TMI Blog2012 (6) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... e the conference at a place and in the manner which is befitting into the participants and objects. Donations presumed as Commercial receipt - Held that:- Only because donors are pharmaceutical companies and they deducted TDS, will not convert a donation into a commercial receipt on the basis of presumptive inferences. As long as the assessee has credited the amount as donations and issued donation receipts, in our view, the same cannot be held to be commercial receipt. We hold that the assessee is eligible for registration u/s 12AA and 80-G, which is granted - Decided in favor of assessee. - IT Appeal Nos. 5241 and 55242 (Delhi) of 2011 - - - Dated:- 31-5-2012 - R.P. TOLANI, T.S. KAPOOR, JJ. ORDER R.P. Tolani, Judicial Member These are two appeals by the assessee assailing refusal of registration u/s 12A and 80-G of the Income-tax Act. Common effective grounds in both the appeals are as under: "1. The learned DIT has erred on facts and in law in refusing to grant registration u/s. 12AA to the appellant. 2. The learned DIT has erred on facts and in law in failing to appreciate the noble objects of the society to conduct research and training in the specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and/or surgical management of diseases and afflictions and to investigate and make known the nature and merits of investigations and findings and research in the aid field and to acquire any patent and licenses or other protective devices relating to the results of any discovery, investigations, findings or researches and to acquire any processes upon such terms as to manufacture and distribute for charitable purposes of any product developed, discovered or improved. ( vi ) To provide, encourage, initiate or promote facilities for the discovery, improvement or development or new methods of diagnosis, understanding and prevention and treatment of diseases. ( vii ) To conduct research and training in specialized areas of cardiac rhythm disorders' for the diagnosis and treatment of arrhythmias. ( viii ) To hold periodic scientific meetings and live demonstration workshops particularly on 'Treatment of cardiac rhythm disorders. ( ix ) To formulate teaching and training programs in centers owned/designated by the Trust to go through various aspects of electro physiology. ( x ) To create a national course on 'Heart Rhythm Disorders'. ( xi ) To hold/organize public aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on are as under: S. No. Name of the donor Cheque Amount TDS deduction Gross receipts. 1. India Meditronic Pvt. Ltd. 63,70,000 1,30,000 2. Boehringer Ingelheim 50,000 3. Merck Limited 1,47,000 3,000 4. Sonofi Syntheiabo India Ltd. 2,45,000 5,000 5. Ranbaxy Laboratories Ltd. 1,96,000 4,000 6. USV Limited 250.000 7. Johnson and Johnson Ltd. 7,84,000 16,000 8. Maakali Enterprises 50,000 9. Cadila Health Ltd. 50,000 10. MDS Pharmaceuticals Pvt. Ltd. 1,47,000 3,000 2.4. DIT(E) by various observations, mainly held as under: ( i ) The holding of conference of doctors was not of charitable nature as the same was sponsored by the donors which are commercial pharmaceuticals organizations. ( ii ) The donations were in fact commercial receipts, after deducting TDS by the donors. In case of a donation, the donor will not deduct TDS. Therefore, they were to be held as comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Act does not provide any particular category of persons being debarred as donors. Therefore, there is no irregularity or illegality in assessee's trust having received donations from pharmaceutical companies for its charitable purposes. ( c ) Apropos deduction of TDS by the donors, it is pleaded that if due to perception of a donor it deducts TDS, assessee cannot refuse to accept the donation as in any case the trust was receiving the amount in two forms i.e. cheque amount and the TDS certificate. In case of refusal it losses donation. Therefore, merely because some of the organizations deducted TDS will have no decisive role on the nature of amount being donated. ( d ) The assessee has given donation receipts only and not any bill or vouchers to the donors. DIT(E) has assumed that the donors will claim this amount as business expenditure and this assumption which may be exercised by some other officer in the hand of some other assessee has been inferred against assessee. According to ld. counsel the assumption of DIT(E) has no legs to stand as the assessee has given only donation receipts. How the donor claims it in its tax return and how some other ld. Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferences are held by various trusts and reputed institutions in the field of engineering art, politics, law, with staying facilities in five star hotels, which are allowed as in furtherance of their charitable work. There is no law which prohibits the holding of conference hosted by charitable organizations in five star hotels. ( g ) Apropos applicability of sec. 2(15), the same reads as under: "2(15) - :Charitable purpose" includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest] and the advancement of any other object of general public utility." It is pleaded that the charitable purpose is an inclusive definition and spreading education and awareness among the maffusil doctors about latest and economical cardiac treatment effective and cheaper heart techniques which can be used for vocal patients in turn gets reflected in treatment of a common man, cannot be held to be a commercial activity. The assessee trust has not rendered any service in relation to any trade or business for a cess or fee or any other considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration has been denied on valid reasons. ( iv ) The amount spending in holding the conference in a five star hotel is exorbitant and not concomitant to the declared objects. The law cannot be a moot spectator to such agendas and cannot come to the help for unscrupulous gains by the doctors. ( v ) In the name of the trust, many organizations who do not have charitable purposes at heart are wily inlay branded as charitable trusts seeking registration u/s 12A and getting 80G certificate and claim tax relaxations. They do not serve for the common man or general public utility but only advance the interests of the trustees of the organizations Therefore, it is a fit case where the activity of brand promotion of organizing doctors the name of trust and charitable cause should be exposed. 5. We have heard rival contentions and gone through the relevant material available on record. As the facts emerge, the assessee is a registered society with specified objects, as mentioned herein above. The objects are mainly towards medical research, experiments workshops etc. in the field of medical sciences in general and heart ailments in particular and take in their fold the ways and mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S can be claimed by trust towards the tax paid. It has not been disputed that for these amounts only donation receipts were issued. There was no loss to trust as on application of income i.e. utilization of donation, the TDS becomes refundable to it. Only because donors are pharmaceutical companies and they deducted TDS, will not convert a donation into a commercial receipt on the basis of presumptive inferences. As long as the assessee has credited the amount as donations and issued donation receipts, in our view, the same cannot be held to be commercial receipt. 5.3. Assessee has demonstrated that no cess or fee was charged from the participants of conference, therefore, there is no contravention of sec. 2(15). Besides, even if the delegates are charged with some fee it goes to the defraying of the expenses on conference, thus, on this issue also nothing turns against the assessee. 5.4. DIT(E)'s apprehension that the donors may claim it as the business expenditure in their assessment, is premature and do not concern the assessee and will be decided by their AO. In any case, if there is any issue about application of expenses, the same can be verified by the AO while frami ..... X X X X Extracts X X X X X X X X Extracts X X X X
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