BIOMEDICAL FOUNDATION OF INDIA, MUMBAI V. DIT (E), MUMBAI

ITA 4420/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8639 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-09-2012
• Assessment Year: misc
• Appeal Filed On: 01-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURINDER JIT SINGH
• Assessee Lawyers: JITENDERA B SANGHVI
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI RAJENDRA (ACCOUNTANT MEMBER) ITA NO.4420/MUM/2011 BIOMEDICAL FOUNDATION OF INDIA, READYMNEY MANSION, 3 RD FLOOR, 43, VEER NARIMAN ROAD, MUMBAI-01 PA NO.AAECB 1972 H DIT (E), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-12 (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI JITENDERA B SANGHVI RESPONDENT BY: SHRI SURINDER JIT SINGH DATE OF HEARING: 27 .9.2012 DATE OF PRONOUNCEMENT: 10 .10.2012 ORDER PER B.R.MITTAL, JM: THE ASSESSEE HAS FILED THIS APPEAL AGAINST ORDER D ATED 16.3.2011 OF THE DIRECTOR OF INCOME TAX (EXEMPTION), MUMBAI DISPUTING THE REF USAL OF REGISTRATION UNDER SECTION 12A OF THE ACT . 2. THE ASSESSEE IS INCORPORATED AS A COMPANY UNDER SECTION 25 OF THE COMPANIES ACT ON 19.7.2010. AS PER ITS OBJECT CLAUSE, IT IS TO PROMOTE AND FACILITATE BIOMEDICAL AND HEALTH SCIENCES EDUCATION, BASIC AND CLINICAL RESEA RCH OPPORTUNITIES, AND OTHER HEALTH CARE-RELATED DELIVERY OPPORTUNITIES AT THE UNIVERSI TY OF ROCHESTER AND THE UNIVERSITY OF ROCHESTER MEDICAL CENTER FOR INDIAN STUDENTS, RESEA RCHERS, AND FACULTY MEMBERS OF KEY INDIAN ACADEMIC AND CLINICAL INSTITUTIONS. IT IS S TATED THAT IN PURSUANCE OF AFORESAID OBJECTIVE, ASSESSEE HAS CARRIED OUT THE FOLLOWING A CTIVITIES I.E. TO COLLECT, PROCESS AND ANALYSIS THE INFORMATION REGARDING EDUCATION PROVID ED BY VARIOUS MEDICAL COLLEGES IN INDIA AND RESEARCH WORK CARRIED OUT BY THEM IN INDI A. ASSESSEE FILED AN APPLICATION IN FORM NO.10A ON 21.9.2010 FOR REGISTRATION UNDER SEC TION 12A OF THE ACT. THE DIT (EXEMPTION) REJECTED THE REGISTRATION UNDER SECTION 12A OF THE ACT ON THE GROUND THAT ASSESSEE HAS NOT CARRIED OUT ANY ACTIVITY SO FAR, W HICH WOULD ENABLE THE COMPETENT ITA NO.4420/MUM/2011 2 AUTHORITY TO LOOK INTO WHETHER THE ACTIVITIES CARRI ED OUT ARE GENUINE AND ARE IN ACCORDANCE WITH THE OBJECTS FOR WHICH THE TRUST HAS BEEN CREATED. THEREFORE, IT IS CONSIDERED THAT THE APPLICATION FOR GRANT OF REGIST RATION IS PRE-MATURE. IT IS FURTHER STATED THAT ASSESSEE HAS NOT COMPLIED WITH THE REQU IREMENTS NECESSARY FOR REGISTRATION U/S.12A OF THE ACT. HENCE, THIS APPEAL BY THE ASSE SSEE. 3. DURING THE COURSE OF HEARING, IT WAS CONTENDED T HAT ASSESSEE HAS BEEN INCORPORATED TO PROMOTE BIOMEDICAL EDUCATION IN IND IA. LD A.R. RELYING ON THE DECISION OF HONBLE KARNATAK HIGH COURT IN THE CASE OF DIREC TOR OF INCOME TAX (EXEMPTIONS) VS MEENAKSHI AMMA ENDOWMENT TRUST, 50 DTR (KAR) 243 SU BMITTED THAT WHEN THE TRUST WAS JUST FORMED, IT CANNOT BE EXPECTED TO CARRY OUT CHARITABLE ACTIVITIES IMMEDIATELY AND THE CONCERNED AUTHORITY COULD NOT COME TO THE CONCL USION THAT THE TRUST WAS NOT INTENDING TO DO ANY CHARITABLE