Cardiac Sugical Academic and Research Trust, Coimbatore V. CIT, Coimbatore

ITA 2047/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0873 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-02-2013
• Assessment Year: 2012-2013
• Appeal Filed On: 09-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K RAGHU
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.2047/MDS/2012 CARDIAC SURGICAL ACADEMIC AND RESEARCH TRUST, NO. 12, RAMANATHAPURAM CO- OPERATIVE COLONY UPPILIPALAYAM, RAJIV GANDHI NAGAR, COIMBATORE 641 045. [PAN:AACTC3383M] VS. THE COMMISSIONER OF INCOME TAX - I, COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAGHU, C.A. RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 04.02.2013 DATE OF PRONOUNCEMENT : 08.02.2013 ORDER PER S.S. GODARA, JUDICIAL MEMBER IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE OR DER DATED 25.09.2012 PASSED BY THE COMMISSIONER OF INCOME TAX -I, COIMBATORE REJECTING ITS APPLICATION FOR REGISTRATION UNDER SE CTION 12AA OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N THE APPEAL: 1. THE LEARNED CIT-I, COIMBATORE, HAS ERRED IN LA W AS WELL AS ON FACTS, IN REJECTING THE APPLICATION OF THE APPELLAN T, FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. 2047 . 2047 . 2047 . 2047/M/ /M/ /M/ /M/12 1212 12 2 2. THE LEARNED CIT-I, COIMBATORE, HAS FAILED TO AP PRECIATE THAT THE APPELLANT TRUST FULFILLED THE CONDITIONS NECESSARY AND QUALIFIED FOR REGISTRATION, THE OBJECTS OF THE TRUST FALL WITHIN THE DEFINITION OF 'CHARITABLE PURPOSES', DEFINED U/S 2(15) OF THE INC OME TAX ACT, 1961, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. 3. THE ORDER OF THE CIT-I, COIMBATORE, IS PURELY O N SUBJECTIVE CONSIDERATIONS, ARBITRARY AND UNJUSTIFIABLE, IN LAW AS WELL AS ON FACTS. 4. THE LEARNED CIT-I, COIMBATORE, OUGHT TO HAVE AP PRECIATED THAT SEMINARS AND CONFERENCES ARE CONTINUING EDUCATIONA L PROGRAMME' AND CONSIDERING THE DOMINANT INTENTION OF THE APPELLANT , IT CANNOT BE HELD TO BE A NON-CHARITABLE ACTIVITY, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. 5. THE LEARNED CIT-I, COIMBATORE, HAS GROSSLY ERRE D, IN HIS ANALYSIS TO CONCLUDE THAT THE ACTIVITIES OF THE APP ELLANT TRUST CANNOT BE CALLED CHARITABLE ACTIVITY, IN THE FACTS AND THE CI RCUMSTANCES OF THE CASE AND IN HIS DECISION TO REJECT THE APPLICATION FILED SEEKING REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961, IN THE FACTS A ND THE CIRCUMSTANCES OF THE CASE AND IN LAW. 6. FOR THESE AND OTHER ADDITIONAL GROUNDS OF APPEA L THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE ORDER OF THE CO MMISSIONER OF INCOME TAX-I, COIMBATORE, IS OPPOSED TO LAW AND UNS USTAINABLE IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE. 3. REITERATING THE PLEADINGS MADE IN THE ABOVE SAI D GROUND, THE ASSESSEE CONTENDS BEFORE US THAT THE CIT HAS WRONGL Y REJECTED ITS APPLICATION FOR REGISTRATION UNDER SECTION 12A OF T HE ACT. BY PLACING RELIANCE ON THE CASE LAW OF YODHA SAMARAK SAMITI V. CIT IN I TA NO. 422(CHD) OF 2010, THE AR HAS PRAYED FOR ACCEPTANCE OF THE APPEA L. 4. PER CONTRA, THE DR REPRESENTING THE REVENUE STR ONGLY SUPPORTS THE ORDER OF THE CIT IN QUESTION. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. 2047 . 2047 . 2047 . 2047/M/ /M/ /M/ /M/12 1212 12 3 5. UNDISPUTED FACTS OF THE CASE ARE THAT HE ASSESS EE IS A TRUST CONSTITUTED BY TRUST DEED EXECUTED ON 28.10.2011. I TS TRUSTEES ARE ITS AUTHOR, (A CARDIAC SURGEON), HIS WIFE AND A DOCTOR. ON 30.0 3.2012, IT MOVED AN APPLICATION SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT BEFORE THE CIT, COIMBATORE. WE NOTICE FROM THE IMPUGNED ORDER THAT AFTER EXAMINING ASSESSEES OBJECTS, BALANCE SHEET, THE CIT HAS TURN DOWN THE APPLICATION OF REGISTRATION SOUGHT BY THE ASSESSEE FOR THE FOLLOWI NG REASONS: 3.0. THE STATED OBJECTS OF THE TRUST ARE: 3.1. OBJECT: TO COLLECT INFORMATION, STUDY MATERIA L AND PAPERS PRESENTED IN VARIOUS SEMINARS AND CONFERENCES FOR T HE PURPOSE OF ,ADVANCEMENT OF KNOWLEDGE IN SCIENCE OF CARDIOTHORA SIC: THIS OBJECT ESSENTIALLY IS PUBLICATION ISSUE: FOR, THE TRUST IN TENDS TO COLLECT THE INFORMATION PERTAINING TO CARDIOTHORASIC. COLLECTIO N OF INFORMATION CAN NOT BE PASSED OFF AS A CHARITABLE ACTIVITY. MOREOVE R, THIS JOB IS DONE BY ANY PUBLISHING HOUSES OF MEDICAL JOURNALS OR BY THE INSTITUTIONS ENGAGED IN MEDICAL SERVICES, AS REQUIRED BY THEM. T HEREFORE, NO ELEMENT OF CHARITY IS FOUND IN SAID OBJECT TO HOLD IT AS OF CHARITABLE NATURE. 3.2 OBJECT: TO HOLD SEMINAR, DISCUSSION AT VARIOUS PLACES IN INDIA AND SPREADING OF LATEST DEVELOPMENT IN THE FIELD OF CARDIOTHORASIC SURGERY: IT IS SEEN THAT HOLDING A SEMINAR AND GROUP-DISCUS SION IS DONE BY MEDICAL INSTITUTES, PHARMACOLOGICAL COMPANIES, M EDICAL COUNCIL OF INDIA FOR THE PURPOSES OF EXCHANGING THE INFORMATIO N AND IDEAS IN MEDICAL PROFESSION. SUCH AN ACTIVITY IS ESSENTIALLY PROFESSIONAL IN NATURE; AND, THEREFORE, THERE IS NO ELEMENT OF CHAR ITY, THEREOF. 3.3. OBJECT: TO CIRCULATE EDUCATIONAL NEWSLETTER AN D AUDIO/VIDEO CASSETTES ON THE SUBJECT OF CARDIOTHORASIC SURGERY: THIS AGAIN IS IN NATURE OF ADVERTISING OF PROFESSIONAL SKILLS OF PAR TICULAR MEDICAL SURGERY TO FURTHER PROFESSION. I DO NOT FIND ANY EL EMENT OF CHARITY IN SUCH PROGRAMME(S). 3.4. OBJECT: TO CARRY ON SUCH ACTIVITY NOT INVOLVIN G ANY ACTIVITY FOR PROFITS BUT AIMED AT PROVIDING RELIEF AND TREATMENT TO PERSONS SUFFERING I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. 2047 . 2047 . 2047 . 2047/M/ /M/ /M/ /M/12 1212 12 4 FROM CARDIAC DISEASES AND TREATMENT OF PERSONS REQU IRING MEDICAL ATTENDANCE OR REHABILITATION: THE FIRST LIMB IS PRONOUNCED IN A VAGUE MANNER, FOR IT HAS NOT SPELL-OUT THE SPECIFIC NATUR E OF SUCH ACTIVITY WHICH IS NOT FOR PROFIT. AND, THE SECOND LIMB ALSO STATES THAT THE TRUST INTENDS TO GIVEN MEDICAL ATTENDANCE AND REHABILITAT E THOSE SUFFERING FROM CARDIO THORASIC DISEASES. BUT, IT HAS NOT SPEL T-OUT WHETHER, SUCH FACILITIES ARE FREE OF COST OR AT CONCESSIONAL RATE S. IN ANY CASE, THE OBJECT IS TOO VAGUE TO REFLECT TRUE ALTRUISTIC INTE NSIONS OF CHARITY. THUS, THERE IS NO ELEMENT OF CHARITY. 3.5. OBJECT: TO CONDUCT AND SPONSOR PROGRAMMES/FACI LITIES, FOR TREATMENT TO PATIENTS REQUIRING MEDICAL ATTENTION A ND CARE AND ALSO FOR PREVENTION OF CARDIAC RELATED DISEASES IN ANY HOSPI TALS, INSTITUTIONS OR PUBLIC PLACES WITHOUT PROFIT MOTIVE AND ONLY FOR TH E PURPOSE OF MEDICAL RELIEF AND SPREADING AWARENESS OF FACILITIES AVAILA BLE TO THE GENERAL PUBLIC: IT IS STRANGE THAT THE TRUST INTENDS TO SPONSOR PR OGRAMMES AND FACILITIES ETC. BUT IT IS NOT CLEAR AS TO WHY IT WA NT TO TAKE-UP THE JOBS OF MEDICAL INSTITUTES, SUPER SPECIALITY HOSPITALS ETC. THE ONLY PLAUSIBLE EXPLANATION FOR SUCH AN ARRANGEMENT IS WITH INTENTI ONS TO GENERATE PROFITS WITHOUT INCIDENCE OF TAXATION AS, ALL SUCH ACTIVITIES ARE LIKELY TO BE MADE OUT TO BE OF CHARITABLE NATURE; THOUGH, CLA IMED AS WITHOUT ANY PROFIT MOTIVE. ABOVE ALL, IT HAS NOT EXPLAINED AS T O HOW SUCH ACTIVITIES WOULD CONSTITUTE A CHARITY. THE MEDICAL INSTITUTES, SUPER SPECIALITY HOSPITALS AND EVEN THE GOVERNMENTS, SPREAD AWARENES S THROUGH ADVERTISEMENTS, IN ACCORDANCE WITH THEIR REQUIREMEN T(S). THEREFORE, IT IS NOT CLEAR AS TO WHY SUCH AN ACTIVITY IS INTENDED TO BE DUPLICATED BY THE TRUST. AGAIN, ONLY PLAUSIBLE ANSWER COULD BE TH AT, IT IS SO ARRANGED TO AVOID PAYMENT OF TAX ON PROFITS GENERATED IN TH E PROCESS BY THRUSTING A FACADE OF CHARITY. 4.0. THE FOREGOING ANALYSES OF THE STATED OBJECTS O F THE TRUST REVEALS THE INTENTIONS OF ITS AUTHOR TO PRACTICE HIS WELL E XPERIENCED PROFESSION THROUGH THE TRUST TO AVOID THE INCIDENCE OF TAX. TH E TRUST IS ALSO FORMED WITH INTENTIONS OF EXTENDING BENEFIT TO AUTHOR'S WI FE (ONE OF THE TRUSTEES) AND THIRD AND LAST TRUSTEE (WHO IS ALSO A DOCTOR). SUCH AN ARRANGEMENT DEFEATS THE LEGISLATIVE INTENTIONS OF 'CHARITY PURP OSES' ENVISAGED IN THE SEC-2(15) OF THE INCOME-TAX ACT, 1961 (ACT). AND, T HOUGH THE SAID DEFINITION IS AN INCLUSIVE ONE THE SAME CANNOT BE I NTERPRETED TO INCLUDE ANY ACTIVITY, ONLY BY CALLING IT AS CHARITABLE. THU S, IT IS INFERRED THAT THE TRUST IS FORMED WITH PROFIT MOTIVE TO EXTEND PROFES SIONAL-SERVICE ON PAYMENT BASIS AND IN THE PROCESS GENERATE PROFITS F OR THE BENEFIT OF THE AUTHOR AND OTHER TWO TRUSTEES. AND I DO NOT FIND AN Y CHARITABLE ACTIVITY IN THE STATED OBJECTS OF THE TRUST. THEREFORE, IN A PPRECIATION OF THE FACTS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. 2047 . 2047 . 2047 . 2047/M/ /M/ /M/ /M/12 1212 12 5 AND CIRCUMSTANCES OF THE CASE, IT IS DECIDED TO REJ ECT THE APPLICATION FILED SEEKING REGISTRATION U/S-12A OF THE ACT. 5.0. THUS, IN THE LIGHT OF THE FOREGOING INFORMATI ON, THE REGISTRATION U/S-12A OF THE ACT IS HEREBY REFUSED. IN THIS BACKDROP, THE ASSESSEE IS IN APPEAL. 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE SUBMISSIONS MADE BY BOTH PARTIES AND ALSO PERUSED CITS ORDER AS WEL L AS CASE LAW QUOTED BY THE ASSESSEE. AS ALREADY REPRODUCED HEREINABOVE, ON E OF THE REASON GIVEN BY THE CIT IN THE IMPUGNED ORDER IS THAT THE TRUST HAS BEEN FORMED WITH THE INTENTION OF GIVING BENEFIT TO THE WIFE OF THE AUTH OR, WHICH DEFEATS THE VERY CONCEPT OF CHARITABLE PURPOSE AS DEFINED UNDER SECT ION 2(15) OF THE ACT. BEFORE US, NO COGENT MATERIAL HAS BEEN FILED BY THE ASSESSEE SO AS TO REBUT THE FINDINGS UNDER CHALLENGE. IN OUR OPINION, MEREL Y A BALD ASSERTION CARRIES NO WAIT IN THE ABSENCE OF COGENT DOCUMENTARY EVIDEN CE. IN VIEW OF THESE FACTS, WE HOLD THAT SINCE THE FINDINGS OF THE CIT H AVE NOT BEEN CONTROVERTED, THE SAME ARE LIABLE TO BE UPHELD. 7. SO FAR AS THE CASE LAW CITED BY THE ASSESSEE IS CONCERNED (SUPRA), WE NOTICE THAT THE TRUST IN QUESTION HAD FILED ITS TRU ST DEED BEFORE THE TRIBUNAL AND THEREFORE, ONLY AFTER EXAMINING IN DETAIL THE O BJECTS OF THE SAID TRUST, ITS APPLICATION SEEKING REGISTRATION HAD BEEN ACCEPTED. WHEN WE APPLY THE FACTS OF THE SAID CASE VIS--VIS THE CASE IN HAND, WE ARE UNABLE TO GRANT RELIEF SOUGHT BY THE ASSESSEE IN THE ABSENCE OF TRUST DEED BEFORE US. THEREFORE, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. 2047 . 2047 . 2047 . 2047/M/ /M/ /M/ /M/12 1212 12 6 WE UPHOLD THE CITS ORDER UNDER CHALLENGE AND REJEC T ASSESSEES CONTENTION. 8. AS SEQUEL TO ABOVE DISCUSSION, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 8 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 08.02.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.