Hyderabad Cleft Society, Hyderabad V. DIT, Hyderabad

ITA 633/HYD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1359 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: misc
• Appeal Filed On: 12-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: K VASANT KUMAR
• Keywords: Charitable institution; Non compliance
• Section: 11A; 80G; 12A; 6; 10; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'B' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHR I CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.633/HYD/2009 ASSESSMENT YEAR : NIL HYDERABAD CLEFT SOCIETY, HYDERABAD VS. DI RECTOR OF INCOME TAX (AAATH 2966 C) (EXEMPTIONS), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. VASANT KUMAR RESPONDENT BY : SMT. NIVEDITA BISWAS ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE DIRECTOR, INCOME TAX (EXEMPTIONS), HY DERABAD DATED 9.3.2009. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: THE ORDER OF THE LD. DIRECTOR OF IT (EXEMPTIONS) DATED 9TH MARCH, 2009 IS CONTRARY TO LAW AND FACTS OF TH E CASE AND THEREFORE APPROVAL U/S80G (5) OF THE IT ACT, 1961 SHOULD BE GRANTED. THE DIRECTOR OF IT(E) HAS NOT GIVEN ANY OPPORTUNIT Y TO FURNISH THE EXPLANATIONS, EXCEPTIONS AN THE CIRCUM STANCES UNDER WHICH PAYMENTS WERE MADE TO THE SECRETARY OF THE S OCIETY. ALL THE EXPENDITURE INCLUDING MOBILE PHONE EXPENSE S, ENTERTAINMENT EXPENSES AND TRAVELLING EXPENSES WER E GENUINELY MADE FOR FURTHERING THE OBJECTIVES OF THE SOCIETY WHICH WERE SPENT IN CONNECTION WITH THE VISIT OF FOREIGN DOCTO RS WHO HAVE BEEN MOSTLY FUNDING THE PROJECTS UNDERTAKEN BY THE SOCIETY AND A SUCH THE ASSUMPTION OF THE LEARNED DIT(E) THAT THE OFFICE BEARERS ARE GETTING BENEFIT FROM THE SOCIETY IS NO T CORRECT. IN VIEW OF ALL THESE AND OTHER REASONS, WHICH MAY BE PRODUCED DURING THE PROCESS OF HEARING OF APPEAL, THE APPEAL MAY PLEASE BE ALLOWED BY SETTING ASIDE THE ORDER REJEC TING THE 2 APPLICATION IN FORM 10G BY THE DIT(E) AND FURTHER GRANTING OF EXEMPTION U/S 80G (5) (VI) OF THE IT ACT, 1961. 2. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS REG ISTERED U/S 12A OF THE IT ACT WHICH IS A CHARITABLE INSTITUTION AND THE ASSESSEE HAS COMPLIED ALL THE REQUIREMENTS U/S 80G (5) OF THE IT ACT. THE ASSESSEE REQUIRED TO BE GRANTED REGISTRATION U/S 80G. HE SUBMITTED THAT THE ASSESSEE HAS REIMBURSED MOBILE PHONE EXPENSES INCUR RED BY VARIOUS PERSONS WORKED FOR THE ASSESSEE. THE REIMBURSEMENT OF EXPENDITURE BY THE ASSESSEE CANNOT BE TERMED AS MEETING OF ANY PER SONAL EXPENDITURE OF ANY PERSONS. FURTHER, REGARDING THE FOOD EXPENSES INCURRED, HE SUBMITTED THAT VARIOUS FOREIGN DOCTORS ARE COMING T O INDIA AND CARRYING OUT THE OPERATIONS ON BEHALF OF THE ASSESSEE AND TH EY RENDER VERY VALUABLE SERVICES ON BEHALF OF THE TRUST. BEING FO REIGNERS, THEY USED TO STAY IN LUXURIOUS HOTELS AND TAKE FOOD AND THE ASSE SSEE IS BOUND TO MEET THEIR FOOD EXPENSES AND IT CANNOT BE SAID THAT MIS- UTILISATION OF THE ASSESSEE TRUST MONEY AND THE AMOUNT INCURRED WAS FO R THE PURPOSE OF PURSUING OF THE OBJECT OF THE ASSESSEE TRUST. FUR THER, HE SUBMITTED THAT AT THE TIME OF GRANTING THE REGISTRATION U/S 80G, T HE DIRECTOR (EXEMPTIONS) NOT REQUIRE TO CARRY OUT THE ENQUIRY R EGARDING INCURRING OF EXPENDITURE BY THE ASSESSEE SINCE HE IS NOT DOING T HE ASSESSMENT OF THE ASSESSEE. THE ASSESSEE RECEIVED ONE OR TWO NORMAL DONATIONS FROM VARIOUS PARTIES WHICH WERE MADE ON VOLUNTARY BASIS, NOT HAVING ANY NEXUS TO SERVICE RENDERED BY THE ASSESSEE. THE DIR ECTOR (E) NOTED ONLY FEW ISOLATED INSTANCES OF RECEIVING DONATIONS AND I T HAS NO DIRECT NEXUS WITH THE RENDERING OF SERVICES BY THE ASSESSEE. TH E DIRECTOR NOT CARRIED OUT FULL ENQUIRY WITH THE DONOR FOR WHICH PURPOSE T HEY HAVE GIVEN THE DONATIONS. HE SUBMITTED THAT THERE IS NO VIOLATION OF ANY PROVISION OF THE IT ACT AND THE DIRECTOR (E) NOT DOUBTED THE FACT TH AT THE ASSESSEE IS CARRIED OUT CHARITABLE ACTIVITIES. FURTHER, HE SUB MITTED THAT IF THE REGISTRATION U/S 80G IS GRANTED TO THE ASSESSEE, IT HAS NO BENEFIT TO THE ASSESSEE AND ON THE OTHER HAND, THE BENEFIT GOES TO ONLY TO THE DONORS. 3 HE PRAYED TO GRANT THE REGISTRATION. FURTHER, HE S UBMITTED THAT IN THE COURSE OF PROCEEDINGS BEFORE THE DIRECTOR (E), HE H AS COLLECTED THE INFORMATION AND GIVEN THE CONCLUSION AND NOT GIVEN OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME. 3. HE RELIED ON THE FOLLOWING JUDGEMENTS: 1. IN THE CASE OF M/S. N.N. DESAI CHARITABLE TRUST VS. COMMISSIONER OF INCOME TAX (GUJ) (246 ITR 452) WHEREIN IT WAS HELD THAT: ' SECTION 80G OF THE IT ACT, DOES NOT RELATE TO ASS ESSMENT OF THE TRUST OR THE INSTITUTION WHOSE INCOMES ARE NOT LIAB LE TO BE INCLUDED IN THE COMPUTATION OF TAXABLE INCOME UNDER VARIOUS PROVISIONS OF THE ACT REFERRED TO THEREIN. PRIMARILY, S.80G IS R ELATED TO GIVING DEDUCTION IN RESPECT OF THE DONATIONS MADE BY A PER SON WHO, BUT FOR THIS PROVISION, WOULD NOT BE ELIGIBLE FOR SUCH DEDUCTION BECAUSE THE DONATIONS ARE NOT ORDINARILY CONSIDERED TO BE EXPENSES INCURRED FOR THE PURPOSE OF EARNING INCOME AND LIABLE TO BE DEDUCTED THEREFROM. ALL DONATIONS GENERALLY ARE NOT TREATED AS ELIGIBLE FOE DEDUCTION, BUT ONLY SUCH DONATIONS AS ARE MADE TO FUNDS OR INSTITUTIONS NAMED IN SUB SECTION (2) OF S .80G WHICH STATES 'ANY FUND OR INSTITUTION TO WHICH THIS SECTI ON APPLIES'. A PROVISION WAS NEEDED TO IDENTIFY THE TRUST OR FUND OR INSTITUTION NOT SPECIFICALLY NAMED IN THE STATUTE, BUT WHICH FE LL IN THAT CATEGORY. THE OBJECT WAS ACHIEVED BY ENACTING SUB SECTION (5) OF SECTION 80G WHICH HELPS IDENTIFY THE FUNDS OR INSTI TUTIONS, DONATION TO WHICH QUALIFIES FOR DEDUCTION U/S 80G. IT PROVIDES THAT THE FUNDS OR INSTITUTIONS REFERRED TO IN SUB S ECTION 2 (A) (IV) ARE SUCH WHOSE INCOME WOULD NOT BE LIABLE TO BE INC LUDED IN ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTIONS 11 AN D 12 OR CLAUSE (22) OR CLAUSE (22A) OR CLAUSE (23) OR CLAUSE (23AA ) OR CLAUSE (23C) OF SECTION 10. PRIOR TO THE INSERTION OF CLA USE (VI), IT BEING NOT A SATISFACTORY REQUIREMENT, EVEN IN THE ABSENCE OF A CERTIFICATE U/S 80G IT WAS POSSIBLE FOR A DONOR TO SATISFY AN I TO INDEPENDENTLY ABOUT THE ELIGIBILITY OF DONATION MAD E BY HIM, FOR DEDUCTION. IT WAS IN ORDER TO KEEP A CHECK ON AN I NQUIRY INTO SUCH DETAILS WHICH MAY NOT BE POSSIBLE FOR EVERY DONOR A ND MAKE GOOD A CLAIM WHICH OTHERWISE HE IS LEGITIMATELY ENTITLED TO MAKE, AND ALSO TO RELIEVE THE ITO TO HOLD SUCH ENQUIRY IN RE SPECT OF THE DONATIONS MADE TO SUCH INSTITUTION AT DIFFERENT LEV ELS AND TO AVOID THE POSSIBILITY OF DIFFERENT CONCLUSIONS REACHED BY DIFFERENT OFFICERS IN RELATION TO DONATIONS MADE TO THE SAME FUND OR INSTITUTION AND TO SIMPLIFY THE PROCEDURE, THAT THE PROVISION WAS MADE FOR RECOGNISING, WHAT WAS PREVAILING PRACTICE BY MAKING A STATUTORY PROVISION IN THAT REGARD. IT IS ALSO TO BE NOTICED THAT 4 WHETHER THE INCOME OF AN INSTITUTION OR FUND WOULD ULTIMATELY BE ABLE TO INCLUSION IN ITS TOTAL INCOME AT THE CLOSE OF THE ASSESSMENT YEAR OR NOT CANNOT BE DETERMINED AT THE TIME OF M AKING OF DONATION. THE ELIGIBILITY OF TIME AT WHICH DONATIO N IS MADE AND NOT WITH RESPECT TO THE TIME IN FUTURE DEPENDING UP ON AN ASSESSMENT OF THE DONEE. THAT IS WHERE THE USE OF THE VERB IN FUTURE TENSE 'WOULD' HAS BEEN USED AND NOT IN PRESE NT OR PAST PERFECT TENSE O AS TO TAKE INTO CONSIDERATION THE A CTUAL INCLUSION OR EXCLUSION OR THE EXTENT OF INCLUSION OR EXCLUSIO N. THE DIRECT NEXUS OF CLAUSE (I) OF SUB SECTION (5) OF SECTION 8 0G, IS TO BE ELIGIBILITY OF THE INSTITUTION OR THE FUND TO CLAIM THAT ITS INCOME IS NOT LIABLE TO BE INCLUDED IN THE COMPUTATION OF THE TOTAL INCOME. THE TWO ARE DIFFERENT CONCEPTS. FIRST WHETHER AN IN STITUTION OR FUND IS SUCH WHOSE INCOME IS NOT LIABLE TO BE INCLU DED IN THE COMPUTATION OF THE TOTAL INCOME DEPENDS ON ITS STAT US OR CHARACTER. THE SECOND IS THE ACTUAL ASSESSMENT OF INCOME WHICH NECESSARILY TAKES PLACE IN FUTURE AFTER DONATION IS RECEIVED BY THE DONEE AND ON FULFILMENT OF OTHER CONDITIONS ABOUT A PPLICATION OF INCOME BY ELIGIBLE TRUSTS, WHICH IN THE VERY NATURE OF THINGS CAN OPERATE ONLY AFTER RECEIPT OF INCOME. THE ACTUAL E XTENT OF EXCLUSION FROM OR INCLUSION IN THE COMPUTATION OF T HE TOTAL INCOME OF THE RECEIPTS OF SUCH INSTITUTION OR FUND, DEPEND S ON FULFILMENT OF FURTHER CONDITIONS WHICH MAY OR MAY NOT EXIST AT TH E CLOSE OF THE YEAR AND HAS NO DIRECT RELATION TO THE PURPOSE FOR WHICH THE PROVISION IS MADE. THE LATTER FALLS IN THE REALM O F THE ASSESSMENT OF THE TRUST, INSTITUTION OR FUND WHICH DERIVES INC OME WHICH IS NOT ORDINARILY INCLUDIBLE IN ITS TOTAL INCOME. THE LIA BILITY TO ASSESSMENT IS NOT AFFECTED BY ISSUANCE OF RECOGNITI ON CERTIFICATE OR APPROVAL CERTIFICATE ISSUED UNDER CLAUSE (VI) OF SUB SECTION (5) OF SECTION 80G NOR DOES IT DEPEND UPON WHETHER THE DONOR IS ULTIMATELY GETTING DEDUCTION IN RESPECT OF SUCH DON ATION. IT MAY BE RELEVANT O TAKE COGNIZANCE OF THE FACT THAT ALL DONATIONS ARE NOT IN THEIR ENTIRELY ELIGIBLE FOR DEDUCTION. THERE EX ISTS A MAXIMUM LIMIT ALSO FOR SUCH ELIGIBILITY AND DONATIONS BEYON D SUCH LIMIT BY A PERSON MAY NOT GET DEDUCTION EVEN IF THEY ARE TO AN APPROVED INSTITUTION U/S 80G. LIKEWISE, ACTUAL INCLUSION OF ANY INCOME IN THE ASSESSMENT OF THE DONEE AS TAXABLE INCOME DOES NOT AFFECT THE ENTITLEMENT OF THE DONOR TO CLAIM DEDUCTION U/S 80G , IF ON THE DATE WHEN HE MADE THE DONATION THE CONDITIONS WERE FULFILLED. THAT WAS THE LAW BEFORE THE INSERTION OF CLAUSE(VI) AND APART FROM THE FACT THAT BY INTRODUCING CLAUSE (VI) WITH RULE 11A A A METHOD OF PROVING THE ELIGIBILITY TO CLAIM DEDUCTION DEPEN DS ON THE ELIGIBILITY OF THE DONEE TO CLAIM EXEMPTION OF ITS INCOME ON THE DATE WHEN DONATIONS ARE MADE. THE AUTHORITY EXAMIN ING THE QUESTION WHETHER A FUND OR INSTITUTION IS ELIGIBLE TO BE CERTIFIED FOR THE PURPOSES OF SECTION 80G IS NOT TO ACT AS AN ASS ESSING OFFICER AND PRONOUNCE UPON THE PENDING ASSESSMENTS. EXPLAN ATION 2 TO 5 SECTION 80G STATES IN NO UNCERTAIN TERMS THAT A DED UCTION TO WHICH THE ASSESSEE IS ENTITLED IN RESPECT OF THE DONATION MADE TO AN INSTITUTION OR FUND TO WHICH SUB SECTION (5) APPLIE S SHALL NOT BE DENIED MERELY ON EITHER OR BOTH OF THE FOLLOWING GR OUNDS, NAMELY, THAT ANY PART OF THE INCOME OF THE INSTITUTION OR F UND HAS BECOME CHARGEABLE TO TAX DUE TO NON COMPLIANCE WITH ANY OF THE PROVISIONS U/S 11, 12 OR 12A AND UNDER CLAUSE ( C) OF SUB SECTION (1) OF SECTION 13, THE EXEMPTION U/ S 11 OR 12 CAN BE DENIED TO AN INSTITUTION OR FUND IN RESPECT OF THE INCOME ACCRUI NG OR ARISING TO IT FROM ANY INVESTMENT REFERRED TO CLAUSE (H) OF TH E SECTION(2) OF SECTION 13.' IN THE CASE OF M/ S. SONEPAT HINDU EDUCATIONAL AND CHARITABLE SOCIETY VS. CIT AND OTHERS (P&H) (278 ITR 262) WHEREIN IT W AS HELD THAT: 'THAT THE SCOPE OF ENQUIRY BY THE COMMISSIONER WHI LE DEALING WITH THE APPLICATION U/S 80G(5) (VI) OF T HE ACT, EXTENDS TO ELIGIBILITY TO EXEMPTION UNDER VARIOUS PROVISIONS OF THE ACT, REFERRED TO IN THE SUB SECTION BUT NOT AC TUAL COMPUTATION OF INCOME UNDER THE ACT, PARTICULARLY WHEN THE SOCIETY OR TRUST IS CLAIMING EXEMPTION U/S 11 AND 1 2 AND NOT U/S 10 OF THE ACT. THE ENQUIRY WHETHER AT THE END OF THE PREVIOUS YEAR, THE DONOR WILL BE ABLE TO SUSTAIN A CLAIM BECAUSE OF NON FULFILMENT OF SOME CONDITION BY HIM WOULD DEPEND AT THE CLOSE OF THE RELEVANT PREVIOUS YEAR, AS IT IS NOT POSSIBLE TO PREDICATE THESE CONDITION IN PRAES ENTI WHEN THE DONATION WAS MADE.' 3. IN THE CASE OF M/S ORPAT CHARITABLE TRUST VS. CI T (GUJ) (256 ITR 690) WHEREIN IT WAS HELD THAT: ' THE PETITIONER, A CHARITABLE TRUST, HAD BEEN CER TIFIED TO BE A CHARITABLE TRUST U/S 80G OF THE IT ACT 1961, FROM J UNE, 10, 1993 TO MARCH 31, 2000. THE COMMISSIONER REFUSED T OG RANT APPROVAL TO THE PETITIONER U/S 80G (5) FOR THE FINA NCIAL YEAR APRIL 1, 2000 TO MARCH 31, 2001 ON THE GROUND THAT IT HAD MADE DEPOSITS IN TWO COMPANIES WHICH WERE NOT APPROVED F OR INVESTMENTS BY A CHARITABLE TRUST. ON A WRIT PETIT ION, THE HIGH COURT DIRECTED THE COMMISSIONER TO RECONSIDER THE M ATTER KEEPING IN MIND THE DECISION OF THE HIGH COURT IN N N DESAI CHARITABLE TRUST VS. CIT (2000) 246 ITR 452) BUT T HE COMMISSIONER AGAIN BY HIS ORDER REFUSED TO GRANT A PPROVAL FOR THE SAME REASON. ON A WRIT PETITION: HELD, SETTING ASIDE THE ORDER OF THE COMMISSIONER R EFUSING GRANT OF APPROVAL, THAT EVEN IF THE GROUND ABOUT CO NTRAVENTION 6 OF SECTION 11(5) WAS VALIDLY TAKEN BY THE COMMISSI ONER THAT WOULD HAVE BEARING ONLY AT THE POINT OF TIME OF THE ASSESSMENT OF THE PETITIONER AND WOULD NOT BE MATERIAL CONSIDE RATION IN SO FAR AS GRANTING APPROVAL U/S 80G (5) WAS CONCERNED. THAT MIGHT BE A MATERIAL FACTOR, BUT THAT COULD NOT BE S OLE DETERMINATIVE FACTOR FOR THE PURPOSE OF DECIDING WH ETHER THE CERTIFICATE OF APPROVAL HAD TO BE GRANTED TO THE PE TITIONER OR NOT. FURTHER, IT HAD BEEN POINTED OUT TO THE COMMI SSIONER THAT THE TRUSTEE THROUGH WHOM THE DEPOSITS HAD BEEN MAD E HAD PAID UP THE FUNDS DEPOSITED IN THOSE INSTITUTIONS T O THE PETITIONER, AND SO FAR AS THE PETITIONER WAS CONCER NED THE TECHNICAL BREACH OUGHT NOT TO HAVE WEIGHED WITH THE COMMISSIONER. 4. THE LEARNED DR SUBMITTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE NOT FOR THE PURPOSE OF THE OBJECT OF T HE ASSESSEE FOR WHICH IT WAS ESTABLISHED AND IN THE NATURE OF PERSONAL EXPEN DITURE OF THE TRUSTEES, AS SUCH THE DIRECTOR (E) DENIED THE REGISTRATION U/ S 80G OF THE INCOME TAX ACT. 5. FURTHER, THE DR SUBMITTED THAT AS SEEN FROM TH E ORDER OF THE DIRECTOR (E), THE ASSESSEE IS SPENDING HUGE AMOUNT ON THE ENTERTAINMENT OF VARIOUS PERSONS. MOREOVER, THE CONSUMPTION OF LIQUOR IS NOT A CHARITABLE ACTIVITY AND ALSO SHE SUBMITTED THAT THE ASSESSEE ALSO COLLECTED DONATIONS WHICH ARE DIRECTLY AGAINST THE SURGERY CA RRIED OUT BY THE PARTICULAR PATIENT. SHE SUBMITTED THAT REGISTRATIO N U/S 80G SHALL NOT BE GIVEN. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ON EXAMINATION OF RECORDS BY THE DIRECTOR ( E), IT WAS FOUND THAT THE ASSESSEE HAS SPENT ON DR. G.SRINIVASA REDD Y, SECRETARY, HCF A SUM OF RS.9258/- FOR CONSUMPTION OF LIQUOR ON 7/9/2 007 AT TAJ BANJARA, ROAD NO.1, BANJARA HILLS, HYDERABAD WHICH WERE REIM BURSED BY THE ASSESSEE. SIMILARLY, THE FOLLOWING EXPENSES WERE I NCURRED BY DR. G.S. REDDY, SECRETARY OF HCF WHICH ARE AS FOLLOWS: 7 QTY. MENU AMOUNT 3 MINERAL WATER 285 1 FRESH FRUIT JUICE 145 5 AERATED BEVERAGES 475 2 TANDOORI JHINGA 1250 2 AJWAINI MACHLI TIKKA 910 2 PATHAR KA GOSHT 790 2 TILANI SEEKH KEBAB 750 4 KHUBANI KA MEETHA 700 VAT @ 15% 398 5703 EXPENSES AT HAMPSHIRE PLAZA HOTEL, HYDERABAD (20.11 .2007) 3 SODA 255 2 BOTTLED WATER 170 5 TEACHERS 50 SMALL 1500 4 BUFFET DINNER 1600 1 AERATED BEVERAGES 85 VAT 158 3768 ENTERTAINMENT EXPENSES (6.11.2007) MARRIOT HOTEL, HYDERABAD 3935 HYDERABAD HOTEL 426 TAJ HOTEL, HYDERABAD 4393 KAKATIYA SHERATON, HYDERABAD 6498 15252 ENTERTAINMENT EXPENSES, TAJ DECCAN, HYDERABAD (24.1 2.06) 3. AQUAFINA BOTTLE WATER 345 1 SMOOTHIES 135 5 BUFFET DINNER 2750 3 AERATED BEVERAGES 345 2 KING FISHER BEER 550 VAT 268 4393 8 ENTERTAINMENT EXPENSES AT KAKATIYA SHERTON, HYDERAB AD (19.5.07) 5 BUFFET DINNER 4750 2 SALAD BAR/SALAD BAR 1390 4 BBS/CASTLE BEER 330 ML 860 4 SOFT BEVERAGE LIST/PACKAGED WATER 360 1 BLUE RIBBAND GIN/SMALL/TONIC WATER 275 VAT 390 6498 FURTHER, THE FOLLOWING EXPENSES WERE SPENT BY SHRI G. SREENIVAS REDDY THROUGH HIS DINERS CREDIT CARD WAS BORNE BY THE ASS ESSEE. DATE TRANSACTION DETAILS 19.5.2007 WELCOME GROUP HOTELS, HYDERABAD 6498 24.5.2007 OHRIS CUISINE COURT, HYDERABAD 1231 28.5.2007 TOUCH, HYDERABAD 2936 28.5.2007 CAF D LAKE (P) LTD., HYDERABAD 2936 7. FURTHER, IT WAS NOTED THE FOLLOWING AMOUNTS WE RE SPENT TOWARDS ENTERTAINMENT THOUGH THE FUND WAS COLLECTED FOR THE PURPOSE OF MEDICAL TREATMENT IN THE FORM OF SURGERY WHICH ARE AS FOLLOWS: DATE PARTICULARS