Heart & Stroke Foundation of India , Hyderabad V. Commissioner of Income Tax, (Exemptions), Hyderabad

ITA 284/Hyd/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9760 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 16-09-2019
• Assessment Year: misc
• Appeal Filed On: 06-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Charitable institution; Wholly owned subsidiary
• Section: 80G; 12AA; 201; 11

Judgement Text

IN THE INCOME TAX A PPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY , ACCOUNTANT MEMBER ITA NO S . 283 & 284 / HYD/201 9 HEART & STROKE FOUNDATION OF INDIA, HYDERABAD. PAN A A ECH 5106P VS. COMMISSIONER OF INCOME - TAX (EXEMPTIONS), HYDERABAD. A PPELLANT RESPONDENT ASSESSEE BY: S H RI A.V. RAGHURAM REVENUE BY: S HRI Y.V.S.T. SAI DATE OF HEARING: 16 / 0 9 / 201 9 DATE OF PRONOUNCEMENT: 20 / 0 9 /201 9 O R D E R PER SMT. P. MADHAVI DEVI, J.M.: THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF CIT (E) REJECTING THE APPLICATIONS OF THE ASSESSEE FOR REGISTRATION U/S 12AA AND 80G OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE , A 100% SUBSIDIARY OF AMERICAN HEART ASSOCIATION INC., USA (AHA) WAS FORMED ON 13/04/2018 WITH THE OBJECTIVE OF TRAINING PEOPLE IN INDIA IN SAVING LIVES DUR ING CARDIAC ARREST AND DURING ACCIDENTS. ASSESSEE FILED APPLICATIONS FOR REGISTRATION U/S 12AA AND ALSO U/S 80G OF THE ACT. THE CIT(E) REJECTED THE SAID APPLICATIONS BY HOLDING THAT THE ASSESSEE, THOUGH, IS REGISTERED U/S 10A OF THE COMPANIES ACT, IT WAS F ORMED ON 13/04/2018 , BUT, HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITIES AND THAT IT IS SELLING TRAINING MATERIAL , WHICH HAS GOT COPY RIGHTS AND IS GENERATING REVENUE FROM THE ACTIVITIES OF TRAINING. HE ALSO HELD THAT DIRECTORS OF THE COMPANY ARE FORMER ASS OCIATES OF AHA AND PRESENT ASSOCIATES ARE APPOINTED ONLY I.T.A. NO S . 283 & 284 /HYD/1 9 HEART & STROKE FOUNDATION OF INDIA, HYD. 2 TO HELP GROW BUSINESS OF AHA IN INDIA. HE ALSO EXAMINED THE CORRESPONDENCE BETWEEN THE DIRECTORS OF THE COMPANY AND AHA TO HOLD THAT THE AIM OF THE ASSESSEE IS ONLY TO SECURE CORPORATE CONNECTIONS. THEREFORE, HE HELD THAT THE OBJECTIVES OF THE ASSESSEE ARE NOT CHARITABLE AND ACCORDINGLY, HE DENIED THE REGISTRATION U/S 12AA AND 80G OF THE ACT. 3. THE LD. COUNSEL FOR THE ASSESSEE , WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE CIT(E), SUBMITTED THAT THE ASSESSEE COMPANY WAS FORMED ONLY FOR THE PURPOSE OF IMPARTING TRAINING TO PEOPLE IN INDIA TO SAVE LIVES DURING CARDIAC ARREST AND ALSO DURING ACCIDENTS. HE SUBMITTED THAT THESE AC TIVITIES ARE NOTHING BUT FOR MEDICAL RELIEF AND HENCE, THE ASSESSEES ACTIVITIES FALL UNDER THE DEFINITION OF SECTION 2(15) OF THE ACT I.E. FOR CHARITABLE PURPOSE. HE ALSO SUBMITTED THAT ASSESSEE IS NOT HAVING ANY BUSINESS ACTIVITY IN INDIA AND THAT TRAIN ING MATERIAL ARE DISTRIBUTED FREE OF COST TO THE PERSONS UNDERGO ING TRAINING. HE SUBMITTED THAT FOR GRANTING OF REGISTRATION U/S S 12AA AND 80G , CIT(E) IS REQUIRED TO LOOK