OUT BY IT ARE IN CONSONANCE WITH THE SAID OBJECT AND GENUINE AND THAT THE PROVISIONS OF SECTION 11 & 12 OF 10 THE ACT, COME INTO OPERATION FOR CALCULATING THE E XEMPT INCOME ONCE REGISTRATION U/S 12A HAS BEEN GRANTED. THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER: AS PER SECTION 12AA OF THE ACT, AN APPLICATION FOR R EGISTRATION OF THE TRUST AND INSTITUTION IS REQUIRED TO BE MADE WITHIN ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR THE ESTABLISHMENT OF SUCH INSTITUTION. THE PROCEDURE FOR REGISTRATION OF THE TRUST OR INSTITUTION IS PRESCRIB ED UNDER SECTION 12AA OF THE ACT. IN TERMS OF CLAUSE (A) OF S ECTION 12AA OF THE ACT, THE COMMISSIONER IS TO SATISFY HIMSELF AB OUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST ON SUCH I NQUIRIES AS HE MAY DEEM NECESSARY. SUB-SECTION (1A) AND (2) OF SECT ION 12AA OF THE ACT, ARE PROCEDURAL IN NATURE, WHEREAS SUB - SECTION (3) OF SECTION 12AA OF THE ACT, EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION OF THE TRUST OR INSTITUTION, IF HE IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. 9. SECTION 11 OF THE ACT CONTEMPLATES THAT THE INCOME AS SPECIFIED THEREIN SHALL NOT BE INCLUDED IN THE TOTAL INC OME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE I NCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, WHEREAS SECTION 12 O F THE ACT, DEALS WITH THE CONTRIBUTIONS RECEIVED BY THE TRUS T OR AN INSTITUTION, ESTABLISHED FOR CHARITABLE AND RELIGIOUS P URPOSES, RECEIVING CONTRIBUTION, SHALL NOT BE AN INCOME IN TERM S OF SECTION 11 OF THE ACT. THE BENEFIT OF SECTIONS 11 AND 12 OF THE ACT, ARE AVAILABLE ONLY IF SUCH TRUST OR INSTITUTION I S REGISTERED UNDER SECTION 12AA OF THE ACT. 10. ON THE OTHER HAND, SECTION 10(23C) OF THE ACT ARE THE PROVISIONS OF THE ACT IN SUBSTITUTION OF THE EARLIER PROVISIONS OF SECTION 10(22) OF THE ACT AS TO WHICH INCOME SHALL NOT BE INCLUDED IN COMPUTING THE TOTAL INCOME OF ANY PERSON. THEREFORE, THE PROVISIONS OF SECTIONS 11, 12 OR SECTIO N 10(23C) OF THE ACT, DEAL WITH THE INCOME OF A TRUST OR OF THE INSTITUTION AND THE CIRCUMSTANCES AS TO WHEN SUCH INCOME IS TO BE EXCLUDED FOR COMPUTING THE TOTAL INCOME, BUT THE BASIS OF SUCH BENEFIT IS THE REGISTRATION UNDER SECTION 12AA OF T HE ACT. UNLESS A TRUST OR INSTITUTION IS REGISTERED UNDER SEC TION 12AA OF THE ACT, SUCH TRUST OR INSTITUTION SHALL NOT BE ENTIT LED TO EXCLUDE FROM ITS TOTAL INCOME, DEDUCTIONS OR CONTRIBUT IONS OR FROM OTHER SOURCES. THEREFORE, THE PRINCIPLES LAID DO WN FOR EXCLUDING THE INCOME FROM CONSIDERATION UNDER SECTIO N 10(22) NOW 10(23)(C) OR SECTIONS 11 AND 12 ARE NOT APPLICABLE WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECT ION 12AA OF THE ACT. THE APPLICATION FOR REGISTRATION IS REQU IRED TO BE MADE WITHIN ONE YEAR OF THE CREATION OF THE TRUST. S ECTION 12AA OF THE ACT, REQUIRES SATISFACTION IN RESPECT OF THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, WHICH INC LUDES THE ACTIVITIES WHICH THE TRUST IS UNDERTAKING AT PRESENT AND ALSO 11 WHICH IT MAY CONTEMPLATE TO UNDERTAKE. THE INSERTION OF SUB- SECTION (3) TO SECTION 12AA OF THE ACT, CLARIFIES THE SAID FACT, WHEN IT EMPOWERS THE COMMISSIONER TO CANCEL THE REGIS TRATION IF THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS. 11. THEREFORE, THE OBJECT OF SECTION 12AA OF THE ACT, IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TRUST , BUT NOT THE INCOME OF THE TRUST FOR CHARITABLE OR RELIGIOUS P URPOSES. THE STAGE FOR APPLICATION OF INCOME IS YET TO ARRIV E I.E. WHEN SUCH TRUST OR INSTITUTION FILES ITS RETURN. THEREFORE, WE FIND THAT THE JUDGMENTS REFERRED TO BY THE LEARNED COUNSEL FOR THE APPELLANT ARE NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE ARISING OUT OF THE QUESTION OF REGISTRATION OF THE TRUST AND NOT OF ASSESSMENT. 13. THIS PROPOSITION HAS BEEN REITERATED BY THE HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT(E) V S SHRI SHIRDI SAI DARBAR CHARITABLE TRUST, DHARAMSALLA REP ORTED IN 395 ITR 567 . THEREFORE ALSO WE HOLD THAT THE LD. C IT(E) HAS ERRED IN DENYING REGISTRATION TO THE ASSESSEES SOC IETY ON ACCOUNT OF THE ALLEGED RESTRICTIVE DISSOLUTION CLAU SE ATTRACTING THE PROVISION OF SECTION 13(1)(C) OF THE ACT. 14. VIS A VIS THE AVAILABILITY OF ONLY ONE DOCTOR, AVAILABLE WITH THE ASSESSEE WE HOLD THAT THE SAID FACT IS NEI THER HERE NOR THERE FOR DETERMINING WHETHER THE ACTIVITIES OF THE ASSESSEES SOCIETY ARE GENUINE OR NOT, WHICH IS THE ONLY PRE- REQUISITE FOR GRANTING REGISTRATION U/S 12A. IN FAC T THE PRESENCE OF A DOCTOR, WHICH IS AN ADMITTED FACT, ES TABLISHES THAT THE ASSESSEES SOCIETY IS GENUINELY RENDERING MEDICAL SERVICES, WHICH IS A CHARITABLE ACTIVITY. THERE IS NO FINDING AT ALL BY THE LD.CIT(E) THAT NO MEDICAL SERVICES WE RE IN FACT BEING RENDERED BY THE ASSESSEE SOCIETY THAT TOO WHE N ALL NECESSARY DETAILS WERE CALLED FOR AND EXAMINED BY T HE LD.CIT(E) DURING THE EXTANT PROCEEDINGS BEFORE IT. IN FACT THE ASSESSEE HAD SUBMITTED DETAILS OF MEDICAL CAMPS 12 ORGANIZED BY IT AND HAD ALSO SUBMITTED THAT IT WAS RENDERING AMBULANCE SERVICES AT SUBSIDIZED RATES.NO NE OF THESE CONTENTIONS HAVE BEEN CONTROVERTED EITHER BY THE LD.CIT(E) OR THE LD.DR BEFORE US. WE THEREFORE AGRE E WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE LD.CIT(E) WAS MERELY ASSUMING AND IN FACT IT WAS ONLY A SUSPICION OF THE LD.CIT(E) THAT THE ASSESSEE WAS NOT RENDERING ANY MEDICAL SERVICES. FURTHER WE FIND THAT THE REFERENCE OF THE LD.CIT(E) TO THE PROVISIONS OF SECTION 10(23C)(IIIAE) UNDER W HICH THE ASSESSEE HAD CLAIMED EXEMPTION IN PRECEDING YEARS F OR STATING HOW THE ASSESSEE COULD BE POSSIBLY RENDERIN G SERVICES ENVISAGED IN THE SAID SECTION WITH THE HEL P OF ONE DOCTOR, WE FIND IS TOTALLY IRRELEVANT TO THE ISSUE AT HAND SINCE THE ASSESSEE HAS IN THE PRESENT CASE APPLIED FOR REGISTRATION AS A CHARITABLE SOCIETY U/S 12A OF THE ACT TO CLAIM EXEMPTION U/S 11 & 12 OF THE ACT AND NOT UNDE R SECTION 10(23C)(IIAE). THE ISSUE THEREFORE HAS TO B E EXAMINED AS PER THE APPLICABLE PROVISIONS WHICH ARE CLEAR AND AS PER WHICH, AS STATED ABOVE, THE CIT HAS ONLY TO EXAMINE THE OBJECTS AND THE GENUINENESS OF ACTIVITI ES OF THE APPLICANT SOCIETY. THERE IS NO NEED AT ALL TO BORRO W FROM ANY OTHER PROVISIONS OF THE ACT UNLESS SO SPECIFICALLY PROVIDED FOR. THEREFORE ALSO WE HOLD THAT THERE COULD NOT HA VE BEEN ANY REASON FOR DENYING GRANT OF REGISTRATION TO THE ASSESSEE SOCIETY. 15. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD.CI T(E) AND DIRECT GRANT OF REGISTRATION TO THE ASSESSEE SOCIE TY. 13 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE SOCIE TY, THEREFORE, STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 21 ST DECEMBER, 2017 *RATI* COPY TO: 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH