TaxTMI 
TaxTMI 
2014 (8) TMI 832
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.... the order of DIT(E) and remitted the matter back to him with a direction to consider assessee's application for registration again independently on its own merits and decide the issue. Pursuant to such direction of ITAT, the DIT(E) initiated proceeding de-novo by issuing a notice to the assessee by calling upon it to produce books of account, financial statements and various other information and document. As noted by DIT(E) in the impugned order, in response to such notice, the appellant appeared before the DIT(E) and furnished information/documents called for. In course of the proceeding before the DIT(E), the appellant referring to the issues raised in the earlier order of the DIT(E) submitted that initially the company was incorporated with 2 directors who were foreign nationals. Subsequently, the board was reconstituted with 3 directors out of those, two are Indian nationals and 3rd Director is also a person of Indian origin. Further, referring to the objects of the company, which allowed extension of its activities to other countries apart from India, it was submitted that the company has no such intention to extend its activities outside India. The appellant also clarified,....
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....l objects. In this context, learned AR referring to the decisions of the Hon'ble Supreme Court in case of Additional CIT Vs. Surat Ark Silk Cloth Manufacturers Association, 121 ITR 1 (SC) and that of the Hon'ble Delhi High Court in case of ICAI Accounting Research Foundation Vs. DCIT (supra), contended that dominant object is to be considered and not incidental and ancillary objects and further there is no business unless there is a profit motive. So far as allegation of DIT(E) that assessee intends to carry out activities outside India and thereby utilize its surplus fund outside country, learned AR submitted that apart from carrying out activities as per its object in India, assessee has no such intention of extending its activities outside India, hence, there is no scope of infringement of section 11. Further, at the stage of grant of registration, the DIT(E) cannot examine assessee's entitlement u/s 11. With regard to allegation of DIT(E) that assessee has not carried out any charitable activity independently, learned AR submitted that while coming to such conclusion DIT(E) has completely misconceived the facts. It was submitted that DIT(E) has completely overlooked the fact t....
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....se run undertakings promoting discovery, diagnosis, and usage of superior medical treatments and prevention strategies for all kinds of diseases, ailments, injuries and health conditions. 4) To act as advisors and consultants on all matters and problems relating to health, administration, organizing, managing, commencement or expansion, procurement, production, cost control, advertisement, publicity, personnel export and import for institutions, concerns, bodies, associations, departments and services of Government, public or local authorities, Non-Governmental organizations, trust, societies, scientific research bodies, international agencies and development centres, in any field of health and medicines." 5.1 Along with the aforesaid main objects, there are other incidental or ancillary objects. As can be seen, the object of the company is to improve public health. At this stage, it will be necessary to look into the definition of charitable purpose as defined u/s 2(15) of the Act, which stood at the relevant point of time reads as under: "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and ....
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....is violation of section 11. 3. The institution during the year has merely carried out certain project work assigned to it by the parent organisation in Sydney and has not carried out any charitable activity on its own. 5.3 As can be seen, the first objection of the DIT(E) is that as per the objects incidental or ancillary to the main objects, the assessee intends to carry out certain activities, which are commercial in nature. In this context, it is to be noted that the DIT(E) has no doubt regarding charitable nature of the main objects. Therefore, ignoring the main objects, the DIT(E) cannot lay stress upon the objects incidental or ancillary to main objects to assume that the intention of the assessee is commercial in nature. Even assuming that there is a commercial intent, but, if it is for achieving the main object, which is of charitable nature, then, it cannot dilute the fact that the objects of the assessee are of charitable nature. In this context, we refer to the decision of the Hon'ble Delhi High Court in case of ICAI Accounting Research Foundation Vs. DCIT (supra). Further, it is well settled that for achieving the main charitable object if an institution carries on so....
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....is clear that he has not found any adverse material to show that the main objects of the assessee are not of charitable nature or its activities are not genuine. That being the case, the other reasons on which the DIT(E) has denied registration u/s 12A of the Act are irrelevant and extraneous for the purpose of granting registration and beyond the scope of section 12A of the Act. In case of CIT Vs. Red Rose School (supra), the Hon'ble Allahabad High Court held as under: "33. In regard to the genuineness of the activities of the trust or the institution, whose objects do not run contrary to public policy and are, in fact, related to charitable purposes, the Commissioner is again empowered to make enquiries as he thinks fit. In case the activities are not genuine and they are not being carried out in accordance with the objects of the trust/society or the institution, of course, the registration can again be refused. But on mere presumptions and on surmises that income derived by the trust or the institution is being misused or that there is some apprehension that the same would not be used in the proper manner and for the purposes relating to any charitable purpose, rejection canno....