UJJAGAR SINGH AULAKH MEMORIAL TRUST, MALERKOTLA V. COMMISIONER OF INCOME TAX (EXAMPTION), CHANDIGARH

ITA 364/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7973 (ITAT-AMRITSAR)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-03-2018
• Assessment Year: 2016-2017
• Appeal Filed On: 07-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK KUMAR LD
• Assessee Lawyers: YASH PAL GOYAL LD
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.364(ASR)/2017 ASSESSMENT YEAR: UJJAGAR SINGH AULAKH MEMORIAL TRUST VILLAGE KUP KALAN TEHSIL, MALERKOTLA PAN:AAATU6533E VS. CIT(EXEMPTIONS), CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY: SH. YASH PAL GOYAL (LD. ADV.) RESPONDENT BY: SH. ALOK KUMAR (LD. DR) DATE OF HEARING: 26.03.2018 DATE OF PRONOUNCEMENT: 12.04.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 28.03.2017 PASSED BY THE LD. CIT(EXEMPTION), CHANDIGA RH U/S 12AA(1)(B)(II) OF THE I.T. ACT, 1961 (HEREINAFTER CAL LED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE ORDER DATED 28.03.2017 PASSED UNDER SECTIO N 12AA OF THE INCOME TAX ACT 1961 IS AGAINST LAW AND FACTS ON THE FILE. ITA NO.364/ASR/2017 UJJAGAR SINGH AULAKH MEMORIAL TRUST VS. CIT(E) 2 2. THAT CIT (EXEMPTIONS) ERRED IN MAKING OBSERVATIO NS IN PARA 2 OF THE ORDER THAT NONE OF THE STATED OBJECTS SEE MS TO HAVE BEEN PURSUED BY THE APPLICANT TRUST. LEARNED CIT (EXEMP TIONS) STATES IN PARA 6 OF THE ORDER THAT INCOME AND EXPENDITURE ACC OUNT FOR THE F.Y. 2015-2016 REVEALS THAT APPROXIMATELY 86% OF THE TOT AL RECEIPTS HAS BEEN SPENT UNDER THE HEAD TO UIIAQAR SINGH AULAKH HOSPITAL APART FROM OTHER HEADS OF EXPENDITURE OF GENERAL NA TURE. OBSERVATION IN PARA 2 OF THE ORDER IS AGAINST FACTS AND LAW. 3. THAT LEARNED CIT (EXEMPTIONS) HAS FAILED TO AP PRECIATE FACTUAL WRITTEN SUBMISSIONS AND DOCUMENTARY EVIDENCE IN SUP PORT OF CHARITABLE ACTIVITIES PRODUCED DURING REGISTRATION PROCEEDINGS. 4. THAT LEARNED CIT (EXEMPTIONS) HAS REFUSED REG ISTRATION ON MERE PRESUMPTIONS AND HAS THUS ACTED ARBITRARILY WITHOUT MAKING ANY ENQUIRY AND THUS THE ORDER IS AGAINST THE WELL LAID DOWN PROVISIONS OF LAW FOR GRANT OF REGISTRATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THE INSTANT CASE , AN APPLICATION FOR REGISTRATION U/S 12A OF THE ACT WAS FILE D ON 26.09.2016 BEFORE THE LD. CIT(E), CHANDIGARH, WHILE CONSIDERING THE AIMS AND OBJECTS OF THE SOCIETY, IT WAS OBSERVED BY LD . CIT(E) THAT NONE OF THE STATED OBJECTS SEEMS TO HAVE BE EN PURSUED BY THE APPLICANT TRUST. THE APPELLANT WAS ALSO ASKED TO SUBMIT SOME DOCUMENTS AND CLARIFICATIONS BY FIXING THE CA SE FOR HEARING ON 19 TH JANUARY, 2017, WHICH WAS RESPONDED BY THE APPELLANT HEREIN BY FILING THE REQUIRED DOCUMENTS AS WELL AS REPLY IN RESPONSE TO THE AFORESAID SHOW CAUSE. AFTER PERUSING TH E MATERIAL ON RECORD, IT WAS OBSERVED BY THE LD. CIT(E) THAT IMMOVABLE PROPERTY OF THE HOSPITAL WAS OWNED BY ONE O F THE TRUSTEE SH. JOGINDER SINGH AULAKH AND ONE OF THE TRU STEE DR. SUKHMANPREET KAUR AULAKH, RUNS CLINIC IN THE HOSPITAL NAMELY SH. UJJAGAR SIGH AULAKH, HOSPITAL SINCE FINANCIAL YEAR: 2013-14, ITA NO.364/ASR/2017 UJJAGAR SINGH AULAKH MEMORIAL TRUST VS. CIT(E) 3 HOWEVER, THE TRUST WAS CREATED LATER ON 1 ST APRIL, 2015 AND IT WAS CLAIMED PRIMARILY TO BE ARRANGING FUNDS FOR THE PAYM ENTS TO THE SPECIALIST DOCTOR VISITING THE HOSPITAL. ALTHOUGH, THE AP PLICANT SUBMITTED COPES OF LETTERS RECEIVED FROM VARIOUS DOCTORS FO R REIMBURSEMENT OF VISITING FEES TO THE AFORESAID HOSPITAL DURING THE YEAR: 2016-17 TILL 10.02.2017, HOWEVER, IT WAS O BSERVED BY THE LD. CIT(E) THAT ALL THE THIRTY TWO LETTERS ARE HANDWRITTEN BY THE SAME PERSON AND IS SEVERALLY DATED FROM 13 TH APRIL, 2016 TO 10 TH FEBRUARY, 2017 WHICH CLEARLY SHOWS THAT THE LETTERS HA VE BEEN FRAMED TO COVER THE SPECIFIC QUERIES RAISED ON THE RELATIONSHIP BETWEEN THE APPLICANT TRUST AND HOSPITAL BECAUSE NO OTHER EVIDENCE IN SUPPORT OF THE CLAIM HAS BEEN SUBMITTE D. SIMILARLY SELF-GENERATED LETTERS HAVE BEEN SUBMITTED B Y THE APPLICANT TRUST FOR THE YEAR 2015-16 DETAILING LIST O F PATIENTS, WHO GOT TREATED IN THE HOSPITAL. IT WAS FURTHER OBSER VED BY THE LD. CIT(E) THAT ALTHOUGH THE AFORESAID ASPECTS HAVE NO T BEEN EVIDENCED BY FURTHER CONFIRMATIONS FROM THE BENEFICIA RIES OR THE DOCTORS. FINALLY, IT WAS OBSERVED BY THE LD. CIT(E), T HAT IT IS ESTABLISHED THAT THERE IS AN INTRICATE LINK BETWEEN TH E APPLICANT TRUST AND THE HOSPITAL WHICH IS BEING RUN SEPARATELY ON COMMERCIAL BASIS, ADMITTEDLY NOT HAVING ANY EXEMPTION AND THE EVIDENCE IN RESPECT OF FEES GIVEN TO THE TRUST AND FREE TREATMENTS ARE SELF-GENERATED AND NOT CONFIRMED BY ANY WAY BY BO TH THE BENEFICIARIES OF THE TRUST OR THE DOCTORS, WHICH SEEMS TO B E A METHOD TO CREATE GOODWILL FOR THE HOSPITAL WHICH IS IN THE INITIAL STAGES AND RUN BY THE TRUSTEES SEPARATELY INCLUDING THE ITA NO.364/ASR/2017 UJJAGAR SINGH AULAKH MEMORIAL TRUST VS. CIT(E) 4 DAUGHTER DR. SUKHMANPREET KAUR AULAKH WHO IS A DENTA L SURGEON. FINALLY THE LD. CIT(E) REJECTED THE REGISTRAT ION U/S 12AA OF THE ACT IN VIEW OF THE FACT THAT NEITHER THE OBJE CTS HAVE BEEN PURSUED NOR THE ACTIVITIES OF THE TRUST GET CORROBORAT ED. 4. THE APPELLANT TRUST ON FEELING AGGRIEVED, FILED T HE INSTANT APPEAL AND IN SUPPORT ITS CASE NOT ONLY ARGUED AT LENGT H BUT ALSO DRAWN OUR ATTENTION TO VARIOUS DOCUMENTS ALREADY FILED BEFORE LD. CIT(E). ON THE CONTRARY LD CIT(DR) VEHEMENTLY AR GUED IN FAVOUR OF THE IMPUGNED ORDER AS SPECIFICALLY SUBMITTED T HAT ORDER UNDER CHALLENGE DOES NOT SUFFERS FROM ANY ILLEGALITY, P ERVERSITY AND IMPROPRIETY , THEREFORE DOES NOT REQUIRES ANY INT ERFERENCE BY THIS COURT. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD, WHICH INCLUDES DETAILS OF VISITING FEES PAID THROU GH CHEQUES TO DIFFERENT SPECIALIST DOCTORS DURING THE FINANC IAL YEAR 2015-16, WHICH IS NOT IN CONTROVERSY AND LIST OF THE PA TIENT ALSO SUPPORTS THE ASSESSEE CASE THAT THE POOR PATIENTS ARE BEING TREATED AT THE HOSPITAL, THEREFORE WE HAVE FAILED TO UNDERSTAND AS TO WHAT EVIDENCES, THE LD. CIT(E) REQUIRED FOR FURT HER CONFIRMATION FROM THE BENEFICIARIES OF THE TRUST. IN THE INSTANT CASE, THE OBJECTS OF THE TRUST ARE NOT I N CONTROVERSY WHICH IS FIRST CONSIDERATION FOR GRANT OF REGI STRATION U/S 12AA OF THE ACT. SECONDLY, THE TRUST IS AT NASCENT STA GE AND DURING THE FINANCIAL YEAR 2015-16 HAVING RECEIVED DO NATION TO ITA NO.364/ASR/2017 UJJAGAR SINGH AULAKH MEMORIAL TRUST VS. CIT(E) 5 THE EXTENT OF RS. 1,12,000/- ONLY AND MAXIMUM OF (RS. 1,03,250/-), WHICH HAS ALREADY BEEN UTILIZED FOR THE CHARITABLE PURPOSES AS IT REFLECTS FROM THE VISITING FEES PAID TO T HE VARIOUS DOCTORS FOR GIVING FREE CONSULTATIONS/TREATMENTS, WHICH EVEN OTHERWISE NOT REFUTED BY THE REVENUE DEPARTMENT AND AFORESAID FACTS FAVOURS THE PURSUING OF OBJECTS . CONSIDERING THE F ACTS AND CIRCUMSTANCES THAT THE APPLICANT TRUST HAS BEEN FORMED ON LY FIRST DAY OF APRIL, 2015 WHICH CERTAINLY AT THE NASCENT STAGE AND APPLICATION FOR REGISTRATION U/S 12AA WAS FILED ON 26. 09.2016 AND THE ASSESSEE TRUST DO NOT HAVE MUCH FUND AT THE INITIAL ST AGE TO PURSUE ITS OBJECTIONS, HOWEVER, FROM THE RECORDS AVAILABL E IN FILE, WE DO NOT HAVE ANY HESITATION TO SAY THAT THE SOME OF THE STATED OBJECT VIS-A-VIS TREATMENT FOR POOR AND WEAKER SECTIONS OF THE SOCIETY, IRRESPECTIVE OF THEIR CASTE OR CREED AND RELIGION , HAVE ALREADY BEEN PERSUADED BY THE APPLICANT TRUST, THERE FORE, THE MAIN REASON FOR REJECTION OF THE REGISTRATION AS GIVEN BY THE LD. CIT(E) THAT NEITHER THE OBJECTS ARE SEEMS TO HAVE BEEN PERSUADED NOR THE ACTIVITIES OF THE TRUST GOT CORROBORA TED, HAVING NO SUBSTANCE AND CAN NOT BE CONSIDERED AS LOGICAL REASONING AND HENCE THE ORDER IMPUGNED HEREIN IS PERVERSE, IMPROPE R AND ILLOGICAL AND LIABLE TO BE SET ASIDE. ON THE AFORESAID CONSIDERATION AND OBSERVATION, WE SET THE ORDER PASSED BY THE LD. CIT(A) AND DIRECT THE LD. CIT( E) TO GRANT REGISTRATION U/S 12AA OF THE ACT TO THE APPELLANT SO CIETY, HENCEFORTH, HOWEVER, THE GRANT OF REGISTRATION CAN BE SUBJECTED ITA NO.364/ASR/2017 UJJAGAR SINGH AULAKH MEMORIAL TRUST VS. CIT(E) 6 TO CONDITION, IF ANY, WHICH THE LD. CIT(E) DEEMS FIT A ND PROPER UNDER THE LAW. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.04.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 12.04.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S UJJAGAR SINGH AULAKH MEMORIAL TRUST, MALERKO TLA (2) THE CIT(EXEMPTION), CHANDIGARH (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER