Smt. Kulwanti Bhatia Charitable Trust Society, Kanpur V. Commissioner of Income Tax (Exemptions), Lucknow

ITA 149/LKW/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1485 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 27-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K BAR
• Keywords: Charitable institution; Onus to prove; Cancellation of registration; Capital expenditure; Set aside
• Section: 143(3); 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 149/LKW/2018 ASSESSMENT YEAR: N.A. SMT. KULWANTI BHATI CHARITABLE TRUST SOCIETY 117/N/8, KAKA DEO KANPUR V. CIT (EXEMPTIONS) LUCKNOW T AN /PAN : AAATK6074E (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI A. K. BAR, CIT (DR) DATE OF HEARING: 26 0 2 201 9 DATE OF PRONOUNCEMENT: 15 0 3 201 9 O R D E R PER A. D . JAIN, V.P . : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (EXEMPTIONS), LU C KNOW PASSED ON 19/1/2018, CANCELLING REGISTRATION UNDER SECTION 12A OF THE ACT, TAKING THE FOLLOWING GROUNDS OF APPEAL: - 01. BECAUSE THE CIT ( EXEMPTIONS) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY CANCELLING THE REGISTRATION GRANTED UNDER SECTION 12A DATED 20.11.1984 OF THE INCOME - TAX ACT, 1961 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER REJECTING THE GRANT OF REGIS TRATION IS BAD IN LAW AND BE QUASHED. 02. BECAUSE THE CIT (EXEMPTIONS) HAS ERRED ON FACTS AND IN LAW NOT APPRECIATING THAT ALL THE ACTIVITIES BEING GENUINE AND BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION, THE ORDER CANCELLING TH E GRANT OF REGISTRATION IS BAD IN LAW, BE SET ASIDE AND REGISTRATION ALREADY GRANTED U.S .12A BE RESTORED. ITA NO.149/LKW/2018 PAGE 2 OF 24 03. BECAUSE THE CIT(E) HAS FAILED TO APPRECIATE THE FACTS, MISINTERPRETED THE WORKING/ACTIVITIES OF THE SOCIETY, HOLDING THAT THE SAME IS NOT GENU INE AND IS NOT BEING CARRIED OUT IN ACCORDANCE TO THE OBJECTS OF THE SOCIETY, AND HAS THEREBY ERRED IN CANCELLING THE REGISTRATION ALREADY GRANTED U/S.12A OF THE ACT OF THE CIT(E) BE QUASHED. ; 04. BECAUSE THE CIT(E) HAS WRONGLY INFERRED AND CONCLUDED THAT CHARGE OF FEES FROM THE PATIENTS, PAYMENTS MADE TO THE DOCTORS AND FOR PATHOLOGICAL SERVICES, AS WELL AS LETTING OUT OF SPACE ON RENT FOR MEDICAL STORE AND ATM, ETC, ARE ALL COMMERCIAL IN NATURE, NOT IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY AND T HE PROVISIONS OF LAW; ARE ALL FINDINGS BASED ON NON - APPRECIATION OF THE FACTS AND EVIDENCES AS SUBMITTED AND FILED BY THE ASSESSEE, THE ORDER PASSED BY CIT(E) REGISTRATION U/S.12AA(3) CANCELLING THE REGISTRATION BE QUASHED AND THE REGISTRATION GRANTED TO T HE SOCIETY U/S.12A BE RESTORED. 05. BECAUSE THERE BEING NO VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C) OF T HE ACT , 1961, THE REGISTRATION GRANTED U/S .12A, THE REGISTRATION GRANTED BE RESTORED. 06. BECAUSE THERE BEING NO CHANGE IN THE OBJECTS OF THE INSTITUTION AND THE NATURE OF THE ACTIVITIES EVER SINCE THE INSTITUTION HAS BEEN ESTABLISHED, AND THE SAME HAVING BEEN ACCEPTED BY THE DEPARTMENT YEAR AFTER YEAR, THE CIT(E) WAS NOT JUSTIFIED IN REVIEWING THE SAME CANCELLING THE REGISTRATION GRANTED U / S :12A . THE ORDER OF THE CIT(E) BE QUASHE D. 2 . THE LD. CIT (EXEMPTIONS), HAS CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE BY HOLDING AS FOLLOWS: - 1. A REPORT WAS RECEIVED FROM INCOME TAX OFFICER (EXEMPTION), KANPUR VIDE LETTER F.NO.LTO(EXEMPTION)/KNP/K ULWANTI/767 DATED 22.02.2017 FORWARDED BY THE JCIT(EXEMPTIONS), GHAZIABAD VIDE LE TTER F.NO . JCIT(E)/GZB/U/S 12A REJECTION/2016 - 17/2985 DATED 02.03.2017 WHEREIN THE AO RECOMMENDED FOR CANCELLATION OF REGISTRATION U/S 12AA AS THE ASSESSEE WAS FOUND TO BE INDU LGED IN VARIOUS NON - CHARITABLE ACTIVITIES. 2. A SHOW CAUSE NOTICE FOR THE CANCELLATION OF REGISTRATION UNDER SECTION 12AA(3) OF THE INCOME TAX WAS ISSUED TO THE ABOVE ITA NO.149/LKW/2018 PAGE 3 OF 24 NAMED TRUST (KULWANTI BHATIA CHARITABLE TRUST SOCIETY)ON 02.03.2017 FOR COMPLIANCE 17.03. 2017. ON THAT DATE I.E. 17.03.2017, SHRI. V.K. MAWKIN, FCA APPEARED ON BEHALF OF THE APPLICANT AND FILED A LETTER. ON PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, IT WAS FOUND THAT THERE ARE 12 VISITING DOCTORS AGAINST WHOM A CHARGE OF RS. 100/ - IS LEVIED BY THE ASSESSEE SOCIETY, HOWEVER THE DOCTORS ARE FREE TO CHARGE THE PATIENTS AS PER THEIR WILL WHICH ESTABLISHES THE FACT THAT THE CLAIM OF CHARITY ON PART OF THE APPLICANT IS A MERE PRETENCE WHICH DOES NOT HAVE ANY SUBSTANCE. IT IS ALSO IMPORTANT TO NOTE THAT PALIWAL DIAGNOSTICS LIMITED, KANPUR (PDPL) GIVES 50% TO TRUST ON ALL RECEIPTS. (F.Y. 2015 - 16 RS. 18.28L). FURTHER IT WAS ALSO FOUND THAT THE ASSESSEE SOCIETY HAS ENTERED INTO A RENT AGREEMENT FOR THE BASEMENT OF THE HOSPITAL OF THE ASSESSEE ABOUT 1000 SQUARE FEET. AND TWO ROOMS ON GROUND FLOOR MEASURING ABOUT 200 SQ. FT. W.E.F. 15.12.2015 FOR A PERIOD OF 5 YEARS ON A MONTHLY RENTAL OF RS. 25,000/ - TO M/S KULWATI SKILL ACADEMY PRIVATE LIMITED WHICH HAS TWO SOCIETY MEMBERS OF THE ASSESSEE SOCIETY AS DIRE CTORS. SHRI. MAWKIN SOUGHT AN ADJOURNMENT TO PRODUCE THE RASTOGI MEDICAL RENT AGREEMENT, OPD CHARGES WITH RECEIPTS FOR THE CURRENT YEAR AND THE BANK ACCOUNT DETAILS FOR 18.04.2017. ON THAT DATE I.E. 18.04.2017, SHRI. MAWKIN APPEARED AND FILED A LETTER. IT WAS FOUND FR O M THE MATERIAL AVAILABLE AND THE SUBMISSIONS OF THE ASSESSE E THAT NO L.D./ADDRESS/C ONTACT NO. OF PATIE N T ( WHO HAVE BEEN CLAIMED TO BE TREATED FREE) ARE AVAILABLE FOR 0 . P . D . FURTHER IT IS ALSO OBSERVED THAT COMMERCIAL ACTIVITIES OF ATM ARE ALSO BEING CARRIED OUT. ALSO THE CLAIM OF THE ASSESSEE, THAT IT IS PROVIDING M EDICA L TREATMENT TO THE NEEDY FREE OF COST, IS BASED ON FA LSE NOTIONS AS ALTHOUGH THE ASSESSEE CLAIMS THAT EACH PATIENT IS CHARGED A NOMINAL COST OF O.P.D OF RS.100/ - EACH TIME HOWEV ER THE DOCTOR ATTENDING THE PATIENT IN THE OPD IS CHARGING A SEPARATE FEE AS PER HIS DISCRETION WHICH SHO WS THAT THE SAID ARRA N GEMEN T IS BASICALLY A PRETENCE OF CHARITY AND IN REALITY LARGE FEE IS BEING EXTORTED FROM THE PATIENTS FOR WHICH NEITHER HAS THE ASSESSEE R EVEALED ANY AMOUNT NOR HAS THE ASSESSEE BEEN ABLE TO PRODUCE THE REQUISITE RECEIPTS. IN THE INTEREST OF NATURAL JU S TICE, THE ASSESSEE SOCIETY WAS ACCORDED ANOTHER OPPORTUNITY OF PRESENTING IT S CASE AND A SHOW CAUSE NOTICE FOR THE CANCELLATION OF REGISTRATION UNDER SECTION 12AA(3) OF THE INC O ME TAX WAS ISSUED ITA NO.149/LKW/2018 PAGE 4 OF 24 TO THE ABOVE NAMED TRUST ( KULWARITI BHATIA CHARITABLE TRUST SOCIETY) O N 2 8. 09.2017 FOR COMPLIANCE 23 . 10 .2017 . HOWEVER ON THAT DATE I.E. 23.10 .2017 NO ONE APPEARED NOR WAS ANY APPLICATION FOR A DJOURNMENT RECEIVED. IN THE INTEREST OF NATURAL JU S TICE , THE ASSESSEE SOCIETY WAS ACCORDED ANOTHER OPPORTUNITY OF PRESENTING IT S CASE AND A SHOW CAUSE NOTICE FOR THE CANCELLATION OF REGISTRATION UNDER SECTION 12AA(3) OF THE INCOME TAX WAS ISSUED TO THE AB OVE NAMED TRUST (KULWANTI BHATIA CHARITABLE TRUST SOCIETY) ON 24.10.2017 FOR COMPLIANCE 06.11.2017. ON THAT DATE I.E. 06.11.2017, SHRI. V.K MAWKIN APPEARED AND FILED A WRITE UP BUT COULD NOT PRODUCE THE REQUISITE DOCUMENTS. SUBSEQUENTLY, A LETTER WAS ISSU ED TO THE ASSESSEE SOCIETY 08.01.2018, FOR PROVIDING A COPY OF THE AGREEMENTS MADE WITH PALIWAL DIAGNOSTICS LIMITED, KANPUR BY 19.01.2018 VIDE POST. O N THAT DATE I.E. 19.01.2018, COPIES OF THE AGREEMENT DATED 08.08.2011 AND 01.09.2014 (NOTARIZED) WITH M/S PALIWAL DIAGNOSTICS PRIVATE LIMITED, KANPUR AND A LEASE RENT AGREEMENT DATED 15.12.2015 WITH M/S KULWANTI SKILL ACADEMY PRIVATE LIMITED, KANPUR, IN WHICH TWO TRUSTEES ARE INTERESTED WAS PRESENTED BY SHRI. V.K. MAWKIN, FGA WHO ALSO FILED A LETTER. IT IS PER TINENT TO NOTE HERE THAT THE SOCIETY HAS MADE AN AGREEMENT WITH PALIWAL DIAGNOSTICS LIMITED, KANPUR ( PDPL) VIDE AGREEMENT DATED 08.08.2011 THAT SOCIETY WILL PROVIDE THE SPACE TO PDPK TO RUN ITS BUSINESS WHEREAS NOWHERE IT IS MENTIONED THAT THE TRUST SHALL MAKE AN AGREEMENT FOR PROVIDING SPACE TO A THIRD PARTY FOR BUSINESS ACTIVITIES. CONSEQUENTLY, THE PATIENTS ARE BEING CHARGED HEAVILY FOR VARIOUS TESTS AND IT IS BEING SHARED BY THE ASSESSEE TRUST AS PDPL. ON BEING QUERIED REGARDING THE SAME, THE APPLICANT HAS FAILED TO PROVIDE ANY CLARIFICATION REGARDING THE AGREEMENT FOR SHARING PROFITS AND HAS SUBMITTED A REPLY AS UNDER: - '.....CERTAIN SPACE WAS PROVIDED TO PDPL TO FACILITATE TO DO BASIC PATHOLOGY TESTING OF PATIENTS OF KULWANTI HOSPITAL AT URGEN T BASIS AND AS COLLECTION CENTRE FOR SPECIALIZED TESTING.......ARRANGEMENT WITH PDPL IS ANCILLARY TO THE OBJECTS OF THE SOCIETY I.E. PROVIDING INSTANT MEDICAL FACILITIES TO THE PATIENTS. FURTHER THE SURPLUS RECEIVED FROM THEM ALSO UTI LIZED FOR THE PRIMARY OBJECT TO OUR SOCIETY'. ITA NO.149/LKW/2018 PAGE 5 OF 24 THE ABOVE ARGUMENT OF THE ASSESSEE TRUST HOLDS NO GROUND AS THE PRETEXT OF PROVIDING A PA THOLOGY TESTING PARTNER FOR ALL EGED PATHOLOGY TESTS ON URGENT BASIS DOES N OT WARRANT SHARING OF THE RECEIPTS OF THE A LLEGED PATHOLOGY PARTNER COMPANY WHICH IS THE ASSESSEE TRUST IN THIS CAS E. MOREOVER THE ASSESSEE STATES THAT THE ARRANGEMENT WITH PDPL IS ANCILLARY TO THE OBJECTS OF THE SOCIETY WHICH IS NOT TRUE AS ON PERUSAL OF THE OBJECTS SET FORTH IN THE TRUST DEED, IT IS FOUND THAT NO WHERE IT MENTIONED THAT THE SOCIETY SHALL MAKE AN ARRA N GEMENT FOR PROVIDING SPACE T O A THIRD PARTY APPLICANT HAS ALSO STATED AS PER OBJECT AT SERIAL III (15) 'TO A M ALGAMATE OR WORK IN COOPERATION WITH ANY INSTITUTION; SOCIETY OR ASSOCIATI ON HAVING OBJECTS ALTOGETHER OR IN PART SIMILAR TO THOSE OF THE SOCIETY'. HOWEVER NEITHER HAS THE APPLI CANT BEEN ABLE TO JUSTIFY THE SHARING OF RECEIPTS OF PDPL WAS EVEN RE M OTELY ASSOCIATED WITH A NY ACT OF CHARITY NOR HAS THE APPLICANT BEEN ABLE TO PROVE T HAT THE OBJECTS OF PDPL, KANPUR HAS OBJECTS ALTOGETHER OR IN PART SIMILAR TO THOSE OF THE ASSESSEE SOCIETY. THUS THE ENTIRE ARRANGEMENT IS PRIMARILY ENSHROUDED IN ULTERIOR MOTIVES OF PROVIDING BENEFITS TO THE SOCIETY ITSELF DEVOID OF ANY ELEMENT OF CHARITY AS PER THE CLAIMED OBJECTIVES. IT IS WORTH MENTIONING THAT THE AFOREMENTIONED AGREE M ENTS WITH ( M /S PALIWAL DIAGNOSTICS KANPUR REGARDING SHARING OF RECEIPTS AND WITH M/S KULWANTI SKILL ACADEMY PRIVATE LIMITED, KANPUR (WHERE 2 ASSSESEE SOCIETY MEMBERS ARE D IRECTORS) REGARDING LEASE RENT AGREEMENTS HAVE BEEN EXECUTED AFTER THE ASSESSEE SOCIETY WAS ACCORDED WITH REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 WHICH CLEARLY GOES TO PROVE THAT FLOATING OF LOFT IDEALS WAS A MERE CAMOUFLAGE UNDER THE GARB OF WHI CH THE APPLICANT INDECOROUSLY ASPIRED FOR REGISTRATION. HOWEVER IT WAS AFTER THE SAID REGISTRATION WAS GRANTED THAT THE APPLICANT SHOWED ITS TRUE COLOUR REGARDING ITS COMMERCIAL INTENT BY ENTERING INTO COLLABORATION WITH OTHER PROFIT - AIMING ENTITIES WHICH ARE UNDER THE UMBRELLA OF THE SAME SET OF INDIVIDUALS WHICH ARE CURRENTLY THE SOCIETY MEMBERS OF THE APPLICANT SOCIETY, THE APPLICANT CONTENDS THIS FACT THAT BY STATING THAT THE SAID AGREEMENTS ARE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE SOC IETY WHICH DON'T APPEAR TO BE REMOTELY TRUE AS NOWHERE DO THE OBJECTS OF THE SOCIETY LAY DOWN THE FACT THAT THE ASSESSEE AIMS TO AUGMENT ITS INCOME BY COLLABORATING WITH COMMERCIAL ENTITIES THAT ARE PROFIT ORIENTED. THUS IT IS QUITE CLEAR ITA NO.149/LKW/2018 PAGE 6 OF 24 THAT THE APPLICAN T HAS CREATED A SUBTERFUGE WHEREBY IT MANAGED TO GET THIS INTENDED REGISTRATION BY FLOATING LOFTY IDEALS AND SUBSEQUENTLY AFTER SECURING THE REGISTRATION HAS INDULGED IN ACTIVITIES WHICH ARE NOT ONLY CONTRADICTORY TO ITS DECARED OBJECTS BUT ARE ALSO GROSSI NGLY DIVERGENT FROM THE LINE OF ACTIVITIES WHICH LEAD TO THE ACCORDING OF REGISTRATION TO THE ASSESSEE IN THE FIRST PLACE. 3, IT HAS COME TO THE NOTICE OF THIS OFFICE THAT THE SOCIETY IS PRESENTLY NOT INVOLVED IN PERFORMANCE OF ANY CHARITABLE CAUSE AND ITS ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THE REPORT SUBMITTED TO THIS OFFICE BY THE INCOME TAX OFFICER(EXEMPTION)) KA N PUR STATES THAT THE SOCIETY HAS MADE AN ARRANGEMENT SOCIETY HAS MADE AN ARRAN GEMENT WITH PALIWAL DIAGNOSTICS LIMITED, KANPUR (PDPL) VOID AGREEMENT DATED 08.08.2011. IN THE AGREEMENT IT HAS BEEN RESOLVED TH AT THE SOCIETY WILL PROVIDE THE SPA CE TO PDPL IN LIEU OF W HICH PDPL SHALL SHARE THE VARIO U S CHARGES RECEIVED FROM THE PATIE NT AT DIFFERENT LEVELS. IN THE AGREEMENT THE MAIN OBJECT OF CHARITY IS ABSENT FOR WHICH THE SOCIETY HAS BEEN REGISTERED AS THE SAID ARRANGEMENT IS NOTHING BUT A MERE PRETENCE ON THE PART OF THE ASSESSEE WHEREBY IT INTENDS TO GENERATE RENTAL INCOME UNDER THE GARB OF CHARIT Y. ON PERUSAL OF THE OBJECTS STATED IN THE MEMORANDUM OF THE SOCIETY IT IS NOWHERE MENTIONED THAT THE SOCIETY SHALL MAKE AN AGREEMENT FOR PROVIDING SPACE TO THIRD PARTY AND SHARE FEE FOR THE SAME. THIS CLEARLY SHOWS THAT THE ASSESSEE IS ENGAGED IN ACTIVITI ES THAT HAVE NOT SEEN SPECIFIED IN THE OBJECTS STATED BY IT BUT ARE BEING PURSUED WITH A COMMERCIAL END IN MIND DEVOID OF ANY CHARITABLE MOTIVE. IT HAS ALSO BEEN MENTIONED IN THE REPORT OF THE INCOME TAX OFFICER (EXEMPTION), KANPUR THAT UPON ENQUIRY IT WAS FOUND THAT THE HOSPITAL FUN BY THE SOCIETY HAS FAILED IN ACHIEVING ITS STATED CHARITABLE OBJECTIVES. THE OPD CHARGES THAT ARE BEING COLLECTED FROM THE PATIENTS STAND AT RS. 150 / - PER PATIENT BY THE RESIDENT DOCTORS AND RS. 250/ - TO RS. 400/ - ARE BEING CHAR GED BY THE OUTSIDE DOCTORS WHICH IMPLIES THAT THE CLAIM OF THE ASSESSEE THAT IT IS LEVYING A MEAGER FEE FOR TREATMENT OF PATIENTS IS BASED ON FALSE NOTIONS AS IN REALITY HEFTY FEES IS BEING CHARGED FROM THE PATIENT WHICH MAKES THE ASSESSEE NO DIFFERENT FRO M A COMMERCIAL ORGANIZATION THAT IS PROVIDING CERTAIN SERVICES AND CHARGING HEAVILY ITA NO.149/LKW/2018 PAGE 7 OF 24 FOR THE SAME.LT WAS ALSO FOUND UPON ENQUIRY THAT THE HOSPITAL BEING RUN BY THE S OCIETY CHARGE ROOM FEE FROM RS.1000/ - TO RS. 4000/ - PER DAY FOR DOUBLE BED ROOMS. FOR SINGLE BE D ROOM THE HOSPITAL CHARGES RS.2000/ - TO RS. 4500/ - PER DAY . THE SAID RATE IS DEFINITELY COMPARABLE WITH WHAT IS BEING OFFERED BY MEDICAL ORGANIZATIONS OPERATING ON COMMERCIAL LINES AND THUS THE SAID FIGURES CLEARLY QUASH THE CLAIMS OF THE APPLICANT THAT IT EXISTS FOR THE PURPOSES OF CHARITY. THE INCOME TAX OFFICER (EXEMPTION), KANPUR HAS FURTHER REPORTED THAT UPON ENQUIRY IT WAS FOUND THAT THE HOSPITAL RUN BY THE SOCIETY CHARGES TINE ULTRASOUND FEES AT RS. 800/ - PER PATIENT WHILE IN OTHER CHARITABLE HOSP ITALS IT IS CHARGED IN THE RANGE OF RS. 400/ - TO RS. 600/ - WHICH CLEARLY SHOWS THE DIFFERENTIAL BETWEEN THE HOSPITALS OPERATING ON CHARITABLE LINES AND THE ONES THAT OPERATE IN A COMMERCIAL AS IS CURRENTLY BEING DONE BY THE ASSESSEE. ON PERUSAL OF THE MATE RIAL AVAILABLE ON RECORD, IT IS FOUND THAT THE ASSESSEE SOCIETY HAS EXECUTED AN ARRANGEMENT WITH PURUSHOTTAM LADDA AND OTHERS TO ALLOT SPACE FOR RUNNING MEDICAL STORE IN THE PREMISES OF THE HOSPITAL ON RENTAL AND COMMISSION BASIS. THE SOCIETY HAS ALSO AUTH ORIZED THE PROPRIETOR OF THE MEDICAL STORE TO SELL THE MEDICINES AT THE PRINTED RATES WHEREAS IN THE OPEN MARKET SOME DISCOUNT IS USUALLY GIVEN TO THE PATIENTS. ON GOING THROUGH THE AGREEMENT IT REFLECT THAT THE HOSPITAL IS RUNNING EXCLUSIVELY FOR MAKING P ROFIT AID THE SOLE PURPOSE OF CHARITY HAS BEEN DEFEATED. IT IS ALSO WORTH NOTING THAT AT CLAUSE 5 OF THE OBJECTS STATED IN THE MEMORANDUM OF THE SOCIETY THE ASSESSEE HAS MENTIONED TO ASSIST, FRAME, SUPPORT, FOUND , ESTABLIS H AND MAINTAIN INSTITUTION MEANT F OR RELIEF OF THE POOR. HOWEVER THE SOCIETY HAS NEI THER ES TABLISHED NOR MAINTAINED EVEN A SINGLE INSTITUTION MEANT FOR RELIEF OF POOR AND THUS HAS FAI LED TO COMPLY WITH THE OBJECTS STATED IN THE MEMORANDUM WHICH GOES TO PROVE THAT THE SAID MEMORANDUM OF OBJ ECTS IS A FAKE RECITAL WITH NO PRACTICAL IMPLICATIONS. SIMILARLY ON GOING THROUGH THE PARA 7 OF THE MEMORANDUM OF THE SOCIETY, IT IS FOUND THAT THE ASSESSEE HAS PRO MISE D TO OPEN, F R A M E , ESTABLISH, ASSIST OR CONTRIBUTE TO THE MAINTENANC E OF ORPHANAGE, WIDOW HOMES, LEPER AND LUNATIC ASYLU M, POOR HOUSE , W ORK HOSTELS, GIRLS HOSTELS, HOSTELS FOR BL IND, DEAF AND DUMB, LABOUR CLUBS, JOURNAL HOSTELS AND HEALTH CENTERS. HOWEVER THE SOCIETY HAS FAILED TO ACHIEVE THE ABOVE STATED OBJECTS AND NOTHING COULD BE FOUND WHI CH CERTIFY THE ITA NO.149/LKW/2018 PAGE 8 OF 24 ASSUMPTION THAT THE SOCIETY WAS EVEN WILLING TO PURSUE ANY CHARITABLE ACTIVITY IN THIS DIRECTION. LIKEWISE AT PARA 8 OF THE MEMORANDUM, THE ASSESSEE SOCIETY HAS PROMISED TO GIVE MONETARY AID OR OTHER HELP FOR RELIEF FROM NATURAL CALAMITIES L IKE FLOODS, CYCLONES, FAMINE, EARTHQUAKES HOWEVER O N EXAMINING THE RECORDS OF SOCIETY NOTHING WAS FOUND BY WHICH IT COULD BE ESTABLISHED THAT THE SOCIETY HAD ACTUALLY CARRIED OUT ANY SORT OF ACTIVITY IN THIS REGARD. AFTER CAREFULLY EXAMINING THE OBJECTS IT APPEARS THAT THERE IS HARDLY ANY FIELD OF HUMAN ENDEAVOR THAT THE APPLICANT INTENDS NOT TO ENGAGE IN. THE RECITAL OF THE OBJECT SUFFERS FROM THE VOICE OF VAGUENESS. WHILE IT IS TRUE THAT IT IS FOR THE APPLICANT TO DEFINE ITS OBJECTS IT IS EQUALLY TRUE THA T THE RECITALS OF THE OBJECT SHOULD NOT BECOME A N EMPT Y FORMALITY WHEREBY THE APPLICANT INCLUDES ANYTHING AND EVERYTHING IN A DEED. SUCH A DEED BECOMES A MEANINGLESS - RITUAL. THERE IS LITERALLY NO MATERIAL AVAILABLE ON RECORD SO AS TO FORM EVEN THE SLIGHTES T SATISFACTION REGARDING THE GENUINENESS OF THE ACTIVITIES CARRIED OUT, IF ANY, BY THE APPLICANT. IT BECOMES IMPERATIVE HERE TO NOTE THAT REGISTRATION WAS ACCORDED TO THE SOCIETY ON THE BELIEF THAT THE SOCIETY SHALL RUN PREFERABLY FOR THE WELFARE OF THE PO OR AND NEEDY PERSON. UNFORTUNATELY THE SOCIETY HAS FAILED IN ACHIEVING THE CAUSE FOR THE WHICH THE SOCIETY WAS CREATED. IT IS CLEAR FROM THE FACTS MENTIONED ABOVE THAT THE ACTIVITIES OF THE SOCIETY ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANC E WITH THE STATED OBJECTS OF THE SOCIETY AND IT HAS BECOME AN INSTRUMENT FOR EXTENDING BENEFITS TO ITS MEMBERS BY INDISCRIMINATELY APPLYING ITS INCOME AND PROPERTY FOR THEIR PERSONAL PROFITS AND GAINS AND THE MODUS OPERAND! OF THE SOCIETY IS THAT OF A CLOS ED ENDED INSTITUTION HAVING NO INDEPENDENT AND TRANSPARENT CONTROL AND MANAGEMENT. 4. SECTION 13( 1 )(C) OF THE I.T. ACT, 19 61 PROVIDES THAT WHERE A PART OF INCOME OF CHARITABLE AND RELIGIOUS TRUST OR INSTITUTIONS ENSURES OR IS USED OR APPLIED DIRECTLY OR IN DIRECTLY FOR THE BENEFIT OF THOSE PERSONS SPECIFIED IN SECTION 13(3), THAT A TRUST OR INSTITUTIONS FORFEITS THE EXEMPTIONS U/S 11 EVEN IF ONLY A SMALL PORTION OF MONEY IS UTILIZED OR USED OR APPLIED FOR BENEFIT OF A PERSON MENTIONED IN SECTION 13(3) AND AC CORDINGLY THE TRUST DENIED THE EXCLUSION EXCEPT AS PER PROVISIONS SECTION 13(4) OF THE ACT. RELIANCE IS ALSO PLACED ON CIT VS. JARNUNALAL BAJAJ SEVA TRUST ITA NO.149/LKW/2018 PAGE 9 OF 24 (1988) 171 ITR 568. THE ACTIVITIES OF THE APPLICANT SOCIETY AS EVIDENT FROM THE MATERIAL AVAILABLE OH RECORD COME IN CLEAR VIOLATION OF SECTION 13(1 )(C) OF T H E IN C O M E TAX ACT,1961 WHICH AGAIN IS DETRIM E N T AL TO THE CLAIM OF THE APPLICANT. IN THIS INSTANCE , THE BURDEN OF PROOF LAY ON THE AP PLICANT BUT APPLICANT HAS FAILED TO PROVIDE ANY SATISFACTORY REPLY. BEING A CHARITABLE INSTITUTION, THERE IS OBLIGAT I ON ON ITS PART TO CONDUCT ITS ACTIVITIES IN MOR E TRANSPARENT AND RELIABLE MANNER. GENERAL PUBLIC, EVEN GOVERN MENT AGENCIES ARE LOOKING TOWARDS CHARITABLE OR GANIZATIONS FOR VARIOUS PHILANTHROPIC PURPOSES. AS A CONSEQUENCE OF SUCH TRUST VOLUNTARY DONATIONS AND GRANTS ARE BEING GIVEN TO SUCH CHARITABLE INSTITUTIONS TO CARRY PHILANTHROPIC ACTIVITIES FOR THE BENEFITS OF THE GENERAL PUBLIC AND SOCIETY AT LARGE. FURTHER , TAX INCENTIVES HAVE B EEN EXTENDED NOT D U LY TO THESE CHARITABLE I N STITUTIONS EXEMPTING THEIR INCOME FROM TAX BUT ALSO THE DONORS TO THESE CHARITABLE INSTITUTIONS ARE GIVEN TAX BENEFITS AS WELL. IN THIS BACKGROUND HIS MANDATORY ON THE PART OF THESE VOLUNTARY ORGANIZATIONS TO KEEP THEIR ACTIVITIES TRANS PARENT AND TO MAINTAIN THEIR BOOKS OF ACCOUNT IN RELIABLE MARINER. I N THE INSTANT CASE, NEITHER ARE THE ACTIVITIES OF THE APPLICANT GENUINE OR IN TANDEM WITH THE OBJECTS SET FORTH IN THE MEMORANDUM OF THE TRUST NOR ARE THE ACTIVITIES AIMED AT BENEFITTING T HE PUBLIC AT LARGE. RATHER, THE ACTIVITIES OF THE APPLICANT ARE AIMED AT BENEFITING A SET OF DISTINGUISHED INDIVIDUALS. THIS IS FATAL TO THE CLAIM OF THE ACTIVITY. 5. ACCORDING TO SECTION 12AA(3) OF THE INCOME TAX ACT, 1961, IF THE CIT IS SATISFIED THAT THE ACTIVITIES OF THE TRUST/SOCIETY ARE NOT GENUINE OR ARE NOT BEING CARRIED PUT IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF THE SAID SOCIETY. 6 . IT IS UNFORTUNATE TO NOTE THAT THE SO CIETY HAS FAILED TO ACHIEVE CAUSE FOR WHICH IT WAS CREATED. IN VIEW OF ABOVE FACTS, ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT GENUINE AND ARE NOT FEEING CARRIED OUT IN ACCORDANCE WITH THE STATED OBJECTS OF THE SOCIETY AND IT HAS BECOME AN INSTRUMENT FOR E XTENDING BENEFITS TO ITS MEMBERS BY INDISCRIMINATELY APPLYING ITS INCOME AND PROPERTY FOR THEIR PERSONAL BENEFITS AND GAINS AND IT IS ONLY A CLOSED ENDED SOCIETY HAVING NO INDEPENDENT AND TRANSPARENT CONTROL AND MANAGEMENT. RELIANCE IS ALSO PLACED IN THE C ASE OF T HE SCIENTIFIC EDUCATION VS. ITA NO.149/LKW/2018 PAGE 10 OF 24 UNION OF INDIA AND ANOTHER DECIDED ON 10 FEBRUARY, 2009 CWP NO. 2852 OF 2009 OF HON'BLE PUNJAB AND HARYANA HIGH COURT AND M/S JOGINPALLY BR EDUCATION SOCIETY, HYDERABAD VS. COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD , ITA NO. 585 /HYD/2012 OF HON'BLE ITAT, HYDERABAD. THE REGISTRATION GRA NTED U/S 12AA CAN BE CANCELLED U/S 12AA(3) OF THE INCOME TAX ACT, IF THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST/ INSTITUTION. IN THIS CASE , IT IS NOT AND CANNOT BE THE OBJECTIVE OF THE ASSESSEE TRUST TO UTI L IZE THE FUNDS OF THE SOCIETY FOR BENEFIT OF THE INTERESTED PERSONS. THUS THE ACTIVITIES OF THE SOCIETY CANNOT BE SAID TO BE CARRIED O UT IN ACCORDAN CE WITH OBJECTS OF THE SOCIETY. AT THE SAME TIME IT CAN BE INFERRED THAT NO GENUINE ACTIVITIES ARE BE INFERRED THAT NO GENUINE ACTIVITIES ARE BEING CARRIED OUT BY THE ASSESSEE. ACCORDINGLY, THE REGISTRATION GRANTED TO THE TRUST IS LIABLE TO BE CANCELLED I N V IE W OF THE ABOVE FACTS, PROVISIONS OF THE ACT AND JUDGMENTS CITED. IN VIEW OF THE ABOVE FACTS, THE REGISTRATION GRANTED U/S 12AA TO THE ASSESSEE IS CANCELLED W.E.F. 1/4/2016. 3 . HEARD. THE LD. CIT (EXEMPTIONS) HAS RECORDED NUMEROUS FINDINGS IN THE IMPU GNED ORDER. THESE FINDINGS AND THE ASSESSEES RESPONSE WITH REGARD TO THERETO HAVE BEEN DELINEATED BY THE ASSESSEE BY WAY OF THE FOL LOWING CHART. IT IS THE CASE OF THE ASSESSEE THAT THE LD. CIT (EXEMPTIONS) HAS NOT AFFORDED DUE, ADEQUATE AND PROPER OPPOR TUNITY TO THE ASSESSEE TO EXPLAIN ITS CASE BEFORE FRAMING OF THE IMPUGNED ORDER: OBSERVATIONS OF THE LEARNED CIT ( EXEMPTIONS) LUCKNOW CLARIFICATIONS / REPLY OF THE APPELLANT ITA NO.149/LKW/2018 PAGE 11 OF 24 1. IT HAS COME TO THE NOTICE OF THIS OFFICE THAT THE SOCIETY IS PRESENTLY NO T INVOLVED IN PERFORMANCE OF ANY CHARITABLE CAUSE AND ITS ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THE REPORT SUBMITTED TO THIS OFFICE BY THE INCOME TAX OFFICER (EXEMPTION) KANPUR THAT THE SOCIETY HAS MADE AN ARRANG EMENT WITH PALIWAL DIAGNOSTICS LIMIED, KANPUR (PDPL) A VOID AGREEMENT DATED 08.08.2011. IN THE AGREEMENT IT HAS BEEN RESOLVED THAT THE SOCIETY WILL PROVIDE THE SPACE TO PDPL, IN LIEU OF WHICH PDPL SHALL SHARE THE VARIOUS CHARGES RECEIVED FROM THE PATIENTS AT DIFFERENT LEVELS. IN THE AGREEMENT, THE MAIN OBJECT OF THE CHARITY IS ABSENT FOR WHICH THE SOCIETY HAS BEEN REGISTERED. AS THE SAID ARRANGEMENT IS NOTHING BUT A PRETENCE ON THE PART OF THE ASSESSEE WHEREBY IT INTENDS TO GENERATE RENTAL INCOME UNDER TH E GRAB OF CHARITY. WE WOULD LIKE TO MENTION HERE THAT LEARNED ITO (EXEMPTION) ,KANPUR HAVE NOT GIVEN US AN OPPORTUNITY TO EXPLAIN OUR CASE WHILE FRAMING HIS OPINION SUBMITTED IN THIS REGARD AND WE HAVE INFORMED THE SAME TO LEARNED CIT (E), LUCKNOW IN PARA 4 OF OUR LETTER DATED 06.11.2017. THE FACTS OF AGREEMENT WITH PDPL ARE GIVEN BELOW: - 1. ORIGINAL AGREEMENT DATED 8.8.2011 FOR 3 YEARS WHICH WAS RENEWED VIDE AGREEMENT DATED 1.9.2014. 2.THE SIZE OF THE SPACE PROVIDED NOT MENTIONED IN THE AGREEMENTS BUT AB OUT 150 SQ.FT. SPACE WAS PROVIDED ON GROUND FLOOR OF THE HOSPITAL. 3. THE SPACE PROVIDED TO PDPL TO FACILITATE TO DO BASIC PATHOLOGY IN HOUSE TESTING OF PATIENTS AT URGENT BASIS AND COLLECTION CENTRE FOR SPECIALIZED TESTING. 4. PDPL CHARGING THEIR STANDARD RATE FOR TESTING OUT OF WHICH THEY GIVE US 40% TO 50% AMOUNT FROM THEIR RECEIPTS. 5. ARRANGEMENT WITH PDPL IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE SOCIETY I.E. PROVIDING INSTANT MEDICAL FACILITIES TO PATIENTS. 6. THE PDPL HAVE ADVANCED TECHNOLOGY TESTING EQUIPMENTS AND PROFESSIONAL TEAM IN A BIG BUILDING IN PANDU NAGAR, KANPUR WHICH IS ABOUT 1 KM. FROM OUR HOSPITAL. THEY HAVE COLLECTION CENTRE AT KULWANTI HOSPITAL ONLY TO FACILITATE BASIC TESTS IN THE LABORATORY PROVIDED BY THE HOSP ITAL TO GIVE QUICKER REPORTS FOR THE IMMEDIATE TREATMENT OF PATIENTS OF THE HOSPITAL. IN THIS CONNECTION WE HAVE TO SUBMIT THAT THE SPECIAL TESTING ARE DONE BY THEM IN THEIR MAIN LABORATORY. FURTHER WE HAVE TO SUBMIT ITA NO.149/LKW/2018 PAGE 12 OF 24 THAT WE CANNOT DO TESTING AT OUR OWN LEVEL AS IT REQUIRE SPECIALIZED TECHNICAL STAFF AND QUALIFIED PATHOLOGIST WHICH INVOLVE VERY HIGH COST AND WE CANNOT BEAR IT AS WE DO NOT HAVE ADEQUATE WORK AND IT WILL INCREASE COST OF TESTING AGAINST THE INTEREST OF THE PATIENTS TO PROVIDE AFFORDABLE MEDICAL FACILITIES TO ACHIEVE THE OBJECT OF THE SOCIETY. 7. WE ARE GIVING DISCOUNT TO THE PATIENTS ON THE DIAGNOSTIC TESTS DONE BY PDPL. 8. THE AMOUNT RECEIVED FROM PDPL DURING FY 2015 - 2016 AMOUNTED TO RS.18.28 LAKHS WAS ALSO UTILIZED FOR THE P RIMARY OBJECT OF THE SOCIETY AS EVIDENT FROM I.T.RETURN AND ANNUAL ACCOUNTS SUBMITTED. 9. WE HAVE MENTIONED IN PARA 1(D) OF OUR LETTER DATED 19.01.2018 THAT WITHOUT PREJUDICE TO OUR SUBMISSIONS THAT IT WAS NOT A BUSINESS ACTIVITY, EVEN FOR ARGUMENT SAKE IF IT BE CONSIDERED AS BUSINESS ACTIVITY, IT IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVE OF THE SOCIETY AND IS ALLOWABLE U/S 11(4A) OF THE INCOME TAX ACT, 1961 AND THE INCOME RECEIVED WAS UTILIZED FOR OBJECT OF THE SOCIETY. 2.ON PERUSAL OF THE OBJECT S STATED IN THE MEMORANDUM OF THE SOCIETY, IT IS NO WHERE MENTIONED THAT THE SOCIETY SHALL MAKE AN AGREEMENT FOR PROVIDING SPACE TO THIRD PARTY AND SHARE FEE FOR THE SAME. TO GIVE PROPERTY ON RENT OR OTHERWISE IS COVERED UNDER CLAUSE 14 OF THE OBJECTS OF THE SOCIETY READ AS UNDER: - TO ACQUIRE, PURCHASE, BUILD, CONSTRUCT OR TAKE ON LEASE OR IN EXCHANGE OR HIRE ANY MOVABLE AND IMMOVABLE PROPERT Y OR RIGHTS OR PRIVILEGES. 2. IN RULES & REGULATIONS OF THE TRUST IN PARA(II) BOARD FUNCTIONS (POINT NO.11) READ AS UNDER: - ITA NO.149/LKW/2018 PAGE 13 OF 24 TO ACQUIRE, BUILD, PURCHASE, TO HOLD ON LESSOR UNDER LICENSE, ANY PROPERTY OR SELL, MORTGAGE, LET, HYPOTHECATE, DONATE ANY PROPERTY OF THE SOCIETY AND TO TAKE SUCH OTHER STEPS AS MAY BE DEEMED NECESSARY BY THE BOARD IN MANAGING THE FINANCES, PRO PERTIES , ASSETS AND LIABILITIES OF THE SOCIETY. POINT NO.13 TO ENTER INTO COMMERCIAL AND FINANCIAL TRANSACTIONS OF ALL KINDS AND ALL DESCRIPTIONS WHICH IN THE OPINION OF THE BOARD ARE IN THE INTEREST OF THE SOCIETY. POINT NO.10 TO ENTER INTO AGREEMENTS , FINANCIAL / COMMERCIAL OR OTHERWISE OF ALL DESCRIPTIONS AND OF ALL KINDS PROVIDED THEY ARE IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY. 3.THE OPD CHARGES THAT ARE BEING COLLECTED FROM THE PATIENTS STAND AT RS. 150/ - PER PATIENT BY THE RESIDENT DOCTORS AND RS.250/ - TO RS.400/ - ARE BEING CHARGED BY THE OUTSIDE DOCTORS, WHICH IMPLIES THAT THE CLAIM OF THE ASSESSEE THAT IT IS LEVYING A MEAGER FEE FOR TREATMENT OF PATIENTS IS BASED ON FALSE NOTIONS, AS IN REALITY , HEFTY FEES IS BEING CHARGED FROM THE PATIE NT , WHICH MAKES THE ASSESSEE NO DIFFERENT FROM A COMMERCIAL ORGANIZATION THAT IS PROVIDING CERTAIN SERVICES AND CHARGING FOR THE SAME. WE ARE PROVIDING FREE OPD TO POOR PATIENTS FREE OF CHARGE AND CHARGE RS.100/ - FROM GENERAL PUBLIC AND RS.50/ - FROM STUDE NTS FOR TREATMENT BY OUR RESIDENT DOCTORS FOR FIVE DAYS . IF ANYBODY WANTS FOR CONSULTATION WITH SPECIALIST DOCTORS AVAILABLE IN THE OPD ,HE/SHE IS ALLOWED TO CONSULT AND PAY DIRECTLY TO THEM. A COPY OF OUR RECEIPT IS ENCLOSED HEREWITH IN WHICH IT IS PRINTE D THAT IT IS VALID FOR FIVE DAYS. WE HAVE SUBMITTED COPY OF OPD ACCOUNT IN OUR LEDGER FOR THE MONTH OF FEBRUARY, 2017 IN PARA 4 OF OUR LETTER DATED 18.4.2017 IN WHICH OPD SERIAL NUMBER ARE MENTIONED AND IN CASE OF FREE PATIENTS NO AMOUNT WAS MENTIONED. ITA NO.149/LKW/2018 PAGE 14 OF 24 4 .THE HOSPITAL BEING RUN BY THE SOCIETY CHARGES ROOM FEE FROM RS.1000/ - TO RS.4000/ - PER DAY FOR DOUBLE BED ROOMS. FOR SINGLE BED ROOMS THE CHARGES ARE RS.2000/ - TO RS.4500/ - PER DAY. THE SAID RATE IS DEFINITELY COMPARABLE WITH WHAT IS BEING OFFERED BY MED ICAL ORGANIZATIONS OPERATING ON COMMERCIAL LINES, AND THUS HE SAID FIGURES CLEARLY QUASH THE CLAIM OF THE APPLICANT THAT IT EXISTS FOR PURPOSES OF CHARITY. WE SUBMITTED A STATEMENT GIVING COMPARATIVE HOSPITALIZATION CHARGES IN DIFFERENT HOSPITALS IN KANPUR FROM WHICH IT WOULD BE OBSERVED THAT OUR RATES ARE MUCH LOWER THAN THE SIMILAR HOSPITALS IN KANPUR. WE ARE NOT GETTING ANY DONATION OR GRANT FOR PROVIDING MEDICAL RELIEF. WE ARE RUNNING THE HOSPITAL AND RECOVERING THE COST OF RUNNING THE HOSPITAL AS T HERE IS NO PROFIT MOTIVE TO ACHIEVE THE PRIMARY OBJECT OF THE TRUST TO PROVIDE MEDICAL RELIEF AND SERVICES TO THE GENERAL PUBLIC. THE PERCEPTION IS TO PROVIDE DIVERSIFIED MEDICAL FACILITIES AT REASONABLE COST TO THE GENERAL PUBLIC I.E. TO MEET THE INFRASTR UCTURE AND TO MEET THE CONTINGENCIES I.E. ACQUISITION OF LATEST EQUIPMENTS. 5.THE HOSPITAL RUN BY THE SOCIETY CHARGES THE ULTRASOUND FEE AT RS.800/ - PER PATIENT WHILE IN OTHER CHARITABLE HOSPITALS, IT IS CHARGED RS.400/ - TO RS.600/ - WHICH CLEARLY SHOWS T HE DIFFERENTIALS BETWEEN THE HOSPITALS OPERATING ON CHARITABLE LINES AND THE ONES THAT OPERATES IN A COMMERCIAL, AS IS CURRENTLY BEING DONE BY THE ASSESSEE. WE HAVE CHARGED ULTRASOUND CHARGES AS PER PREVAILING MARKET RATE I.E RS.800/ - PER CASE, OUT OF WHI CH WE ARE PAYING RS.400/ - TO DOCTOR RADIOLOGIST WHO ARE NOT IN OUR EMPLOYMENT AND DO ULTRASOUND WITH OUR MACHINE IN OUR PREMISES. HE IS BEING CALLED WHEN ANY PATIENT NEEDS ULTRASOUND. THE ULTRASOUND CHARGES CHARGED BY MARIAMPUR HOSPITAL (12A REGISTERED HOS PITAL) WHO ARE CHARGING RS.750/ AS PER THEIR RECEIPT ENCLOSED. THERE IS NO OBJECT OF PROFITABILITY IN SUCH CHARGES. ITA NO.149/LKW/2018 PAGE 15 OF 24 6. THE SOCIETY HAS EXECUTED AN ARRANGEMENT WITH PURSHOTTAM LADHA & OTHERS , PARTNERS M/S MEDICINE CENTRE TO ALLOT SPACE FOR RUNNING MEDICA L STORE IN THE PREMISES OF THE HOSPITAL ON RENTAL AND COMMISSION BASIS. THE SOCIETY HAS ALSO AUTHORIZED THE PROPRIETOR OF THE MEDICAL STORE TO SELL THE MEDICINES AT THE PRINTED RATES WHEREAS IN THE OPEN MARKET SOME DISCOUNT IS GIVEN TO THE PATIENTS. THE O RIGINAL MEDICAL SHOP WAS ALLOTTED ON 01.04.1990 AND LAST RENEWED AS PER AGREEMENT DATED 2.3.2003 FOR 9 YEARS TO M/S MEDICINE CENTRE. THEIR ARRANGEMENT HAS BEEN TERMINATED ON 27.7.2012 AND HOSPITAL HAD STARTED ITS OWN MEDICAL SHOP W.E.F. 4.9.2013.HOWEVER TH EY HAVE DISPUTED THE MATTER AND FINALLY VACATED THE SHOP ON 22.08.2016 AND DISCOUNT ARE BEING ALLOWED. WE ARE ALSO ALLOWING DISCOUNT ON SALE OF MEDICINES. TWO COPIES OF CASH MEMOS ARE ENCLOSED HEREWITH. 7 .IT IS ALSO WORTH NOTING THAT AT CLAUSE 5 OF THE O BJECTS STATED IN THE MEMORANDUM OF THE SOCIETY , THE ASSESSEE HAS MENTIONED TO ASSIST , FRAME, SUPPORT, FOUND, ESTABLISH AND MAINTAIN INSTITUTION MEANT FOR RELIEF OF THE POOR AND ADVANCEMENT OF MEDICAL RELIEF , EDUCATION AND ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY TO RUN SCHOOLS, COLLEGES AND RESEARCH CENTRES, AS AN INDUSTRIAL ACTIVITY TO ACHIEVE THIS CHARITABLE OBJECT. TO PROVIDE FUNDS FOR BUILDINGS OR MAINTAIN OF HOSPITALS OR DISPENSARIES OR FOR SUPPLYING OF FREE MEDICINES FOR TREATMENT OF THE POOR. T HE SOCIETY IS RUNNING A MEDICAL HOSPITAL NAMELY KULWANTI HOSPITALS & RESEARCH CENTRES AT KANPUR. IN SUPPORT OF OUR CHARITABLE ACTIVITIES WE SUBMITTED 22 LETTERS OF APPRECIATION AND CONFIRMATION OF HOLDING MEDICAL CHECK UP CAMPS FROM VARIOUS ASSOCIATIONS, B ANKS , INDUSTRIES AND INCOME TAX OFFICES VIDE OUR LETTER DATED 17.3.2017 . TOTAL 14706 PATIENTS WERE PROVIDED FREE MEDICAL SERVICES DURING THE YEAR ENDED 31.3.2016. A COMPLETE LIST OF 222 PAGES WERE SUBMITTED WITH THE ABOVE LETTER BUT RETURNED TO US. AS RE QUIRED WE ALSO SUBMITTED COPIES OF 3 BILLS AS SPECIMEN WHERE CONCESSIONAL /FREE SERVICES WERE PROVIDED TO INDOOR PATIENTS. DURING HEARING OF OUR ABOVE PROCEEDINGS ON 18.4.2017, REGISTERS MAINTAINED AT THE CAMPS WERE PRODUCED IN WHICH MOBILE NUMBERS OF PAT IENT WERE GIVEN AND THE LEARNED CIT (EXEMPTIONS) HAD AT RANDOM ENQUIRED FROM A PATIENT ON HIS MOBILE ABOUT A PARTICULAR FREE MEDICAL CAMP AND GOT THE MEDICAL FACILITY WHICH HE CONFIRMED. ITA NO.149/LKW/2018 PAGE 16 OF 24 ON HIS SPECIFIC ENQUIRY ABOUT CHARGES, THE PERSON CONFIRMED THAT IT W AS FREE MEDICAL CAMPS AND THEY HAVE NOT PAID ANYTHING. THIS WAS MENTIONED IN PARA 3 OF OUR LETTER DATED 6.11.2017 SUBMITTED. FURTHER COPIES OF LETTERS FOR HEALTH CHECK UP CAMPS AT THREE INCOME TAX OFFICES EXPRESSING THEIR APPRECIATION WERE SUBMITTED WITH OUR LETTER DATED 17.3.2017. WE ARE PROVIDING FREE MEDICAL FACILITIES TO POOR PATIENTS BY HOLDING MEDICAL CAMPS AND SET UP FREE CLINICS AT PANKI INDUSTRIAL AREA, KANPUR AND LUVKUSH NAGAR, BITHOOR, KANPUR, ON REGULAR BASIS WHERE WE ALSO PROVIDE FREE MEDICINES TO PATIENTS AS PER OBJECT 2 OF OUR MEMORANDUM OF ASSOCIATION . WE ALSO PROVIDE FREE QUARTERLY MEDICAL CHECK UP AT VRIDHASHRAM, RATANPUR, KANPUR, SHAKTI SEWA DAL SCHOOL, KAUSHALPURI, KANPUR AND OTHER SOCIAL ORGANISATIONS. WE ALSO PROVIDE 50% DISCOUNT TO POOR PATIENTS (BPL), RECOGNIZED ASHRAMS, OLD AGE HOMES ETC. ON HOSPITALIZATION. WE ARE HOLDING POLIO CAMPS AS PER GOVERNMENT POLICIES. WE ENCLOSE HEREWITH A STATEMENT GIVING NUMBER OF PATIENTS GIVEN MEDICAL FACILITIES AT CAMPS FREE OF COST. A S REGARD OTHER ACTIVITIES WE HAVE TO MENTION HERE THAT WE COULD NOT ENTER IN THE FIELD OF EDUCATION OR OTHER PUBLIC UTILITY DUE TO SHORTAGE OF FINANCES AND SPECIALISED MAN POWER. ITA NO.149/LKW/2018 PAGE 17 OF 24 8 .ON GOING THROUGH THE PARA 7 OF THE MEMORANDUM OF THE SOCIETY, IT IS FOUND THAT THE ASSESSEE HAS PROMISED TO OPEN, FRAME, ESTABLISH, ASSIST OR CONTRIBUTE TO THE MAINTENANCE OF ORPHANAGE, WIDOW HOMES, LEPER AND LUNATIC ASYLUM , POOR HOUSE, WORK HOSTELS, HOSTELS FOR BLIND, DEAF AND DUMB, LABOUR CLUBS, JOURNAL HOSTELS AND HEALTH CE NTRES. HOWEVER THE SOCIETY HAS FAILED TO ACHIEVE THE ABOVE STATED OBJECTS AND NOTHING COULD BE FOUND TO CERTIFY THE ASSUMPTION THAT THE SOCIETY WAS EVEN WILLING TO PURSUE ANY CHARITABLE ACTIVITY IN THIS DIRECTION. LIKEWISE AT PARA 8 OF THE MEMORANDUM , THE ASSESSEE SOCIETY HAS PROMISED TO GIVE MONETARY AND OTHER HELP FOR RELIEF FROM NATURAL CALAMITIES LIKE FLOOD, CYCLONES, FAMINE, EARTHQUAKES. HOWEVER ON EXAMINING THE RECORDS OF THE SOCIETY NOTHING WAS FOUND BY WHICH IT COULD BE ESTABLISHED THE SOCIETY HAS ACTUALLY CARRIED OUT ANY SORT OF ACTIVITY IN THIS REGARD. THE SOCIETY IS RUNNING CHARITABLE HOSPITAL AND WHATEVER IT EARNS HAVE TO BE INVESTED IN MAINTENANCE OF THE HOSPITAL AND UPDATION OF THE MEDICAL EQUIPMENTS FOR THE GROWTH OF THE HOSPITAL TO ACHIEVE I TS BASIC OBJECT TO PROVIDE RELIEF TO HUMAN BEINGS FROM DISEASES OF ALL MODERN AND ANCIENT METHODS OF CURE VIZ HOMEOPATHY, AYURVEDIC, UNANI, ALLOPATHY AND YOGA THERAPY AND TO RUN NURSING HOSPITALS AS AN INDUSTRIAL ACTIVITY TO ACHIEVE THIS CHARITABLE OBJECT. IT WILL BE APPRECIATED THAT IN THE MEDICAL FIELD NEW INVENTIONS AND MEDICAL EQUIPMENTS ARE UPDATED AND WE HAVE TO KEEP OURSELVES UPTO DATE TO GIVE BEST MEDICAL SERVICES TO ACHIEVE THE CHARITABLE OBJECT OF THE SOCIETY THE CAPITAL EXPENDITURE INCURRED D URING LAST FOUR YEARS ARE GIVEN IN THE ANNEXURE FOR WHICH WE HAVE ALSO TAKEN TERM LOANS FROM BANK OF INDIA, KANPUR. AS REGARD PARA 7 AND 8 OF THE MEMORANDUM WE HAVE TO SUBMIT THAT THESE ARE NOT PROMISES. OTHER OBJECTS ARE ALWAYS WRITTEN IN THE MEMORANDUM TO GET POWERS TO EXPAND ITS ACTIVITIES BY THE SOCIETY IF ADDITIONAL /SURPLUS FUNDS ARE AVAILABLE AND MANAGEMENT WANTS TO EXPAND ITS ACTIVITIES.. WE ARE NOT ABLE TO START ANY NEW ACTIVITIES DUE TO SHORTAGE OF FUNDS. ONLY ON THIS GROUND THAT WE HAVE NOT STAR TED ANY NEW ACTIVITY MENTIONED IN THE OTHER OBJECTS CANNOT BE A BASIS OF CANCELLATION OF EXEMPTION GRANTED U/S 12AA OF THE INCOME TAX ACT, 1961. ITA NO.149/LKW/2018 PAGE 18 OF 24 9 .SECTION 13(1)(C) OF THE I.T.ACT,1961 PROVIDES THAT WHERE A PART OF THE INCOME OF A CHARITABLE AND RELIGIOUS TRUST OR INSTITUTIONS ENSURES, OR IS USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF THOSE PERSONS SPECIFIED IN SECTION 13(3) THAT TRUST OR INSTITUTIONS FORFEITS THE EXEMPTIONS UNDER SECTION 11, EVEN IF ONLY A SMALL PORTION OF MONEY IS UTILIZED OR USED OR APPLIED FOR THE BENEFIT OF A PERSON MENTIONED IN SECTION 13(3) AND ACCORDINGLY THE TRUST BE DENIED THE EXCLUSION EXCEPT AS PER PROVISIONS SECTION 13(4) OF THE ACT. NO INCOME OR PART OF INCOME ENSURES , OR IS USED OR APPLIED DIRECTLY OR INDIRECTL Y FOR THE BENEFIT OF THE THOSE PERSONS SPECIFIED IN SECTION 13(3) OF THE ACT. THE LEARNED CIT (EXEMPTIONS) HAVE NOT MENTIONED ANY BENEFIT OR ANY INSTANCE WHERE THE SPECIFIED PERSONS UTILIZE INCOME OR PART OF THE INCOME FOR THEIR PERSONAL BENEFIT AND THERE WAS NO VIOLATION OF SECTION 13(1)( C) OF INCOME TAX AC, 1961. FURTHER DURING THE ASSESSMENT YEAR 2015 - 16 AND 2016 - 17 OR IN EARLIER YEARS THE ASSESSING OFFICER HAVE NOT FOUND ANY SUCH CASE AND COMPLETED THE ASSESSMENTS U/S 143(3) ON RETURN INCOME WITH THE REMARK AS UNDER: - ASSESSMENT YEAR 2015 - 16 ORDER U/S 143(3) DATED 11.12.2017 PASSED BY DCIT EXEMPTION CIRCLE , GHAZIABAD THE SOCIETY IS RUNNING A CHARITABLE HOSPITAL NAMELY KULWANTI HOSPITAL & RESEARCH CENTRE, KANPUR. THE SOCIETY IS REGISTERED U/S 12AA AND ENJOYING EXEMPTION UNDER THE I.T.ACT, 1961. THE ACTIVITIES OF THE SOCIETY ARE FOUND TO BE GENUINE IN NATURE. THUS RATIONAL BEHIND THE PURPOSE OF THE SOCIETY IS ESTABLISHED AND THE SOCIETY IS ENTITLED FOR EXEMPTION U/S 11 OF THE I.T.ACT. ASSESSMENT YEAR 2016 - 17 ORDER U/S 143(3) DATED 15.12.2018 PASSED BY ITO EXEMPTION WARD, KANPUR THE ASSESSEE SOCIETY IS REGISTERED WITH REGISTRAR OF SOCIETY U.P. UNDER SOCIETIES ACT VIDE CERTIFICATE NO. 346/1984 - 85 DATED 27.06.1984 AND RENEWAL FOR FURTHER PERIOD OF 5 YEARS WAS GRANTED WITH EFFECT FROM 27.06.2016. THE SAID SOCIETYS ACTIVITIES ITA NO.149/LKW/2018 PAGE 19 OF 24 ARE FOR BENEFIT OF GENERAL PUBLIC BY WAY OF PROVIDING MEDICAL FACILITIES THROUGH HOSPITAL AND MEDICAL CAMPS. THE REGISTRATION U/S 12A OF THE ACT WAS GRANTED TO THE ASSESSEE CHARITABLE SOCIETY BY THE LD.COMMISSIONER OF INCOME TAX OF INCOME TAX - 1, VIDE R.NO. 250/12A/CIT - 1/T/84 DATED 17.11.1985. ALSO DURING THE COURSE OF EXAMINATION OF DOCUMENTS SUBMITTED ON LINE , THE ASSESSEE HAS NOT BEEN FOUND INVOLVED IN CARRYING ON ANY OF THE ACTIVI TIES WHICH ARE HIT BY NEWLY INSERTED PROVISIONS U/S 2(15) OF THE INCOME TAX ACT, THEREFORE, NO ADVERSE INFERENCE HAS BEEN DRAWN. ACCORDINGLY, ASSESSMENT IS COMPLETED U/S 143(3) OF THE INCOME TAX ACT,1961 AT NIL. 1 0 .BEING A CHARITABLE INSTITUTION, THERE I S OBLIGATION ON ITS PART TO CONDUCT ITS ACTIVITIES IN A MORE TRANSPARENCE AND RELIABLE MANNER. GENERAL PUBLIC, EVEN GOVERNMENT AGENCIES ARE LOOKING TOWARDS CHARITABLE ORGANIZATIONS FOR VARIOUS PHILANTHROPIC PURPOSES. AS A CONSEQUENCE OF SUCH TRUST, VOLUNTA RY DONATIONS AND GRANTS ARE BEING GIVEN TO SUCH CHARITABLE INSTITUTIONS TO CARRY PHILANTHROPIC ACTIVITIES FOR THE BENEFITS OF THE GENERAL PUBLIC AND SOCIETY AT LARGE. FURTHER TAX INCENTIVES HAVE BEEN EXTENDED, NOT ONLY TO THESE CHARITABLE INSTITUTIONS, EXE MPTING THEIR INCOME FROM TAX, BUT ALSO TO DONORS TO THESE CHARITABLE INSTITUTIONS ARE GIVEN TAX BENEFITS AS WELL. IN THIS BACKGROUND , IT IS THE ACTIVITIES OF ASSESEE ARE GENUINE AS MENTIONED IN PARA ABOVE AND 14706 PATIENTS WERE ATTENDED IN THE CAMPS BESI DES POOR PATIENTS IN THE HOSPITAL TO WHOM DISCOUNTS FOR RS.46.15 LAKHS WERE ALLOWED DURING THE YEAR ENDED 31.03.2016 AND RS.75.18 LACS DURING THE YEAR ENDED 31.03.2017 PROPERLY DISCLOSED IN ANNEXURE - 9 HOSPITAL SERVICES RECEIPTS IN THE BALANCE SHEET FILED. AS FOR AS ACCOUNTS OF THE SOCIETY AND THE HOSPITAL ARE CONCERNED, THESE ARE MAINTAINED ON THE INTEGRATED COMPUTER SYSTEM IN A TRANSPARENT MANNER AND ARE REGULARLY ACCEPTED BY THE ASSESSING OFFICERS. THERE WAS NOT A SINGLE INSTANCE IN THE LONG HISTORY OF MORE THAN 30 YEARS OF THE SOCIETY WHEN ANY OBJECTION WAS RAISED BY ANY ASSESSING OFFICER ON THE ACCOUNTS OR ACCOUNTING SYSTEMS. THE ACCOUNTS ARE DULY AUDITED ITA NO.149/LKW/2018 PAGE 20 OF 24 MANDATORY ON THE PART OF THESE VOLUNTARY ORGANIZATIONS TO KEEP THEIR ACTIVITIES TRANSPARENT AND TO MAINTAIN THEIR BOOKS OF ACCOUNTS IN A RELIABLE MANNER. IN THE INSTANT CASE , NEITHER ARE THE ACTIVITIES OF THE APPLICANT GENUINE, OR IN TANDEM WITH THE OBJECTS SET FORTH IN THE MEMORANDUM OF THE TRUST NOR ARE THE ACTIVITIES AIMED AT BENEFITING THE PUBLIC AT LARGE. RATHER , THE ACTIVITIES OF THE APPLICANT ARE AIMED AT BENEFITTING A SET OF DISTINGUISHED INDIVIDUALS. THIS IS FATAL TO THE CLAIM OF THE ACTIVITY. AND INCOME TAX RETURNS ARE ALWAYS FILED WITHIN STATUTORY TIME LIMIT U/S 139(1) OF THE ACT. IN THE CIRCUMSTANCES PROPER BOOKS OF ACCOUNTS ARE BEING MAINTAINED IN A TRANSPARENT MANNER AS EXPECTED FROM CHARITABLE INSTITUTIONS. FURTHER WE WOULD LIKE TO MENTION HERE THAT WE HAVE NOT RECEIVED ANY DONATION OR GRANT FOR THE SOCIETY. WE HAVE TAKEN INTEREST F REE UNSECURED LOANS FROM TRUSTEES AND THEIR RELATIVES AND FRIENDS IN VARIOUS YEARS AND PRESENT OUTSTANDING OF RS. 44.15 LAKHS AS ON 31.03.2016 BESIDES SECURED LOANS FOR RS.98.88 LAKHS FROM BANK OF INDIA TAKEN FOR MODERNIZATION PURPOSES. THE ACTIVITIES OF TH E SOCIETY IS RUNNING IN EFFICIENT MANNER KEEPING IN VIEW THE MAIN OBJECT TO COMBAT THE DISEASE FOR THE SUFFERING HUMANITY IRRESPECTIVE OF CASTE, COLOUR OR CREED .THE MEDICAL BENEFITS ARE GIVEN TO POOR PATIENTS BY WAY OF DISCOUNTS ALSO. 1 1 .IT WAS FOUND THAT THERE WAS 12 VISITING DOCTORS AGAINST WHOM A CHARGE OF RS.100/ - IS LEVIED BY THE ASSESSEE SOCIETY, HOWEVER DOCTORS ARE FREE TO CHARGE THE PATIENTS AS PER THEIR WILL WHICH ESTABLISHES THE FACT THAT THE CLAIM OF CHARITY ON PART OF THE APPLICANT IS A MER E PRETENCE WHICH DOES NOT HAVE ANY SUBSTANCE. WE ARE PROVIDING FREE OPD TO POOR PATIENTS FREE OF CHARGE AND CHARGE RS.100/ - FROM GENERAL PUBLIC AND RS.50/ - FROM STUDENTS FOR TREATMENT BY OUR RESIDENT DOCTORS FOR SEVEN DAYS. IF ANYBODY WANTS FOR CONSULTATI ON WITH SPECIALI ST DOCTORS AVAILABLE IN THE OPD , HE IS ALLOWED TO CONSULT AND PAY DIRECTLY TO THEM. 1 2 .IT IS IMPORTANT TO NOTE THAT THAT M/S PALIWAL DIAGNOSTICS PRIVATE LIMITED ,KANPUR (PDPL) GIVES 50% TO TRUST ON ALL RECEIPTS. (FY - 2015 - 2016 - RS.18.28 L AKHS ) 1. ORIGINAL AGREEMENT DATED 8.8.2011 FOR 3 YEARS WHICH WAS RENEWED VIDE AGREEMENT DATED 1.9.2014. 2.THE SIZE OF THE SPACE PROVIDED NOT MENTIONED IN THE AGREEMENTS BUT ABOUT 150 SQ.FT. SPACE WAS PROVIDED ON GROUND FLOOR OF THE HOSPITAL. ITA NO.149/LKW/2018 PAGE 21 OF 24 3. THE SPACE PROVIDED TO PDPL TO FACILITATE TO DO BASIC PATHOLOGY IN HOUSE TESTING OF PATIENTS AT URGENT BASIS AND COLLECTION CENTRE FOR SPECIALIZED TESTING. 4. PDPL CHARGING THEIR STANDARD RATE FOR TESTING OUT OF WHICH THEY GIVE US 40% TO 50% AMOUNT FROM THEIR RECEI PTS. 5. ARRANGEMENT WITH PDPL IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE SOCIETY I.E. PROVIDING INSTANT MEDICAL FACILITIES TO PATIENTS. 6. THE AMOUNT RECEIVED FROM THEM DURING FY 2015 - 2016 AMOUNTED TO RS.18.28 LAKHS WAS ALSO UTILIZED FOR THE PR IMARY OBJECT OF THE SOCIETY AS EVIDENT FROM I.T.RETURN AND ANNUAL ACCOUNTS SUBMITTED. 7. WE HAVE MENTIONED IN PARA 1(D) OF OUR LETTER DATED 19.01.2018 THAT WITHOUT PREJUDICE TO OUR SUBMISSIONS THAT IT WAS NOT A BUSINESS ACTIVITY, EVEN FOR ARGUMENT SAKE IF IT BE CONSIDERED AS BUSINESS ACTIVITY, IT IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVE OF THE SOCIETY AND IS ALLOWABLE U/S 11(4A) OF THE INCOME TAX ACT, 1961 AND THE INCOME RECEIVED WAS UTILIZED FOR OBJECT OF THE SOCIETY. 1 3 .THE ASSESSEE SOCIETY H AS ENTERED INTO A RENT AGREEMENT FOR THE BASEMENT OF THE HOSPITAL OF THE ASSESSEE ABOUT 1000 SQ.FT. AND TWO ROOMS ON GROUND FLOOR MEASURING ABOUT 200 SQ. FT. W.E.F. 15.12.2015 FOR A PERIOD OF FIVE YEARS ON A MONTHLY RENTAL OF RS.25000/ - TO M/S KULWANTI SKI LL ACADAMY PRIVATE LIMITED WHICH HAS TWO SOCIETY MEMBERS OF THE SOCIETY AS DIRECTORS. THE PREMISES WAS GIVEN ON RENT TO M/S KULWANTI SKILL ACADAMY PRIVATE LIMITED IN WHICH TWO TRUSTEES ARE INTERESTED, ON HIGHER THAN MARKET PREVAILING RENT OF RS.25000/ - PER MONTH. IN SUPPORT OF PREVAILING MARKET RENT WE SUBMITTED A CERTIFICATE FROM A BROKER M/S JAI DURGE PROPERTIES, KANPUR, WHO STATED ESTIMATED RENT FROM RS.12.00 TO RS.16.00 PER SQ.FT. .THERE IS NO BAR ON BUILDING GIVEN ON RENT ON REASONABLE FAIR MARKET RENT TO A COMPANY IN WHICH TWO TRUSTEES ARE INTERESTED AS DIRECTOR. ITA NO.149/LKW/2018 PAGE 22 OF 24 1 4 .NO ID/ ADDRESS/ CONTACT NO. OF PATIENT ( WHO HAVE BEEN CLAIMED TO BE TREATED FREE) ARE NOT AVAILABLE FOR OPD. WE HAVE SUBMITTED COPY OF OPD ACCOUNT IN OUR LEDGER FOR THE MONTH OF FEBRUARY , 2017 IN PARA 4 OF OUR LETTER DATED 18.4.2017 IN WHICH OPD SERIAL NUMBER ARE MENTIONED AND IN CASE OF FREE PATIENTS NO AMOUNT WAS MENTIONED. 1 5 .COMMERCIAL ACTIVITIES OF ATM ARE ALSO BEING CARRIED OUT. CERTAIN SPACE WAS PROVIDED FOR ATM OF BANK OF INDIA A S PER AGREEMENT WITH M/S FIS PAYMENT SOLUTIONS AND SERVICES FOR WHICH MONTHLY RENT WAS RECEIVED. DURING THE YEAR ENDED 31.03.2016 TOTAL RENT OF RS.3,38,400.00 WAS RECEIVED AND UTILIZED FOR THE PRIMARY OBJECT OF THE SOCIETY AS EVIDENT FROM I.T.RETURN AND AN NUAL ACCOUNTS SUBMITTED. THERE IS NO BAR ON BUILDING GIVEN ON RENT PARTICULARLY TO A NATIONALISED BANK. 1 6 . THE SOCIETY IS PRESENTLY NOT INVOLVED IN PERFORMANCE OF ANY CHARITABLE CAUSE AND ITS ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IN SUPPORT OF OUR CHARITABLE ACTIVITIES WE SUBMITTED 22 LETTERS OF APPRECIATION AND CONFIRMATION OF HOLDING MEDICAL CHECK UP CAMPS FROM VARIOUS ASSOCIATIONS, BANKS , INDUSTRIES AND INCOME TAX OFFICES VIDE OUR LETTER DATED 17.3.2017 . TOTAL 14706 PATIENTS WERE PROVIDED FREE MEDICAL SERVICES DURING THE YEAR ENDED 31.3.2016. A COMPLETE LIST OF 222 PAGES WERE SUBMITTED WITH THE ABOVE LETTER BUT RETURNED TO US. AS REQUIRED WE ALSO SUBMITTED COPIES OF 3 BILLS AS SPECIMEN WHERE CONCESSIONAL /FREE SERVICES WERE PROVIDED TO INDOOR PATIENTS. DURING HEARING OF OUR ABOVE PROCEEDINGS ON 18.4.2017, REGISTERS MAINTAINED AT THE CAMPS WERE PRODUCED IN WHICH MOBILE NUMBERS OF PATIENT WERE GIVEN AND THE LEARNED CIT EXEMPTIONS) HAD AT RANDOM ENQUIRED FR OM A PATIENT ON HIS MOBILE ABOUT A PARTICULAR FREE MEDICAL CAMP AND GOT THE MEDICAL FACILITY WHICH HE CONFIRMED. ON HIS SPECIFIC ENQUIRY ABOUT CHARGES, THE PERSON CONFIRMED THAT IT WAS FREE MEDICAL CAMPS AND THEY HAVE NOT PAID ITA NO.149/LKW/2018 PAGE 23 OF 24 ANYTHING. THIS WAS MENTIONED IN PARA 3 OF OUR LETTER DATED 6.11.2017 SUBMITTED. FURTHER COPIES OF LETTERS FOR HEALTH CHECK UP CAMPS AT THREE INCOME TAX OFFICES EXPRESSING THEIR APPRECIATION WERE SUBMITTED WITH OUR LETTER DATED 17.3.2017. 1 7 .THE SOCIETY HAS EXECUTED AN ARRANG EMENT WITH PURSHOTTAM LADHA & OTHERS , PARTNERS M/S MEDICINE CENTRE TO ALLOT SPACE FOR RUNNING MEDICAL STORE IN THE PREMISES OF THE HOSPITAL ON RENTAL AND COMMISSION BASIS. THE SOCIETY HAS ALSO AUTHORIZED THE PROPRIETOR OF THE MEDICAL STORE TO SELL THE MED ICINES AT THE PRINTED RATES WHEREAS IN THE OPEN MARKET SOME DISCOUNT IS GIVEN TO THE PATIENTS THE ORIGINAL MEDICAL SHOP WAS ALLOTTED ON 01.04.1990 AND LAST RENEWED AS PER AGREEMENT DATED 2.3.2003 FOR 9 YEARS TO M/S MEDICINE CENTRE. THEIR ARRANGEMENT HAS BE EN TERMINATED ON 27.7.2012 AND HOSPITAL HAD STARTED ITS OWN MEDICAL SHOP W.E.F. 4.9.2013.HOWEVER THEY HAVE DISPUTED THE MATTER AND FINALLY VACATED THE SHOP ON 22.08.2016. 1 8 .THE SOCIETY CHARGED HEAVY ROOM RENT CHARGES FROM PATIENTS. IT IS MENTIONED IN THE ORDER THAT THE SAID RATE IS DEFINITELY COMPARABLE WITH WHAT IS BEING OFFERED BY MEDICAL ORGANIZATIONS OPERATING ON COMMERCIAL LINES AND THUS THE SAID FIGURES CLEARLY QUASH THE CLAIMS OF THE APPLICANT THAT IT EXISTS FOR THE PURPOSE OF CHARITY. WE SUBMITTED A STATEMENT GIVING COMPARATIVE HOSPITALIZATION CHARGES IN DIFFERENT HOSPITALS IN KANPUR FROM WHICH IT WOULD BE OBSERVED THAT OUR RATES ARE MUCH LOWER THAN THE SIMILAR HOSPITALS IN KANPUR. 4 . THE GRIEVANCE RAISED BY THE ASSESSEE IS JUSTIFIED . A A PERUSAL O F THE ABOVE CONTENTIONS OF THE SOCIETY EVINCES THAT IT HAS NOT BEEN PROVIDED ADEQUATE OPPORTUNITY BY THE LD. CIT (EXEMPTIONS), TO SUPPORT ITS CASE. THE SUBMISSIONS MADE BEFORE THE LD. CIT (EXEMPTIONS) HAVE NOT BEEN TAK EN INTO CONSIDERATION, RESULTING IN T HE PASSING OF THE IMPUGNED ORDER , WHICH IS A RESULT OF MISREADING AND NON - READING OF THE SUBMISSIONS AND MATERIAL DOCUMENTARY EVIDENCE BROUGHT ON RECORD BY THE SOCIETY. THESE SUBMISSIONS WERE MADE VIDE REPLIES DATED ITA NO.149/LKW/2018 PAGE 24 OF 24 17/3/2017 (APB: 95 - 98), 18/4/2017 (APB: 27 - 28), 6.11.2017 (APB: 22 - 24) AND 19.1.2018 (APB: 5 - 8) . 5 . IN VIEW OF THE ABOVE, THE MATTER , IN THE INTEREST OF JUSTICE, IS REMITTED TO THE FILE OF THE LD. CIT (EXEMPTIONS), TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON AFFORDING DUE, ADEQUATE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE TO SUPPORT ITS CASE. THE ASSESSEE, NO DOUBT, SHALL CO - OPERATE IN THE FRESH PROCEEDINGS BEFORE THE LD. CIT (EXEMPTIONS). ALL PLEAS AVAILABLE UNDER THE LAW SHALL REMAIN SO AVAILABLE TO THE ASSESSEE. ORDERED ACCORDING LY. 6 . IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 / 0 3 /201 9 . SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAIN ] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 15 /03/ 201 9 JJ: 2602 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASSISTANT REGISTRAR