Hasnu Ahmad Memorial Educational & Charitable Society, Nainital V. CIT(E), Lucknow

ITA 3024/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97946 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 02-12-2015
• Assessment Year: misc
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K SINGH
• Assessee Lawyers: PAWAN KR NATH
• Keywords: Capital expenditure
• Section: 12A; 12AA

Judgement Text

HANSU AHMAD MEMORIAL EDUCATION & CHARITABLE SOCIETY V CIT ( E ) ITA 3024/ DEL/2015 1 | P A G E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3024/DEL/2015 HANSU AHMAD MEMORIAL EDUCATION & CHARITABLE SOCIETY, KHAN BUILDING, LAL KUAN, NAINITAL PAN:AABAH0064M VS. CIT(E), AAYAKAR BHAWAN, 5 - ASHOK MARG, LUCKNOW (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PAWAN KR. NATH, CA RE VENUE BY : SH. B.K. SINGH, CIT DR DATE OF HEARING 02.12.2015 DATE OF PRONOUNCEMENT 0 7 . 12.2015 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT ( EXEMPTIONS) - , LUCKNOW DATED 26.02.2015. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. BECAUSE, THE LEARNED CIT (EXEMPTIONS) ERRED IN REJECTING THE SOCIETYS REGISTRATION U/S 12AA OF THE ACT HOLDING THAT THE ASSESSEE SOCIETY AT PRESENT IS NOT CARRYING OUT ANY CHARITABLE ACTIVIT IES. THE INCOME & EXPENDITURE ACCOUNTS OF THE SOCIETY AS ON 28.02.2015 SHOWS THAT NO DEBIT HEAD IS DIRECTLY RELATED TO ANY CHARITABLE ACTIVITIES. THE OBSERVATIONS OF THE LD CIT (EXEMPTIONS) ARE FAR AWAY FROM THE ACTUAL FACTS, AS THE SOCIETY HAS CONSTRUCTE D THE UNANI MEDICAL COLLEGE AND HAS ALSO BEEN GRANTED THE RELATED APPROVALS FROM THE APPROPRIATE AUTHORITIES FOR ITS ACTIVITIES. 2 . THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE SOCIETY FILED AN APPLICATION FOR REGISTRATION U/S 12A ( A) OF THE INCOME TAX - ACT, 1961 ON 15.09.2014. THE LEARNED COMMISSIONER OF INCOME - TAX ( EXEMPTIONS) DENIED THE REGISTRATION TO ASSESSEE SOCIETY U/S 12A(A) BY OBSERVING THAT THE SOCIETY WAS CREATED ON 05.12.2013 AND ON PERUSAL OF THE MATERIAL AVAILABLE ON RECORD IT IS EVIDENT THAT THE ASSESSEE SOCIETY WAS NOT CARRYING OUT ANY CHARITABLE ACTIVITIES; THAT NO DEBIT HEAD WAS DIRECTLY RELATED TO HANSU AHMAD MEMORIAL EDUCATION & CHARITABLE SOCIETY V CIT ( E ) ITA 3024/ DEL/2015 2 | P A G E ANY CHARITABLE ACTIVITIES; THAT EXPENSES OF RS.8970/ - HAD BEEN INCURRED ON THE DOCTORS AND NURSES ON THE DUTY; THAT THERE WAS NO MEDICAL RELIEF; THAT THE WAS CONSTRUCTED THE BUILDING, HOWEVER THERE WAS NO EVIDENCE THAT IT WOULD BE USED FOR CHARI TABLE PURPOSES. THE LEARNED COMMISSIONER OF INCOME T AX (EXEMPTIONS) FURTHER OBSERVED THAT THE ASSESSEE SOCIETY DID NOT FURNISH ANY EVIDENCE TO SHOW ANY CHARITABLE ACTIVITIES OF THE ASSESSEE SOCIETY. HE RELYING ON SEVERAL DECISIONS OF THE COURTS WHERE IN IT IS HELD THAT CIT CANNOT SHUT HIS EYES AND SHOULD SEE THE ACTIVITIES CARRIED OUT BY THE TRUST BEFORE GRANTING REGISTRATION. IN VIEW OF THE ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) REJECTED THE APPLICATION OF THE ASSESSEE SOCIETY FOR R EGISTRATION U/S 12A ( A) OF THE ACT. 3 . BEFORE US THE LD AR SUB MITTED THAT WHILE GRANTING THE REGISTRATION OF THE TRUST U/S 12A ( A ) OF THE ACT CIT NEEDS TO EXAMINE WHETHER THE OBJECT OF THE TRUST IS CHARITABLE OR NOT IN NATURE AND ABOUT GENUINENESS OF THE ACTIVITIES. IT IS SO IN CASE OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE BALANCE SHEET OF THE TRUST ALSO SHOWS THAT IT IS IN THE PROCESS OF SETTING UP A HOSPITAL AND WHICH ITSELF PROVES THAT ASSESSEE IS CARRYING ON MEDICAL RELIEF ACTIVITY, WHICH IS IN NATURE OF CHARITABLE OBJECTS . THEREFORE, CIT SHOULD HAVE GRANTED THE REGISTRATION TO THE TRUST. 4 . LD. DR RELIED ON THE ORDER OF CIT REJECTING THE REGISTRATION TO THE TRUST. 5 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE PARTIES AS WELL AS THE PAPER B OOK SUBMITTED BY THE AR, WHICH CONTAINED THE BALANCE SHEET AND INCOME EXPENDITURE ACCOUNT OF THE ASSESSEE. ACCORDING TO SECTION 12A (A) OF THE INCOME TAX ACT CIT IS REQUIRED TO SEE THE OBJECT OF THE TRUST AND GENUINENESS OF THE ACTIVITIES OF THE TRUST. I N ORDER UNDER CHALLENGE, CIT HAS NOT DOUBTED THE OBJECT OF THE TRUST, HOWEVER IT WAS HELD BY HIM THAT ASSESSEE WAS NOT CARRYING ON ANY CHARITABLE ACTIVITIES. WE DO NOT AGREE WITH THE FINDING OF CIT THAT THERE ARE NO ITEMS OF EXPENDITURE IN THE INCOME & EXP ENDITURE ACCOUNT OF THE TRUST EXCEPT MINISCULE EXPENDITURE AND THEREFORE TRUST HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITIES. HOWEVER REACHING AT THIS CONCLUSION WE NOTE THAT LD. CIT HAS LOST SIGHT OF THE BALANCE SHEET OF THE TRUST WHICH SHOWS SUBSTANTI AL EXPENDITURE ON MEDICAL EQUIPMENT OF RS. 1578351/ - , AMBULANCES OF RS. 40,000/ - AS WELL AS CONSTRUCTION OF HOSPITAL OF RS 11738312/ - . THEREFORE, IT IS BEYOND DOUBT THAT ASSESSEE TRUST IS CONSTRUCTING HOSPITAL AND ITS OBJECTS ARE MEDICAL RELIEF . AS SUBMITTED TRUST HAS ALSO BEEN GRANTED VARIOUS APPROVALS BY RESPECTIVE AUTHORITIES FOR SETTING UP HOSPITAL. THEREFORE IN OUR VIEW THE ASSESSEE TRUSTS HAS GENUINE ACTIVITIES OF SETTING UP THE HOSPITAL. WE ALSO DO NOT ENDORSE THE VIEW OF THE CIT THAT T HE CONSTRUCTION ACTIVITY THOUGH ASSESSEE CARRIED OUT CONSTRUCTION BUT WHETHER AFTER C ONSTRUCTION BUILDING WOULD BE USED FOR THE CHARITABLE ACTIVITIES OR HANSU AHMAD MEMORIAL EDUCATION & CHARITABLE SOCIETY V CIT ( E ) ITA 3024/ DEL/2015 3 | P A G E NOT IS NOT CERTAIN. ON SUCH APPREHENSIONS THE REGISTRATION TO THE TRUST CANNOT BE DENIED AS LAW HAS BUILT SAFEGUARDS AGAINST SUCH EVENTS U/S 12A (A) (3) OF THE INCOME TAX ACT. FURTHER, THE CASE LAWS CITED BY CIT ARE NOT APPLICABLE TO THE FACTS OF THIS CASE BECAUSE ASSESSEE TRUST IS ENGAGED IN CONSTRUCTION OF HOSPITAL WITH APPROVALS AND H AS SPENT AMOUNT ON MEDICAL ACTIVITIES. IN THIS CASE, CIT HAS NOT SEEN CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE . THEREFORE WE DIRECT CIT TO GRANT REGISTRATION TO ASSESSEE TRUST U /S 12A (A ) OF THE INCOME TAX ACT. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 7 .12.2015. - S D / - - S D / - (I.C. SUDHIR) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 7 / 12/2015 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI