TMI Blog2012 (10) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Respondent: Shri N.K.Saini ORDER PER MEHAR SINGH, AM The present appeal filed by the assessee is directed against the order dated 29.03.2012 passed by the ld. CIT u/s 12AA of the Income-tax Act,1961 (in short 'the Act'). 2. In this appeal, the assessee has raised the following Grounds of Appeal: 1. That the order of the Learned Commissioner of Income Tax II, Chandigarh is defective both in law and facts of the case. 2. That the Learned Commissioner of Income Tax II, Chandigarh is not justified in rejecting the application of the appellant for the grant of registration u/s 12A of Income Tax Act, 1961 as the appellant Trust duly fulfills all the necessary conditions for registration u/s 12A of Income Tax Act, 1961. The Application for Registration has been rejected only on surmises and on whimsical grounds. 3. That any other ground may kindly be allowed to be taken at the time of hearing. 3. In the course of present appellate proceedings, ld. 'AR' vehemently contended that ld. CIT has declined registration, to the appellant, u/s 12AA of the Act, vide order, dated 29.03.2012, on the foundation of irrelevant considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dical camp at Missionaries of Charity; Psychiatry, Physiotherapy, Peeds PIMS performing major acid burn injuries and cancer tissue. May 06'11 Cambridge School students; 503 visit PIMS for check up 3(i) Activities of the appellant society are providing health care and education. Punjab Institute of Medical Sciences under the aegis of PIMS Medical and Education Charitable Society, is spread over 56 acre of land in the heart of city, has been contributing to the society in form of healthcare and education since two years now. Fifth June, 2010 has been an important land mark in the history of the hospital, as on this day the hospital started functioning. Since then it has reached out to nearly 2.5 lakh OPD patients, with an average of 1300 patients a day and the IPD mark touching 17,000 patients. An extremely dedicated team of professional doctors, nurses and technicians have performed approximately 6,700 surgeries with well equipped ICU, ICCU and NICU unit. PIMS is also providing oncology treatment at 15% discount and has a well equipped dialysis unit providing treatment at subsidized cost. 3(ii) Jalandhar, being the heart of Doaba, has the highest number o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ories of services. 6. Ld. 'AR' also filed a copy of registration certificate No. 4004 of 2009, vide order dated 29.01.2009 by the Registrar of Firms Societies, UT, Chandigarh (at page 54 of the Paper Book). Page 55 of the Paper Book contains rules and regulations of the Society with aims and objectives of appellant Society stated therein. The aims and objects, interalia, includes to start, establish, run, takeover or manage and maintain educational institutions, schools, colleges, technical educational institutes in any one or multiple fields of Arts, design, science, medical, nursing, dental, pharmaceutical, para-medical, engineering, law, education, management, information technology, commerce or any other discipline/system of education, to open, run manage hospitals, health clubs, hostels, recuperation centers, orphanages, old people s homes, shelters for needy/poor, shelters for widows or destitute women and provide transport for students, faculty, patients or staff etc. 6(i) Ld. 'AR' placed reliance, on the decision, of the Chandigarh Bench, in ITA No. 253/Chd/2011 dated 31.05.2012 in the case of Sandhya Educational Trust, Sector 37, Chandigarh V CIT-II, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he existence/identity of the persons stated to have made such massive contributions towards the Corpus Fund of the Society. The CIT also noticed and observed that no proof has been given regarding the investments made in the Corpus Fund. The CIT also observed that Trust/Institution is required to file its accounts for relevant years under Rule 17(A), for the purpose of ascertaining, whether a genuine Trust or Institution was in existence, for which registration is sought. The CIT observed that such massive contribution from individuals/entities, whose identity/existence is not beyond doubt, raised query, on the very identity of the society and its charitable purpose. The ld. CIT, referred to para 9.2 and 8.3 of Concession Agreement dated 28.08.2009, and hold that activities of the Society cannot be performed, in accordance with the objects, for which had been set up, and the same has been set up for, the purpose of carrying and running the Institution, for profit and on commercial lines. The CIT found that it is not a case where society is carrying on charitable activities. Ld. CIT, further, observed that veracity and genuineness of the society is in doubt. After referring to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business for a cess or free or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year. 12. In simple language, the activities incorporated in the newly inserted proviso are excluded from the definition of charitable purpose provided u/s 2(15) of the Act a) any activity in the nature of trade, commerce or business b) any activity of rendering any service in relation to trade, commerce or business c) if fee or cess or any other consideration, irrespective of the nature of use or application or retention of such income by the concerned entity. The aforesaid proviso will be operative from 1.4.2009 and will accordingly apply in relation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 16. It is settled proposition that registration by itself would not confer the right to exemption. The registration is granted by the CIT u/s 12A read with Section 12AA of the Act, whereas exemption is granted by the AO, on the satisfaction of statutory condition as laid down under Section 11, 12 and 13 of the Act. Further, as per Section 12AA(3) of the Act, CIT is competent to cancel the registration of an assessee if satisfied that its activities are not genuine. The registration u/s 12A read with 12AA, is one of the conditions for exemption and not the only condition for exemption. In this specific context, the CIT, is required to appreciate the real activities and objects but not the enabling powers to achieve the objects. 17. The assessee relied on the decision, in the case of Pinegrove International Charitable Trust V Union of India (supra), the Hon'ble Punjab Haryana High Court where it was held as under: Even after the new dispensation from Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aritable purpose as provided u/s 2(15) of the object, as the appellant society is engaged in providing technical education and medical relief. The first proviso to Section 2(15) of the Act is not applicable to the society as the same covers the last limb of the charitable purpose , viz the advancement of any other object of general public utility , being legally settled proposition. The CIT has proceeded to conclude that the activities of the assessee society is run on commercial line with profit motive, ignoring the express object of providing medical facilities on the line of PGI, Chandigarh. The taint of commerciality or profitability is covered by the first proviso to Section 2(15) of the Act. Mere earning of surplus income in carrying out charitable activities within the meaning of Section 2(15) of the Act, would not render the activities of the appellant society, as non-genuine, and non-charitable as construed by the ld. CIT, in the instant case. This proposition is fortified by the decision of the jurisdictional High Court in the case of Pine Grove International Charitable Trust (supra). 20. The satisfaction of statutory conditions of Sections 11, 12 13 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nai). It is held in Vidhya Sikshaa Educational Charitable Trust V CIT (2011) 111 ITR (Trib) 236 (Chennai) that the Act specifies a methodology where anonymous receipts are received by trust. Section 115BBC of the Act specifies a method for taxing anonymous donations. Thus, even if the trustees didn t have the wherewithal to contribute the sums mentioned and even if such donation was treated as coming from anonymous sources, it would not be reason to deny registration u/s 12AA of the Act. 22. In view of the above legal and factual discussions, it is evident that the assessee society has fulfilled statutory conditions, for grant of registration u/s 12A read with Section 12AA of the Act, as the society is carrying out its activities, in pursuance of its objects. The observation of the CIT that society is running on commercial lines and making profit, is not acceptable in view of the settled legal proposition that eleemosynary element is not essential for charitable purpose, as the definition of charitable purpose has been statutorily defined u/s 2(15) of the Act and judicially interpreted by the Courts. To provide something more for nothing or for less than it costs or less than ..... X X X X Extracts X X X X X X X X Extracts X X X X
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