AMOUNTS 14.7.07 DINNER EXPENSES INCURRED FOR DOCTORS, CONFERENCE AT HOTEL DECCAN 6,575 9.10.09 CATERING CHARGES PAID TO SV CATERERS FOR CONFERENCE ENTERTAINMENT INCURRED TO DOCTORS (AS PER BILLS/VOUCHERS) 1. ALANKRITA RESIDENCY 2. PARADISE 17.6.07 3. AT GSR HOSPITAL 17.6.07 4.AT HOTEL KAKATIYA 17.6.07 5. AT MANGALA RESORTS 10,039 1,107 1,107 432 1,905 1,215 9 6.11.07 AMOUNT INCURRED FOR DOCTORS A) AT WATERFRONT (HOTEL) BILL 6.9.07 B) AT WATER FRONT BILL 2.9.07 C) AMOUNT INCURRED AT MARRIOTT HOTEL D) AMOUNT INCURRED AT HYDERABAD HOUSE E) TAJ HOTEL F) KAKATIYA HOTEL FOR FOREIGN DOCTORS G) AMOUNT INCURRED AT WELCOME HOTEL H) OBEROI HOTEL I) TOUCH & CUISINE J) CAF & LAKE 8,788 1,328 3,935 479 4,393 6498 1,231 6,498 8,000 2,036 7.11.2008 ENTERTAIN FOR FOREIGN DOCTORS A) HOTEL TAJ AS PER BILLS B) HOTEL TAJ AS PER BILLS C) HOTEL TAJ AS PER BILLS 204 9,158 5,703 15.11.07 HOTEL TAJ AS PER BILLS 2,500 10.12.2008 EXPENSES INCURRED AT HOTEL CAF DELUXE, HYDERABAD FOR DOCTORS 5,032 31.12.2008 AT CAFE DELUXE HOTEL FOR DOCTORS WORKSHOP ON NEW YEAR DAY 9,400 29.2.2008 A) ENTERTAINMENT TO FOREIGN DOCTORS AS PER BILLS AT VICEROY HOTEL 13,640 31.3.2008 ENTERTAINMENT EXPENSES @ 3000/- P.M. TO DOCTORS 30,000 8. FURTHER, IT WAS NOTED THAT VARIOUS MOBILE EXPEN SES INCURRED ARE WHICH ARE AS FOLLOWS: 10 1. MOBILE NO.98490 59836: THE ADDRESS MENTION WAS HOSPITAL LOCATED AT D.NO.17.1.383, VINAYNAGAR COLONY, SAIDABAD, HYDERAB AD. ON AN EXAMINATION OF THE DETAILED BILLING, IT IS SEEN THA T THE SAID AIRTEL MOBILE PHONE BILL WAS DRAWN IN THE NAME OF M/S MEDICITY HO SPITALS, C/O JAR HOSPITAL, D.NO.17.1.383/53, VINAYNAGAR, SAIDABAD. THE BILL WA FOR AN AMOUNT OF RS.1716/- AND WAS FOR THE PERIOD FROM 5.1 2.07 TO 4.1.08. THUS IT IS SEEN THAT THE APPLICANT SOCIETY IS CLAIM ING EXPENDITURE WHICH DOES NOT PERTAIN TO IT. 2. PHONE NO.040-27425223: THE PHONE CONNECTION IS IN THE NAME OF MR. G. MALAKONDA REDDY WHO IS THE FATHER OF THE SECRETA RY, DR. GS REDDY. IT IS SEEN THAT ALL THE TELEPHONE BILLS OF THE FAMILY MEMBERS ARE DEBITED TO THE PHONE EXPENDITURE OF HCS. THUS, THE SOCIETY IS REIMBURSING THE PERSONAL EXPENDITURE TO THE FATHER OF THE SECRETARY , SHRI G.S. REDDY WHICH IS A VIOLATION OF THE PROVISIONS OF S.13 (1 ) (C ). 3. MOBILE NO.9849964444: AIRTEL MOBILE IS IN THE PERSONAL NAME OF MRS. PRASANTHI GOSLA REDDY. THERE IS NO LOG BOOK FOR TE LEPHONE AND THIS TELEPHONE IS IN THE NAME OF THE SOCIETY. IT COULD NOT BE CLARIFIED IN WHAT WAY THESE TELEPHONE EXPENSES HAD NEXUS WITH THE ACT IVITY OF THE SOCIETY. 9. THE CIT(A) ON APPRAISING THE ENTIRE FACT OF TH E CASE CAME TO THE CONCLUSION THAT, THOUGH THE ASSESSEE A NON-PROF IT CHARITABLE ORGANIZATION, FOR THE PURPOSE OF RENDERING ANY MEDI CAL SERVICES, VIOLATED THE PROVISIONS OF SECTION 13(1) (C) OF THE IT ACT A ND ALSO THE ASSESSEE CHARGED AMOUNTS FROM THE PATIENTS BEFORE GIVING THE TREATMENT AND VIOLATED THE CONCEPT OF PRE-TREATMENT AND COMMITMEN T GIVEN TO THE FOREIGN FUND AGENCIES. AS PER AGREEMENT WITH FOREI GN AGENCIES, ASSESSEE IS REQUIRED TO GIVE ALL SERVICES AT FREE OF COST TO PATIENTS. THIS INCLUDES PROVIDING ACCOMMODATION, CATERING AND TRANSPORTATIO N OF PATIENTS AND THEIR RELATIVES', FROM THE PATIENTS PLACE TO ASSES SEE'S PLACE AND BACK TO THE PATIENTS RESIDENCE. HOWEVER, CONTRARY TO THIS, THE ASSESSEE HAS COLLECTED 1,32,900/- AS RECEIPT FROM OUTPATIENT CON SULTANCY. THIS REFLECTED 11 THE NON-CHARITABLE ACTIVITIES OF THE ASSESSEE DEVIA TING FROM THE PURPOSE FOR WHICH IT WAS CREATED. 10. FURTHER IT WAS NOTICED THAT THE HCS, WITH A V IEW TO RUN ITS HOSPITAL SERVICES HAS SET UP THE GSR INSTITUTE OF C RANIO FACIAL SURGERY CLAIMING TO BE A UNIT OF HCS (REGISTERED) WITH AN INTENTION TO GIVE FREE OR LOW COST SURGICAL OPTIONS TO PATIENTS FROM LOW SOCI O ECONOMIC BACKGROUNDS BORN WITH THE SUFFERING FROM CRAINO FACIAL SURGICAL DEFECT. THE OBJECTS IN THE MOA DATED 24.10.08 OF HCS DOES NOT MENTION ANYT HING ABOUT THE INTENTION TO START A SEPARATE UNIT UNDER THE NAME A ND STYLE OF M/S GSR CRAINO FACIAL AND PLASTIC SURGERY (GSRICFS) UNDER S HRI GOSLA SRINIVASA REDDY AS ITS MD. THUS, INCORPORATION OF A SEPARATE UNIT IN THE NAME AND STYLE OF M/S GSRICFS IS A CLEAR VIOLATION OF THE OB JECTS AND IS AN EXAMPLE OF UNDERTAKING ACTIVITIES OUTSIDE THE JURISDICTION OF ITS MOA. 10.1. IT IS FURTHER SEEN THAT DR. GS REDDY VISI TED NUMBER OF FOREIGN COUNTRIES TO CONDUCT ACTIVITIES ABROAD. TOWARDS TH IS, HUGE AMOUNTS WERE REIMBURSED FROM THE SOCIETY WHICH ARE LISTED AS UND ER: A) RECEIPT NO.114 DATED 7.11.07 AMOUNT REIMBURSED F OR OBTAINING VISA CHARGES (FOR EHIOPIA) PAID TO PLUS TRAVELS RS.3000/ - B) RECEIPT NO.1322 DATED 7.11.07 AMOUNT REIMBURSED FOR OBTAINING AIR TICKET HYDERABAD/TOKYO/HYDERABAD RS.37,655/- C) RECEIPT NO.1157 DATED 6.11.07 AMOUNT REIMBURSED TOWARDS FOREIGN CONFERENCE/TRAVEL (NEU/HYDERABAD) RS.12,382/- D) RECEIPT NO.083 DATED 9.10.07 AMOUNT REIMBURSED T OWARDS HOTEL BILLS ON SEOUL (KOREA) CONFERENCE RS.18,727/- E) RECEIPT NO.944 DATED 9.10.07 AMOUNT REIMBURSED T OWARDS KOREA CONFERENCE (PAID THROUGH ICICI BANK CARD AND NOW RE IMBURSED) RS.10,968/ 10.2. FURTHER IT WAS NOTICED THAT FROM THE INFORMA TION AVAILABLE ON THE FILE IT IS SEEN THAT DR. GS REDDY IS THE PROPRI ETOR OF M/S GSR CRAINO FACIAL COSMETICS AND PLASTIC SURGERY CENTRE, FLAT N O.112, JAMUNA TOWERS, NALGONDA X ROADS, HYDERABAD (2) M/S GSR DENTAL HOSP ITAL HYDERABAD. HE ALSO HAPPENS TO BE THE SECRETARY OF THE ASSESSEE SOCIETY I..E., HCS. 12 THE PATIENTS WERE GETTING TREATMENT BY THE ASSESSEE SOCIETY FOR WHICH THE APPLICANT SOCIETY IS ALSO RECEIVING FUNDS FROM ABRO AD, ARE NOW BEING TREATED BY THE NEWLY FORMULATED SOCIETY I.E. M/S GS RCFC & PSC AND M/S GSR DENTAL HOSPITAL, WHICH ARE RUNNING UNDER THE PR OPRIETORSHIP OF DR. G.S. SREENIVASA REDDY WHO IS ALSO THE SECRETARY OF THE SOCIETY I.E. HCS. FROM THE INCOME AND EXPENDITURE ACCOUNT IT IS SEEN THAT DURING THE YEAR I.E. FINANCIAL YEAR 2006-07, THE APPLICANT SOCIETY I.E. HCS HAS PAID RS.10.67 LAKHS TO M/S GSR CRAINO FACIAL AND PLASTIC SURGERY SOCIETY. IN ADDITION TO THE ABOVE, DURING THE FINANCIAL YEAR 20 07-08 DR. G REDDY HAS RECEIVED 23.56 LAKHS ON ACCOUNT OF PROFESSIONAL CHA RGES FROM HCS. THUS, INDIRECTLY THE SECRETARY, I.E. DR. GS REDDY IS GETT ING THE BENEFIT IN THE FORM OF PROFESSIONAL CHARGES RECEIVED FROM THE ASSE SSEE SOCIETY. IT IS NOT KNOWN HOW SHRI GS REDDY IS ABLE TO JUSTIFY HIS ROLE AS SECRETARY OF THE HCS AS WELL BEING THE PROPRIETOR OF THE TWO BIG HOS PITALS. 10.3 FURTHER IT WAS NOTICED THAT MR. G SAI MADHU, AGED 5 YEARS WITH REGN. NO.4495 02-08 HAS UNDERGONE SURGERY FOR ONE LIP ON 3.3.08. AS PER THE OBJECTIVES OF THE SOCIETY AND ON ACCOUNT OF THE COMMITMENT WITH THE FOREIGN FUNDING AGENCY (ICLPF), THE HCS WA S OBLIGED TO GIVE THE TREATMENT FREE OF COST. ON THE CONTRARY, IT IS SEE N FROM THE LIST OF DONATIONS RECEIVED BY THE HCS IN THE MONTH OF MARCH , 2008 AN AMOUNT OF RS.2000/- WAS SHOWN TO HAVE BEEN RECEIVED FROM MR. G. SAI MADHU ON 5.3.08 AT PAGE 193 OF THE REGISTER. THUS, IT IS EV IDENT FROM THE CROSS VERIFICATION THAT THE SOCIETY IS INDIRECTLY COLLECT ING FEES/CONSULTANCY CHARGES FOR THE SERVICES BEING PROVIDED TO THE PATI ENTS WHICH IS AGAINST THE BASIC OBJECTS OF THE SOCIETY FOR WHICH IT WAS F ORMED. THE ABOVE CITED EXAMPLE IS NOT A STRAY CASE IN WHICH THE HCS COLLEC TED FEE/CHARGES INDIRECTLY BUT IN A NUMBER OF CASES AS DETAILED HER EUNDER: 10.4 MR. A. BHAGEERATH RAJ, AGED 18 YEARS MALE RE GN. NO.3165- 07-06 TREATMENT UNDERGONE PALATOPLASTY ON 11.3.2008 ADDRESS 1-9-97 KUSHAIGUDA, HYDERABAD, DONATION IN THE NAME OF A. B HAGEERATH ON 13.3.2008 FOR AN AMOUNT OF R.2000/- 13 10.5. MS. K. VAISHALI, AGED 18 YEARS REGN NO.3135- 07-06 SEX-FEMALE, TREATMENT UNDERGONE 2 LIPS, NOSE REVISION ON 10.3.2 008 ADDRESS 1-7-322, BAKARAM, MUSHEERABAD, HYDERABAD, DONATION RS.2000/- . THUS, IT IS EVIDENT THAT HCS IS IN THE REGULAR PR OCESS OF COLLECTING THE AMOUNTS FEES/CONSULTANCY CHARGES) IN DIRECTLY AS DONATIONS, EITHER IN THE NAMES OF THE PATIENTS OR IN THE NAMES OF THEIR NEAR RELATIVES, THEREBY VIOLATING THE OBJECTIVES AS WELL AS THE COM MITMENT TO THE FOREIGN FUNDING AGENCIES. 11. THE DIRECTOR (E), AFTER OBSERVING THE ABOVE F ACTS REJECTED THE CLAIM OF THE ASSESSEE FOR REGISTRATION UNDER SECTIO N 80G. THE SECTION 80G OF THE IT ACT PROVIDES FOR DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS ETC. A LARGE NUMBER OF INSTITUTIONS, FIRMS AND BODIES, CORPORATE ARE REFLECTED IN THE SAID PROVISI ON. SUB SECTION 5 PROVIDES FOR CERTAIN EXEMPTION IN THE MATTER OF PAY MENT OF TAX SUBJECT TO CERTAIN CONDITIONS. SUB SECTION 5 PROVIDES FOR REGI STRATION IN THE MATTER OF EXEMPTION IN TERMS OF EXEMPTION U/S 80G OF THE IT A CT. RULE 11A OF THE IT RULES, 1962 PROVIDES FOR CONSIDERATION OF APPROV AL OF AN INSTITUTION OR FUND U/S 80G (5) OF THE IT ACT, 1961. RULE 11AA PRO VIDES FOR AN APPLICATION BEING MADE IN TERMS OF PROVISION 80G. THE SAID APPLICATION USED TO BE ACCOMPANIED BY A COPY OF REGISTRATION GR ANTED U/S 12A NOTES OF ACTIVITIES OF INSTITUTIONS, COPIES OF ACCOUNTS O F INSTITUTIONS AND FUNDS, SINCE ITS INCEPTION OR DURING THE LAST YEAR WHICHEV ER IS SOUGHT. SUB RULE 3 PROVIDES FOR CALLING FOR SUCH FURTHER DOCUMENTS OR INFORMATION FROM THE INSTITUTION AND IT FURTHER PROVIDES FOR SUCH INQUIR Y TO BE MADE, AS THE DIRECTOR (E) MAY DEEM NECESSARY AS TO SATISFY HIMSE LF ABOUT GENUINENESS OF ACTIVITIES OF THE INSTITUTIONS. AFTER SATISFACTI ON, APPROVAL CAN BE GRANTED IN THE MATTER. SUB RULE 5 PROVIDES FOR REJECTION AF TER RECORDING THESE NOTES. THE AUTHORITY IS AT LIBERTY TO SATISFY OF TH E GENUINENESS OF ACTIVITIES OF SUCH INSTITUTION OR FUND. IN THE PRESENT CASE, T HE DIRECTOR (E) WAS NOT SATISFIED OF ANY CHARITABLE ACTIVITIES BEING CARRIE D OUT BY THE ASSESSEE. ON EXAMINATION OF THE FACTUAL ASPECT OF THE MATTER, AS DISCUSSED IN EARLIER 14 PARAGRAPHS, SATISFACTION IS NOT REACHED BY DIRECTOR (E) IN TERMS OF SECTION 80G READ WITH RULE 11AA OF THE IT ACT. THE FACT OF THE CASE WOULD SHOW THAT THE ASSESSEE TRUST HAS DONE SEVERAL ACTS WARRA NTING NO REGISTRATION U/S 80G. THE SATISFACTION IS NECESSARY ON THE PART OF DIRECTOR (E) FOR THE PURPOSE OF GRANTING REGISTRATION U/S 80G (5). IN OU R OPINION, THE TRUST CANNOT BE A TOOL OF FURTHERANCE OF TRADE INTEREST O F ANY OTHER PERSON OR PURPOSE U/S 80G FOR PROMOTING COMMERCIAL ACTIVITIES . THE GRANT OF EXEMPTION U/S 80G IS NOT AUTOMATIC. IT IS SUBJECT T O THE SATISFACTION OF THE AUTHORITY WITH REGARD TO THE REGISTRATION IN PURSUA NCE TO THE RULE 11AA OF THE IT RULES. IT STANDS TO LOGIC BECAUSE SECTION 80 G PROVIDES FOR EXEMPTION FROM PAYMENT OF INCOME TAX. THE REVENUE T O THE GOVERNMENT IS DENIED ON ACCOUNT OF EXEMPTION IN TERMS OF LOSS. THEREFORE, THE AUTHORITY HAS TO LOOK INTO THE OBJECT OF THE INSTIT UTION AND ALSO FACTS AND CIRCUMSTANCES OF EACH CASE TO SATISFY ITSELF WITH R EGARDS TO THE CHARITABLE CHARACTER AND WITH REGARD TO ITS ACTIVITIES U/S 80G TO READ WITH RULE 11AA OF THE IT RULES, 1962. ONLY ON BEING SATISFIED WITH THE OBJECT, REGISTRATION IS PERMISSIBLE IN TERMS OF THE FACTS AVAILABLE ON R ECORD U/S 80G OF THE ACT. AS WE HAVE NARRATED IN THE EARLY PARAGRAPHS, THE AS SESSEE SPENT ITS FUND AGAINST THE PROVISIONS OF SECTION 13 OF THE IT ACT. AS SUCH, IN OUR OPINION, THE DIRECTOR (E) HAS TAKEN THE CORRECT VIEW OF THE FACTS OF THE CASE AND DENIED REGISTRATION U/S 80G OF THE ACT AND WE DO NO T FIND ANY JUSTIFIABLE GROUNDS TO INTERFERE WITH THE ORDER OF THE AUTHORI TY ON FACTS. ACCORDINGLY, WE CONFIRM THE SAME. WE HAVE ALSO GONE THROUGH VARI OUS CASE LAWS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE WHICH WERE DELIVERED ON AT DIFFERENT CONTEXTS OF THE FACTS AND WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE ASSESSEE COUNSEL. 12. IN THE CASE OF N.N. DESAI CHARITABLE TRUST CI TED SUPRA AUTHORITY EXAMINING THE QUESTION WHETHER A FUND OR INSTITUTION IS ELIGIBLE TO BE SATISFIED FOR THE PURPOSE OF SECTION 80G IS T O ACT AS THE ASSESSING OFFICER, ONCE THE ASSESSEE TRUST WAS REGISTERED U/S 12A AND WAS GRANTED RENEWAL U/S 80G (5). ALSO, REMOVAL THEREAFTER, THE CIT WAS NOT JUSTIFIED IN 15 REFUSING. FURTHER RENEWAL ON THE GRANT THAT THE INC OME OF THE ASSESSEE TRUST WAS LIKELY TO BE INCLUDED IN THE TAXABLE INCO ME FOR NOT COMPLYING WITH THE REQUIREMENT OF SECTION 11A. THE FACTS IN THE PRESENT CASE ARE ENTIRELY DIFFEREN T FROM THE ABOVE. IN THE INSTANT CASE THE QUESTION IS GRANT OF REGISTRATION UNDER SECTION 80G AND NOT RENEWAL AND ALSO THE ASSESSEE SPENT ITS FUND FO R NON-CHARITABLE PURPOSE. 13. IN THE CASE OF ORPAT CHARITABLE TRUST, THE HI GH COURT OBSERVED THAT CONTRAVENTION OF PROVISIONS OF SECTION 11 (5) BY THE ASSESSEE MAY BE A MATERIAL FACTOR, BUT CANNOT BE THE SOLE DETERMINA TIVE FACTOR FOR REFUSING RENEWAL U/S 80G (5). IN THE PRESENT CASE, IT IS NO T RENEWAL BUT GRANT OF REGISTRATION. 14. IN THE CASE OF SONIPET EDUCATIONAL CHARITABLE SOCIETY, PUNJAB HIGH COURT OBSERVED THAT, WHILE DEALING WITH THE AP PLICATION U/S 80G, THE SCOPE OF ENQUIRY BY THE CIT EXTENDS TO ELIGIBILITY OF THE ASSESSEE TO EXEMPTION UNDER VARIOUS PROVISIONS REFERRED TO IN T HAT SUB SECTION BUT NOT TO THE ACTUAL COMPUTATION OF THE INCOME, UNDER REGI STRATION OF INSTITUTION U/S 12A BY ITSELF IS SUFFICIENT PROOF THAT THE INST ITUTION IS CREATED OR ESTABLISHED FOR RELIGIOUS PURPOSES. 14. 1. FURTHER IT OBSERVED IN THAT FROM THE AFO RE EXTRACTED PROVISIONS, IT IS EVIDENT THAT THE FIRST AND FOREMOST REQUIREMENT WHICH THE INSTITUTION OR FUND HAS TO SATISFY IS THAT IT IS ESTABLISHED IN IN DIA FOR A CHARITABLE PURPOSE. THE CONDITIONS CONTEMPLATED BY CLAUSES (I) TO (VI) OF SECTION 80G(5) ARE THE CONDITIONS WHICH THE INSTITUTION OR THE FUND MUST ADDITIONALLY FULFIL SO AS TO BE ENTITLED TO THE APP ROVAL OF THE COMMISSIONER. IT IS WELL SETTLED THAT FOR THE PURPOSE OF CONSTRUC TING THE PURPOSE OF A TRUST, IT IS NOT NECESSARY THAT ONE REMAINS CONFINE D TO THE OBJECTS OF THE SOCIETY, OR THE TRUST, AS SET OUT IN THE MEMORANDUM OF ASSOCIATION OR THE TRUST DEED, AS THE CASE MAY BE. WHAT IS REQUIRED T O BE FOUND IS THE REAL PURPOSE OF ESTABLISHMENT OF THE TRUST. THERE CAN B E NO QUARREL WITH THE 16 PROPOSITION THAT THE COMMISSIONER, CONFERRED WITH T HE POWER TO GRANT EXEMPTION, IS FULLY COMPETENT TO FIND OUT THE REAL PURPOSE, AS DISTINGUISHED FROM THE OSTENSIBLE PURPOSE OF ESTABL ISHMENT OF THE SOCIETY OR THE TRUST. IF THE COMMISSIONER IS CONVINCED THA T THE PURPOSE OF THE SOCIETY OR THE TRUST IS NOT CHARITABLE, NOTHING DEB ARS HIM FROM DENYING THE APPROVAL, BUT AT THE SAME TIME, IF HE IS SATISFIED THAT THE OBJECTS OF THE TRUST AS SET OUT IN THE DEED OF DECLARATION, WERE C HARITABLE, THEN HAVING REGARD TO THE OBJECT OF THE PROVISION, THE APPROVAL SHOULD NOT BE DENIED ON MERE TECHNICALITIES. AS A MATTER OF FACT, THE P OWER TO GRANT OR NEGATIVE THE CLAIM FOR APPROVAL IS COUPLED WITH A D UTY.' 14.2. FURTHER IT WAS OBSERVED IN THAT CASE THAT D IRECTOR (E) HAS NOT FOUND THAT OBJECTS OF THE ASSESSEES SOCIETY WAS SE T OUT IN ITS OBJECT CLAUSE ARE NOT FOR CHARITABLE PURPOSE, NEITHER DID THE SOCIETY CARRY OUT ITS ACTIVITIES FOR FURTHERANCE OF ITS OBJECTS. BUT IN T HE PRESENT CASE, DIRECTOR (E) BROUGHT ON RECORD THAT THE ACTIVITIES CARRIED O UT IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 13 (1) (C) OF THE IT ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE ST AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.11.2009 SD SD (N.R.S. GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 20TH NOVEMBER, 2009 17 COPY FORWARDED TO: 1. M/S HYDERABAD CLEFT SOCIETY (REGD.) 2-2-23/29, DD C OLONY, BAGH AMBERPET, HYDERABAD 2. ADVOCATE, 2-2-23/22/29, DD COLONY, BAGH AMBERPET, H YDERABAD-13. 3. THE DIRECTOR INCOME TAX (EXEMPTIONS), HYDERABAD 4. CIT, HYDERABAD 5. DDIT (E), HYDERABAD 6. THE DR, ITAT, HYDERABAD NP/