TMI Blog2010 (8) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... r. This appeal is preferred by the assessee against the order of the CIT, Siliguri dated 29-1-2010 regarding rejection of grant of registration under section 12AA of the Income-tax Act. 2. Brief facts of the issue are that the assessee is an institution which was created on 11-10-1995 under Sikkim-Manipal University of Health, Medical and Sciences Act, 1995 (Act No. 9 of 1995) passed by the Sikkim Legislative Assembly. The main objects of the assessee are to provide health, medical care, educational and research facilities in the field of Medical Science and Technology to all eligible persons. The assessee applied for registration on 9-7-2009 under section 12A of the Income-tax Act, 1961 with the CIT, Siliguri. The CIT, after taking into consideration the issues taken before him, passed the impugned order dated 29-1-2010 under section 12AA of the Act rejecting the application for registration made in Form 10A with the following observations : 5. In its written submission filed on 28-1-2010, the applicant has, inter alia, mentioned that as per para 16.8 on page 6 of our MOU with the Government of Sikkim dated 12th March, 1992, we have to provide free medical treatment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e genuinity of the institution was not disputed by the CIT. He further argued that the main objects of the assessee, as provided at page No. 18 of the paper book, is to provide relief for poor, medical care, educational facilities which are embraced within the definition of charitable purpose conceived in the provision of section 2(15) of the Income-tax Act, 1961. He further elaborated that the assessee treats poor people of the State of Sikkim without charging them any fees in its hospital, as per an agreement with the Government of Sikkim, which is enclosed at page No. 43 of the paper book. It is also submitted by the Ld. Counsel that the assessee is running a medical and technological institution under its aegis and achieving its prime objects to provide medical relief and impart education through these establishments. Therefore, the Ld. Counsel contended that the objects attributable to charity in the sense of providing relief to the poor, medical relief and education were achieved by the assessee. He further pointed out that the CIT had not recorded any adverse finding to the extent that the statutory requirement has not been satisfied by the assessee. Thus, the two conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the institution was earning profit by charging exorbitant fees and as such the same cannot be a ground for denial of registration, on such premise relied on the cases of St. Don Bosco Educational Society v. CIT [2004] 90 ITD 477 (Lucknow) and Aryan Educational Society v. CIT [2005] 93 ITD 546 (Delhi). In such scenario, he submitted that the activities of the assessee are therefore, charitable in character within the meaning of section 2(15) of the Income-tax Act, 1961 and as such it is entitled to registration under section 12A of the Income-tax Act, 1961 and the CIT misread and misconstrued the provision of the statute in this regard in passing such impugned order refusing registration under section 12AA of the Income-tax Act, 1961 which is not in consonance with the law and the facts of the case. 5. On the other hand, the Ld. D.R., appearing on behalf of the Revenue, only relied on the order of the CIT but could not contradict the arguments made by the Ld. Counsel of the assessee. 6. After hearing the rival submissions and on a careful perusal of materials available on record and the case laws relied on by the Ld. Counsel of the assessee, we find, that the Ld. CIT was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a creation of a statute of the Sikkim Legislative Assembly, which was created to fulfil the objects as per the provisions of the enactment. We also find that the Governor of the State of Sikkim is the Chancellor of the assessee. It is an admitted fact that the Government of Sikkim has allotted 25 acres of land and a sum of Rs. 30 crores for construction of Central Referral Hospital building and further grants were given each year for running the institution, as is evidenced by the copy of Deed of Lease, appearing at pages 36-42 of the paper book, and copy of Memorandum of Agreement at pages 43-48 of the paper book. Therefore, in our considered opinion, the assessee is entitled to registration under section 12A of the Income-tax Act, 1961. We also find that the Ld. CIT has made two observations to justify his order rejecting the application which, in our considered opinion, are not justified, keeping in view the statutory parameters of section 12AA of the I.T. Act. The first observation of the Ld. CIT is that the activities in providing free medical facilities only to the BPL people hailing from the State of Sikkim is clearly intended for the benefit of communities based in Sikki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty necessary for the benefit of students. The object of setting up an educational institution is by definition charitable and such an entity will essentially be of charitable nature. Therefore, there cannot be any limit on the fees charged in order to fulfil such object. Therefore, the scale of fees provided was in consonance with the class of education being imparted taking into consideration the high expenses incurred for conducting and betterment of medical and technological education and research. We also find that there is no observation of the CIT to the effect that the institution was earning profit by charging exorbitant fees. The Hon ble Lucknow Bench of the ITAT, in the case of St. Don Bosco Educational Society (supra) has observed as under : Where once Commissioner has not doubted genuineness of activities of assessee-society nor doubted its objects, his power ends and he cannot be allowed to travel beyond it and to enter into scope to find out as to whether assessee is a charitable institution or not or whether assessee is a charitable institution or not or whether assessee is carrying on any activity which is covered under definition of section 2(15). 6.3 It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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