M/s. Geedee Medical Foundation, Coimbatore V. CIT-I, Coimbatore

ITA 979/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61376 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-07-2012
• Assessment Year: 2011-2012
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K RAGHU
• Keywords: Charitable institution; Maximum Marginal Rate
• Section: 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO.979/MDS/2012 ASSESSMENT YEAR : 2011-12 GEEDEE MEDICAL FOUNDATION NO.1 CHETTIPALAYAM ROAD PODANUR COIMBATORE 641 018 VS THE CIT-I COIMBATORE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAGHU, C.A RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 30-07-2012 DATE OF PRONOUNCEMENT : 31-07-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE AS SESSEE AGAINST THE ORDER OF THE CIT-I, COIMBATORE, DATED 14.2.2012. 2. THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL AND T HE ONLY ISSUE INVOLVED IN ALL THESE GROUNDS OF APPEAL OF THE ASSESSEE IS THAT THE CIT ERRED IN REFUSING REGISTRATION U/S 12A OF THE ACT TO THE ASSESSEE. I.T.A.NO. 979/12 :- 2 -: 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE- TRUST WAS CONSTITUTED ON 11.10.2010. THE ASSESSEE FILED APP LICATION BEFORE THE CIT-I, COIMBATORE, ON 10.08.2011 SEEKING REGISTRATI ON U/S 12A OF THE ACT. THE CIT REJECTED THE APPLICATION FOR REGISTRA TION ON THE GROUND THAT THE ASSESSEE WAS RUNNING A PHARMACY AND THERE FORE, IT CANNOT BE CONSIDERED AS CHARITABLE ACTIVITY. 4. THE A.R OF THE ASSESSEE FILED BEFORE US A PAPER BO OK WHICH CONTAINS A BRIEF WRITE UP OF GEDEE HOSPITAL, A UNIT OF GEDEE MEDICAL FOUNDATION, LETTER OF APPRECIATION FOR SERVICES REN DERED BY SHRI P.S.SUBRAMANIAM, MARSHALL-FOWLER ENGINEERS INDIA (P ) LTD., AND LETTERS FROM FOUR PERSONS WHICH ARE IN VERNACULAR L ANGUAGE AND CANNOT BE CONSIDERED BY US AS NO ENGLISH TRANSLATION FOR T HE SAME HAVE BEEN FILED, TOGETHER WITH CONFIRMATION LETTERS FOR FREE MEDICAL SERVICES RENDERED BY THE INDIVIDUAL MEDICAL PROFESSIONALS AS SOCIATED WITH GEDEE HOSPITAL. THE A.R OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE-TRUST HAS HELPED POOR PEOPLE IN MEDICAL SERVICES BY PROVI DING MEDICINES AT REASONABLE COST AND THE RUNNING OF PHARMACY WAS INC IDENTAL TO THE CHARITABLE ACTIVITY OF THE TRUST. THE A.R OF THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE FILED BEFORE THE CIT C OPIES OF ITS BOOKS OF ACCOUNT, PROFIT & LOSS ACCOUNT TOGETHER WITH THE AC TIVITY REPORT. WHEN I.T.A.NO. 979/12 :- 3 -: ASKED BY THE BENCH, WHAT IS THE RECEIPTS FROM THE P HARMACY AND HOW THE SAME WAS UTILIZED IN THE CHARITABLE ACTIVITIES OF THE TRUST, IT WAS SUBMITTED BY THE A.R THAT THE TOTAL RECEIPTS SHOWN IN THE PROFIT & LOSS ACCOUNT ARE TO THE TUNE OF ` 46 LAKHS, BUT HE CANNOT GIVE THE BREAK-UP OF THE ACTIVITY FROM PHARMACY AND ITS UTILIZATION F OR THE CHARITABLE PURPOSES OF THE TRUST. HE ALSO SUBMITTED THAT THE COPY OF THE TRUST DEED WHICH IS FILED BEFORE THE TRIBUNAL WAS ALSO FI LED BEFORE THE CIT AND THE OBJECTS CITED THEREIN ARE CHARITABLE IN NAT URE. ON A QUERY BY THE BENCH, WHAT HAPPENED IN EARLIER YEARS, HE SUBM ITTED THAT AS THE GROSS RECEIPTS OF THE TRUST WERE BELOW ` 1 CRORE, ITS INCOME WAS EXEMPT U/S 10(15) OF THE ACT AND AS SUCH, NO RETUR NS OF INCOME WERE FILED BY THE TRUST. 5. ON THE OTHER HAND, THE DR VEHEMENTLY SUPPORTED THE ACTION OF THE CIT AND SUBMITTED THAT THE CIT HAS RIGHTLY REFUSED REGISTRATION U/S 12A OF THE ACT TO THE TRUST AS IT WAS RUNNING T HE PHARMACY ON COMMERCIAL BASIS. THE ASSESSEE, EVEN BEFORE THE B ENCH, IS NOT ABLE TO PRODUCE THE COPY OF THE PROFIT & LOSS ACCOUNT AN D SHOW THE AMOUNT OF RECEIPT FROM THE PHARMACY AND ITS UTILIZATION FO R CHARITABLE PURPOSES OF THE TRUST. HENCE, HE SUPPORTED THE ACTION OF TH E CIT IN NOT GRANTING REGISTRATION TO THE ASSESSEE. I.T.A.NO. 979/12 :- 4 -: 6. IN THE REJOINDER, THE A.R OF THE ASSESSEE SUBMITTE D THAT AT THE TIME OF GRANTING OF REGISTRATION U/S 12A OF T HE ACT, THE CIT HAS TO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. HE SUBMITTED THAT IT IS WHEN THE ASSESSMENT WAS BEING MADE, FOR GRANTING DEDUCTION U/S 11 AND 12 OF THE ACT, THE ASSESSING OFFICER HAS TO EXAMINE THE UTILIZATION OF THE RECEIPTS BY THE TRUS T FOR CHARITABLE PURPOSES AND AT THAT TIME, IF THE ASSESSING OFFICER FINDS THAT THE MONEY IS NOT UTILIZED FOR CHARITABLE PURPOSES, HE C AN REFUSE DEDUCTION U/S 11 AND 12 OF THE ACT AND BRING THE RECEIPTS TO TAX AT THE MAXIMUM MARGINAL RATE OF INCOME TAX. 7. TO THIS, THE DR SUBMITTED THAT WHAT IS THE USE OF G RANTING REGISTRATION FIRST AND THEN CANCELLING IT AT A LATE R DATE FINDING THAT THE ACTIVITIES OF THE TRUST ARE NOT CHARITABLE IN NATUR E. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE CIT. WE FIND THAT THE CIT HAS REJECTED THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF THE ACT TO THE ASSESS EE ONLY ON THE GROUND THAT THE ASSESSEE IS RUNNING A PHARMACY. THE CIT HAS STATED NOTHING AFTER EXAMINING THE TRUST DEED OF THE ASSESSEE WHE THER IT CONTAINS ANY OBJECTS WHICH ARE NOT CHARITABLE IN NATURE. TH E CIT HAS ALSO NOT EXAMINED THE PROFIT & LOSS ACCOUNT AND BALANCE SHE ET OF THE ASSESSEE TO FIND OUT WHAT IS THE AMOUNT OF RECEIPT FROM PHARMACY RUN BY THE ASSESSEE AND THE UTILIZATION OF THE RECEIPT S FROM THE PHARMACY. I.T.A.NO. 979/12 :- 5 -: AS THESE ASPECTS ARE VITAL FOR DECIDING THE ISSUE A T HAND AND AS BOTH THE PARTIES HAVE NOT FILED THE COPY OF THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF THE TRUST BEFORE US, WE ARE UNABL E TO DECIDE THE ISSUE COMPLETELY. WE, THEREFORE, HAVE NO ALTERNATI VE BUT TO REMAND THE MATTER BACK TO THE FILE OF THE CIT FOR ADJUDICA TING THE ISSUE OF REGISTRATION U/S 12A OF THE ACT AFRESH IN THE LIGH T OF THE DISCUSSION MADE HEREIN ABOVE AFTER ALLOWING REASONABLE AND P ROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THEREFORE, THE GROUND S OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 31 ST OF JULY , 2012, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 31 ST JULY, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR