M/S SHRI NATH KIDNEY FOUNDATION SOCIETY , JALANDHAR V. COMMISSIONER OF INCOME TAX, (EXAMPTION), CHANDIGARH

ITA 687/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6852 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-11-2018
• Assessment Year: misc
• Appeal Filed On: 06-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK KUMAR LD
• Assessee Lawyers: ADITYA SHARMA LD
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.687(ASR)/2017 SHRI NATH KIDNEY FOUNDATION SOCIETY 37-A, SILVER RESIDENCY APARTMENTS NAKODAR ROAD, JALANDHAR [PAN: AAMTS 91632] VS. THE CIT, (EXEMPTIONS) CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ADITYA SHARMA (LD. CA) RESPONDENT BY: SH. ALOK KUMAR (LD. CIT- DR) DATE OF HEARING: 14.11.2018 DATE OF PRONOUNCEMENT: 02.01.2019 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/AP PELLANT AGAINST THE ORDER DATED 28.08.2017, IMPUGNED HEREIN , PASSED BY THE LD. CIT, (EXEMPTIONS), CHANDIGARH, U/S 12AA(1)(B)(II) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON FACTS AND THE CIRCUMSTANCES OF THE CAS E AND THE PROVISIONS OF LAW, REJECTING THE APPLICATION OF THE ASSESSEE S OCIETY FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT, 1961 IS INCORRECT AND UNJUSTIFIED. 2. THAT ON FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE WORTHY COMMISSIONER OF INCOME TAX (EXEM PTIONS), CHANDIGARH ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 2 HAS WRONGLY CONCLUDED THAT THE APPLICANT ASSESSEE I S ENGAGED IN PROMOTING A PROFIT MAKING VENTURE. 3 . AT THE OUTSET, IT IS OBSERVED THAT THERE IS A DE LAY OF FIVE DAYS FOR FILING THE INSTANT APPEAL WHICH BY WAY OF APPLICATION AS WEL L AS AN AFFIDAVIT FILED BY THE PRESIDENT OF THE ASSESSEES SOCIETY, EXPLAINED BY SUB MITTING THAT THE ORDER IMPUGNED HEREIN WAS RECEIVED BY THE ASSESSEE ON 31 ST AUGUST, 2017 AND THE SAME WAS FORWARDED TO THEIR AUTHORIZED REPRES ENTATIVE, SH. ADITYA SHARMA, C.A OF M/S. D. SHARMA & CO., JALANDHAR FOR F ILING THE APPEAL, HOWEVER, THE SAME WAS GOT DELAYED DUE TO RUSH OF OFFICE WORK IN THE OFFICE OF ASSESSEES COUNSEL AND FURTHER RUSH OF THE WORK WAS INCRE ASED IN THE MONTHS FOLLOWING IMPOSITION OF GOODS & SERVICE TAX (GST ) IN JULY, 2017 WHICH WAS FURTHER INCREASED BY THE DUE DATE OF FILING T AX AUDITS & INCOME TAX RETURN IN THE MONTH OF OCTOBER, 2017. 4. ON THE CONTRARY, THE LD. DR OBJECTED AND SUBMITTED THA T THE DELAY AS EXPLAINED BY THE ASSESSEE/APPELLANT SOCIETY IS NOT GENUIN E AND THEREFORE, THE APPEAL OF THE ASSESSEE IS LIABLE TO BE DISMISSED IN LIMINE ITSELF. 5. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE PARTIES. T HE ASSESSEE SOCIETY HAS SPECIFICALLY FILED THE AFFIDAVIT OF ITS P RESIDENT AND EXPLAINED THE UNAVOIDABLE CIRCUMSTANCES DUE TO BUSYNESS OF ITS COUNSEL WHICH ACCORDING TO OUR OPINION SEEMS TO BE QUITE LOGICAL AND REASONABLE AND HENCE, WE DO NOT HAVE ANY HESITATION TO CONDONE THE DE LAY OF FIVE DAYS. 6. NOW, WE WILL PROCEED WITH THE CASE ON MERIT. IN THE INSTANT CASE, THE SOCIETY IS AN ON-GOING ENTITY AN D HAS BEEN AN OPERATION SINCE 11.02.2013 AND HAD FILED AN APPLICATIO N U/S 12A OF THE ACT, ON 07.02.2017 WHICH WAS TAKING INTO CONSIDERATION WHILE OFFERING AN ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 3 OPPORTUNITY OF PERSONAL HEARING ON 18.07.2017 BY THE LD. CIT(E) AND THE APPLICANT WAS REQUESTED TO FILE THE DETAILS/CLARIFICATIO NS AS MENTIONED IN PARA NO.5 OF THE ORDER ON 02.08.2017, HOWEVER, NO ONE AT TENDED ON THE DATE FIXED AND THEREAFTER ANOTHER SHOW CAUSE DATED 7/8 AUGU ST, 2017 WAS ISSUED TO THE APPLICANT SOCIETY WHILE REQUESTING TO SUBMIT TH E REPLY TO THE QUERIES RAISED ON 16.08.2017, IN RESPONSE TO WHICH SH. INDREJE ET SHARMA CA, THE AR OF THE ASSESSEE SOCIETY ATTENDED THE PROCEEDING. THE CO UNSEL WAS FURTHER REQUESTED TO SUBMIT THE DETAILS OF TAX, HOSPITAL EXPENSE S AS CLAIMED ALONG WITH STATEMENT OF BANK ACCOUNTS AND THE CASE WAS ADJOURNE D TO 22.08.2017. SUBSEQUENTLY, REPLY TO THE QUERIES RAISED BY THE LD. C IT(E) WAS SUBMITTED BY THE ASSESSEE SOCIETY ON 22.08.2017. ON PERUSAL OF WHICH THE LD. CIT(E) REJECTED THE GRANT OF REGISTRATION U/S 12AA OF THE ACT BY OBSERVING AS UNDER: 7. PERUSAL OF THE REPLY SUBMITTED BY THE APPLICA NT REVEALS THAT THE RECEIPTS OF THE SOCIETY ARE ONLY THROUGH DONATI ONS. MAJOR EXPENDITURE HAS BEEN SHOWN UNDER THE HEAD HOSPITAL IZATION EXPENSES WHICH CONSTITUTE 41.3%, 86.7% AND 78.7% O F THE TOTAL EXPENDITURE INCURRED BY THE SOCIETY DURING FINANCIA L YEAR 2013-14, F.Y.2014-15 AND F.Y.2015-16 RESPECTIVELY. OTHER CLA IMED EXPENSES ARE OF GENERAL NATURE SUCH AS ACCOUNTING CHARGES, B ANK CHARGES, LEGAL CHARGES AND SALARIES ETC. THE APPLICANT WAS S PECIFICALLY ASKED TO CLARIFY AND EXPLAIN THE NATURE AND GENUINENESS O F THE EXPENDITURE REFLECTED UNDER THE HEAD HOSPITALIZATION EXPENSES , SINCE THE EXPENDITURE WAS CLAIMED TO BE FOR THE CHARITABLE PU RPOSE. THE APPLICANT VIDE REPLY DATED 22.08.2017 SUBMITTED THA T THE HOSPITALIZATION EXPENSES ARE PAID TO M/S SRINATH NE PHROCARE PRIVATE LIMITED, A SUBSIDIARY OF M/S FRESENIUS MEDICAL CARE INDIA PRIVATE LIMITED AS A REIMBURSEMENT TO THE EXPENDITURE INCUR RED BY THE PATIENTS AT M/S NEPHROCARE PRIVATE LIMITED FOR DIAL YSIS. FURTHER, THE TWO DIRECTORS OF THE COMPANY (RECEIVING THE PAYMENT ) SH. RAJEEV KUMAR BHATIA AND SH. AJAY MARWAHA ARE ALSO THE MEMB ERS OF THE APPLICANT SOCIETY. IT IS CLEAR THAT THE COMPOSITION OF THE SOCIETY OVERLAPS WITH THAT OF THE COMPANY M/S SRINATH NEPHR OCARE PRIVATE LIMITED GOING BY SIMILAR NAME AS THAT OF THE APPLIC ANT SOCIETY. MOREOVER THE OPERATIONS OF THE TWO ENTITIES ARE SEE MINGLY INTERTWINED. THE QUANTUM OF FINANCIAL ASSISTANCE GI VEN BY THE SOCIETY IS VERY MEAGER AND VARIES FROM RS.200 TO RS .2,250 WITH MAJORITY OF THE FIGURES TOWARDS THE LOWER END. ON T HE OTHER HAND, IT IS A KNOWN FACT THAT EXPENSES ON NEPHROCARE/SURGERY ARE QUITE ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 4 SUBSTANTIAL AND ARE NOT EVIDENCED TO BE BORN BY THE SOCIETY. IN A NUTSHELL IT IS EVIDENT THAT THE SOCIETY IS SUBSIDIZ ING PART OF THE ADMISSION FEE/FACILITATING ADMISSIONS TO A RELATED CONCERN. THERE IS NO EVIDENCE OF ANY PERSON SUFFERING FROM A SERIOUS AILMENT, BEING HELPED FINANCIALLY OR SUBSIDIZED BY THE SOCIETY. TH E ACTIVITIES OF THE APPLICANT SOCIETY ARE MERE COLLECTING DONATIONS AND DISBURSING THE SAME INDIRECTLY TO ITS RELATED COMPANY AND CREATING A CAPTIVE PATIENT BASE FOR THE CONNECTED HOSPITAL. THIS CONCLUSION WO ULD HAVE BEEN REBUTTED HAD EVEN A SINGLE CASE OF FINANCING A KIDN EY TRANSPLANT OR TREATMENT OF SERIOUS KIDNEY AILMENT BEEN CITED. FIN ANCIAL STATEMENTS DO NOT CORROBORATE PURSUANCE OF ANY OTHER OF THE HO ST OF OBJECTIVES ENUMERATED IN THE MEMORANDUM OF THE SOCIETY. IN SUC H A CASE ONE CANNOT RESTRICT ONESELF TO THE OSTENSIBLE OBJECTS M ERELY PARTICULARLY IN A CASE WHERE THE ACTIVITIES ARE HELD TO BE UNDERTAK EN TO PROMOTE A PROFIT MAKING CONNECTED VENTURE. 8. IN VIEW OF ALL THE ABOVE COUPLED WITH THE FACT T HAT FACILITATING ADMISSION DOESNT AMOUNT TO CHARITY, THE CHARITABLE INTENT OF THE SOCIETY IS NOT BROUGHT OUT. THE APPLICATION FOR GRA NT OF REGISTRATION U/S 12AA IS ACCORDINGLY REJECTED. 7. FROM THE GROUNDS OF REJECTIONS AS OBSERVED IN PARA NO .7 OF THE IMPUGNED HEREIN, IT REFLECTS THAT THE CIT(E) HAD TAKE N INTO CONSIDERATION, FINANCIAL STATEMENT OF FINANCIAL YEAR 2013-14, 14-15 AND 2015-16 AND OBSERVED THAT THE MAJOR EXPENDITURE HAVE BEEN SHOWN U NDER THE HEAD HOSPITALIZATION EXPENSES, WHICH CLAIMED TO BE PAID TO M/S. SRINATH NEPHROCARE PRIVATE LIMITED, A SUBSIDIARY OF M/S FRESENI US MEDICAL CARE INDIAN PRIVATE LTD. AS A REIMBURSEMENT TO THE EXPENDI TURE PARTLY INCURRED ON ACCOUNT OF TREATMENTS OF THE PATIENTS AT M/S. SRINATH NEPHROCARE PRIVATE LIMITED FOR DIALYSIS. IT WAS FURTHER OBSERVED BY THE L D. CIT(A) THAT TWO DIRECTORS OF THE COMPANY (RECEIVING THE PAYMENT) SH. R AJIV KUMAR BHATIA AND SH. AJAY MARWAHA ARE ALSO THE MEMBERS OF THE APPL ICANT SOCIETY. IT IS CLEAR THAT THE COMPOSITION OF THE SOCIETY OVERLAPS WITH T HAT OF THE COMPANY M/S. SRINATH NEPHROCARE PRIVATE LIMITED, GOING BY SIMI LAR NAME AS THAT OF THE APPLICANT SOCIETY. MOREOVER, THE OPERATIONS OF THE TWO ENTITIES ARE SEEMINGLY INTERTWINED. IT WAS FURTHER OBSERVED BY THE LD. CIT(A) THAT THE QUANTUM OF FINANCIAL ASSISTANCE GIVEN BY THE SOCIETY IS VE RY MEAGER AND ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 5 VARIES FROM RS.200 TO RS.2,250 WITH MAJORITY OF THE FI GURES TOWARDS THE LOWER END. ON THE OTHER HAND, IT IS A KNOWN FACT THAT EXPENSES ON NEPHROCARE /SURGERY ARE QUITE SUBSTANTIAL AND ARE NOT EVIDENCED TO BE BORNE BY THE SOCIETY. IN A NUTSHELL, IT IS EVIDENT THAT TH E SOCIETY IS SUBSIDIZING PART OF THE ADMISSION FEE/FACILITATING ADMISSIONS TO A RELATE D CONCERN. THERE IS NO EVIDENCE OF ANY PERSON SUFFERING FROM A SERIOUS ALIMENT, BEING HELPED FINANCIALLY OR SUBSIDIZED BY THE SOCIETY. THE ACTIVITIE S OF THE APPLICANT SOCIETY ARE MERE COLLECTING DONATIONS AND DISBURSING THE SAME IN DIRECTLY TO ITS RELATED COMPANY AND CREATING A CAPTIVE PATIENT BASE FOR THE CONNECTED HOSPITAL. FURTHER, IT WAS ALSO OBSERVED BY THE LD. CIT( A) THAT FINANCIAL STATEMENTS DO NOT CORROBORATE PURSUANCE OF ANY OTHER HOST OF OBJECTIVES ENUMERATED IN THE MEMORANDUM OF THE SOCIETY. IN SUCH A CASE, ONE CANNOT RESTRICT ONESELF TO THE OSTENSIBLE OBJECTS MERELY PARTICUL ARLY IN A CASE WHERE THE ACTIVITIES HELD TO BE UNDERTAKEN TO PROMOTE A PRO FIT MAKING CONNECTED VENTURE. FINALLY, IT WAS OBSERVED BY THE LD. CIT(E), THAT IN VIEW OF ALL THE ABOVE COUPLED WITH THE FACT THAT FACILITATING ADMISSION DOESNT AMOUNT TO CHARITY, THE CHARITY INTENT OF THE SOCIETY IS NOT BROUG HT OUT. 8. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THE ASSESSEE/APPLICANT SOCIETY IS A SOCIETY REGISTE RED UNDER THE PROVISIONS OF THE SOCIETIES REGISTRATION ACT, 1860 VIDE REGISTRATION NO.DIC/JAL/416/2012-13 DATED 11.02.2013 WITH THE FO LLOWING OBJECTS. 1. TO PROVIDE MEDICAL AID AND FINANCIAL ASSISTANC E TO THE POOR PATIENTS SUFFERING FROM ILLNESS OR ANY OTHER DISEAS ES AND PROVIDING EVERY KIND OF MEDICAL FACILITIES. 2. TO PROVIDE THE TREATMENT TO THE PERSON REQUIRING MEDICINAL ATTENTION OF REHABILITATION AND TO PROVIDE MEDICAL RELIEF TO THE PUBLIC IN ALL BRANCHES OF MEDICAL SCIENCES BY ALL AVAILABL E MEANS. 3. TO PROVIDE FREE MEDICAL CONSULTATION TO THE NEEDY PATIENTS AND TO ORGANIZE AND CARRY OUT DONATION CAMPS. FREE HEALTH CHECK-UPS AND SUCH OTHER PROGRAMS TO CREATE PUBLIC AWARENESS AND ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 6 DO EDUCATE GENERAL PUBLIC TOWARDS BETTER HEALTH AND HYGIENE AND PREVENTIVE MEASURES AGAINST DISEASES. 4. TO PROVIDE EDUCATION REGARDING VARIOUS DISEASES TO THE PEOPLE LIVING IN THE MUD AREAS, VILLAGE ETC. AND TO PROVID E THE WAYS OF TREATMENT TO PREVENT SUCH DISEASES. 5. IMPROVING THE PUBLIC HEALTH AND MEDICAL EDUCATION I N INDIA AND TO SET UP HOSPITALS, NURSING HOMES AND HEALTH C ARE CENTRES AND PROVIDE, ENCOURAGE, INITIATE OR PROMOTE FACILITIES FOR DISCOVERY IMPROVEMENT OR DEVELOPMENT OF NEW METHODS OF DIAGNO SIS, UNDERSTANDING AND PREVENTIONS AND TREATMENT OF DISE ASES. TO BUILD HOSPITALS AND MAKE ARRANGEMENTS LIKE FREE AMBULANCE FACILITY, FREE MEDICINES ETC. FOR POOR AND NEEDY PEOPLE. 6. TO DO THE OTHER SOCIAL WORK, CAMPAIGNING AGAINST E VILS OF THE SOCIETY LIKE HIV/AIDS, SMOKING AND DRINKING, DRUGS, EDUCATION REGARDING PREVENTION FROM SUCH EVILS. 9. FROM THE OBJECTS, IT REFLECTS THAT THE ASSESSEE SOCIETY HAS B EEN ESTABLISHED IN ORDER TO PROVIDE MEDICAL AID AND FINA NCIAL ASSISTANCE TO THE POOR PATIENTS SUFFERING FROM ILLNESS OR ANY OTHER DISEASE S, TO PROVIDE EVERY KIND OF MEDICAL FACILITIES AND TO PROVIDE THE TREATMEN T TO THE PERSON REQUIRING MEDICAL ATTENTION OR REHABILITATION AND TO PROVIDE MEDICAL RELIEF TO THE PUBLIC IN ALL BRANCHES OF SCIENCES BY ALL AVAILABLE ME ANS. MORE OR LESS THE SOCIETY HAS BEEN FORMED WITH THE OBJECT TO PROVIDE MEDI CAL AID AND FINANCIAL ASSISTANCE TO THE POOR PATIENTS IRRESPECTIVE OF ANY DISEASE . DURING THE FINANCIAL YEAR 2013-14 AND 2014-15 AND 2015-16 THE ASSESSEE SOCIETY HAS INCURRED EXPENSES UNDER THE HEAD HOSPITALIZATION EXPENS ES TO THE TUNE OF RS.41.3%, 86.7% & 78.7% OF THE DONATIONS RECEIVED WHICH GOES TO SHOW THAT THE ASSESSEE SOCIETY IS CERTAINLY DOING SOME CHARITABLE WORK TO ACHIEVE ITS OBJECT, MAY NOT BE GENERAL IN NATURE BUT OTHERWI SE IN SPECIAL BRANCH OF MEDICAL SCIENCE LIKE KIDNEY DISEASE. 10. DURING THE COURSE OF HEARING, WE ALSO VERIFIED FROM THE VOUCHERS, DOCUMENTS AND OTHER MATERIAL AVAILABLE ON RECORD I.E., INVOICES, DEBIT NOTES ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 7 AND CREDIT NOTES FROM WHICH GOES TO SHOW THAT THE ASSESEE SOCIETY HAS EXPLAINED TO HAVE EXTENDED MEDICAL AIDS TO THE PATIEN TS OF KIDNEY DISEASE. 11. THE LD. DR HAD RAISED OBJECTION THAT THE ASSESSEE SOCIETY IS HELPING THE PATIENT OF M/S. SRINATH NEPHROCARE PRIVATE LIMITE D ONLY BUT NOT OTHERWISE AND THERE IS NOT A SINGLE INSTANCE WHEREBY IT CAN BE PRO VED THAT THE ASSESSEE SOCIETY HAS EXTENDED ANY MEDICAL HELP TO THE PATI ENTS SUFFERING FROM OTHER AILMENTS OR PATIENTS OF OTHER HOSPITALS/ME DICAL CENTERS ETC. WHICH STRENGTHEN THAT THE SOCIETY SUBSIDIZING PART OF THE ADMI SSION FEE WHICH FACILITATE M/S. SRINATH NEPHROCARE PRIVATE LIMITED ON LY, FROM WHERE DIALYSIS CENTRE IS BEING OPERATED AND EVEN 02 DOCTORS OF THAT CE NTER ARE ALSO MEMBERS OF THE APPLICANT SOCIETY, FROM WHICH IT IS CLEAR T HAT THE COMPOSITION OF THE SOCIETY OVERLAPS WITH THAT OF THE COMPANY M/S. SR INATH NEPHROCARE PRIVATE LIMITED AND GOING BY SIMILAR NAME AS THAT OF THE APPLICANT SOCIETY AND OPERATIONS OF THE TWO ENTITIES ARE SEEMINGLY INTE RTWINED. 12. IN REPLY, IT WAS SUBMITTED BY THE LD. COUNSEL OF THE ASSESSEE SOCIETY THAT M/S. SRINATH NEPHROCARE PRIVATE LIMITED IS SUBSIDIA RY OF M/S FRESENIUS MEDICAL CARE INDIA PRIVATE LIMITED AND THE ULTIMATE HOLDING COMPANY OF THESE COMPANIES IS FRESENIUS MEDICAL CARE AG & CO. (A GERM AN COMPANY). FURTHER, THE PARENT COMPANY HOLDS APPROXIMATELY 89.5% OF THE SHARE CAPITAL IN SRINATH NEPHROCARE PRIVATE LIMITED WHILE 5% OF TH E SHARE CAPITAL IS HELD BY DR. AJAY MARWAHA & DR. RAJEEV KUMAR BHATIA, EACH, WHO ARE DIRECTORS IN THE COMPANY AND ALSO MEMBERS OF THE MANAGING BODY OF T HE SOCIETY. THE WORKING STYLE OF THE APPLICANT SOCIETY IS AS UNDER: A PATIENT, WHO IS FINANCIAL WEEK, IS COUNSELED AT THE DIALYSIS CENTRE TO APPROACH THE SOCIETY FOR FINANCIAL AID. T HE PATIENT THEN SUBMITS AN APPLICATION TO THE SOCIETY FOR FINANCIAL HELP. THE PATIENT IS REQUIRED TO PROVIDE HIS FAMILY DETAILS AND FINA NCIAL POSITION IN THE APPLICATION. THE MATTER IS CONSIDERED BY THE TR USTEES AND NECESSARY AID IN THE FORM OF REGULAR DISCOUNTS FRO M THE DIALYSIS UNIT IS ALLOWED TO THE PATIENT. IN OTHER WORDS, A PART OF THE ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 8 EXPENSE OF THE PATIENT WHICH ARE PAYABLE TO THE DIA LYSIS UNIT, ARE BORNE BY THE SOCIETY. M/S. SRINATH NEPRHOCARE PRIV ATE LIMITED ISSUES A DEBIT NOTE TO THE SOCIETY, FOR THE CHARGES RECOVERABLE FROM THE PATIENT, IN RESPECT OF WHOM THE SOCIETY HAS COM MITTED TO PROVIDE FINANCIAL HELP AND IN SUBSEQUENTLY THE ASSE SSEE SOCIETY IS PAYING THE SAID AMOUNT OF DEBIT NOTE. IN SUPPORT OF ITS CASE, THE ASSEASSEE HAS ALSO RELIED UPON THE CASE TITLED AS DY. CIT(EXEMPTIONS) VS. ST. SAVIER EDUCATIONAL & CH ARITABLE TRUST (ITA NO.1192/CHNY/ 2017) WHEREIN CERTAIN PAYMENTS IN LIEU OF SERVICES WERE MADE TO A COMPANY IN WHICH TWO TRUSTEES OF THE TRUST WE RE ALSO DIRECTORS AND THE EXEMPTION UNDER SECTION 11 WAS NOT ALLOWED. IT WAS HELD BY THE BENCH THAT JUST BECAUSE, THE TRUSTEES WERE DIRECTORS, WOU LD NOT MEAN THAT THEY WERE ENTITLED TO 20% OF THE PROFIT OR WERE HAV ING 20% OF ITS VOTING POWER. IN OUR CONSIDERED OPINION THE RATIO OF THE AFO RESAID JUDGMENT PASSED BY THE CHENNAI BENCH IS SQUARELY APPLICABLE TO THE INSTA NT CASE WHEREIN 02 MEMBERS OF THE SOCIETY HAPPENED TO BE A DIRECTOR IN M/S. SRINATH NEPHROCARE PRIVATE LIMITED BY HOLDING ONLY 5% OF THE SHARE CAPITAL IN EACH, THEREFORE, THE ADVERSE INFERENCE CANNOT BE DRAWN THAT COMPOSITION OF SOCIETY OVERLAPS WITH THAT COMPANY M/S. SRINATH NEPHROCARE PRIV ATE LIMITED GOING BY SIMILAR NAME AS THAT OF APPLICANT SOCIETY AND OPERATI ONS OF THE TWO ENTITIES ARE SEEMINGLY INTERTWINED. 13. NOW COMING TO ANOTHER GROUND OF REJECTION OF APPLICA TION U/S 12AA OF THE ACT TO THE EFFECT THAT THE SOCIETY IS SUBSIDIZING PA RT OF THE ADMISSION FEE WHICH FACILITATING ADMISSION TO RELATED CONCERN AND THE RE IS NO EVIDENCE OF ANY PERSON SUFFERING FROM A SERIOUS ALIMENT, BEING HE LPED FINANCIALLY OR SUBSIDIZED BY THE SOCIETY. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. CIT-DR THAT ALTHOUGH THE ASSESSEE SOCIETY IS NOT ENTITLED TO GET REGISTRATION BUT FOR THE SAKE OF ARGUMENT, STILL IF THE BENCH CONSID ERING THE GRANT OF REGISTRATION THEN IT SHOULD BE SUBJECTED TO THE CONDITIO N THAT THE ASESSEE ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 9 SOCIETY SHALL NOT RESTRICT ITS MEDICAL HELP TO PARTICULAR P ATIENT OF KIDNEY DISEASE AND OF M/S. SRINATH NEPHROCARE PRIVATE LIMITED ONLY BUT SHOULD ALSO EXTEND MEDICAL AIDS/HELP TO THE OTHER PATIENTS SUFFERI NG FROM VARIOUS OTHER ALIMENTS AND OF OTHER HOSPITALS/NURSING HOMES ETC. ON TH E AFORESAID SUBMISSION, THE LD. AR HAS NOT SHOWN ANY RELUCTANCE AND/OR OBJECTIONS. IN OUR CONSIDERED VIEW SUBMISSION/SUGGESTION OF THE LD. DR SE EMS TO BE QUITE LOGICAL AND REASONABLE BECAUSE THE ASSESSEE SOCIETY CAN NOT RESTRICT ITS MEDICAL AID/HELP TO PATIENTS SUFFERING FROM PARTICULAR DECEASE AND/OR PATIENTS OF PARTICULAR HOSPITAL. 14 IT IS ALSO CASE OF THE ASSESSEE THAT WORTHY CIT(E) HAS NO T ACCORDED ANY OPPORTUNITY TO THE ASSESSEE SOCIETY TO PROVIDE ANY SU BMISSION/ EXPLANATION ON THE ISSUE, ALTHOUGH, VARIOUS DETAILS AND INFORMATION HAVE BEEN CALLED FOR AND HAVE DULY BEEN PROVIDED AT THE T IME OF HEARING AND THEREFORE IN ABSENCE OF OPPORTUNITY OF BEING HEARD, T HE ASSESEE WAS UNABLE TO EXPLAIN/SUBSTANTIATE ITS CASE PROPERLY. WE CONSIDERED THIS ASPECTS ALSO, AS IT IS REFLECTING FROM TH E ORDER THAT ON TWO OCCASIONS, THE ASSESSEE WAS ASKED TO SUBMIT THE REPLY IN RESPONSE TO THE QUERIES RAISED IN PARA NO.5 OF THE ORDER AND ON B OTH OCCASIONS THE ASSESSEE HAS SUBMITTED THE DETAILED REPLY ALONG WITH DOCUM ENTS, HOWEVER, AFTER RECEIVING THE REPLY ON 22.08.2017, THE ASSESSEE WA S NEVER BEEN CONFRONTED WITH THE DOCUMENTS SUBMITTED IN SUPPORT OF IT S CASE AND EVEN NOT GIVEN ANY OPPORTUNITY OF HEARING TO SUBSTANTIATE ITS C ASE BEFORE THE LD. CIT(E) WHICH GOES TO SHOW THAT THE ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY OF BEING HEARD WHICH ACCORDING TO OUR CONSID ERED VIEW AMOUNTS TO CONTRAVENTION TO THE PRINCIPLE OF NATURAL JUSTICE A ND THEREFORE ORDER IMPUGNED HEREIN CANNOT SUSTAIN AND LIABLE TO BE SET ASID E WITH DIRECTION TO ITA NO.687/ASR/2017 SH. NATH KI DNEY FOUNDATION SOCIETY VS. CIT(E) 10 THE LD. CIT(E) TO PROVIDE PROPER AND REASONABLE OPPO RTUNITIES OF BEING HEARD TO THE ASSESSEE SOCIETY AND TO PASS THE ORDER AFRESH WITHIN 03 MONTHS OF THIS ORDER, WHILE CONSIDERING THE PECULIAR FACTS AND CIRCUMSTA NCES OF THE CASE AND ALSO KEEPING IN VIEW THE DISCUSSIONS/OBSERVATIONS MADE IN THIS ORDER. HENCE, THE CASE IS REMANDED TO THE FILE OF LD. CIT(E), CHANDI GARH. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE SOCIETY ST ANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 02.01.2019. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:02.01.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SHRI NATH KIDNEY FOUNDATION SOCIETY 37-A, S ILVER RESIDENCY APARTMENTS NAKODAR ROAD, JALANDHAR (2) THE CIT(EXEMPTIONS), CHANDIGARH (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER