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2015 (9) TMI 440 - ITAT HYDERABAD

2015 (9) TMI 440 - ITAT HYDERABAD - TMI - Grant of registration u/s 12AA denied - as per DIT(E)objects of assessee do not come under the purview of charitable purpose as defined u/s 2(15) and the entire activity of collecting sperm/egg, arranging facility for surrogacy, etc, which is in the nature of medical services are actually undertaken by M/s Diana Medical Services Pvt. Ltd. and assessee has been created only on paper - Held that:- Unless corroborative evidences are brought on record to est .....

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(E) in refusing to grant registration u/s 12AA of the Act to assessee. As far as the first condition is concerned, there cannot be any doubt that aims and objects of assessee society are of charitable nature.

The only other condition which is required to be satisfied is genuineness of its activities. On perusal of income and expenditure statement of assessee as well as other materials, it is not visible how assessee has created awareness amongst general public whether by holding semin .....

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ed from childless couples, who undergo treatment for infertility are only voluntary contribution but he has not furnished details as to how many patients have received sperm/egg and what is the contribution made by each patient. This is very much essential to prove the fact that assessee is not undertaking any commercial activity of trading in sperm/egg, and it is a no profit organisation. Further, nature and purpose of operational grant received by assessee from hospital also needs to be explai .....

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aspects have not at all been examined by ld. DIT(E) while rejecting assessee's application for grant of registration u/s 12AA matter requires re-examination by ld. DIT(E). - Decided in favour of assessee by way of remand. - ITA No. 1764/Hyd/2012 - Dated:- 26-8-2015 - P. M. Jagtap, AM And Saktijit Dey, JM, JJ. For the Petitioner : Shri A V Raghuram For the Respondent : Shri D Srinivasa ORDER Per Saktijit Dey, JM. This appeal by assessee is directed against the order dated 27/09/2012 of ld. DIT(E .....

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lso called upon the society to produce books of account, bills & vouchers for verification. In response to the query raised by ld. DIT(E), it was submitted by assessee society vide letter dated 17/07/2012 that its activity is maintenance of sperm and egg bank and collection of sperm and eggs from eligible donors, which is used in case of childless couples for reproduction. It was submitted by assessee that for this purpose it has a tie up with M/s Diana Medical Services Pvt. Ltd. a research .....

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ough, parliament has not enacted any law in this regard, but, the guidelines provided by ICMR regulates the procedure. It was submitted, to spread awareness amongst prospective donors and public at large so that they will come forward and donate sperm and eggs for utilizing in treatment of infertility of childless couples, assessee is providing yeomen services to the society. It was submitted that assessee in connection with its activities works in close association with Dr. Rama's Institute .....

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d. 3. Ld. DIT(E) after perusing MoU entered by assessee with M/s Diana Medical Services Pvt. Ltd. found that as per the said MoU, assessee is maintaining a semen bank established to screen and identify sperm/egg donors and surrogates and to store gametes whereas M/s Diana Medical Services Pvt. Ltd. is a hospital working on infertility using various methods of Assisted Reproductive Technologies (ART). Ld. DIT(E) observed that while the MoU is signed by both the parties, however, under the witness .....

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nnot be granted registration u/s 12AA of the Act. Further, it was observed by ld. DIT(E), the entire gamut of activity of collecting sperm, eggs, arranging facility for surrogacy etc., which come under the field of medical services are actually undertaken solely by M/s Diana Medical Services Pvt. Ltd. The consideration received from such activities, which is in the nature of commercial receipt is, therefore, liable for taxation in the hands of hospital M/s Diana Medical Services Pvt. Ltd. He not .....

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ipts in the hands of assessee society. He was of the view that as the entire medical infrastructure for creating semen bank and for storage of gametes etc belongs to the hospital along with all equipments used for such purpose, activity relating to maintenance of sperm/egg bank belongs to hospital, existence of assessee society is totally irrelevant, therefore, assessee society cannot be granted registration u/s 12AA of the Act. Being aggrieved of the aforesaid order, assessee is before us. 4. L .....

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ing a sperm/egg bank. He submitted, considering the infertility problem amongst couples in the present age, maintenance of a sperm/egg bank is very much essential to treat infertility. Thus, it was submitted, unless, the donors are persuaded by making them aware of the noble nature of the activity, nobody will voluntarily come forward for donation of sperm/egg. Thus, the activity undertaken by assessee for maintaining sperm/egg bank for facilitating treatment of infertility is in the nature of m .....

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bmitted, since assessee does not have fund to invest in infrastructure like medical equipments for testing, storage, etc. it is utilizing facilities of hospital for which hospital is also compensated. Ld. AR submitted, the activity of assessee is aimed at creating awareness amongst general public (donors for donating sperm/egg) for maintaining the sperm/egg bank, which is supplied to the hospital as per their requirement for treatment of infertility of childless couples strictly in terms with re .....

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eceives voluntary contributions from persons who have been treated for infertility, utilizing of sperm/egg from assessee's bank. Ld. AR submitted, if at all, there is income from assessee's activity, the same has also been utilized for the objects for which assessee society is created. As far as allegation of ld. DIT(E) that the entire income relating to activity of collection of sperm/egg and utilization in infertility treatment belongs to the hospital, ld. AR submitted, such allegation .....

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ry thriving and lucrative business in the modern age. He submitted, childless couples are spending a fortune for undertaking treatment for removing infertility. It was submitted, assessee is nothing but a name lender for the hospital M/s Diana Medical Services Pvt. Ltd., which is maintaining all facilities/infrastructure including the sperm/egg bank by collecting, testing, and storing of sperm/egg from donors. It utilizes the same in the infertility treatment undertaken in the hospital on childl .....

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cannot be considered to be a charitable activity. In this context, he relied upon the decision of Hon'ble Karnataka High Court in case of CIT Vs. P. Krishna, 84 ITR 119 and the decision of the Hon'ble Supreme Court in case of Indian Chamber of Commerce Vs. CIT, 101 ITR 796. Thus, it was submitted by ld. DR, assessee not being a charitable institution, its application for grant of registration u/s 12AA has been rightly rejected. 6. We have considered the submissions of the parties and pe .....

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Medical Services Pvt. Ltd. and assessee has been created only on paper. As far as the first reasoning of ld. DIT(E) is concerned, he has not ascribed any reasons why he considers objects of the society do not come within the purview of charitable purpose as defined u/s 2(15). When ld. DIT(E) accepts that collecting sperm/egg and storage of the same comes within the term medical services, then, the objects of the assessee society clearly provide for such services. Hence, we are unable to underst .....

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es come within the purview of 'medical services' as defined u/s 2(15). Even otherwise also, the very fact that assessee creates awareness amongst public for donation of sperm/egg, which can be utilized for curing infertility in childless persons itself is an activity towards advancement of object of general public utility, hence, comes within the purview of 'charitable purpose' as defined u/s 2(15) of the Act. As far as other allegation of ld. DIT(E) that entire activity of colle .....

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g of gamete it cannot be said that assessee is a mere name lender or has been created in paper only. Unless corroborative evidences are brought on record to establish that the entire activity of bringing donors, collecting sperm/egg, storage etc., has been solely undertaken by hospital, assessee's role cannot be ignored. Therefore, without making any enquiry to find out the exact nature of activity of assessee and the hospital, it cannot be presumed that the entire activity of collection of .....

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there cannot be any doubt that aims and objects of assessee society are of charitable nature. Therefore, the only other condition which is required to be satisfied is genuineness of its activities. In this context, we need to observe, the society on its part is also required to explain in detail its activities of creating awareness amongst general public to come forward for donation of sperm/egg, etc. for creating and maintaining a sperm/egg bank. On perusal of income and expenditure statement o .....

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