ACTIVITY. IN SUCH A SITUATION, THE OBJECTS OF THE TRUST HAVE TO BE TAKEN INTO CONSIDERATION BY THE AUTHORITIES. FURTHER, THE ACTIVITIES OF THE TRUST HAVE TO BE CONSIDERED IF SUCH REGISTRATION IS SOUGHT LON G AFTER THE FORMATION OF THE TRUST OR AFTER THE EXPIRY OF THE EARLIER REGISTRATION. ACCO RDINGLY, IT WAS HELD THAT THE TRIBUNAL WAS JUSTIFIED IN DIRECTING DIT (E) TO GRANT IF OTHER CO NDITIONS ARE SATISFIED. LD A.R SUBMITTED THAT REJECTION OF THE APPLICATION OF THE ASSESSEE F OR REGISTRATION UNDER SECTION 12A IS NOT JUSTIFIED. 4. ON THE OTHER HAND, LD D.R. RELIED ON ORDER OF DI T(EXEMPTIONS). 5. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTAT IVES OF PARTIES AND ORDER OF DIT (EXEMPTION). 6. THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE HA S BEEN REGISTERED UNDER SECTION 25 OF THE COMPANIES ACT. ASSESSEE HAS MADE AN APPL ICATION FOR REGISTRATION IN THE PRESCRIBED FORM AND IN THE PRESCRIBED MANNER FOR GR ANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. THERE IS NO DISPUTE TO THE FACT THAT U NDER SECTION 12AA OF THE ACT, THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGI STRATION OF A TRUST OR INSTITUTION MADE U/S 12A, SHALL CALL FOR SUCH DOCUMENTS OR INFORMATI ON FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH ENQUIRI ES AS HE MAY DEEM NECESSARY IN THIS BEHALF, AND AFTER SATISFYING HIMSELF ABOUT THE OBJE CTS OF THE TRUST OR INSTITUTION AND THE ITA NO.4420/MUM/2011 3 GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORD ER IN WRITING REGISTERING THE TRUST OR INSTITUTION, OR SHALL, IF HE IS NOT SO SATISFIED, P ASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT. 7. IN THE LIGHT OF THE CONDITIONS SPECIFIED U/S 12 AA FOR GRANTING REGISTRATION TO THE TRUST OR INSTITUTION, WE HAVE TO SEE THE OBJECT OF THE PRESENT INSTITUTION AND GENUINENESS OF ITS ACTIVITIES. THE ASSESSEE IS REGISTERED U/S 2 5 OF THE COMPANIES ACT, 1956. SUB- SEC.(1) OF SEC. 25 OF THE COMPANIES ACT, 1956, PRO VIDES THAT WHERE IT IS PROVED TO THE SATISFACTION OF THE CENTRAL GOVERNMENT THAT AN ASSO CIATION IS ABOUT TO BE FORMED AS A LIMITED COMPANY FOR PROMOTING COMMERCE, ART, SCIENC E, RELIGION, CHARITY OR ANY OTHER USEFUL OBJECT, AND INTENDS TO APPLY ITS PROFITS, IF ANY, OR OTHER INCOME IN PROMOTING ITS OBJECTS, AND TO PROHIBIT THE PAYMENT OF ANY DIVIDEN D TO ITS MEMBERS, THE CENTRAL GOVERNMENT MAY, BY LICENCE, DIRECT THAT THE ASSOCIA TION MAY BE REGISTERED AS A COMPANY WITH LIMITED LIABILITY WITHOUT THE ADDITION TO ITS NAME OF THE WORD LIMITED OR THE WORDS PRIVATE LIMITED. IN THAT EVENT, THE ASS OCIATION MAY BE REGISTERED ACCORDINGLY, AND ON REGISTRATION, THE ASSOCIATION S HALL ENJOY ALL THE PRIVILEGES, AND (SUBJECT TO THE PROVISION OF SEC. 25 OF THE COMPANI ES ACT) BE SUBJECT TO ALL THE OBLIGATIONS, OF LIMITED COMPANIES. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE CENTRAL GOVERNMENT HAS DIRECTED THAT THE ASSESSEE A SSOCIATION IS TO BE REGISTERED AS A COMPANY WITH LIMITED LIABILITY. IT IS THUS PROVED T HAT THIS ASSOCIATION HAS BEEN FORMED AS A LIMITED COMPANY FOR PROMOTING COMMERCE, ART, SCIE NCE, RELIGION, CHARITY OR ANY OTHER USEFUL OBJECTS AND IT INTENDED TO APPLY ITS PROFIT IF ANY, OR OTHER INCOME, IN PROMOTING THE AFORESAID OBJECTS. ASSESSEE IS ALSO PROHIBITED FROM MAKING PAYMENT OF ANY DIVIDEND TO ITS MEMBERS. THEREFORE, PRIMA FACIE , ASSESSEE ASSOCIATION REGISTERED AS A LIMITED COMPANY UNDER SEC. 25 OF THE COMPANIES ACT, HAS BEE N FORMED FOR CHARITY OR ANY OTHER USEFUL OBJECT AS SO PROVIDED UNDER SEC 25(1) OF THE COMPANIES ACT. 8. THE ONLY QUESTION ARISES AS TO WHETHER ASSESSEE CAN BE CONSIDERED TO BE ELIGIBLE FOR REGISTRATION UNDER SECTION 12A OF THE ACT. 9. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA) HAS HELD THAT WHEN THE TRUST WAS JUS T FORMED, IT CANNOT BE EXPECTED TO CARRY OUT CHARITABLE ACTIVITIES IMMEDIATELY AND THE CONCERNED AUTHORITY WHILE CONSIDERING FOR REGISTRATION U/S.12A OF THE ACT HAS TO CONSIDER WHETHER ITS OBJECTS OR ITS ITA NO.4420/MUM/2011 4 ACTIVITIES FOR WHICH IT IS FORMED ARE CHARITABLE OR NOT. THE HONBLE ALLAHABAD HIGH COURT ALSO CONSIDERED SIMILAR ISSUE IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY V. COMMISSIONER OF INCOME-TAX, 185 ITR 634 (ALL), WHEREIN, IT WAS HELD THAT REGISTRATION UNDER SECTION 12A OF THE ACT IS A PRE- CONDITION FOR AVAILING OF BENEFIT UNDER SECTIONS 11 AND 12 OF THE ACT. THEREFORE, AT THE T IME OF REGISTRATION, THE COMMISSIONER IS NOT REQUIRED TO EXAMINE APPLICATION OF INCOME OF TRUST. ALL THAT HE MAY EXAMINE WHETHER OBJECTS OF TRUST ARE CHARITABLE OR NOT?. I T WAS ALSO LAID DOWN THAT IT IS NOT THE REQUIREMENTS OF SECTION 12A OF THE ACT THAT ANY ACT IVITY SHOULD BE CARRIED ON BY CHARITABLE SOCIETY FOR OBTAINING REGISTRATION. 10. CONSIDERING THE REASONS GIVEN BY DIT (EXEMPTION S) IN THE CASE BEFORE US AND IN THE LIGHT OF THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA) AND ALSO DECISION OF HONBL E ALLAHABAD HIGH COURT IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY (SUPRA), WE H OLD THAT REFUSAL OF REGISTRATION U/S.12A OF THE ACT BY DIT (EXEMPTION) IS NOT JUSTI FIED. THEREFORE, WE DIRECT THAT THE ASSESSEE BE REGISTERED UNDER SECTION 12A OF THE ACT BECAUSE MERELY BY REGISTRATION U/S.12A OF THE ACT, ASSESSEE DOES NOT BECOME ENTITL E TO GET EXEMPTION U/S.11 AND 12 OF THE ACT. MOREOVER, IF THE ASSESSEE DOES NOT CARRY OUT ACTIVITIES AS PER ITS OBJECT CLAUSE OR THE ACTIVITIES ARE NOT GENUINE AND CHARITABLE IN NATURE, SECTION ITSELF PROVIDES THAT DIT CAN CANCEL REGISTRATION AFTER DUE OPPORTUNITY OF HE ARING TO THE ASSESSEE. HENCE, IN THE FACTS OF THE CASE, WE DIRECT THE DIT (EXEMPTION) TO GRANT REGISTRATION TO THE ASSESSEE. ACCORDINGLY, GROUNDS OF APPEAL TAKEN BY ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2012 SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 10 TH OCTOBER, 2012 PARIDA ITA NO.4420/MUM/2011 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. ITO(HQ) EXEMPTION, MUMBAI 4. DEPARTMENTAL REPRESENTATIVE, BENCH B MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI