M/s. Punjab Institute of Medical Sciences, Jalandhar V. The Commissioner of Income Tax II, Jalandhar

ITA 740/ASR/2013

• Counselvise Citation: 74020914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-08-2015
• Assessment Year: misc
• Appeal Filed On: 23-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Charitable institution; Principle of natural justice; Block assessment; Cancellation of registration
• Section: 143(3); 12A; 12AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (BEFORE SHRI A.D. JAIN, JM & SHRI T.R. MEENA AM) ITA NO. 740/ASR/2013 ASSESSMENT YEAR : M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES, GARHA ROAD, JALANDHAR VS. COMMISSIONER OF INCOME TAX-II, JALANDHAR. PAN NO.: AAABP 0193 P APPELLANT RESPONDENT ASSESSEE BY : SHRI PADAM BAHL & SHRI VIPUL ARORA (CA) REVENUE BY : SHRI TARSEM LAL (DR) DATE OF HEARING : 24/08/2015 DATE OF PRONOUNCEMENT : 29/09/2015 O R D E R PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISES AGAIN ST THE ORDER DATED 24/10/2013 PASSED BY THE LD. C.I.T.-II, JALAND HAR. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX, JALANDHAR HAS GROSSLY ERRED, BOTH IN LAW AND ON FACT S WHILE CANCELLING REGISTRATION GRANTED U/S 12A. 2. THE LEARNED COMMISSIONER OF INCOME TAX, JALANDHAR HAS FAILED TO APPRECIATE THE POWER TO CANCEL 2 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT REGISTRATION IN RESPECT OF REGISTRATION GRANTED U/S 12A WAS BROUGHT ON THE STATUTE W.E.F. 01/06/2010 PROSPECTIVELY IN SECTION 12AA(3) AND THE CANCELLATI ON MADE W.E.F. ASSESSMENT YEAR 2004-05 IS INVALID AND ILLEGAL IN THE EYES OF LAW. 3. THAT LEARNED CIT-II, JALANDHAR HAS ERRED IN RELYING UPON REJECTION OF APPLICATION OF THE APPELLANT U/S 10(23)(C)(VI) BY WORTHY CHIEF COMMISSIONER OF INCOME TAX, LUDHIANA AND IN NOT APPRECIATING THAT TH E REJECTION CANNOT HAVE ANY BEARING ON ITS REGISTRATI ON U/S 12(A)(A) OF THE INCOME TAX ACT, 1961 AS THE TWO PROVISIONS ARE APPLICABLE IN DIFFERENT SPHERES. 4. THAT THE SHOW CAUSE NOTICE DATED 04/06/2013 ISSUED BY COMMISSIONER OF INCOME TAX, JALANDHAR IS VAGUE INASMUCH AS IT DOES NOT MENTION THE YEARS IN WHICH THE ACTIVITIES OF THE TRUST WERE ALLEGEDLY NOT GENUIN E AND THE SAME WEE NOT CARRIED OUT AS PER THE OBJECTS OF THE TRUST. 5. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX, JALANDHAR CANCELLING THE REGISTRATION RETROSPECTIVELY FROM ASSESSMENT YEAR 2004-05 HAS BEEN PASSED WITH THE SOLE OBJECTIVE OF SUPPORTING TH E APPEAL OF THE DEPARTMENT FOR ASSESSMENT YEAR 2006- 07 BEFORE THE HONBLE ITAT, AMRITSAR BENCH, AMRITSAR . 6. A) THAT THE LEARNED COMMISSIONER OF INCOME TAX, JALANDHAR HAS FAILED TO APPRECIATE THAT THE TRIPARTITE CONCESSION AGREEMENT WAS DONE BY THE APPELLANT AND GOVERNMENT OF PUNJAB WITH 3 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT CHARITABLE SOCIETY REGISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. B) THAT THE LEARNED COMMISSIONER OF INCOME TAX, JALANDHAR HAS ALSO FAILED TO APPRECIATE THAT THE TRIPARTITE CONCESSION AGREEMENT WAS DONE IN A TRANSPARENT MANNER AND IT WAS IN FURTHERANCE OF THE OBJECTS OF THE SOCIETY. C) THAT THE COMMISSIONER OF INCOME TAX, JALANDHAR HAS FAILED TO APPRECIATE THAT THE TRIPARTITE CONCESSION AGREEMENT FOR DEVELOPMENT OF PUNJAB INSTITUTE OF MEDICAL SCIENCES UNDER PUBLIC PRIVATE PARTNERSHIP FORMAT WAS EXECUTED ON 28 TH AUGUST, 2009 WHEREAS THE REGISTRATION U/S 12A(A) HAS BEEN CANCELLED W.E.F. ASSESSMENT YEAR 2004-05. D) THAT THE LEARNED CIT-II, JALANDHAR HAS ALSO FAILED TO APPRECIATE THAT THE TERMS OF THE CONCESSION AGREEMENT CONTAINED AND FIXED THE FEES STRUCTURES TO BE CHARGED FROM PATIENTS IN HOSPITAL AND FROM STUDENTS OF THE MEDICAL COLLEGE AND TO PROVIDE PREDETERMINED STANDARD OF INFRASTRUCTURE AS LAID DOWN BY THE APPELLANT IN FURTHERANCE OF ITS OBJECTS. E) THAT THE LEARNED CIT-II, JALANDHAR HAS FAILED TO APPRECIATE THAT THE APPELLANT HAD ALREADY ESTABLISHED THE PUNJAB INSTITUTE OF MEDICAL SCIENCES AND THE CONCESSION AGREEMENT WAS ENTERED INTO TO ADMINISTER AND MANAGE ITS AFFAIRS IN A BETTER MANNER. 4 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT F) THAT THE LEARNED CIT-II, JALANDHAR HAS WRONGLY INFERRED THAT THE APPELLANT WAS A LESSOR WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAS LAID DOWN ALL THE POLICIES, TERMS AND CONDITIONS OF RUNNING THE HOSPITAL AND MEDICAL COLLEGE UNDER THE CONCESSION AGREEMENT AND THAT FOUR OUT OF FIVE MEMBERS OF STEERING COMMITTEE WERE FROM APPELLANT AND GOVERNMENT OF PUNJAB. 7. THAT THE LEARNED CIT-II, JALANDHAR FURTHER FAILED TO APPRECIATE THAT THE APPELLANT HAS UNDERTAKEN CHARITABLE PROJECTS FOR FURTHERANCE OF ITS OBJECTS WHICH INCLUDE UPGRADATION OF DIFFERENT MEDICAL COLLEGES, SETTING UP OF CANCER DIAGNOSTIC TREATMENT CENTRES, DRUG DE-ADDICTION CENTRES IN PUNJAB AND HAD APPLIED AN AMOUNT OF RS. 78.67 CRORE TILL 22/11/2012 TOWARD S THE SAME. 8. THAT THE CIT-II, JALANDHAR HAS GROSSLY ERRED IN N OT APPRECIATING THAT THE SOCIETY HAD COMPLIED WITH THE PROVISIONS OF SECTION 11(2) AND APPLIED SET APART F UNDS IN FURTHERANCE OF ITS OBJECTS WITHIN THE STIPULATED TIME. 9. THAT THE CIT-II, JALANDHAR HAS FAILED TO APPRECIA TE THAT ASSESSMENTS FOR ASSESSMENT YEARS 2003-04, 2004-05, 2008-09 AND 2010-11 WERE MADE U/S 143(3) OF INCOME TAX ACT, 1961 AND ASSESSING OFFICERS HAS HELD THE SOCIETY TO BE GENUINE & CARRYING OUT ITS ACTIVITIES IN FURTHERANCE OF ITS OBJECTS IN ALL THE SE YEARS. 5 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT 10. THAT THE IMPUGNED ORDER U/S 12AA(3) PASSED BY TH E LEARNED COMMISSIONER OF INCOME TAX, JALANDHAR IN THE CASE OF APPELLANT IS PATENTLY INVALID, CONTRARY TO PROVISION OF LAW, CONTRARY TO ALL CANONS OF NATURAL JUSTICE AND IS VOID AN INITIO. 11. THAT THE APPELLANT CRAVES LEAVE TO ALTER/MODIFY GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. GROUNDS NO. 3, 6(C), 6(D), 6(E), 6(F) AND 7 OF T HE APPEAL ARE NOT PRESSED, THEREFORE, THE SAME ARE DISMISSED AS N OT PRESSED. 3. ALL THE REMAINING GROUNDS OF APPEAL ARE AGAINST CANCELLATION OF REGISTRATION IN RESPECT OF REGISTRATION GRANTED U/S 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE AC T) BY THE C.I.T., JALANDHAR. THE BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE SOCIETY WAS GRANTED REGISTRATION NO. 12AA OF THE ACT W.E.F. 06/04/1994 VIDE ORDER DATED 20/05/1994 PASSED BY TH E THEN COMMISSIONER OF INCOME TAX, JALANDHAR. THE MAIN OBJEC TS OF THE SOCIETY ARE AS UNDER:- A) TO ESTABLISH AND CARRY ON THE ADMINISTRATION AND MANAGEMENT OF PUNJAB INSTITUTE OF MEDICAL SCIENCES, JALANDHAR. B) TO SET UP, ESTABLISH, PROMOTE, MANAGE OR ASSOCIAT E WITH, ANY OTHER INSTITUTION OR CENTRE IN THE STATE O F PUNJAB DEVOTED TO EDUCATION, TRAINING, RESEARCH AND 6 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT RELATED INFRASTRUCTURE IN VARIOUS BRANCHES OF HEALT H SCIENCES AND WORKING FOR THE ADVANCEMENT OF SCIENTIF IC KNOWLEDGE AIMED AT ENHANCING THE QUALITY OF PATIENT CARE. IN ASSESSEES CASE, THE CHIEF COMMISSIONER OF INCOM E TAX, LUDHIANA VIDE HIS ORDER F. NO. CCIT/LDH./10(23C)(VI )/193/2012- 13/1613 DATED 23/07/2012 HAS REJECTED THE APPLICATI ON MADE BY THE PUNJAB INSTITUTE OF MEDICAL SCIENCE (PIMS) SOCI ETY, JALANDHAR FOR GRANT OF EXEMPTION U/S 10 (23C)(VI) OF THE ACT. THE LD CIT, JALANDHAR OBSERVED THAT THE ASSESSEE SOCIETY HAS AL READY LEASED OUT THE PROJECT TO M/S NRI ACADEMY OF SCIENCES & OT HERS FOR AN UPFRONT CONSIDERATION OF RS. 131 CRORES AND A FURTH ER CHARGE OF 5% OF THE UPFRONT CONSIDERATION SHALL BE CHARGED FROM THE LESSEE FROM THE 8 TH YEARS OF THE DATE OF ACCEPTANCE OF THE AWARD BY THE LESSEE. THUS, THE ASSESSEE SOCIETY IS BASICALLY A LESSOR WHIC H HAS LEASED THE BUILDING AND LAND TO THE LESSEE I.E. THE NRI AC ADEMY OF SCIENCES, WHICH IS RUNNING THE HOSPITAL. FURTHER NRI ACADEMY OF SCIENCES IS MANAGING THE ADMINISTRATION OF HOSPITAL . THE DOCTORS AND THE PARAMEDICAL STAFF ALONGWITH THE ADMINISTRATI VE STAFF ARE EMPLOYED FOR THE LESSEE I.E. NRI ACADEMY OF SCIENCE S. ALSO THE LESSEE HAS MADE THE UPFRONT PAYMENT TO THE LESSOR F OR THE LEASE OF 7 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT LAND AND THE BUILDING. AS THE HOSPITAL IS BEING RUN AND MANAGED BY THE LESSEE, THE LESSER I.E. THE ASSESSEE CANNOT CLA IM OF RUNNING AND MANAGING THE HOSPITAL AND FURTHER CLAIM EXEMPTION U /S 10(23C)(VI). ALSO THAT THE RECEIPTS OF ASSESSEE SOC IETY ARE NOT FROM THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FR OM DISEASED BUT ONLY FROM THE INTEREST ON FDRS WHICH HAS BEEN EARNED FROM THE SALE PROCEEDS OF LAND (THROUGH PUDA). ALSO THERE IS NO EXPENDITURE INCURRED BY THE ASSESSEES SOCIETY ON THE DAY TO DA Y RUNNING OF THE HOSPITAL LIKE SALARY TO DOCTORS, PARAMEDICAL STAFF ETC. SO THE ASSESSEE SOCIETY NOWHERE QUALIFIES FOR THE CLAIM OF EXEMPTION U/S 10(23C)(VI) AS IT IS NEITHER RUNNING A HOSPITAL NOR IS RECEIVING ANY PATIENTS FOR TREATMENT OF ANY DISEASE. HE FURTHER O BSERVED THAT THE ASSESSEE SOCIETY WAS HAVING SURPLUS IN EXCESS OF 15% OF ITS GROSS RECEIPT FROM F.Y. 31/03/2007 TO 31/03/2011. THE ASSE SSEE CONCERN HAS EARNED SYSTEMATIC PROFITS REGULARLY SINCE LAST MANY YEARS. AS SHALL BE SEEN FURTHER IN THE ORDER, REGULARLY PROFI TS HAVE BEEN EARNED IN ALL THE YEARS BY THE INSTITUTION. ALSO AC CUMULATED SURPLUS HAS BEEN INVESTED IN FDRS THE AMOUNT OF WHICH HAS S TEADILY INCREASED OVER THE YEARS. THIS SHOWS THAT THE INTENTI ON OF THE 8 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT INSTITUTION IS TO EARN PROFITS WITHOUT APPLYING THE SURPLUSES AVAILABLE FOR PHILANTHROPIC PURPOSES. THE LD CIT FUR THER OBSERVED THAT THE ASSESSEE HAS ALSO VIOLATED PROVISIONS OF S ECTION 11(5) OF THE ACT DURING CERTAIN YEARS. IN ASSESSMENT YEAR 20 06-07,THE ASSESSING OFFICER HAS HELD THAT THE SOCIETY HAS NOT APPLIED ANY PART OF ITS INCOME OF THE YEAR FOR CHARITABLE PURPOSES A ND THEREFORE IT DOES NOT QUALIFY FOR EXEMPTION U/S11 OF THE ACT. HO WEVER, THE LD CIT(A) HAS HELD THAT THE SOCIETY IS ELIGIBLE FOR EX EMPTION U/S 11(I) (A)ONCE IT IS REGISTERED U/S 12AA.THE SOCIETY HAD MA DE INVESTMENT OF RS. 6.5 CRORES IN THE MODES PRESCRIBED U/S 11(5) OF THE ACT. IN VIEW THEREOF, THE SOCIETY HAS LEASED OUT ITS INFRAST RUCTURE TO M/S NRI ACADEMY OF SCIENCES FOR 99 YEARS. THE ASSESSEE FILED COPY OF CONCESSION AGREEMENT UNDER PPF MODE AND ALSO FILED WRITTEN REPLY BEFORE THE LD CIT, WHICH HAS BEEN REPRODUCED BY HIM A T PAGES 4 TO 7 OF HIS ORDER. THE DCIT, ITAT, AMRITSAR ALSO MADE RE QUEST TO THE CIT FOR CANCELLATION OF REGISTRATION U/S 12AA(3) VID E LETTER NO. 289 DATED 07/01/2012, WHICH HAS BEEN REPRODUCED AT PAGE NO. 8-9 OF THE IMPUGNED ORDER. FURTHER A LETTER HAD BEEN RECEI VED FROM THE OFFICE OF DCIT, ITAT, AMRITSAR VIDE LETTER DATED 13/0 5/2013, WHICH 9 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT HAS BEEN ALSO REPRODUCED ON PAGE 10 AND 11 OF THE O RDER. THE LD CIT ISSUED DETAILED SHOW CAUSE NOTICE FOR CANCELLATI ON OF REGISTRATION U/S 12AA(3) OF THE ACT, WHICH IS ALSO R EPRODUCED ON PAGES 11TO 13 OF THE CIT ORDER. THE ASSESSEE FILED RE PLY BEFORE THE LD CIT, JALANDHAR, WHICH HAS ALSO BEEN REPRODUCED ON PAGES 13 TO 15 OF THE ORDER. AFTER CONSIDERING THE SHOW CAUSE NO TICE AS WELL AS SUBMISSIONS OF THE ASSESSEE, THE LD CIT HELD THAT AP PLICATION FILED U/S 10(23C)(VI) OF THE ACT HAS ALREADY BEEN REJECTE D BY THE CHIEF COMMISSIONER OF INCOME TAX, LUDHIANA WITH DETAILED RE ASONING. THE LD CIT REPRODUCED SECTION 12AA AND HELD THAT THE ASSESSEE SOCIETY IS BASICALLY A LESSER, WHICH HAS LEASED BUI LDING AND LAND TO THE LESSEE I.E. M/S NRI ACADEMY OF SCIENCES, WHO IS RUNNING THE HOSPITAL. M/S NRI ACADEMY OF SCIENCES IS MAINTAININ G THE ADMINISTRATION OF THE HOSPITAL. THE DOCTORS AND THE PARAMEDICAL STAFF ARE EMPLOYED FOR THE LESSEE I.E. NRI ACADEMY OF SCIENCES. THE LESSEE ALSO HAD MADE THE UPFRONT PAYMENT TO THE LESSOR FOR THE LEASE OF LAND AND THE BUILDING. THE RECEIPTS OF ASSESSEE SOCIETY ARE NOT FROM THE RECEPTION AND TREATMENT OF PERSONS SUFFERING FROM DISEASED BUT ONLY FROM THE INTEREST ON FDRS WHICH HA D BEEN 10 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT EARNED FROM THE SALE PROCEEDS OF LAND (THROUGH PUDA ). THERE IS NO EXPENDITURE INCURRED BY THE ASSESSEES SOCIETY ON T HE DAY TO DAY RUNNING OF THE HOSPITAL LIKE SALARY TO DOCTORS, PAR AMEDICAL STAFF ETC. THE SURPLUS EARNED HAS BEEN TABULATED AS UNDER:- F.Y. %AGE OF SURPLUS 31/03/2011 94.59 31/03/2010 99.78 31/03/2009 71.87 31/03/2008 81.36 31/03/2007 77.78 THE ASSESSEE CONCERNED HAD EARNED SYSTEMATIC PROFITS REGULARLY SINCE LAST MANY YEARS. REGULAR PROFITS HAVE BEEN EA RNED IN ALL YEARS BY THE INSTITUTION AND THE ACCUMULATED SURPLU S HAD BEEN INVESTED IN FDRS THE AMOUNT IN WHICH HAS STEADILY IN CREASED OVER THE YEAR. THIS SHOWS THAT THE INTENTION OF THE INSTI TUTION IS TO EARN PROFITS WITHOUT APPLYING THE SURPLUSES AVAILABLE FOR PHILANTHROPIC PURPOSES. THE FACTS OF INVESTMENT ARE NOT VERIFIABLE FROM THE BALANCE SHEET FOR THE YEAR ENDING 31/3/2011 WHERE NO SUCH INVESTMENT/MOVEMENT OF FUNDS ARE VISIBLE THE INVESTM ENT TILL THE YEAR ENDING 31/3/2011 IS ONLY IN FDRS. IT PROVES TH AT THE STATUS OF ASSESSEE SOCIETY IS MORE OF A FUNDING/LANDING BODY RATHER THAN A HOSPITAL. HE RELIED ON THE DECISION IN THE CASE OF D.R. RANKA 11 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT CHARITABLE TRUST VS DIT (EXEM.) (ITAT BANGALORE) REPOR TED AT 3ITR 151 WHEREIN IT IS HELD THAT TRUST ESTABLISH FOR CARR YING OUT MEDICAL AND EDUCATIONAL ACTIVITIES CONSTRUCTING BUILDING AN D LETTING IT OUT TO THE EDUCATIONAL INSTITUTION NOT PART OF CHARITABLE ACTIVITY THEREFORE DENIAL OF RENEWAL OF REGISTRATION U/S 12AA IS JUSTIF IED. HE FURTHER OBSERVED THAT MOREOVER, THE ONLY OBJECT AS PER CLAU SE 3(I) OF THE MEMORANDUM OF ASSOCIATION FOR WHICH THE ASSESSEE SOC IETY HAD BEEN CREATED IS TO ESTABLISH AND TO CARRY ON THE AD MINISTRATION AND MANAGEMENT OF PUNJAB INSTITUTE OF MEDICAL SCIENCES, JALANDHAR. SINCE THE SAID INSTITUTE HAS NEVER BEEN RUN BY THE ASSESSEE SOCIETY AND IS BEING PRESENTLY RUN BY PIMS MEDICAL & EDUCAT ION CHARITABLE SOCIETY, GARHA ROAD, JALANDHAR UNDER THE TRIPARTITE CONCESSION AGREEMENT IN THE PPP MODE. THEREFORE, THE ASSESSEE SOCIETY IS NOT ENTITLED FOR REGISTRATION GRANTED UNDER SECTION 12AA(3) AS THE ASSESSEE SOCIETY IS NOT EXISTING AND WORKING FOR THE OBJECT FOR WHICH IT WAS CREATED AS PER ITS MEMORANDUM OF ASSOCIA TION. THE LD CIT-II, JALANDHAR WAS SATISFIED WITH THE FACT THAT TH E ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT GENUINE, THEREFORE, HE CANCELLED THE ASSESSEES SOCIETY REGISTRATION W.E.F. A.Y. 2004-05. 12 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT 4. BEING AGGRIEVED BY THE ORDER OF LD CIT-II, JALAN DHAR, THE ASSESSEE CARRIED THE MATTER BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE SOCIETY IS REGISTER ED UNDER THE SOCIETIES REGISTRATION ACT, 1860 ON 10 TH OCTOBER, 1994 AND REITERATED THE ARGUMENTS MADE BEFORE THE LD CIT THAT THE LD CIT CAN CANCEL THE REGISTRATION IF THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE, THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT BEING CARRIED OUT WITH IN ACCORD ANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THE SOCIETY IS R EGISTERED WITH THE OBJECT OF START A HOSPITAL AND MEDICAL COLLEGE IN THE SAME NAME AT JALANDHAR. THE OBJECTS OF THE SOCIETY ARE AS UNDE R:- A) TO ESTABLISH AND TO CARRY ON THE ADMINISTRATION A ND MANAGEMENT OF PUNJAB INSTITUTE OF MEDICAL SCIENCES, JALANDHAR. B) TO SET UP, ESTABLISH, PROMOTE, MANAGE OR ASSOCIAT E WITH, ANY OTHER INSTITUTION OR CENTRE IN THE STATE O F PUNJAB DEVOTED TO EDUCATION, TRAINING, RESEARCH AND RELATED INFRASTRUCTURE IN VARIOUS BRANCHES OF HEALT H SCIENCES AND WORKING FOR THE ADVANCEMENT OF SCIENTIF IC KNOWLEDGE AIMED AT ENHANCING THE QUALITY OF PATIENT CARE. HE FURTHER ARGUED THAT IN FINANCIAL YEAR 2009-10, T HE PIMS WAS ESTABLISHED. THEREAFTER NOTICE OF COMMENCEMENT WAS IS SUED ON 13 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT 04/6/2010 TO THE PIMS MEDICAL & EDUCATION CHARITABL E (PMEC) SOCIETY BEING CONCESSIONAIRE AND THE HOSPITAL WAS ST ARTED FUNCTIONING SINCE THEN. THE MEDICAL COLLEGE ALSO STA RTS FROM ACADEMIC SESSION 2011-12. EVEN SINCE PIMS SOCIETY I S FUNCTIONING AS CONCESSIONING AUTHORITY AS PER CONCESSION AGREEM ENT. THE SOCIETY TO SET UP, ESTABLISH, PROMOTE, MANAGE OR AS SOCIATE WITH, ANY OTHER INSTITUTION OR CENTRE IN THE STATE OF PUN JAB DEVOTED TO EDUCATION, TRAINING, RESEARCH AND RELATED INFRASTRU CTURE IN VARIOUS BRANCHES OF HEALTH SCIENCES AND WORKING FOR THE ADVA NCEMENT OF SCIENTIFIC KNOWLEDGE AIMED AT ENHANCING THE QUALITY OF PATIENT CARE. THE SOCIETY HAS UNDERTAKEN GOVERNMENT HOSPITAL S AND MEDICAL UNIVERSITIES/COLLEGES AS PER OBJECT AT VARI OUS PLACED IN THE STATE OF PUNJAB. IN FINANCIAL YEAR 2005-06 THE GOVE RNING BODY HELD VARIOUS MEETINGS TO LOOK FOR BEST SUITED MODEL FOR RUNNING THE INSTITUTE. ON THE ADVICE OF GOVT. OF INDIA, THE PPP MODEL WAS FINALIZED IN 2007-08. RFP DOCUMENT WAS PREPARED IN J ULY 2008 WITH A MINIMUM RESERVE PRICE OF RS. 120 CRORE BY PIDB. A SUITABLE PRIVATE PARTNER M/S NRI OF ACADEMY OF SCIENCES AND OTHERS CONSORTIUM WHICH LATER FORMED PIMS MEDICAL AND EDUCA TION 14 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT CHARITABLE SOCIETY WAS FINALIZED FOR PPP MODEL AT UP FRONT CONSIDERATION OF RS. 131 CRORES AND ANNUAL CONCESSI ON FEES OF 5% OF THE UPFRONT CONSIDERATION PAYABLE FROM THE 8 TH YEAR FROM THE PROPOSAL ACCEPTANCE DATE. CONCESSION AGREEMENT WAS S IGNED BY THE PARTIES ON 28/08/2009. THE HANDING OVER OF THE M AIN BUILDING WAS COMPLETED TO THE CONCESSIONAIRE IN FEBRUARY, 201 0. THE PAYMENT AMOUNTING TO RS. 6 CRORES WAS RECEIVED IN A. Y. 2009-10, 61.23 CRORES IN A.Y. 2010-11 AND 47.42 CRORES IN A. Y. 2011-12. THE PIMS HAD AMENDED BY ADDING A NEW OBJECT IN OCTOBE R, 2009 I.E. TO SET UP, ESTABLISH, PROMOTE, MANAGE, ASSOCIA TE WITH ANY OTHER INSTITUTION OR CENTRE IN THE STATE OF PUNJAB DEVOTED TO EDUCATION, TRAINING, RESEARCH AND RELATED INFRASTRU CTURE IN VARIOUS BRANCHES OF HEALTH SCIENCES AND WORKING FOR THE ADVA NCEMENT OF SCIENTIFIC KNOWLEDGE AIDED AT ENHANCING THE QUALITY OF PATIENT CARE. HE FURTHER ARGUED THAT POWER TO CANCEL REGISTRATION IN RESPECT OF REGISTRATION GRANTED U/S 12A WAS BROUGHT ON THE STAT UTE W.E.F. 01/6/2010 PROSPECTIVELY IN SECTION 12AA(3) AND HENC E THE CANCELLATION MADE W.E.F. ASSESSMENT YEAR 2004-05 IS INVALID AND ILLEGAL IN THE EYES OF LAW. HE RELIED ON THE FOLLOWIN G DECISIONS: 15 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT (I) AGRA DEVELOPMENT AUTHORITY VS. CIT, ITAT AGRA BEN CH (2013) 35 CCH 230. (II) MCA VS. DIRECTOR OF INCOME TAX (2013) 153 TTJ (MUMBAI) 166. (III) KAPOOR EDUCATIONAL SOCIETY VS. CIT (2010) 134 TTJ (LUCKNOW) 250. (IV) AJIT EDUCATION TRUST VS. CIT (2010) 134 TTJ (AHD) 483. (V) DIRECTOR OF INCOME TAX VS. MOOL CHAND KHAIRATI R AM TRUST (2011) 339 ITR (DELHI) 622. (VI) LAXMAN PUBLIC SCHOOL SOCIETY VS. DEPUTY DIRECT OR OF INCOME TAX (2012) 31 CCH 092 DEL TRIB. (VII) DIRECTOR OF INCOME TAX (EXEMPTION) VS N.H. KAP ADIA EDUCATION TRUST (2012) 74 DTR (AHD) (TRIB) 233. THE LD AR FURTHER ARGUED THAT AS PER CBDT CIRCULAR NO . 01/2011, THE AMENDMENT MADE IN SECTION 12AA(1)(B) WAS TO APPL Y FROM A.Y. 2011-12 AND SUBSEQUENT YEAR. HE FURTHER DRAWN OUR ATTENTION ON PAGE NO. 5 OF THE PAPER BOOK AND ARGUED THAT THE HONBLE ITAT MUMBAI BENCH HELD THAT SUB-SECTION (3) WAS INTRODUCE D IN THE STATUTE BOOKS ONLY WITH EFFECT FROM 01/06/2010 I.E. ITS FUNCTION SHALL ONLY BE PROSPECTIVE AND IT CANNOT BE APPLIED RETROSPECTIVELY. SIMILAR VIEW HAS ALSO HELD BY THE VARIOUS HONBLE IT ATS IN ABOVE CITED SUBJECT, THEREFORE, ORDER PASSED BY THE LD CI T-II, JALANDHAR IS 16 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT REQUIRED TO BE SET ASIDE. THERE IS NO BEARING ON THE CANCELLATION OF REGISTRATION PASSED BY THE LD CIT THAT CCIT HAS REJEC TED THE ASSESSEES APPLICATION U/S 10(23C)(VI) OF THE ACT F OR WHICH HE ALSO RELIED ON THE FOLLOWING CASE LAWS:- (I) SUNBEAM ENGLISH SCHOOL SOCIETY VS. CIT (2011) 1 39 TTJ(ALL) 81. (II) CIT VS RAO BAHADUR CALAVALA CUMMAN CHETTY CHARITIES (1982) 135 ITR 485 (MAD). THE LD CIT HAS NOT GIVEN CLEAR CUT FINDING ON NON-GEN UINE ACTIVITIES OF THE ASSESSEE SOCIETY AND THERE WAS NO SHOW CAUSE N OTICE TO THE ASSESSEE FOR WITHDRAWAL OF REGISTRATION W.E.F. A.Y. 20 04-05 FOR WHICH HE RELIED ON THE DECISION IN THE CASE OF KALI NGA INSTITUTE OF INDUSTRIAL TECHNOLOGY VS. CIT & ANR. (2011) 336 ITR 3 89 WHEREIN IT HAS BEEN HELD BY THE HON'BLE HIGH COURT THAT THE CIT SHOULD HAVE CLEAR CUT SATISFACTION OF THE CIRCUMSTANCES FO R EXERCISE OF SUCH POWER. THE LD CIT ALSO CONSIDERED IN PASSING THE ORDER U/S 12AA THAT APPEAL FOR A.Y. 2006-07 WAS PENDING BEFORE THE HONBLE ITAT, AMRITSAR. TRIPARTITE CONCESSION AGREEMENT WAS DO NE BY THE APPELLANT AND THE GOVERNMENT OF PUNJAB WITH A CHARIT ABLE SOCIETY REGISTERED U/S 12AA OF THE ACT. HE HAS DRAWN OUT ATT ENTION ON THE 17 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT COPY OF MEMORANDUM OF ASSOCIATION OF PIMS MEDICAL & EDUCATION CHARITABLE SOCIETY (CONCESSIONAIRE) AT PAGE NOS. 32 3 TO 341 OF THE PAPER BOOK AND ALSO REGISTRATION U/S 12AA OF THE ACT. IT IS FURTHER ARGUED THAT CONCESSION AGREEMENT ON PPP MOD E WAS DONE ON THE RECOMMENDATION OF GOVERNMENT OF INDIA, THE C OPY OF LETTER RECEIVED FROM GOVERNMENT OF INDIA SUGGESTING PPP MO DE AND RELEVANT CORRESPONDENCE ARE ALSO PLACED IN THE PAPE R BOOK FOR CONSIDERATION OF BENCH. THERE WAS NEW CLAUSE IN THE OB JECTS OF THE SOCIETY WAS ALSO ADDED. THE AR FURTHER ARGUED THAT TH E ASSESSEE HAS COMPLIED THE PROVISIONS OF SECTION 11(2) AND AP PLIED SET APART FUNDS IN FURTHERANCE OF ITS OBJECTS WITHIN STIPULATE D TIME. THE LD CIT HAD NOT POINTED OUT ANY DEFECT IN THE COMP UTATION MADE BY THE ASSESSEE SOCIETY AT THE TIME OF HEARING BUT HE HAS TAKEN FIGURES FROM THE INCOME AND EXPENDITURE ACCOU NT FOR WHICH HE HAS DRAWN OUR ATTENTION ON PAGE NOS. 31 TO 5 8 OF THE PAPER BOOK AND PRAYED TO SET ASIDE THE ORDER OF THE LD CIT-II, JALANDHAR. 5. AT THE OUTSET, THE LD SR.DR HAS VEHEMENTLY SUPP ORTED THE ORDER OF THE LD CIT AND SUBMITTED A WRITTEN REPLY ON THE CASE LAWS 18 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT REFERRED BY THE ASSESSEE AND ARGUED THAT THE CASE LAWS REFERRED BY THE ASSESSEE BEFORE THE HONBLE BENCH ARE PER IN -CURIUM AS A VERY VITAL ISSUE HAS BEEN MISSED IN ALL THESE JUDGM ENTS. THE AMENDMENT U/S 12AA(3) WAS MADE BY THE FINANCE ACT, 2 010, WHICH HAS BEEN EXPLAINED BY THE CBDT VIDE CIRCULAR N O. 1/2011 DATED 06/4/2011. IF THE TRUSTS ACTIVITY IS FOUND NO N-GENUINE OR ITS ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS FO R WHICH SUCH TRUST WAS ESTABLISHED, THE REGISTRATION GRANTED U/S 1 2AA CAN BE CANCELLED BY THE LD CIT AFTER PROVIDING REASONABLE O PPORTUNITY OF BEING HEARD TO THE TRUST. THE POWER OF COMMISSIONER OF INCOME TAX FOR CANCELLATION OF REGISTRATION IS INHERENT AND FLOWS FROM THE AUTHORITY OF GRANTING REGISTRATION. HOWEVER, JUDICIA L RULINGS IN SOME CASES HAD HELD THAT THE COMMISSIONER DOES NOT HAVE POWER TO CANCEL THE REGISTRATION, WHICH WAS OBTAINED EARLIER B Y ANY TRUST OR INSTITUTION UNDER THE PROVISIONS OF SECTION 12AA AS IT IS NOT SPECIFICALLY MENTIONED IN SECTION 12AA OF THE ACT. THEREFORE, SECTION 12AA HAD BEEN AMENDED TO PROVIDE THAT THE C OMMISSIONER CAN ALSO CANCEL THE REGISTRATION OBTAINED U/S 12A A S IT STOOD BARE AMENDMENT BY FINANCE ACT AS IT IS NOT SPECIFICALLY MENTIONED IN 19 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT SECTION 12AA. IT IS FURTHER ARGUED THAT INTENTION O F AMENDMENT OF SECTION 12AA WAS NOT BROUGHT TO THE NOTICE OF ABOVE MENTIONED TRIBUNALS AND THE HONBLE DELHI HIGH COURT, IF THE A MENDED PROVISION WOULD MAKE APPLICABLE W.E.F. 01/6/2010, IT MEANS THAT THE CIT CANNOT CANCEL THE REGISTRATION GRANTED PRIOR TO HIS DATE, WHICH MAKES THE AMENDMENT AS REDUNDANT. THEREFORE, TH E ABOVE JUDGMENTS ARE PER IN-CURIUM AND SAME SHOULD NOT BE FOLLOWED. HE FURTHER RELIED ON THE DECISION IN THE CASE OF LALIT HOSIERY & ORS. VS. UNION OF INDIA & ORS. 221 CTR (P&H) 692 ON SURCHARGE ON BLOCK ASSESSMENT TAX AND AMENDMENT MADE IN STATUTE. THE INTERPRETATION OF THE STATUTE HAS TO BE DONE AS SUC H AS MANNER AS MAY FURTHER CAUSE OF THE LEGISLATION AND MANNER. THE INTERPRETATION HAS BEEN MADE IN THE DECISION OF HON BLE ITAT AND HONBLE DELHI HIGH COURT CLEARLY ARE NOT SUPPORTIV E OF THE INTENDMENT OF THE ENACTMENT WHICH CAME TO BE IGNORE D IN THE ABOVE JUDGMENTS AND AS SUCH THE ABOVE JUDGMENTS ARE PATENTLY PER IN-CURIUM AND THUS NOT TO BE FOLLOWED. THE HON BLE ITAT HAS UPHELD THE ORDER OF THE LD CIT, JALANDHAR FOR CANCEL LATION OF REGISTRATION IN CASE OF RAM SARAM DASS KIHORI LAL C HARITABLE TRUST 20 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT VIDE ITS ORDER IN ITA NO. 33/ASR/2009 DATED 26/06/2 009. IT IS FURTHER SUBMITTED THAT THE HONBLE ITAT HAD DISMISSE D THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 AND ALL OWED THE APPEAL OF THE DEPARTMENT BY HOLDING THAT THE ASSESS EE IS NOT ENGAGED IN ANY CHARITABLE ACTIVITY AS PER ITS STATE D OBJECT IN ITA NO. 504/ASR/2009 AND ITA NO. 515/ASR/2009 DATED 31/ 12/2013 WHEREIN THE HONBLE ITAT HAS HELD THAT THE ASSESSEE H AD NOT PROVED ITS CASE FOR SEEKING EXEMPTION U/S 11 OF THE ACT BY PRODUCING ANY DETAILS OF EXPENDITURE INCURRED TO TH E ASSESSEE- TRUST ON VARIOUS ACTIVITIES UNDERTAKEN TO ACHIEVE IT S OBJECTS THE REVENUE AUTHORITIES AS WELL AS BEFORE US TILL THE CL OSING OF HEARING PRESENT APPEALS. THE ASSESSEE HAD NEVER UNDERTAKEN ANY ACTIVITIES IN FURTHERANCE OF ITS STATED OBJECTS. THE ASSESSEE H AD LEASED THE BUILDING AND THE LAND TO THE LEASE I.E. THE NRI ACA DEMY OF SCIENCE WHICH MANAGED THE ADMINISTRATION OF THE HOSPITAL AND THE ALL DOCTORS AND PARA MEDICAL STAFF WAS EMPLOYED BY THE N RI ACADEMY OF SCIENCE (LESSEE). THE LESSEE HAD MADE THE UPFRONT PAYMENT TO THE LESSOR FOR THE LEASE OF LAND AND BUILDING AND S INCE THE HOSPITAL WAS BEING RUN AND MANAGED BY THE LESSEE I.E. M/S NRI ACADEMY OF 21 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT SCIENCE. IT IS CLEAR THAT THE ASSESSEE DONE NOTHING TO BE ELIGIBLE FOR REGISTRATION U/S 12A AND IT SHOULD BE CANCELLED. TH E LD CIT HAS NOT TAKEN BASIS OF APPLICATION REJECTED U/S 10(23C)(VI) OF THE ACT FOR CANCELLATION OF REGISTRATION BUT HE HAD VERIFIED TH E ACTIVITIES PERFORMED BY THE ASSESSEE SOCIETY. HE FURTHER PLACE D RELIANCE ON THE DECISION IN THE CASE OF D.R. RANKA CHARITABLE TR UST VS DIT (EXEM.) (ITAT BANGALORE) (SUPRA) WHEREIN CONSTRUCTED BUILDING AND INCOME WAS LET OUT ON RENT AND THE HONBLE BANGA LORE ITAT HELD THAT THERE IS NO CHARITABLE ACTIVITY OF THE TRU ST. THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT-II, JALAN DHAR. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LD CIT-II, JALANDHAR PASSED ORDER U/S 12AA OF THE ACT ON 24/10 /2013 W.E.F. A.Y. 2004-05 BUT IN SECTION 12AA(3), THE AMENDMENT WAS MADE BY THE FINANCE ACT, 2010, WHICH WAS EFFECTIVE PROSPE CTIVELY AS CLARIFIED BY THE CBDT AS WELL AS VARIOUS ITATS. THE CAS E LAWS RELIED BY THE AR OF THE ASSESSEE ALSO SUPPORT THE C ASE OF THE ASSESSEE, THEREFORE, FROM A.Y. 2004-05, THE CANCELL ATION IS OUT OF JURISDICTION. THE HONBLE DELHI HIGH COURT IN THE CA SE OF DIRECTOR OF 22 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT INCOME TAX (EXEMPTION) VS. MOOL CHAND KHAIRATI RAM TR UST (2011)339 ITR 622 (DELHI) HAS HELD THAT POWER OF CAN CELLATION OF REGISTRATION OBTAINED U/S 12A CAME TO BE INCORPORAT ED BY WAY OF AMENDMENT INTRODUCED IN SECTION 12AA(3) BY THE FINA NCE ACT, 2010 W.E.F. 1 ST JUNE, 2010. THE DIRECTOR OF THE INCOME TAX WAS, THEREFORE, NO JUSTIFIED IN CANCELLING THE REGISTRAT ION U/S 12AA(3) W.E.F. DECEMBER 2002-03 VIDE HIS ORDER DATED 30 TH JUNE, 2009. SIMILAR VIEW HAS ALSO HELD BY THE VARIOUS ITATS AS R EFERRED ABOVE, THEREFORE, WE SET ASIDE THE ORDER OF THE LD C IT-II, JALANDHAR. HENCE, THIS APPEAL OF THE ASSESSEE IS AL LOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29. 09.2015 . SD/- SD/- (A.D. JAIN) (T. R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:29 TH SEPTEMBER, 2015 *RANJAN COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S PUNJAB INSTITUTE OF MEDICAL SC IENCES, JALANDHAR. 2. THE RESPONDENT- THE CIT-II, JALANDHAR. 3. THE CIT 23 ITA 740/ASR/2013 M/S PUNJAB INSTITUTE OF MEDICAL SCIENCES VS. CIT 4. THE CIT(A) 5. THE DR, ITAT, AMRITSAR. 6. GUARD FILE (ITA NO. 740/ASR/2013). BY ORDER (ASSISTANT REGISTRAR) ITAT, AMRITSAR BENCH: AMRITSAR.