M/s. Divine Health Services Fondation, Amritsar. V. The Commissioner of Income tax-II, Amritsar.

ITA 417/ASR/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60672 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-05-2012
• Assessment Year: 2010-2011
• Appeal Filed On: 06-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: SSH PADAM BAHL; G S GROVER
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 417(ASR)/2010 ASSESSMENT YEAR:2010-11 PAN :AABTD4087F M/S. DIVINE HEALTH SERVICES VS THE COMMISSIONER OF INCOME TAX-II, FOUNDATION, AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH. PADAM BAHL, CA & G.S. GROVER,ADV OCATE RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING:29/05/2012 DATE OF PRONOUNCEMENT:07/06/2012 ORDER PER BENCH ; THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER OF LD. COMMISSIONER OF INCOME TAX-II, AMRITSAR, DAT ED 21/23-09-2010. 2. THE ASSESSEE HAS FILED AN APPLICATION UNDER SECT ION 12A(1)(AA) IN FORM NO.10A ALONGWITH PHOTOCOPY OF TRUST DEED FOR G RANT OF REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 ON 3 1.03.2010 TO THE COMMISSIONER OF INCOME TAX II, AMRITSAR. THE LD. C IT-II, AMRITSAR, CALLED FOR REPORT FROM THE ITO WARD 4(1), AMRITSAR ON THE GENUINENESS OF ITA NO.417(ASR)/2010 2 THE OBJECTS AND ACTIVITIES OF THE ASSESSEE-TRUST. I N RESPONSE TO THE SAME, THE ITO WARD 4(1), SUBMITTED HIS DETAIL INQUIRY REPORT DATED 16/21-07-2010, IN WHICH HE HAS NOT RECOMMENDED FOR GRANT OF REGISTRAT ION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE-TRUST. THE LD. CIT-II, A MRITSAR, PROVIDED THE OPPORTUNITY TO THE ASSESSEE BY FIXING THE HEARING F OR 11.08.2010. IN RESPONSE TO THE SAME, THE AUTHORISED REPRESENTATIVE OF THE A SSESSEE APPEARED FROM TIME TO TIME AND ALSO FILED VARIOUS DOCUMENTARY EVI DENCE AS MENTIONED BY THE LD. CIT-II, AMRITSAR IN PARA 2 (PAGE 1) OF HIS ORDER. AFTER PERUSING THE CONTENTS OF APPLICATION AS WELL AS DOCUMENTARY EVID ENCE FURNISHED BY THE ASSESSEE ALONGWITH REPORT OF THE ITO WARD-4(1), AMR ITSAR, THE LD. CIT-II FINALLY HELD THAT THE ASSESSEE-TRUST IS JUST A FAMI LY TRUST OF TWO PROFESSIONALS WHO ARE IN THE LINE OF MEDICAL AND HEALTH PROFESSIO N. AS PER THE MAIN AIMS AND OBJECTS OF THE ASSESSEE-TRUST, IT SEEMS THAT TH ESE MEDICAL PROFESSIONAL TRUSTEES WANT TO RUN PROFESSIONAL INSTITUTION OF HE ALTH AND MEDICAL EDUCATION AND IN ORDER TO GIVE IT A FACE OF CHARITY, THE TRUS T HAS BEEN CREATED WITH THE INTENTION TO FIRST GET IT REGISTERED AS A CHARITABL E TRUST U/S 12AA OF THE ACT. HE FINALLY OPINED THAT THE ASSESSEE TRUST IS UNABLE TO SATISFY OR TO CONVINCE HIM FOR ITS CHARITABLE FACE. THEREFORE, THE ASSESSE E-TRUST IS NOT ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT AND REJE CTED THE APPLICATION FILED BY THE ASSESSEE VIDE IMPUGNED ORDER DATED 21/23-09- 2010. ITA NO.417(ASR)/2010 3 3. AGGRIEVED BY THE IMPUGNED ORDER OF THE LD. CIT-I I, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THIS BENCH. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SH. PADAM BAHL, CA, STATE D THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT-II IS AGAINST THE LAW A ND FACTS ON THE FILE AND LIABLE TO BE CANCELLED BECAUSE THE LD. CIT-II, AMRI TSAR, HAS EXCEEDED HIS JURISDICTION FOR EXAMINING THE APPLICATION OF INCOM E FOR CHARITABLE PURPOSE, WHICH CAN BE EXAMINED AT THE STAGE WHEN THE TRUST F ILES ITS RETURN. HE FURTHER STATED THAT IF THE OBJECTS OF THE TRUST ARE NOT FOU ND CHARITABLE OR THE ACTIVITIES OF THE TRUST ARE NOT ACCORDING TO THE AIMS AND OBJE CTS OF THE TRUST OR NOT GENUINE THEN THE LD. CIT-II, AMRITSAR, CAN CANCEL T HE REGISTRATION GRANTED TO THE ASSESSEE. HE FURTHER STATED THAT THE ASSESSEE H AS FILED ALL NECESSARY REQUIRED DOCUMENTARY EVIDENCE BEFORE THE LD. CIT-II , AMRITSAR, WHICH HAS NOT BEEN THOROUGHLY APPRECIATED BY HIM. HE HAS ALSO FILED INCOME TAX RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2011-12 ALONGWITH RENT DEED AND STATEMENT OF ACCOUNT FOR THE YEAR ENDING 3 1.03.2011 ALONGWITH COMPUTATION OF INCOME TO SUPPORT HIS ARGUMENTS. HE FINALLY REQUESTED THAT THE ASSESSEE IS ENTITLED FOR GRANT OF REGISTRATION U/S 12AA OF THE ACT AND REQUESTED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE ACCEPTED AND DIRECTION BE ISSUED TO THE LD. CIT-II, AMRITSAR TO GRANT REGI STRATION AS REQUESTED BY THE ASSESSEE. HE ALSO PLACED RELIANCE ON THE FOLLOWING CASE LAWS: ITA NO.417(ASR)/2010 4 I) COMMISSIONER OF INCOME TAX VS. SURYA EDUCATIONAL & CHARITABLE TRUST 203 TAXMAN 53 (P&H) II) NEW LIFE ON CHRIST EVANGELISTIC ASSOCIATION VS. CIT 246 ITR 532 (MAD) III) MEDICAL ACCIDENT PREVENTION SOCIETY VS. CIT 278 ITR 165 (KER.) IV) DIRECTOR OF INCOME TAX (EXEMPTIONS) VS. MEENAKSHI A MMA ENDOWMENT TRUST 50 DTR (KAR) 243. V) CIT VS. RED ROSE SCHOOL 163 TAXMAN 19 (ALL) VI) CIT VS. LUCKNOW EDUCATION & SOCIAL WELFARE SOCIETY 340 ITR 86 (ALL) VII) FIFTH GENERATION EDUCATION SOCIETY VS. CIT 185 ITR 634 (ALL) 4. ON THE CONTRARY, THE LD. DR, SH. AMRIK CHAND, RE LIED UPON THE ORDER PASSED BY THE LD. CIT-II, AMRITSAR. HE STATED THAT THE LD. CIT-II HAS PASSED A WELL REASONED ORDER AFTER PERUSING THE EVIDENCE F ILED BY THE ASSESSEE AND FINALLY FOUND THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND HAS RIGHTLY REJECTED THE APPLICATION FILED BY THE ASSESSEE FOR GRANT OF REGISTRATION. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIALS AVAILABLE WITH US. WE ARE OF THE VIEW THAT THERE IS A FORCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE BECAUS E FOR GRANTING REGISTRATION UNDER SECTION 12AA BY THE LD. CIT-II, AMRITSAR, THE SCOPE OF INQUIRY BY HIM IS ONLY TO EXAMINE THE GENUINENESS OF THE OBJECTS O F THE TRUST AND NOT APPLICATION OF INCOME FOR CHARITABLE PURPOSE, WHICH CAN BE EXAMINED AT THE STAGE WHEN THE TRUST FILES ITS RETURN. IT IS ALSO A N ADMITTED FACT THAT IN VIEW OF SUB SECTION (3) OF SECTION12AA WHICH EMPOWERS THE L D. CIT TO CANCEL REGISTRATION OF THE TRUST OR INSTITUTION, IF THE LD . CIT IS SATISFIED THAT THE ITA NO.417(ASR)/2010 5 ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE OR NOT CARRIED OUT IN ACCORDANCE WITH THE AIMS AND OBJECTS OF THE TRUST O R INSTITUTION. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SURYA E DUCATIONAL & CHARITABLE TRUST 203 TAXMAN 53 (P&H). THE HONBLE ALLAHABAD HIGH COURT (LUCKNOW BENCH) IN THE CASE OF COMMISSIONER OF INCOME TAX VS. LUCKNOW EDUCATION AND SOCIAL WELFARE SOCIETY [2012] 340 ITR 86 HAS ALSO HELD THAT THE TESTS FOR REGISTRATION WHICH HAVE TO BE APPLIED ARE (I) WHETHER THE ACTIVITIES OF THE SOCIETY ARE GENUINE, AND (II) WHETHER THE PURPOSE OF THE SOCIETY IS CHARITABLE. WE ARE OF THE CONSIDERED VIE W THAT THE ASSESSEE HAD SATISFIED THE CONDITIONS FOR REGISTRATION UNDER SEC TION 12AA OF THE INCOME- TAX ACT, 1961 BECAUSE THE ACTIVITIES OF THE ASSESSE E3-TRUST ARE GENUINE AND PURPOSE OF THE ASSESSEE-TRUST IS CHARITABLE. AS PER AIMS AND OBJECTS MENTIONED IN THE TRUST DEED, WHICH HAVE BEEN REPR ODUCED BY THE LD. CIT-II, AMRITSAR, IN THE IMPUGNED ORDER IN PARA 3 (PAGES 2 & 3, THE LD. CIT-II, AMRITSAR, HAS PASSED THE IMPUGNED ORDER CONTRARY TO THE REVISION OF SECTION 12AA, WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW. AFTER PERUSING THE COPY OF AUDITED ACCOUNTS FOR THE YEAR ENDING 31.03.2010, NOTES ON ACTIVITIES OF THE TRUST FILED BEFORE LD. CIT, LETTER DATED 28.08.2010 FILED WITH CIT AT THE TIME OF HEARING U/S 12AA, COY OF PAMPHLETS FILED WITH CI T, COPY OF RENT DEED ITA NO.417(ASR)/2010 6 DATED 13.04.2010 FILED WITH THE WORTHY CIT AS WELL AS OTHER DOCUMENTARY EVIDENCE SUPPORTING THE CLAIM OF THE ASSESSEE, WE A RE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR GRANT OF REGISTRATION UNDE R SECTION 12AA OF THE ACT. IN VIEW OF THE ABOVE DISCUSSIONS, WE CANCEL THE IMP UGNED ORDER PASSED BY THE LD. CIT-II, AMRITSAR AND DIRECT HIM TO GRANT RE GISTRATION TO THE ASSESSEE- TRUST WITHOUT ANY FURTHER DELAY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.417(ASR)/2010 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH JUNE, 2012 SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH JUNE, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. DIVINE HEALTH SERVICES FOUNDATIO N, AMRITSAR. 2. THE CIT-II, AMRITSAR. 3. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.