INTO THE OBJECTIVES OF THE ASSESSEE COMPANY ONLY AND CAN LOOK INTO THE ACTIVITIES C ARRIED OUT BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND CAN DISALLOW ANY EXPENDITURE WHICH IS NOT SPENT TOWARDS CHARITABLE ACTIVITIES OF THE COMPANY FOR WHICH IT IS REGISTERED. THUS, HE PRAYED FOR A DIRECTION TO THE CIT(E) TO GRANT REGIS TRATION BOTH U/S 12AA AS WELL AS SECTION 80G OF THE ACT. 4. LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF CIT(E) AND REITERATED THE OBJECTIONS OF THE CIT(E) IN DENYING THE REGISTRATION U/S 12AA AND 80G OF THE ACT. 5. HAVING REGARD TO THE RIVAL CO NTENTIONS AND THE MATERIAL ON RECORD AS WELL AS HAVING GONE THROUGH THE OBJECTIVES OF THE I.T.A. NO S . 283 & 284 /HYD/1 9 HEART & STROKE FOUNDATION OF INDIA, HYD. 3 ASSESSEE COMPANY , WE FIND THAT THEY ARE FOR THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY AND NOT MEDICAL RELIEF AS CLAIMED BY THE ASSESSEE. A SSESSEE IS NOT CONDUCTING OR RENDERING ANY MEDICAL SERVICES DIRECTLY TO THE PATIENTS , AND THEREFORE, IT CANNOT BE SAID TO BE ENGAGED IN THE RENDERING OF MEDICAL RELIEF ACTIVITIES. WE ARE OF THE OPINION THAT THE ASSESSEE S ACTIVITIES FALL UNDER THE LIMB OF ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY. CIT(E) HAS GONE BY THE CORRESPONDENCE BETWEEN THE DIRECTORS OF THE COMPANY TO OPINE THAT ASSESSEE COMPANY IS INTO REVENUE GENERATING ACTIVITIES AND ONLY TO DEVELOP CORPORATE CONNECTIONS. SINCE THE COMPANY WAS FORMED ONLY ON 13/04/2018 AND HAS FILED APPLICATIONS FOR REGISTRATION IMMEDIATELY, THEREAFTER, THE ASSESSEE C OULD NOT HAVE CARRIED OUT ANY OF THE ACTIVITIES AS PER ITS OBJECTIVES. AT THE TIME OF REGISTRATION U/S 12AA AND 80G, THE CIT(E) IS REQUIRED TO GO ONLY INTO THE OBJECTIVES OF THE COMPANY OR TRUST AS HELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CI T VS. SHREEDHAR SEWA TRUST IN INCOME TAX APPEAL NO. 33 OF 2017, DATED 07/09/2017. IF THERE ARE ANY VIOLATIONS BY THE COMPANY TO THE PROVISIONS OF SECTION 11 OR SECTION 13 OF THE IT ACT, THE AO WHILE COMPLETING ASSESSMENTS CAN DENY EXEMPTION U/S 11 IN RESPE CT OF SUCH ACTIVITIES. THEREFORE, WE ARE OF THE OPINION THAT REGISTRATION TO THE ASSESSEE OUGHT TO HAVE BEEN GRANTED BOTH U/SS 12AA AND 80G OF THE ACT. IN VIEW OF THE ABOVE OBSERVATIONS, WE REMAND THE ISSUE TO THE FILE OF CIT(E) WITH A DIRECTION TO GRANT R EGISTRATION BOTH U/S S 12AA AS WELL AS U/S 80G OF THE ACT. I.T.A. NO S . 283 & 284 /HYD/1 9 HEART & STROKE FOUNDATION OF INDIA, HYD. 4 6. IN THE RESULT, BOTH THE APPEALS UNDER CONSIDERATION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER , 2019. SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER HYDERABAD, DATED 20 TH SEPTEMBER , 201 9. KV COPY FORWARDED TO: 1. HEART & STROKE FOUNDATION OF INDIA, 8 TH FLOOR, SLN TERMINUS, SURVEY NO. 133, BESIDES BOTANICAL GARDEN, GACHIBOWLI, HYDERABAD. 2 . CIT(E), 2 ND FLOOR, AAYAKAR BHAVAN, BASHEER BAGH, HYDERABAD. 3 . ITO(E) 2, HYDERABAD. 4. ADD. CIT (E), HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE