The Medically Aware and Responsible Citizen of Hyderabad, Hyderabad V. DIT (E), Hyderabad

ITA 601/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69926 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 601/HYD/2013 THE MEDICALLY AWARE AND RESPONSIBLE CITIZEN OF HYDERABAD, HYDERABAD. PAN AAATT4042P VS. DIRECTOR OF INCOME-TAX (EXEMPTIONS), HYDERABAD. APPELLANT RESPONDENT APPELLANT BY: SRI S. RAMA RAO RESPONDENT BY: SRI P. SOMA SEKHAR REDDY DATE OF HEARING: 13/11/2013 DATE OF PRONOUNCEMENT: 13/11/2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE DIT(EXEMPTIONS), HYDERABAD DATED 08/02/2013. 2. THE ASSESSEE HAS RAISED 5 GROUNDS OF APPEAL, THE SUM AND SUBSTANCE OF WHICH IS WITH REGARD TO NON-GRANTI NG OF APPROVAL U/S 80G OF THE IT ACT. 3. BRIEFLY, THE FACTS RELATING TO THE ISSUE ARE THA T ON AN EARLIER OCCASION, ASSESSEE APPLIED FOR 80G APPROVAL VIDE ITS APPLICATION DATED 30/05/2011, WHICH WAS REJECTED BY THE DIT(E). THE ASSESSEE CAME IN APPEAL BEFORE THE TRIB UNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 11/07/2012 IN ITA NO. 15/HYD/2012 SET ASIDE THE ISSUE TO THE FILE OF THE DIT(E) DIRECTING FOR FRESH ADJUDICATION OF THE SAME BY OBS ERVING VIDE PARA 5 OF ITS ORDER, AS UNDER: I.T.A. NO. 601/HYD/2013 THE MEDICALLY AWARE AND RESPONSIBLE CITIZEN OF HYD ERABAD ==================== 2 'WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDER S OF THE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. IT IS EVIDENT FROM THE IMPUGNED ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTION) THAT MAIN REASON OF THE DIRECTOR OF INCOME-TAX (EXEMPTION) FOR NOT GRANTING APPROVAL UNDER SECTION 8 OG OF THE ACT IS THE INABILITY OF THE ASSESSEE TO FURNISH EITHER IN ORIQINAL OR COPY THEREOF OF THE ORDER PASSED BY HIM GRANTING REGISTRATION TO THE ASSESSEE UNDER SECTION 12A OF THE ACT. IT APPEARS T HAT THE APPLICATION OF THE A SSESSEE FOR REGISTRATION UNDER 5.12A OF THE ACT WAS NOT DISPOSED OFF AT THE RELEVA NT OF TIME. THAT BEING SO, SINCE THE GRANTING OF REGISTRA TION UNDER SECTION 12A ACT HAS A BEARING ON THE APPROVAL BEING GRANTED TO THE ASSESSEE UNDER SECTION 80G OF THE ACT, THE DIRECTOR OF INCOME-TAX (EXEMPTION) , IS NOT JUSTIFIED DISPOSING OFF THE ASSESSEE'S APPLICATION FOR APPROVAL UNDER SECTION 8 OG OF THE ACT, DURING THE PENDENCY OF THE APPLICATION FOR REGISTRATION UNDER SECTION 12A ACT. IN THE CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER OF THE OIL OF INCOME-TAX (EXEMPTION) AND RESTORE THE MATTER TO HIS FILE FOR CONSIDERATION AN D DISPOSAL OF THE ASSESSEE'S APPLICATION FOR APPROVAL 5.80G OF THE ACT, IN ACCORDANCE WITH LAW AND AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE, AND AFTER T AKING INTO ACCOUNT THE DECISION OF THE DIRECTOR OF INCOME -TAX (EXEMPTION) ON THE APPLICATION OF THE ASSESSEE FOR REGISTRATION UNDER 5.12A OF THE ACT, VIDE THE PROCE EDINGS DATED 28-7-1999 WITH EFFECT FROM 18-9-1997. ACCORDINGLY, THE MATTER WAS REHEARD BY THE LEARNED DIT(E) AND THE DIT(E) REFUSED TO GRANT APPROVAL U/S 80G(5)(VI) OF THE ACT ON THE GROUND THAT THE ASSESSEE DOES NOT SATISFY TH E CONDITION STIPULATED IN CLAUSE (IV) TO SUB-SECTION (5) TO SEC TION 80G OF THE ACT. THE RELEVANT FINDINGS OF THE DIT(E) ARE AS UNDER: 3.1 AS SEEN FROM THE SUBMISSIONS OF THE ASSESSEE A ND ALSO NOTICED DURING THE PROCEEDINGS, IT IS ONLY HOL DING MEETINGS IN SUCH A STAR HOTEL IE., TAJ BANJARA, HYD ERABAD, MOSTLY ATTENDED BY MEDICAL PROFESSIONALS AND A FEW REPRESENTATIVES FROM PHARMACEUTICAL AND OTHER ALLIE D INDUSTRIES, HAVING LINK WITH MEDICAL FIELD AND HEAL THCARE. THUS, AS MAY BE NOTICED, THE ASSESSEE SOCIETY, IN T HE INSTANT CASE, IS ONLY MEANT FOR THE MEDICAL PROFESS IONALS AND THE PHARMACEUTICAL INDUSTRIES. FURTHER, IT APPE ARS THAT SUCH MEETINGS ARE MOSTLY ATTENDED BY THE PERSONS AN D REPRESENTATIVES FROM HOSPITALS AND OTHER INSTITUTIO NS, WHO I.T.A. NO. 601/HYD/2013 THE MEDICALLY AWARE AND RESPONSIBLE CITIZEN OF HYD ERABAD ==================== 3 ARE MEMBERS OF THE SOCIETY. THE SOCIETY HAS NO INTE RFACE WITH THE PUBLIC AT LARGE. UNDER THESE CIRCUMSTANCES , IT CANNOT BE SAID THAT THE ASSESSEE SOCIETY IS MEANT F OR THE BENEFIT OF PUBLIC AT LARGE, NOTWITHSTANDING THE CON TENTION THAT UNIVERSAL HEALTH COVERAGE IS DESIGNED WITH INI TIATIVE OF MARCH. FURTHER, ACTIVITY IN THAT REGARD THAT IS INITIATIVE UNDERTAKEN BY MARCH FOR FORMULATING SUCH SCHEME OF UNIVERSAL HEALTH COVERAGE IS NOT EVIDENT FROM THE ACCOUNT STATEMENT IE., INCOME & EXPENDITURE ACCOUNT OF THE ASSESSEE SOCIETY. SO FAR AS THE CONTENTION OF REDUCTION IN COST OF DIAGNOSTIC TESTS, REDUCTION IN EXPENDITURE ON VITAMINS / MINERALS BY DECIDING NOT TO PAY REFERRAL PAYMENTS TO REFERRAL DOCTORS FOLLOWING ADV ICE TO REDUCE HAEMOGLOBIN STANDARD AND SUGGESTION FOR MINIMUM INVASIVE SURGERY ETC. ARE CONCERNED, NO EVIDENCE HAS BEEN FURNISHED TO DEMONSTRATE SUCH CLA IM THAT THE EFFORT OF THE SOCIETY HAS RESULTED IN BENE FIT TO PUBLIC AT LARGE. IN FACT, AS NOTICED, THE SAME ARE ONLY IN THE NATURE OF ADVICES GIVEN TO THE PARTICIPANTS IN SUCH MEETINGS. 3.2 FURTHER, AS SEEN FROM THE ACCOUNTS OF THE ASSES SEE, THE SAME ARE NOT RELIABLE. DURING THE COURSE OF HEA RING, THE ASSESSEE HAS FILED THE COPIES OF RECEIPTS AND PAYMENTS ACCOUNT AND INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31-3- 2012 AND ALSO THE BALANCE SHEE T AS ON 31-3-2012. IN THAT BALANCE SHEET, THE OUTSTANDIN G LIABILITIES ARE SHOWN AT RS.3,44,886/-. FROM THE DE TAILS OF SUCH OUTSTANDING LIABILITIES AS GIVEN IN SCHEDULE-I L, IT IS SEEN THAT THE SAME INCLUDES A SUM OF RS.3,25,650/- PERTAINING TO ONE SUKRITI CONSULTANCY FOR MEETING C HARGES ETC., PERTAINING TO THE PERIOD 20-10-2002 TO 21-6-2 004 ON 22 INSTANCES. DURING THE COURSES OF PROCEEDINGS, TH E ASSESSEE WAS ALSO ASKED TO FURNISH THE DETAILS OF R ECEIPTS & PAYMENTS MADE DURING THE CURRENT FINANCIAL YEAR IE. , FROM 1-4-012 TO 31-12-2012. FROM THE STATEMENT OF PAYMENTS FOR THE SAID PERIOD FILED BY THE ASSESSEE, IT IS SEEN THAT A SUM OF RS.L,97,650/- IS SHOWN AS PAID T O SUKRITI ON 16- 5-2002 TOWARDS ARREARS FOR 2003-04. FROM SUCH ENTRY, IT IS NOT KNOWN AS TO FOR WHICH SPECIFI C LIABILITY AND FOR WHICH PERIOD DURING THAT FINANCIAL YEAR SUC H PAYMENT HAS BEEN MADE. LATER, A SUM OF RS.96,000/- IS SHOWN AS PAID TO THE SAME ORGANIZATION TOWARDS ARRE ARS FOR DECEMBER! 2002, JANUARY, MARCH, APRIL, MAY AND JUNE, 2003. WHEN EARLIER IN THE MONTH OF MAY, THE ASSESSEE HAS CLAIMED TO HAVE MADE PAYMENT FOR ARREA RS OF 2003-04, IT IS NOT CLEAR AS TO HOW, LATER IE., I N JUNE, 2012, IT IS CLAIMING TO HAVE MADE PAYMENT FOR EARLI ER PERIOD IE., DECEMBER, 2002. FROM THAT STATEMENT, IT IS I.T.A. NO. 601/HYD/2013 THE MEDICALLY AWARE AND RESPONSIBLE CITIZEN OF HYD ERABAD ==================== 4 FURTHER NOTICED THAT THE ASSESSEE HAS MADE PAYMENT IN MAY, JUNE, JULY, AUGUST, SEPTEMBER, OCTOBER AND NOVEMBER 2012 TO ONE NAMDHARI FOR EQUIPMENT HIRING AND TO TAJ BANJARA, TOWARDS MEETING HALL CHARGES. HOWEVER, IT HAS AGAIN SHOWN PAYMENT OF AN AMOUNT OF RS.L,61,000/- MADE ON 27-11-2012 TO THAT ORGANIZATI ON SUKRITI, SHOWING AS PAYMENT FOR APRIL, 2012 TO NOVE MBER, 2012 AND OCTOBER & NOVEMBER, 2009. WHEN IN THAT STATEMENT, EARLIER THE ASSESSEE ITSELF HAS SHOWN MA KING PAYMENTS FOR EQUIPMENT HIRING AND FOR THE HOTEL CHA RGES FOR HOLDING MEETINGS IN DIFFERENT MONTHS, IT IS NOT CLEAR AS TO HOW, IT HAS AGAIN CLAIMED FOR MAKING PAYMENT FOR THE SAME PERIOD IE., FROM APRIL, 2012 TO NOVEMBER, 2012 TO THAT ORGANIZATION. FURTHER, WHEN AS PER THE SAID BA LANCE SHEET IN THE CASE OF THE ASSESSEE AS ON 31-3-2012, THE ENTIRE LIABILITY RELATING TO THAT CONCERN SUKRITI C ONSULTANCY, IS SHOWN AS PERTAINING TO THE PERIOD FROM OCTOBER, 2002 TO JUNE, 2004, IT IS NOT UNDERSTOOD AS TO HOW IN THAT AMOUNT RS.L,60,000/- SHOWN AS PAID ON 27-11-2012 TO THAT CONCERN, IT HAS CLAIMED SUCH PAYMENT PARTLY PERTAIN ING TO OCTOBER & NOVEMBER, 2009. FROM SUCH CLAIM, RATHER IT SHOWS THAT THE ACCOUNTS OF THE ASSESSEE ARE NOT REL IABLE. RATHER, IT SHOWS THAT THE ASSESSEE IS NOT MAINTAINI NG REGULAR ACCOUNTS OF ITS TRUE RECEIPTS AND EXPENDITU RE. UNDER THAT CIRCUMSTANCES, THUS, IT DOES NOT SATISFY THE CONDITION STIPULATED IN CLAUSE (IV) TO SUB-SECTION (5) TO SECTION 80G OF THE ACT, AND HENCE, IT CANNOT BE GRA NTED APPROVAL U/S 80G(5)(VI) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF DIT(E), THE ASSESSEE, ONCE AGAIN, CAME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. WE ARE OF THE VIEW THAT THE REA SONS GIVEN BY THE DIT(E) FOR DENYING APPROVAL U/S 80G ARE NOT