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2015 (4) TMI 186 - AT - Income TaxWithdrawal of approval/registration granted u/s 12A - Appellant Society was not a charitable organization, as the property/hospital of the Appellant- Society were taken over by Max Group, by creating various financial and legal obligations on the Appellant Society and the Max Group was running the hospital with a profit motive as held by DIT(E) - Held that:- DIT(E) has passed a well-reasoned speaking order on the issue. He has recorded a finding that the assessee’s foundation has not been in operation as a charitable institution as the trustees allowed the property as to be taken over by the Max group by creating various financial and legal obligations as detailed in the foregoing paragraphs of his order. He has further recorded that the hospital is virtually run by the Max Group of concerns which are corporate bodies established with the clear intention of profit motive and this is against the basic principles of the charitable organization. Imparting education and health services to the weaker sections of the society was one of the main charities in good old times. However, in recent times, imparting of education and running a hospital have become one of the main commercial activities. Under the guise of charity, the people are exploiting the charitable institutionally commercially. Although in this case of the assessee, there is no conclusive evidence or material on record to conclude that the hospital itself has been given away by the trustees of the assesseesociety to Max group of companies to exploit the hospital commercially, but, the facts of this case do raise a reasonable suspicion that the hospital itself has been given out by the assesseesociety to Max group of companies to exploit the same commercially and, in a non-charitable manner for reasons best known to the trustees of the assessee-society only. The assessee-society was charitable to only one entity out of the whole planet, i.e., the corporate Max Group of companies. It was not charitable towards the society or public at large but, in fact, it was “uncharitable”. It conducted its affairs in such a way that inspite of charging the most exorbitant fees etc. from its patients in the capital city of the country, if not the highest rates so charged, siphoned off its receipts to commercial corporate companies by entering into a number of agreements with them, to make itself liable to the entire amount of its excess of income over expenditure and even more and after deducting allowable expenditure, the net income was negative i.e. a “loss”, year after year. The reason for such modusoperandi is best known to the assessee-society itself or to be investigated by the concerned agencies or the government allotting the prime land to the assessee-society on certain conditions, never fulfilled by the assessee-society. Thus no hesitation in holding that the assessee has conducted its activities in a non-charitable manner and not in accordance with its object as detailed in its memorandum of association. - Decided against assessee.
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