9911796707
TMI Blog2013 (12) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... was not justified in treating Rs. 10 crores received by the assessee during the year out of the total Rs. 25 crores as assistance received from the Central Government as income as the same was clearly a loan granted by the Central Government. iv. That the CIT(A) was not justified in sustaining the disallowance of Rs. 1004252/- out of Rs. 1098101/- made by the A.O. on account of running of vehicles on the on the ground that expenditure was excessive and not for the purpose of the Trust. v. The order of the CIT(A) and A.O. is against law and facts of the case. 2. Grounds of appeal raised by the Revenue in I.T.A. No. 515(Asr)/2009 are as under: i. That the learned Commissioner of Income Tax(Appeals) has erred in restricting the disallowance at Rs. 10,04,252/- out of total disallowance of Rs. 10,98,101/- made on account of expenditure of vehicle. ii. That the learned Commissioner of Income Tax(Appeals) has erred in restricting the addition at Rs. 6.5 crore out of total addition of Rs. 25 crore made on account of capital receipts which was claimed exempt by the assessee firm. iii. That the learned Commissioner of Income Tax(Appeals) has erred in deleting the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT, Chandigarh. The Assessing Officer held that the trust is not eligible for exemption under Section 11 of the Act for the year under assessment. The Assessing Officer, in para no. 4 at page 3, confronted with the newspaper's report dated 20.12.2008 in the Hindustan Times of 21.12.2008, in which the opposition parties led by Congress asked Chief Minister Sh. Prakash Singh Badal to justify the decision to strike a "lease out deal" despite the Punjab Institute of Medical Sciences' (PIMS) capacity to generate Rs. 350 crore on its own. The Assessing Office reproduced the news item at page no. 4 and 5 of the assessment order and asked the assessee for its defence on 26.12.2008 at 11 a.m. The Assessing Officer thoroughly examined the reply filed by the assessee on 19.12.2008 by distinguishing the citation cited by the assessee in its reply and was of the view that whether there is a sincere move in the direction of the main objects contained in clause 3.i.a to 3.i.t of the MOA-attainment of which will follow as a result of such sincere moves/karam- has been made and executed. Without moving in the direction of the activity zone of the main objects- with the only exception of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation by the assessee. In the end, the Assessing Officer has held that the assessee-trust has not applied any part of the income of the year for charitable purposes and as such does not deserve exemption of its income for the year under assessment and he rejected the claim of the assessee and initiated the proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income for the assessment year in dispute and made the addition of Rs. 1,72,80,372/- for interest income; Rs. 36,282/- for other receipts; Rs. 25,00,00,000/- for capital receipts; Rs. 1,00,00,000/- for excess deposits with Capital Local Area Bank, Jal; and Rs. 10,98,101/- for expenses on vehicles; totaling Rs. 27,84,14,760/- and completed the assessment under Section 143(3) of the Act on 30.12.2008. 5. Aggrieved by the assessment order dated 30.12.2008, the assessee filed an appeal before learned CIT(A), Jalandhar, who vide impugned order dated 25.09.2009, partly allowed the appeal. Now, the assessee being aggrieved with the impugned order, filed the present appeal i.e. I.T.A. No. 504(Asr)/2009 on the additions mentioned in the grounds of appeal, and the Revenue has also filed the cross ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted by the department till Assessment Year 2006-07 which is the year under appeal. iv. Thus the main objective of the Trust was to establish 500 bedded hospital and Medical College for 100 students for which the Government transferred land measuring 104 Acres and 5 Kanals to the Society after paying compensation of Rs. 15 Crores to Pb. Agriculture University. The construction of the hospital started in the year 2001. 3. While framing the assessment the A.O. in para 2 of page 3 has given a finding that since the Trust has only been carrying on construction of the building although the same is charitable in nature but since construction was going on for a long period, therefore he held that the trust was not eligible for exemption u/s 11 for the year under assessment. Thus he tried to interfere into the registration granted by the CIT to the Trust as a Charitable Trust. 4. In para 3 & 4 on pages 3,4,5 & 6 of the assessment order the A.O. has reproduced certain newspaper reports condemning the establishment of PIMS which although has no relevance to the case of the assessee. These newspaper reports has no meaning in the eyes of law and cannot be used as any kind of eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the society in his comments. The rejoinder to A.O.'s comments was also filed by the assessee which have been reproduced by the CIT(A) in para 2.3 to 2.14 on page 13 to 16 of the CIT(A) order. 8. The CIT(A) has given his findings in this regard on page 18 of his order and has given a clear finding that once a Commissioner has granted a registration u/s 12AA by looking into the objects of institutions and its genuineness of activities the institution is eligible of exemption u/s 11. He further relied on the order of the Hon'ble Supreme Court in ACIT Vs. Surat City Gymkhana, reported in 300 ITR 214 (copy enclosed) Page No. 33 to 35 which was cited before him by the assessee in this regard and thereafter in the law lines of para 3.2 he gave a finding that: "The Hon'ble Supreme Court has also held in the case of ACIT Vs. Surat City Gymkhana 300 ITR 214(SC) that registration u/s 12A was fait accompli to hold the A.O. back from further probe into the objects of the trust. Considering the facts of the case and the decisions discussed above, I hold that A.O. is precluded from examining the eligibility of the trust or institution for exemption u/s 11, though he may exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd it is submitted that the A.O. himself has admitted in his order that no cognizance is being taken by him on these newspaper reports. Hence neither the DR nor the bench can take the cognizance of the newspaper report reproduced by him. Further, the DR has argued that in the subsequent year after the completion of the settling up of the college and hospital it was given to another society for running it on public private partnership basis, therefore exemption of the income should not be granted. In this regard it is submitted that firstly the subsequent events cannot be taken into consideration in the year under appeal because the only question disputed by the department is that firstly the trust does not deserve registration which has been granted by the CIT and secondly the amount spent on the construction of the institution does not amount to applying the funds for charitable activities. The CIT(A) has rightly held that when the registration is granted by the CIT the A.O. cannot interfere into the objects of the society but only can see at the time of assessment that the society has applied its funds towards the objects of the trust. In case he is not satisfied he can only appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of a trust for charitable and religious purposes, any income thereof if for any period during the previous year. ii. Any funds of trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in sub section (5) of sec. 11 continue to remain so invested or deposited after the 30th day of November 1983. Further sec. 11(1) provides that subject to the provisions of sec. 60 to 63 the following incomes shall not be included into the total income of the previous year of the person in receipt of the income. In clause (d) income in the form of voluntary contribution made with a specific direction that they shall form part of the corpus of the trust/institution. From the above it is very clear that in order to apply the provisions of sec. 13 it is to be established that amount invested in the unscheduled bank is INCOME OF THE TRUST which is not the case of the assessee. ii. That it is not disputed that Rs. 25 crores has been received from the Government on account of 18 Crore as Loan and 7 crores on account of assistance for settling up the PIMS. It is also not disputed that Rs. 6.50 crores d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest income generated on the FDR of Rs. 6.50 crores and in this regard your kind attention is drawn towards the following judgments: 34 ITD 489(Bombay)(Page 30 to 33 compendium of judgment) 249 R 533(Bombay) (Page 34 to 39 compendium of judgment) v. That even otherwise the Hon'ble Supreme Court in the following judgments has held that 85% of the income is to be applied for charitable purposes and assessee is allowed to accumulate balance 15% as free income without any restrictions and the same can be invested in any mode. 230 ITR 636 (Page 1 to 8 of compendium of judgment) 216 ITR 697 (Page 40 to 51 of compendium of judgment) In view of the above submissions ground no. 1,2,3 of the assessee deserve to be allowed. Ground No. 4 The A.O. had disallowed Rs. 1098101/- out of car maintenance expenses on the grounds that Log Books of the cars have not been maintained although these cars belong to the trust. The CIT(A) in para 6.1 has given a finding that expenses on 2 cars which were being used by the Chairman and the Vice Chairman was quite high as compare to the expenses on the car used by the Director of the institute. Therefore he sustained the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's business. Simply because the vehicles have been used by Director of staff, it does not mean that the expenditure has been used for the assessee's objectives. In this regard, it is further submitted that the assessee's registration granted under Section 12AA(3) has been cancelled by the worthy CIT-II, Jalandhar vide his order 24.10.2013 with retrospective effect from the assessment year 2004-05 (Copy enclosed marked as Annexure-A). Thus, this expenditure was not admissible as expenditure as the assessee had done no business during the year besides the assessee's failure to bring on record any evidence that the use of vehicle by the Director and staff had been for objectives/business of the assessee. Therefore, it is prayed that the relief allowed by the learned CIT(A) may kindly be reversed. Ground No. 2: It is submitted that the Central Government had given grant of Rs. 25 crore as Additional Central Assistance to Govt. of Punjab for setting up medical institute. This grant consisted of a loan portion and a grant portion. The loan portion carries interest at the rate of 13% per annum. The learned CIT(A) has recorded a finding at para 5.5 that the assessee has always s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne. Ground No. 2: In the light of the learned CIT(A) finding that the assessee had been treating Additional Central Assistance as part of its income and seeking its accumulation under Section 11(2) of the Income Tax Act, 1961, it is clearly proves that the assessee has been treating the Assistance as its income and as such the assessee cannot claim in contravention of its own history that it is now a capital receipt. Ground No. 3: This ground is not maintainable in the light of the observation of the learned CIT(A) that the assessee has treated this amount given as loan as non-returnable and the Punjab Govt. vide its letter 17.09.2008 had decided to waive the condition of return of loan on the assessee. The learned CIT(A) has observed that the de-facto treatment of the grants by the assessee as nonreturnable has been confirmed by the State Govt. and as such the ACA has to be treated as its income. There is nothing perverse in this finding of the Hon'ble CIT(A). Therefore, the assessee's appeal on this ground also deserves to be rejected. Ground No. 4: Since no business activity had been undertaken during the year under consideration and further in the light of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtinent to mention here and admitted by CIT that registration to the trust has been granted u/s 12Aa w.e.f. 6.4.1994 and hence it could not be cancelled u/s 12AA(3) till 1.6.2010 when Finance Act 2010 made the amendments in section 12AA(3) and covered even the registration granted u/s 12Aa w.e.f. 1.6.2010. Hence without going into the merits of the order of CIT passed u/s 12AAA(3) it is very clear that the registration granted to the assessee trust could not have been cancelled u/s 12AA(3) w.e.f. 2004-05. In this regard, your kind attention is drawn towards the following judgments: a. Kapoor Education Society Vs. CIT, Lucknow Bench (134 TTJ (Lucknow) 250 It has been held by the Hon'ble Bench that Amendment of Section 12AA(3) by the Finance Act 2010, w.e.f. 1.6.2010 is prospective in nature and if any trust/institution has been registered prior to 1.10.2014, either u/s 12A or 12AA, CIT has no power to cancel the registration u/s 12AA(3). b. DIT Exemption Vs. Shri N.H. Kapadia Education Trust, Ahmedabad Bench (148 TTJ 37) Charitable Trust registration u/s 12AA cancellation u/s 12AA(3). DIT (Exemption) having cancelled registration on grounds on which exemption u/s 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue authorities. In the first paper book filed by the learned counsel for the assessee, includes Copy of Written Submissions dated 13.03.2009 filed before the CIT(A) with Annexures (page nos. 1 to 11); Copy of comments of the A.O. to the submissions, dated 20.03.2009 (page nos. 12 to 20); Copy of replication to the comments of A.O. dated 21.04.2009 (page nos. 21 to 23); Copy of submissions before the CIT(A) dated 05.06.2009 with regards the status of Capital Local Area Bank with its Annexures (page nos. 24 to 27); Copy of letter dated 10th Oct. 97 about the loan & central assistance of Rs. 25 crores and the utilization of the same (page Nos. 28 to 32); and Copy of letter of Punjab Govt. dated 17.09.2008 converting the loan into grant alongwith english translation (page no. 33 to 36). In the second paper book containing pages from 1 to 51, learned counsel for the assessee has attached some decisions/judgments i.e. S.RM. M. CT. M. Tiruppani Trust Vs. CIT [230 ITR 636 (S.C.)]; Bhubaneshwar Stock Exchange Vs. ACIT, Circle-I (1), [96 ITD 480 (Cut)]; CIT & Another Vs. Karnataka Urban Infrastructure Development & Finance Corp. [284 ITR 582(Kar)]; CIT Vs. U.P. Upbhokta Sahkari Sangh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the order dated 24.10.2013 passed by CIT-II, Jalandahar, under Section 12AA(3) of the Act. Copy of the written submission of learned DR, dated 26.11.2013 along with the order dated 24.10.2013 passed under Section 12AA(3) of the Act in the case of assessee, was given by the Bench to the learned counsel for the assessee and he requested that this case may be adjourned for 27.11.2013 as he wanted to file the rebuttal of the written submission filed by learned DR. Accordingly, the Bench adjourned the matter for 27.11.2013. On 27.11.2013, Sh. Y.K. Sud, CA, again filed written argument mainly in respect of the cancellation of registration vide order dated 24.10.2013 passed by CIT-II, Jalandhar, which we have reproduced in the foregoing para no. 9. 14. After going through the assessment order dated 30.12.2008 passed by the Assessing Officer under Section 143(3) of the Act, the Assessing Officer issued a show-cause notice under Section 143(3) of the Act on 8.12.2008 fixing the case for 15.12.2008. The Assessing Officer dissatisfied with the reply given by the assessee on 10.11.2008, 11.11.2008 and 26.11.2008 and further asked the assessee for more clarification on various issues raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the objects has been achieved during the year. The building is under construction and completion of the project is under consideration. Even construction of building for the society is part of charitable purpose. In reply to the point raised in D-1, the assessee stated that there is no doubt that the running of medical college and other facilities on private public participation is under consideration as one of the proposals but there is no harm in it as it has become need of the hour. Even the Government had opened telecommunication, defence, power and other sensitive sectors for this purpose. So going for private participation keeping in view the need of the day. (ii) As regards to other questions raised by the Assessing Officer, the assessee mainly emphasized upon that no doubt the imparting of education comes within the scope of charitable purposes, but creating infrastructure for the same as per the guidelines of the authorities controlling such education is also part of charity. So creating infrastructure and construction of building is also a step towards that and part of charity. So it is wrong to say that the society is not doing any object specified in the deed. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure incurred during the financial year 2005-06; and a copy of some orders of Hon'ble Punjab and Haryana High Court, in support of its claim. 18. Assessing Officer held that the explanation given by the assessee along with the case laws cited by the assessee are not helpful to the assessee and finally held at page 10 to 12, which is reproduced as under: "The citation (1989) 30 ITD 23(AHD) relied upon by the assessee is also of no help to enable me to allow exemption u/s 11 for the year under assessment. The last two lines of this citation are very important and pregnant with substance and at the same time breaking-through. In the case of the respondent assessee before the learned I.T.A.T. Bench (AHD), as per observations in the citation to the effect- "there was play of the circumstances and natural forces also" that call for allowing for time period of a few years for developing the botanical garden and the plants to grow because the growth of plants cannot be enhanced by a year or so by human efforts alone or to use simple words "a child in the womb takes around nine months - a little less or a little more- to take birth and enter this visible world." So is the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cars have been given on a paper. These expenses are disallowed. Penalty proceedings u/s 271(1)(c) are initiated on this issue for furnishing inaccurate particulars of income. The assessee trust/society has not applied any part of the income of the year for charitable purposes and as such does not deserve exemption of its income for the year under assessment. This claim is rejected and penalty proceedings are initiated for furnishing inaccurate particulars of income u/s 271(1)(c). After discussion with Shri Nirmal Mahajan, CA, counsel for the assessee and Shri Sandeep Singh, account officer of the trust, who also attended the assessment proceedings from time to time income of the assessee is computed as under:- In Rs. i. Income declared as per return 0 Add:- ii. Interest income claimed exempt 1,72,80,372/- iii. Other receipts 36,282/- iv. Capital receipts 25,00,00,000/- v. Excess deposits with Capita Local Area Bank, Jal. (75000000- : Rs. 465000000) Actual : Deposit as per deposit : balance as per bank : sheet st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that even though trust was set up on 10.10.94 constructions of the Institute building started only in or around the year 2002 and even thereafter, the construction has not been completed. He has also taken note of the report that State Govt. was planning to transfer the hospital to private persons even though sufficient fund was available with the Govt. and money from land sold by the PUDA had not been transferred fully to the assessee trust. 3.1 The appellant has claimed exemption of its income u/s of the I.T. Act. Section 11 allows exemption of income from property held under trust wholly for religious or charitable purposes if the same is applied for such purposes. Section 12(1) deems voluntary donations to be income to be treated as such u/s 11. Section 12A, inserted in the statute from 1.4.1973 provides that the provisions of section 11 and 12 shall not apply any relation to the income of any trust or institution unless the persons in receipt of income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner and the trust or institute furnish report of accountant in the prescribed form. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in specified assets; e) Income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust of institution -11(1)(d)-276f) Audited account should be submitted with the return of income- 12A(1) Section 12AA(1) of the Act deal with the procedure for dealing with the application for registration by the trust or institution made u/s 12A. The Commissioner is required to satisfy himself about the objects of the trust or institution and genuineness of its activities, and, if he is satisfied with the same, he should pass an order in writing registering the trusts or institutions; else he should refuse the registration by an order in writing. Section 12AA(3) grants power to the Commissioner to cancel the registration of the trust or institution if he is satisfied that the activities of the trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution. Hence, once the Commissioner has granted registration u/s 12AA, it has to be taken that the objects of the institution and the genuineness of the activities of the trust are such that the institution is eligible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has not invoked section 13 in the assessment order. The A.O. has held that the assessee had not applied any part of it income for charitable purposes and as such did not deserve exemption (though he has mentioned in the assessment order that construction of the building was a charitable activity). He has denied exemption in respect of interest income of FDRs of Rs. 1,72,80,372/- and of misc. receipts of Rs. 36,282/-. He has also added the capital receipt of Rs. 25 crores income of the assessee, besides adding a sum of Rs. 10,98,101/- being expenditure on running of vehicles. A sum of Rs. 1 crores has been added by the A.O. as the difference in actual balance with bank and account books, while he has held as not properly explained. 3.4 The A.O. has subsequently clarified in his letter dated 20.03.2009 that it was not his intention to state that the assessee was not eligible for exemption u/s 11. Rather, he has stated, it was his intention to hold that the income of the assessee had not been applied for the charitable purposes and was, therefore, not eligible for exemption. Let us, therefore, examine if the contention of the A.O. that the income of the assessee from propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducation, and medical institutes need an attached hospital to start functioning, "education" and "medical relief", in the context of the assessee may be charitable activities under section 2(15) of the IT Act. An examination of the MOA of the Society reveals that education features in the MOA at clause no. 3(ii)(a). Thus, the appellant's contention that clause 3(i) states the charitable objects of the Society does not appear to be correct. Setting up of an Institute and managing the Institute cannot be charitable activities in themselves in the context of section 2(15) of the Act. These activities can facilitate charitable activities of providing education or medical care. It is the providing of medical education mentioned in clause 3(ii)(a) of the MOA that can be and is the 'charitable' object or purpose of the Society. Though clause 3(ii)(a) is mentioned under the heading 'functions of the Society', it is, in my opinion, the main clause in the MOA laying down the charitable purpose and object of the Society. The other objects and functions deal with the powers of the Society to achieve this main charitable purpose of the Society. Hence, I hold that setting up of the Institution a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was decided that the main source of funding would be development of around 104 acres of land purchased by PIMS from PAU for Rs. 15 crores. PUDA would develop and sell the land. In 2001, L&T was selected as the main contractor for the main building and the construction was started. In February 2002, supervision of the work of the project was awarded to Punjab Health Systems Corporation (a state Govt. Enterprise) by PIMS. A tripartite agreement between State Govt., PUDA and PIMS for development and sale of land of 104 acres was entered into. During F.Y. 2003-04, contract for other works were awarded. In 2005- 06, it was decided by the Governing Body to take the Public Private Partnership (PPP) mode for operationalising and managing the Institute. [This has been finally achieved in August, 2009, as per information submitted by the appellant.] 4.5 It is obvious from the sequent of events and activities of the Society described above that the Society was taking steps for constructing a building for setting up the Institute to impart medical education. The major source of funding was arranged in the year 2001 when land was transferred to the assessee for development and sale. Contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functioning. As long as the registration u/s 12AA is valid, the activities of the Society can only be held to be genuine. Even the facts show that the expenditure has been incurred for constructing the institute building, which the Assessing Officer has accepted in the asst. order to be charitable activity. Once this is so, exemption u/s 11(1)(a) in respect of income applied to such construction has to be allowed. 4.7 The A.O.'s contention is that the ultimate aim of delivering charitable activities has to be seen. However, it must be appreciated that a medical institute cannot start functioning within the short period of a year. Construction of the building may take more time. It has not been contended directly by the A.O. that income of the Society would be exempt u/s 11 only after the medical instate started functioning. The contention of the A.O. is that the society was taking too long to set up the institute, and therefore, not applying its income to its objects. However, the provision of section 11(2) of the Act take care of this situation. If the assessee accumulates its income and does not utilize it for the stated objectives within the period provided in the Act, the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income has been applied for charitable purposes, we are of the view that this finding given by learned CIT(A) in the impugned order, is totally against the law and facts on the file which deserves to be cancelled and we accordingly cancel the same by holding that even if the registration is granted to the assessee-trust under Section 12AA of the Act, as has been granted in the present appeal, then it will not preclude the Assessing Officer to examine in details the very objects of the assessee and to give the findings in assessment order as to whether the assessee has complied with requirement of Section 11 of the Act or not, as and when assessee seeking exemption under Section 11 of the Act. The registration granted under Section 12AA of the Act to the assessee should not be the obstacle in the way of Assessing Officer at the time when the assessment proceedings are to be taken and to decide as to whether the assessee is entitled for benefit of Section 11 or 12, as the case may be. 22. As per the facts narrated by the learned CIT(A) in para no. 4.4 at page 20 of the impugned order, the assessee was proposed to be set up in the year 1993 by the State Government and decided to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understand that if the building, as stated by learned CIT(A), completed in 2000, then why the assessee has not taken any step to impart the medical education and to provide free medical facilities to the general public of the concerned area. Further, learned CIT(A) has allowed the exemption benefit to the assessee only on the ground that the assessee has been registered under Section 12AA of the Act, which is contrary to the law and facts on the file and are not logical. ii) As regards to the development of 104 acres of land purchased by assessee-trust from PAU for Rs. 15 crores, in the year 2001 L&T was selected as the main contractor for the main building and the construction was started in 2001. In 2005-06, it was decided by the Governing Body to take Public Private Partnership (PPP) mode for operationalising and managing the Institute. This has been finally achieved in August, 2009. We are of the view that the motive of the assessee behind the long period for about more than 8 years spent on construction of building by the assesseetrust, is to take Public Private Partnership (PPP) mode for operationalising and managing the Institute and capitalizing more and more on the proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other posts under the society and make appointments thereto as needed in accordance with rules and Bye-laws. i) to co-operate with educational or other institutions in any part of the world having objectives wholly or partly similar to those of the Society by exchange of teachers, scholars & generally in such manner as may be conductive to their common objects. j) to make Rules and Bye-laws for the conduct of the affairs of the Society and to amend, vary or rescind them from time to time with the approval of the State Govt./ Medical Council of India. k) to q Only administrative clauses r) to do all such things as may be necessary incidental or conducive to the attainment of all or any of the objects of the Society. s) to continue such committee or committees as it may deem fit for the disposal of any business of the institute or for tendering advice in any matter pertaining to the Institute. t) ---------------------------------------------------------------------------- Please also furnish. j) to iv)----------------------------------------------------------------------- v) Total number of department-wise Professors, Lectures, Ministerial and other te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be Chief Minister Prakash Singh Badal's word against the decision of Punjab Infrastructure Development Board (PIBD), chaired by the CM himself. The Board's rejoinder in the Punjab and Haryana High court states that Fortis did not fulfill the eligibility criteria and was denied prequalification for changing the foreign collaborator from Nassau Healthcare Corporation, USA, to University of Minnesota. On the other hand, Fortis claims that the CM himself had granted it the permission to change the tie-up at a meeting between him and the Ranbaxy chairman. Interestingly, the standing committee appointed by the Board is headed by Dr. JS Bajaj, a close confidante of the CM. Fortis too share a good rapport with the Badals, and they had together recently launched the campaign to save environment and the girl child, 'Nanhi Chaan'. In fact, the Punjab government seems to be divided house on the issue. In its letter dated August 20 to the Principal Secretary, Medical Education and Research, on opinion regarding Fortis, Punjab Attorney General (AG) HS Mattewal had stated that 'as the project is very large, and it seems that the main endeavour of the government is to give this pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iguing priority of building construction - for what so ever reasons - buried the sacred and holy purposes and objects for which the society/trust PIMS was set up in the city of Jalandhar for giving world class medical services to the people of Punjab, India and world in the debris of its surplus "Malwa" and now the final burial farewell has come with the ongoing process for auction of this society/trust as reported in the papers on 11.11.08 and reproduced (supra). iv) After receiving the notice dated 08.12.2008, the assessee has given its detailed reply dated 19.12.2008, in which the assessee stated that completion of complete project is under consideration and construction of building for the society is part of charitable purpose. Further, at page 5 of the reply dated 19.12.2008, the assessee itself admitted that there is no doubt that the running of medical college and other facilities on private public participation is under consideration as one of the proposal but there is no harm in it as it has become need of the hour. For the sake of convenience, the relevant paragraph at page no. 5 of reply dated 19.12.2008 is reproduced as under: "Further the point raised in D1 is of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the society are duly reflected in the Memorandum of Association. The society was formed under the Chairmanship of Chief Minister of Punjab with Health Minister as Vice Chairman, Chief Secretary and other Government Officials as members who are reflected with the Memorandum of Association. He further stated that the main objects of the assessee-trust was to establish 500 bedded hospital and Medical College for 100 students for which the Government transferred land measuring 104 acres and 5 kanals to the Society after paying compensation of Rs. 15 crores to Punjab Agriculture University. The construction of the hospital started in the year 2001. He stated that while framing the assessment, the Assessing Officer has given a finding that since the Trust has only been carrying on construction of the building although the same is charitable in nature but since construction was going on for a long period, therefore he held that the trust was not eligible for exemption u/s 11 of the Act for the year under assessment. Thus, he tried to interfere into the registration granted by the CIT to the trust as a charitable trust. With respect to the reply to the aforesaid argument advanced by le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The registration granted under Section 12AA of the Act to the assessee should not be the obstacle in the way of Assessing Officer at the time of completion of assessment proceedings. Therefore, the arguments advanced by learned counsel for the assessee are rejected. The citations cited by the learned counsel for the assessee in his written submission are not applicable on the facts and circumstances of the present case because the case-laws relied by him are not identical to the facts of the present case. Learned counsel for the assessee has not supplied us any decision of Hon'ble Courts on the issue in dispute, in which the assessee is incurring expenditure on construction only for a very long period, as in the present case and any court of law has given the exemption under Section 11 of the Act. 27. We have perused the audited balance-sheet also produced by the assessee along with his written submission and found that the assessee has incurred huge expenditure on construction of the building as well as on the payment of salaries to the employees. We have not seen any expenditure incurred by the assessee to achieve the objects of the assessee-society or for charitable purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red view that learned First Appellate Authority has passed the impugned order contrary to the law and facts on the file, which deserves to be cancelled and accordingly we cancel the same by upholding the assessment order dated 30.12.2008 passed by the Assessing Officer, under Section 143(3) of the Act and hold that when the registration is granted, it does not mean that the Assessing Officer is barred from examining the details of various activities/works undertaken by the trust to achieve the objects of the assessee-trust. The Assessing Officer is within his power to call complete details of income and expenditure of the assessee whether these have been spent on the activities to achieve the objects of the trust or not. In the present case, the assessee has not filed any documentary evidence before the Revenue Authorities as well as before us to establish that the assessee has incurred any expenditure on charitable purpose to achieve the main objects of the assessee-trust. The assessee has also not satisfied this Bench as to whether any action has been taken by the assessee-trust simultaneously with the construction of building to achieve the main objects of the assessee-trust sin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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