PROPER AS THE ASSESSEE BEING TRUST CONDUCTED ITS MEETINGS IN FIVE STAR HOTELS TO FACILITATE ATTENDANTS FROM MEDICAL PROFES SION AND FROM PHARMACEUTICAL AND OTHER ALLIED INDUSTRIES AND THE AMOUNT SPENT FOR THE MEETINGS WAS CONTRIBUTED BY TH E MEMBERS OF THE TRUST OF RS. 2,80,000/- AND THE EXPE NDITURE INCURRED BY THE ASSESSEE WAS AT RS. 2,42,282/-. SIN CE THE MEETINGS CONDUCTED BY THE ASSESSEE IS A CONTRIBUTOR Y IN NATURE AS THE AMOUNTS CONTRIBUTED BY THE LIFE MEMBE RS OF THE I.T.A. NO. 601/HYD/2013 THE MEDICALLY AWARE AND RESPONSIBLE CITIZEN OF HYD ERABAD ==================== 5 TRUST, THE DIT(E) CANNOT FIND FAULT WITH THE FACT T HAT THE ASSESSEE CONDUCTED MEETINGS IN FIVE STAR HOTELS. 6. FURTHER, AFTER GOING THROUGH THE INCOME AND EXPE NDITURE ACCOUNT AND BALANCE SHEET AS AT 31/03/2012, THE DI T(E) OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING PROPE R BOOKS OF ACCOUNT IN THIS CONNECTION, IT IS TO BE NOTED THAT THE ASSESSEE OBTAINED A VALID REGISTRATION U/S 12AA OF THE ACT, THEREFORE, HOW THE ASSESSEE COULD BE DENIED THE APPROVAL U/S 8 0G OF THE ACT AND ALSO INCLINED TO TAKE SUPPORT FROM THE JUDG MENT OF HONBLE GUJARAT HIGH COURTS DECISION IN THE CASE O F HIRALAL BHAGWATI VS. CIT, 246 ITR 188 (GUJ.) WHEREIN IT WAS HELD AS UNDER: THAT THE TRUST WAS A CHARITABLE TRUST UNDER THE PRO VISIONS CONTAINED IN THE BOMBAY PUBLIC TRUSTS ACT AND REGISTERED BY THE CIT U/S 12A. IT WAS FOR THE BENEF IT OF THE STAFF OF THE INSTITUTE ENGAGED IN PROVIDING EDU CATION. THE OBJECT OF THE TRUST IN CREATING THE FUND WAS TO PROVIDE AID IN CASE OF SICKNESS AND DISABLEMENT AND FROM THE SCHEME OF THE TRUST IT WAS CLEAR THAT THE SAME WAS INTENDED TO BENEFIT A SECTION OF THE PUBLIC. ON CE THE REGISTRATION U/S 12A(A) OF THE ACT WAS GRANTED, THE ITO WAS NOT JUSTIFIED IN REFUSING THE BENEFITS ON THE G ROUND THAT IT WAS NOT FOR THE BENEFIT OF THE PUBLIC AT LA RGE. ACCORDINGLY, THE ORDER REJECTING THE APPLICATION U/ S 80G(5) WAS LIABLE TO BE QUASHED. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE GUJAR AT HIGH COURT IN THE SAID DECISION, WE ARE OF THE OPINION T HAT THE DIT(E) OUGHT TO HAVE GRANTED THE APPROVAL U/S 80G O F THE ACT TO THE ASSESSEE. WE, THEREFORE, DIRECT THE DIT(E) T O GRANT APPROVAL U/S 80G(5)(VI) OF THE ACT TO THE ASSESSEE . 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 13/11/2013. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER I.T.A. NO. 601/HYD/2013 THE MEDICALLY AWARE AND RESPONSIBLE CITIZEN OF HYD ERABAD ==================== 6 HYDERABAD, DATED 13 TH NOVEMBER, 2013 KV COPY FORWARDED TO: 1. THE MEDICALLY AWARE AND RESPONSIBLE CITIZEN OF HYDERABAD, C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, H.N. 3-6-643, ST. NO. 9, HIMAYAT NAGAR, HYDERABAD 500 029. HYDERABAD. 2. DIT(E), HYDERABAD. 3. ADIT(E)-III, HYDERABAD 4 THE DR, ITAT, HYDERABAD