JAIPUR NATIONAL UNIVERSITY SOCIETY FOR SOCIAL WELFARE,JAIPUR V. CIT (EXEMPTION), JAIPUR

ITA 714/JPR/2024

AI Insights

The case involves the Jaipur National University Society for Social Welfare appealing against the decision of the CIT(Exemption), Jaipur, which rejected their application for registration under section 12AB of the Income Tax Act and cancelled their provisional registration under section 12A(1)(ac)(vi). The CIT(Exemption) had found discrepancies in the application and questioned the genuineness of the society's activities, citing non-registration under the Rajasthan Public Trust Act, 1959, and concerns over the nature of expenses and activities reported. The tribunal found that the CIT(Exemption) had not adequately considered the society's submissions and directed a re-evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469934 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2023-2024
• Other Referred Cases: Ananda Social and Education Trust Vs The Commissioner of Income Tax & ANR, DIT vs Bharat Diamond Bourse, CIT(E) Vs Water and Land Management Training and Research Institute, Andhra Pradesh State Seed Certification Agency vs. Chief CIT, Infoparks vs. Dy. CIT, CST vs Sai Publication Fund
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAL
• Assessee Lawyers: VINOD KUMAR GUPTA
• Keywords: Set aside; Business income; Principle of natural justice; TDS; Charitable institution; Bogus
• Section: 12AA; 12A

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 714/JPR/2024 Jaipur National University Society for Social Welfare Plot No. 3, Tirupati Balaji Nagar, Jaipur. cuke Vs. The CIT(Exemption), Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACAJ4954B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Vinod Kumar Gupta, C.A. jktLo dh vksj ls@ Revenue by : Smt. Runi Pal, Addl.CIT lquokbZ dh rkjh[k@ Date of Hearing : 29/01/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 20/02/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Learned Commissioner of Income Tax (Exemption), Jaipur [for short “CIT(E)”] dated 30.03.2024. rejecting the application of the assessee in Form no. 10AD for registration as per provision of section 12AB of the Income Tax Act [ here in after referred to as “the Act”]. 2. In this appeal, the assessee has raised the following ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 2 grounds: - “1. Under the facts and circumstances of the case and in law, the Ld. CIT (Exemptions), Jaipur has erred by rejecting application for registration u/s 12AB of the Act. The rejection is illegal, unjustified and deserves to be quashed. 2. Under the facts and circumstances of the case and in law, the Ld. CIT (Exemptions), Jaipur has erred in cancelling the provisional registration u/s 12A(1)(ac) (vi) of the Act by invoking the provisions of section 12AB(1)(b)(ii)(B) of the Act. The said action and resultantly cancellation is contrary to the law as well as facts, illegal, unjustified and deserves to be quashed. 3. Impugned order dated 30.03.2024 passed u/s 12AB of the Act is bad in law for want of jurisdiction, against the principle of natural justice and various other statutory reasons, thus deserves to be quashed.” 3. The brief fact of the case is that the assessee filed an online application on 27.09.2023 in Form No. 10AB seeking registration u/s 12AB of the Act, 1961. While dealing with that application so filed by the assessee ld. CIT(E) issued a letter / notice dated 17.01.2024 requiring the assessee to submit certain documents / explanations by 01.02.2024. In response the assessee filed its reply on 13.02.2024 through e-mail. Submission of assessee was thoroughly examined and found some discrepancies which were conveyed to the assessee vide show cause notice dated 09.03.2024 wherein date of hearing was given 14.03.2024. The ld. AR of the assessee of the trust sought adjournment on 13.03.2024. Thereafter, the last and final opportunity was given to ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 3 the assessee vide letter dated 17.03.2024 to submit complete details on or before 22.03.2024. In response the assessee furnished part reply which is also examined and placed on record. Since it was a limitation matter, therefore the case is decided on the basis of material available on record and thereby ld. CIT(E) rejected the application for registration by observing as under:- “However in response, on perusal of reply dated 22.03.2024 furnish by the applicant admitted at point no. 01 that the trust/society is not register with RPT Act, 1959 only application has been filed for RPT registration and still awaited. The applicant nor furnished any evidence vide various letters proving its registration under Rajasthan Public Trust Act, 1959. Hence, it is clear that applicant is not registered under RPT Act, 1959. 04. Genuineness of Activities:. It is important to mention here that while examining the claim of the assessee u/s 12AB of I.T. Act, the Commissioner of Income-tax has been empowered to call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf. 4.2. Under such powers vested in CIT (E), the applicant vide letter dated 17.01.2024 was asked to file various details to verify the genuineness of activities. In response to the above queries, applicant filed its part reply which was examined the few discrepancies were found. Therefore, again to further verify the genuineness certain further details were asked vide show cause notice dated 09.02.2024 fixing the case on 14.03.2024, Relevant queries asked are reproduced as under. 1. It is seen from the income and expenditure accounts that major portion of expenses is towards professional fee:- ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 4 From the above it is clear that you are making payment to your employees and only meager amount is being incurred in scholarship which is het come to professional fees Furnish your explanation why your application may not be rejected on the ground of charitable activity. Also furnish for what purpose of trust deed profession fees is gen. Prima facie it is seen that you are paying professional fee of employees of medical college and hospital and expenses are shown in society books. 3. You have furnished details of charitable activities, but the same does not commensurate with income and expenditure account furnished for the 2022-23, explain why it not be considered as misrepresentation of facts. And at the so called activities are not routed through bank account all shown done in cash only Why your activities may not be treated as non genuine. 4. Photographs bearing name of JNU Medical college and hospital, this activities are done by other entity and you are claiming it as own. Further name appearing on photographs in advertisement for JNU medical college and hospitals. 5. Please submit all communications, agrement MOU' (a) JNU (b) Spectrum clinical research (c) Rana life (d) IPCA lab (e) Govt. of Rajasthan As TDS has been deducted in many of such receipts. Same prima face fall under category of business which is a specilled violation under clause() of 1244 Please explain why this business activity qualify as charity uls 2(15). Further violation of your own deed which do not allow contract receipts. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 5 6. No details actual work given that what exactly is one by employees and why such huge expense made. Submit note on activities, justify its expenses charitable in nature, how same fall under 2(15). 7. Please submit following details for professional les paid in ach year separately 8. For person appearing at S. No. 1,3,6,9 in professional fee list furnish (a) copy of appointment letter (b) brief profile of his work done in society 9. Exact address, Map of building and premise where books of account maintained and where all staff/employees, persons providing professional service sit and give their services. 10. If any person who is employee or taken money for professional service. Submit following details for 5 years (two year before joining the society and 3 years). In response, the applicant submitted its reply on 22.03.2024 and submit few details but not submit details as asked in show cause notice dated 09.03.2024. Hence, it is clear that the activities of applicant trust are not genuine and conclusion drawn from above is under:- • No details of expenses of professional fees at point no.04 of camps but these expenses are not prove that expenses are genuinely for this work. Relevant reply is as under:- ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 6 No details of communications, agreement, MOU's asked in show cause notice is as under- 5. Please submit all communications, agreement, MOU's etc with (a) JNU (b) Spectrum clinical research (c) Raha life (d) IPCA lab (e) Govt. of Rajasthan As TDS has been deducted in many of such receipts. Same prima facie fall under category of business which is a specified violation under clause (a) of 12AB(4), Please explain why this business activity qualily as charity u/s 2(15). Further violation of your own deed which do not allow contract receipts The applicant submit copy of deed of JNU in its earlier reply. But could not verified following details - (a) Whether such receipts are eligible for assessee as per its deed (b) Whether receipts are commercial of donations. (c) TDS deduction prima facially business nature. (d) Assessee failed to prove the same are not bogus. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 7 Above mentioned activities are primarily commercial or for-profit making rather than charitable activities. Although the applicant has earned huge profit from these activities as evident from the I/E account. Charitable trusts are typically established for specific charitable objects/ activities that benefit the public at large, and their resources are generally intended to be used exclusively for those purposes. Organizing of conference of doctors are activities of business nature which are not within the ambit of charitable spirit of an institution and are also not incidental to any of the objects of the institution. Thus, these objects are not charitable in the light of section 2(15) of the Income Tax Act. No details of actual work done by the trust and not proves that such expenses are in charitable nature. Only 4 medical camps shows as activities, which are organized JNU, with held of assessee society, however total expenses of more than 4.5 cr. as professional fee for same is paid to JNU, which is disporationate. No actual details of work for which such huge professional fee is paid have been submitted. Hence from the above it is clear that the activities are not verifiable and it could not be determined whether the applicant is genuinely carrying out charitable activity. Therefore, the applicant claim of registration u/s 12AB is also liable to be rejected on ground of not proving its genuineness of activity. 06. In view of above discussion applicant's application for registration u/s 12AB is liable to be rejected and thus being rejected on following grounds: - • Rajasthan Public Trust Act, 1959. • Genuineness of Activities. 07. Further 12AB (1)(b)(ii)(B) of the Income Tax Act, 1961 also state that if CIT is not satisfied has to pass order rejecting such application and also cancelling its earlier registration. Thus, it is clarified that applicant's provisional registration under clause (vi) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 dated 07.04.2022 is also being cancelled. Further assessee has failed to give proper justification for regularization of provisional registration, thus with this order provisional registration is also lapsed and cancelled. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 8 4. Feeling dissatisfied with the finding so recorded by the ld. CIT(E), the assessee preferred the present appeal on the grounds as stated here in above. In support of the grounds of appeal the ld. AR of the assessee has relied upon the following written submission:- “Brief Facts of the Case: 1. Appellant is a society (created on 04.03.2016) and engaged in carrying out charitable activities of education, medical relief and relief to poor. 2. The appellant commenced its charitable activities on 01.04.2021 and was granted provisional registration, u/s 12A(1)(ac)(vi) of the Income Tax Act, on 07.04.2022 which was valid for A.Y. 2023-24 and 2024-25. 3. Thereafter, the appellant applied for permanent registration in FORM No. 10AB on 27.09.2023 to the Ld. CIT(Exemption). 4. Accordingly, to examine the application, theLd. CIT(Exemption) issued notices requiring certain information/ documents which were duly complied with by the appellant. 5. Subsequently, the Ld. CIT(Exemption) rejected the application filed for registration u/s 12AB of the Act vide order dated 30.03.2024 and also cancelled the provisional registration granted earlier. 6. Aggrieved with the above order, the appellant filed this appeal. Grounds of Appeal No. 1 Under the facts and circumstances of the case and in law, the Ld. CIT (Exemptions), Jaipur has erred by rejecting application for registration u/s 12AB of the Act. The rejection is illegal, unjustified and deserves to be quashed. Grounds of Appeal No. 2 Under the facts and circumstances of the case and in law, the Ld. CIT (Exemptions), Jaipur has erred in cancelling the provisional registration u/s 12A(1)(ac)(vi) of the Act by invoking the provisions of section 12AB(1)(b)(ii)(B) ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 9 of the Act. The said action and resultantly cancellation is contrary to the law as well as facts, illegal, unjustified and deserves to be quashed. Grounds of Appeal No. 3 Impugned order dated 30.03.2024 passed u/s 12AB of the Act is bad in law for want of jurisdiction, against the principle of natural justice and various other statutory reasons, thus deserves to be quashed. Common Submission: Since all the ground are inter-connected, hence common submission: Under the current case, the Ld. CIT(Exemption) has rejected application for registration, u/s 12AB of the Act,of the appellant and further cancelled the provisional registration u/s 12A(1)(ac)(vi) of the Act by invoking the provisions of section 12AB(1)(b)(ii)(B) of the Act on the ground that the appellant is not registered under Rajasthan Public Trust Act, 1959 and further on the ground that the activities of the appellant are not genuine+. In this regard, we humbly submit as under: With Regard to Registration under Rajasthan Public Trust Act, 1959: 1. The appellant applied for registration under Rajasthan Public Trust (RTP) Act, 1959 on 21.12.2023 (PBP:1-2) and the application was pending at the time of current proceedings. The same fact was conveyed to the Ld. CIT(Exemption). Accordingly, the appellant could not submit the copy of registration under RTP Act, 1959 to the Ld. CIT(Exemption). 2. Thereafter, the appellant was granted registration under the RTP Act, 1959 vide registration dated 29.04.2024 (PBP: 3). 3. Therefore, the appellant should not be deprived of the registration due to the default on the part of the authority granting registration under RPT Act, 1959. With Regard to the Genuineness of Activities:we have re-produced the queries raised in the Show Cause Notice (SCN) dated 09.03.2024 (PBP: 4 - 7), reply submitted by the appellantvide letter dated 22.03.2024 (PBP:8 - 14), observation made by the Ld. CIT(Exemption)in the order and at last put our submission for your ready reference: I. Point (2) of SCN and Sub-point (1) of Point 4.2 of Order: A. Queries raised in Show Cause Notice dated 09.03.2024: 2. It is seen from the income and expenditure accounts that major portion ofexpenses is towardsprofessional fee,: ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 10 F.Y. Income Expense Professional Fees % of total income 2021-22 3,15,07,002 3,11,10,134/- 98.74% 2022-23 4,52,04,323 4,56,01,162/- 100.87% 2023-24 (till dec, 23) 4,97,38,734 4,33,59,016/- 87.17% From the above it is clear that you are making payment to your employees and only meagreamount is being incurred in scholarshipwhich is negligible compare to professional fees.Furnish your explanation why your application may not be rejected on the ground of nilcharitable activity. Also furnish for what purpose of trust deed profession fees is given. Primafacie it is seen that you are paying professional fee of employees of JNU medical college andhospital and expenses are shown in society books. B. Reply submitted by Appellant vide letter dated 22.03.2024: 1. The objects of society are education, medical relief, & Relief for the Poor. A copy of the deed outlining these objectives has been submitted in our earlier reply. The assessee has spent the amount professional fees to doctors. It is emphasized that the assessee provides services to general public free of cost without any charges and donations received by the assessee are utilized for the welfare of the general public. In the course of charitable activities such as organizing medical camps and providing medical relief to the poor, professional services are engaged from doctors. Therefore, it is incorrect to characterize these professional fee payments as revenue-generating, as these doctors are providing the services to public at large without any cost. 2. Further, it is submitted that the trust has engaged professional services solely for the purpose of conducting charitable activities and not for any commercial endeavor. As far as the specific purpose of deed for which these professional fees are concerned, these payments are in tandem with purpose as enlisted at Point-4, which is being placed hereunder: C. Observation of Ld. CIT(Exemption) in the order: ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 11 1. No details of expenses of professional fees at point no.04 of camps but theseexpenses are not prove that expenses are genuinely for thiswork.Relevantreply is as under:- … D. Submission before Hon’ble Bench: 1. The Ld. CIT(Exemption) has alleged that the appellant has not provided details of professional fees,which is against the material available on record. In this regard, the appellant wants to attract your honors attention to Annexure 1 (PBP: 15 - 17) of reply dated 22.03.2024 which contains details of deductees along with their name, PAN, Qualification/ Nature of work done and address and the same was available with the Ld. CIT(Exemption). Instead of availability of such details, the Ld. CIT(Exemption) has made such presumptive allegation. 2. The Ld. CIT(Exemption), has further alleged that these expenses are not proof that these are genuinely for this work. Here, the Ld. CIT(Exemption) while accepting that the payment has been made, raises doubt on the purpose for which the said expenses have been made. Here, it is important to note that the objects of appellant, inter alia, includes medical relief& Relief for the Poor. A copy of the deed outlining these objectives has already been submitted(PBP: 18 - 27). Accordingly, it is obvious that in order to attain these objectives, certain activities would be undertaken, therefore under the current case, health camps have been organized and there is no denial in the order that such health camp have not been organized. Further, to provide medical services to participants, professional services would be needed since these services demands duly qualified and trained professionals and JNU Medical College and Hospital is an established hospital with ample infrastructural facilities, resources and pool of experts. Therefore, these professionals were hired from pool of hospital for the activities of society also which enabled the society to carry out the activities more economically and efficiently. 3. Therefore, when it is admitted by the Ld. CIT(Exemption) that professional fees have been paid by the appellant then why itspurpose is doubtful when there is direct link of such expenses with the objective of the appellant and there is no denial on the happening of such health camps. 4. Without prejudice to anything stated above and without any admission, we would like to bring in your honors notice that appellant received significant portion from Jaipur National University (JNU). Under the ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 12 facts and circumstances, even for sake of academic discussion, if we look to the allegation of the Ld. CIT(Exemption) that professional fees have been paid to the employees of JNU then the question arises, if this is the truth then why JNU has paid the money to the appellant and then to its employees which could directly be paid to employees without any tax disadvantage. The presumption of the Ld. CIT(Exemption) is against the human probabilities and rational way of analyzing the facts and circumstances. The facts narrated above shows that appellant has paid professional fees at its own, on the basis of services taken for the object of the society. 5. Hence, in view of the above submission, it is evident that the expenses are genuine and it is incorrect to say that the appellant has not proved that the genuineness of the expenses under the current case. II. Point (5) of SCN and Sub-Point (5) of 4.2 of Order: A. Queries raised in Show Cause Notice dated 09.03.2024: 1. Please submit all communications, agreement, MOU’s etc with (a) JNU, (b) Spectrum clinical research (c) Raha life (d) IPCA lab (e) Govt. of Rajasthan As TDS has been deducted in many of such receipts. Same prima facie fallunder category ofbusiness which is a specified violation under clause (a) of 12AB(4). Please explain why thisbusiness activity qualify as charity u/s 2(15). Further violation of your own deed which do notallow contract receipts. B. Reply submitted by Appellant vide letter dated 22.03.2024: a) The details of receipt from the entities mentioned in Point-5 and nature thereof was submitted As Annexure-6 of our earlier reply. A perusal of the same shows that the receipts either pertains to amount received towards clinical research study, grant or reimbursement of expenses. The receipt in AY 2023-24 on which TDS has been deducted belongs to receipts from Government of Rajasthan. In the captioned notice, the said receipts have been termed as business receipts therefore violative of clause (a) of 12AB(4) and section 2(15) along with deed of society which do not allow contract receipts. At the outset it is critical to mention that Clause-9 and 11 of objectives of the society permit the assessee to co-operate, collaborate or associate with any other institution, societies, governmental organizations etc. for in furtherance or attainment of its objectives. The said clauses reads as under: ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 13 b) In view of said mandate given by the objectives of the assessee society, assessee entered into an agreement with Government of Rajasthan as support implementing agency wherein it was entrusted to carry out a study of Jal Jeevan Mission in certain villages of Rajasthan. In thisregard, copy of work order has been submitted with our earlier reply. It is crucial to mention that “Jal Jeevan Mission” is a government initiative envisioned to provide safe and adequate drinking water through individual household tap connections by 2024 to all households of rural India along with implementing the source sustainability measures, such as recharge and reuse through grey water management, water conservation, rain water harvesting etc. (source: official website of jal jeevan mission) Hon’ble Prime Minister has also termed this scheme as a measure of relief to poor by communicating the below message (source: Jal Jeevan Samvad, the official monthly mouth piece of Jal Jeevan Mission, February, 2024 edition): c) The said activity was directly contributing to the social welfare along with preservation of environment and sustainable development which are falling under the definition of Charitable Activity of relief to poor and preservation of environment u/s 2(15). The said activity was also in ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 14 tandem with objectives of society, more specifically mentioned at Para- 1, 5 and 6 which reads as under: d) The nature of receipts from JNU were grants and the amounts received from IPCA Lab were towards carrying out the clinical research studies in medical sciences, which are also aligned with the objectives of the assessee. e) The activities of the trust shall not be covered under the term of “business”, in view of the fact that the primary activity is assessee society is providing medical relief and relief to poor. No charitable activity can be carried in isolation without taking support of ancillary or incidental activity therefore no distinction should be made between the primary objective and ancillary activities, and so long as the ancillary activities involve any transaction giving rise to income, fees, gain, had not been carried on solely with the profit motive but primarily for the purpose of fulfillment of primary objective. The society has undertaken the activity of clinical research studies and Jal Jeewan Mission study, with a view to achieve the objective of medical relief and relief to poor, therefore, these activities shall not be termed as business. As in the essence, the activities are providing medical relief and relief to poor only. The similar view has been taken by the Hon’ble Apex Court in the case of CST vs Sai Publication Fund (2002) 177 CTR 001 (SC). We further rely on the following case law: \u0001 DIT vs Bharat Diamond Bourse (2013) 126 taxaman 365 (SC), wherein the Hon’ble SC held that where primary or dominant purpose of institution is charitable and other objects which by themselves may not be charitable but are mere ancillary or incidental to primary or dominant object, the same would not prevent the institute from validly being recognized as charity. \u0001 CIT(E) Vs Water and Land Management Training and Research Institute (2017) 398 ITR 283 (AP HC) “The main fallacy in the conclusion reached by the Director, lay in the fact that all the activities of the assessee were linked by the ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 15 Director only to the last of the 7 items that form part of s. 2(15). In other words, both the Director as well as the Tribunal thought that the activities of the assessee would fall within the ambit of the words \"advancement of any other object of general public utility\". By doing so, the Original Authority as well as the Tribunal omitted to take note of the activity, namely, \"preservation of environment including water- sheds, forests and wildlife\". If these authorities had understood the activity carried out by the respondent to have a direct causal connection to the activity of preservation of environment, they would not have invoked the first proviso to s. 2(15). This is where the respondents appear to have gone wrong. The Director of IT (Exemptions) as well as the Tribunal committed 2 mistakes, namely, (a) that of overlooking the first 6 activities covered by s. 2(15) and focusing on the 7th activity which has a correlation to the first proviso and (b) that of looking at the gross receipts even before the grant of registration.—Andhra Pradesh State Seed Certification Agency vs. Chief CIT (2013) 256 CTR (AP) 380 : (2013) 83 DTR (AP) 23 : (2013) 356 ITR 360 (AP) and Infoparks vs. Dy. CIT (2009) 227 CTR (Ker) 486 : (2009) 31DTR (Ker) 162 : (2010) 329 ITR 404 (Ker) distinguished.” C. Observation of Ld. CIT(Exemption): 1. Second para at page 11: No details of communications, agreement, MOU’s asked in show cause notice is as under:- … The applicant submits copy of deed of JNU in its earlier reply. But could not verified following details:- (a) Whether such receipts are eligible for assessee as per its deed (b) Whether receipts are commercial of donations. (c) TDS deduction prima facially business nature. (d) Assessee failed to prove the same are not bogus. Above mentioned activities are primarily commercial or for-profit making rather than charitable activities. Although the applicant has earned huge profit fromthese activities as evident from the I/E account. Charitable trusts are typicallyestablished for specific charitable objects/ activities that benefit the public atlarge, and their resources are generally intended to be used exclusively forthose purposes. Organizing of conference of doctors are activities of businessnature which are not within the ambit of charitable spirit of an institution andare also not incidental to any of the objects of the institution. Thus, theseobjects are not charitable in the light of section 2(15) of the Income Tax Act. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 16 D. Submission before the Hon’ble Bench: 1. To classify any activity or receipt as business receipt, deduction of TDS cannot be a predominant criterion rather Ld. CIT(Exemption) failed to appreciate that recipient of services in furtherance of object need not to pay any charges which itself shows that appellant carrying no business. 2. The activities of the trust shall not be covered under the term of “business”, in view of the fact that appellant is providing medical relief, relief to poor free of cost, study of rural area under Jal Jeevan Mission, the source of donation is separate, expenses have been incurred for specified objective and no separate services has been provided to the donors. Therefore, these activities cannot be termed as business. 3. Please note that the appellant entered into an agreement with Government of Rajasthan to carry out a study of Jal Jeevan Mission in certain villages of Rajasthan. The said activity falls under the definition of Charitable Activity of relief to poor and preservation of environment u/s 2(15). Further, the nature of receipts from JNU were grants and the amounts received from IPCA Lab were towards carrying out the clinical research studies in medical sciences, which are also aligned with the objectives of the appellant. Furthermore, all the receipts have been received in bank of the appellant and there is no dispute with regard to the identity of the donors. Hence, in view of the above submission, the objects cannot be said to be commercial. III. Point (6) of SCN and Sub-Point (6) of Point 4.2 of Order: A. Queries raised in Show Cause Notice dated 09.03.2024: 6.No details actual work given that what exactly is done by employees andwhysuch hugeexpense made. Submit note on activities, justify its expenses charitable in nature, how samefall under 2(15). B. Reply submitted by Appellant vide letter dated 22.03.2024: In this regards a sheet containing list of professionals, services of whom has been used is enclosed as Annexure-1, along with their other details. As far as actual work done by them is concerned, as submitted above, assessee society is engaged in conducting the health camps and relief to poor, thus services of these professionals and employees were taken to carry out those activities. JNU Medical College and Hospital is an established hospital with ample infrastructural facilities, resources and pool of experts, therefore, these professionals were hired from pool of hospital for the activities of society also which enabled the society to carry out the activities more economically and efficiently and getting infrastructural support from hospital. C. Observation of Ld. CIT(Exemption): ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 17 \u0001 No details of actual work done by the trust and not proves that such expenses are in charitable nature. \u0001 No actual details of work for which such huge professional fee is paid have been submitted. D. Submission before Hon’ble Bench: 1. The appellant, vide reply dated 22.03.2024 (refer sub-point no. 1 of point no. 6,7,8 and 10) (PBP: 13), clearly provided its submission with regard to the actual work done and the details of work for which professional fees have been paid, instead of that, the Ld. CIT(Exemption) has stated that no such details have been provided by the appellant. 2. As stated above, there is no denial that the appellant was engaged in conducting health camps and undertaking research activities to carry out its objectives and the appellant had also submitted cuttings of newspaper advertisement published with respect to such health camp. 3. All these facts, circumstances and material provide support that the charitable activities have indeed been undertaken by the appellant since such health camps are public events and such outreach programs are attended by large number of participants and if such camps were not organized there would be public outrage and consequent coverage by media which did not happen in the present case. IV. Point (3) of SCN and Sub-Point (3) of Point 4.2 of Order: A. Queries raised in Show Cause Notice dated 09.03.2024: 3. You have furnished details of charitable activities, but the same does not commensurate with income and expenditure account furnished for the F.Y. 2022-23, explain why it not be considered as misrepresentation of facts. And all the so-called activities are not routed through bank account all shown done in cash only. Why your activities may not be treated as non-genuine. B. Reply submitted by Appellant vide letter dated 22.03.2024: 1. It is submitted that assessee has furnished detail of charitable activity in reply dated 22.02.24 as Annexure 15, relevant part of Annexure-15 is placed below. Now it is important to note that only Rs. 48,350/- were shown as cash expenses. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 18 C. Observation ofLd. CIT(Exemption): 1. Only 4 medical camps shows as activities, which are organized JNU, withheldof assessee society, however total expenses of more than 4.5 cr. Asprofessional fee for same is paid to JNU, which is disporationate. D. Submission before Hon’ble Bench: 1. At the outset, it is submitted that no payment has been made to JNU by the appellant in the present case. Hence, the above statement is incorrect. 2. Without prejudice to anything stated above and without any admission, for sake of argument, it is submitted that it is alleged that the payment has been made to JNU/ employee of the JNU, then it becomes important to see from where the money is received and in the present case, the money was mainlyreceived from JNU. Thus, as per the reasoning of the CIT(Exemptions) himself, it is a neutral transaction since the receipt and payment are both from JNU. Therefore, our submission is having strength that money has been given for genuine cause for activities to be carried out by the appellant for the welfare of the appellant’s objective which is also evident from evidence furnished hereinbefore.Further, also refer submission made in point no. 4 of page 6 of this submission. 3. Further, with respect to the allegation that only 4 camps have been held, please note that the appellant had clearly stated in point no. 8 of its reply dated 22.02.2024 (PBP: 28 - 30) that the appellant had organized several camps and list of 4 camps were submitted as an illustration. 4. Hence, presuming adversely on the basis of number of camps not commensurating with the expenses, is unjustified. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 19 V. Point (4) of SCN: A. Queries raised in Show Cause Notice dated 09.03.2024: Photographs bearing name of JNU Medical college and hospital,thus activities are done byother entity and you are claiming it as own. Further name appearing on photographs isadvertisement for JNU medical college and hospitals. B. Reply submitted by Appellant vide letter dated 22.03.2024: At the outset it is submitted that it was crucial to inform the general public about the ongoing medical camp to ensure that the maximum number of individuals could benefit. Therefore, the dissemination of information through a newspaper advertisement was primarily a means of publicizing the camps and not an advertisement for JNU Medical College and Hospitals. Further, the very same photographs along with name of JNU Medical College and Hospitals are also containing the name of assessee society with the clear mention that camps are being organized by the assessee society as under” The hindi word “सौज\u0004” translate to “by Charity or Kindness of” in English. Thus, the advertisement itself clearly mentioned that the camp is a charitable event organized by assessee society. C. Submission before Hon’ble Bench: 1. The photographs, submitted to the Ld. CIT(Exemption)(PBP: 31 – 34), carries the name of the appellant and specifically contain the name of the ‘organizer’. Hence, the allegation is incorrect. VI. Conclusion drawn by Ld. CIT(Exemption): A. Hence from the above it is clear that the activities are not verifiable and it could not be determined whether the applicant is genuinely carrying out charitable activity. Therefore, the applicant claim of registration u/s 12AB is also liable to be rejected on ground of not proving its genuineness of activity. B. Submission before Hon’ble Bench: 1. Perusal of the submission made hereinbefore shows that CIT(Exemption) perceived his conclusion based upon the presumptions without appreciating the facts in right perspective. It is not the case where bogus payment has been made. In the instant case, maximum ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 20 payment has been made after due deduction of TDS and through banking channels, copy of advertisement for conducting medical camps were also filed. In practical scenario various camps or assistant have been provided by the appellant is nearby area by sending medical teams on the request of local people. The rejection can only be based upon adversarial material. 2. The Ld. CIT(Exemption) has stated that the appellant has earned huge profit from these activities which is also contrary to the current facts. In fact the appellant had incurred losses during the current year. Audit report along with Income and expenditure account is enclosed for your reference (PBP: 35 - 39). 3. Further, the registration u/s 12AB of the appellant has been rejected on the basis of presumption since the Ld. CIT(Exemption) himself was not sure about the genuineness of activities of the appellant. Further, it is a settled principal that registration cannot be cancelled on presumptive basis.” 5. To support the contention so raised in the written submission ld. AR of the assessee filed a detailed paper book and the index of the document submitted reads as under:- S. No. Particulars Page No. 1. Application filed under RPT Act, 1959 1-2 2. Registration certificate under RPT Act, 1959 3 3. Show cause notice dated 09.03.2024 4-7 4. Reply dated 22.03.2024 8-14 5. Details of professionals to whom fees was paid (Annexure-1) 15-17 6. Copy of deed 18-27 7. Reply dated 22.02.2024 28-30 8. Copy of advertisement photograph 31-34 9. Copy of audit report along with income and expenditure account for the A.Y. 2023-24 35-39 6. Ld. AR of the assessee in addition to what has been submitted vehemently argued that the objects of society are education, medical relief, & Relief for the Poor which has not been ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 21 doubted. The observations are merely for the payment made on the services made to doctors for professional fees and thereby he stated that the assessee is paying the professional fees to employees and the scholarship fees paid are very much negligible. Therefore, there is no observation as to the activities are charitable in nature or not. The assessee made the payment to the payee after complying with the provision of withholding tax on the payment and thereby merely the payment made to professional the genuineness of the activities of the trust cannot be doubted. The ld. CIT(E) has not doubted the fact that the object of the trust are not charitable and in nature. The ld. CIT(E) has to measure the object of the trust and not the receipt and payment whether are commercial nature or not. The ld. CIT(E) is measuring the payment are disproportionate or not but he has not commented upon the activities are charitable or not. 7. Per contra, the ld. DR relied on the orders of the ld. CIT(E) and the detailed observation made in the order of the ld. CIT(E) and at the same time he did not object to the prayer of the ld. AR of the assessee that he should be given a chance to represent the case before ld. CIT(E). ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 22 8. We have heard the rival contentions and perused material available on record. The Bench noted from the order of the ld. CIT(E) that he has rejected the application of the assessee pertaining to registration of the society u/s. 12AB of the Act on the ground that the assessee was not registered with the Rajasthan Public Trust Act, 1959 coupled with the observation on the activities of the trust and thereby held that the activities of the trust are not Genuine and thereby he did not consider the trust for registration. As regards the first reasons given by the ld. CIT(E) the bench noted that the assessee-appellant applied for registration under Rajasthan Public Trust (RTP) Act, 1959 on 21.12.2023 (PBP: 1-2) and the application was pending which was conveyed to the Ld. CIT(Exemption). Accordingly, the appellant could not submit the copy of registration under RTP Act, 1959 to the Ld. CIT(Exemption). Thereafter, the appellant was granted registration under the RTP Act, 1959 vide registration dated 29.04.2024 (PBP: 3). Therefore, the appellant should not be deprived of the registration due to the default on the part of the ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 23 authority granting registration under RPT Act, 1959 as that observation being curative in nature and the same effectively granted. Therefore, we are of the considered view that the assessee needs to be given an opportunity to represent this fact before the ld. CIT(E) and thereby cure that observation. 9. Now coming to the second observations of the ld. CIT(E) for the Genuineness of the activities of the trust we note that ld. CIT(E) noted that the assessee has not given the details of professional fees at point no. 4 of camps, but these expenses do not prove that expenses are genuinely for this purpose. He further noted that assessee – appellant made the payment to employees and only meagre amount is being incurred in scholarship which was considered negligible compared to professional fees and that is why the doubt was raised on nature of charitable activities carried out the assessee trust. There is no doubt about the nature of activities as per the object of the trust is to provide education and medical facilities and relief to the poor. As we note from the observation as recorded in the order under challenge that ld. CIT(E) noted that the assessee has spent the amount on professional fees to doctors. It is emphasized that the assessee ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 24 provides services to general public free of cost without any charges and donations received by the assessee are utilized for the welfare of the general public. Therefore, merely the receipt and payment are used to pay the doctor does not disentitle the assessee of not engaged in the charitable activities as the activities conducted are for the benefit of general public and charitable in nature. In fact that support the case of the assessee that the assessee received the donation and has been used for arranging the best doctors and thereby the poor get the medical advice and that activities itself is a charitable in nature and therefore, there is no substance on this reasons advanced by the ld. CIT(E) while dealing with the registration application of the assessee trust characterizing professional fee payments as revenue-generating instead these doctors are providing the services to public at large without any cost. The ld. CIT(E) did not prove that the expenditure incurred on the camps is not charitable and not as per the object of trust. Even the four camps and the volume of expenditure that does not define the activities are not charitable in nature. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 25 As regards the other aspect of the observation as per the notice issued by the ld. CIT(E) the bench noted that the assessee submitted details of all communications, agreement, MOU’s with JNU, Spectrum clinical research, Raha life, IPCA lab and Government of Rajasthan. From those agreement the ld. CIT(E) noted that he could not verified that the a) such receipt are as per the deed of the trust or not, b) whether the receipts are commercial donations, c) TDS deductions prima facially business nature and the d) assessee failed to prove the same are not bogus. These four observations are general in nature. When the ld. CIT(E) asked for the details and the assessee furnished all the details available. The ld. CIT(E) should have rendered his specific comments but the observation are general in nature and went of the financial aspect the to deal with that activities are charitable or not. The receipts may be a commercial, but the exemption is on the activities to be seen as a charitable in nature or not, which ld. CIT(E) has to see. For that nature of activity there is no comments based on these agreements and connected details submitted by the assessee. Thus, the donations / receipts may be commercial in nature but the expenditure is to be seen to see the trust activities are charitable in nature or not. The TDS deducted ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 26 or not will not decide the nature of receipt in the hands of the assessee as payee has understood to deduct tax based on the payment in their hands. The activities are charitable in nature or not when the assessee furnished all the details and deed as called for the assessee cannot be established to prove the donations are bogus or not? It was the allegation made by the ld. CIT(E) and he has to establish and without doing so based on the general statement registration to the trust cannot be denied. As regards the other four allegations on the activities of the trust the bench noted from the detailed filed by the assessee ld. CIT(E) noted that the assessee has not submitted the details of the actual work done by the trust and not proved that such expenses are of a charitable nature. He also commented that the assessee conducted only four camps and expenses incurred are on the professional fees only no details of the actual work vis a vis the professional fees were justified. In the case of professional fees paid it was not the assessee case to justify when a professional charge to the assessee and assessee has paid the fees is enough to check the payment and reasonable is to be seen if the payment were made to the relatives here that is not ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 27 the observations of ld. CIT(E). Thus, when the assessee proved based on the activities of the trust it was the case of ld. CIT(E) and not of the assessee prove the activity. The bench observed that Hon’ble Supreme Court upheld the Delhi High Court's decision, affirming that a in a case of newly registered trust, registration can be granted under Section 12AA based on its stated objectives and proposed activities, even in the absence of any prior activities while dealing with the appeal of the revenue in Civil Appeal no(s). 5437-5438/2012 in the case of Ananda Social and Education Trust Vs The Commissioner of Income Tax & ANR. The relevant observation of the apex court reads as under: For the reasons stated earlier, we are of the view that the object of the provision in question is to ensure that the activities undertaken by the Trust are not contrary to its objects and that a commissioner is entitled to refuse registration if the activities are found contrary to the objects of the Trust. In the present case, what has been found is that the Trust had not spent any amount of its income for charitable purposes. This is a case of not carrying out the objects of the Trust and not carrying on activities contrary to its object. These circumstances may arise for many reasons including not finding suitable circumstances for carrying on activities. Undoubtedly the inaction in carrying out charitable purposes might also become actionable depending on other circumstances; but we are not concerned with such a case here. Therefore, the denial was not correct and as per the direction of the apex court. Thus, we note that ld. CIT(E) has not commented on the activities, but he is seeing the nature of receipt and ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 28 expenditure but his observation are clearly absent as to the activities of the trust are charitable or not when the assessee except the registration under RPT Act submitted all the details called for and therefore, the denial was no in accordance with the law. 10. Since on the aspect of the registration of the trust the assessee submitted the registration after the application disposed off by the ld. CIT(E) we restore the matter of registration to the file of the ld. CIT(E). In the light of these facts we are of the considered view that the reasons advanced for rejection of the registration to the assessee was not correct. Thus, the assessee is directed to produce the registration granted to them under RPT Act before the ld. CIT(E) to settle the dispute raised hereinabove. Based on the observation made and thus we set aside the issue to the file of the ld. CIT(E) with direction as given herein above. In the result, the appeal of the assessee is allowed for statistical purposes. ITA No. 714/JPR/2024 Jaipur National University Society for Social Welfare 29 Order pronounced in the open Court on 20/02/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBkSM+ deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 20/02/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Jaipur National University Society for Social Welfare, Jaipur. 2. izR;FkhZ@ The Respondent- CIT(E), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA No. 714/JPR/2024} vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar ` "