TMI Blog2015 (9) TMI 1550X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessee. - ITA No. 740/Asr/2013 - - - Dated:- 29-9-2015 - SHRI A.D. JAIN, JM SHRI T.R. MEENA AM Assessee by: Shri Padam Bahl Shri Vipul Arora (CA) Revenue by: Shri Tarsem Lal (DR) ORDER PER: T.R. MEENA, A.M. This is an appeal filed by the assessee arises against the order dated 24/10/2013 passed by the ld. C.I.T.-II, Jalandhar. The effective grounds of appeal are as under:- 1. That the learned Commissioner of Income Tax, Jalandhar has grossly erred, both in law and on facts while cancelling registration granted U/s 12A. 2. The learned Commissioner of Income Tax, Jalandhar has failed to appreciate the power to cancel registration in respect of registration granted U/s 12A was brought on the statute w.e.f. 01/06/2010 prospectively in Section 12AA(3) and the cancellation made w.e.f. assessment year 2004-05 is invalid and illegal in the eyes of law. 3. That learned CIT-II, Jalandhar has erred in relying upon rejection of application of the appellant U/s 10(23)(c)(vi) by Worthy Chief Commissioner of Income Tax, Ludhiana and in not appreciating that the rejection cannot have any bearing on its registration U/s 12(A)(a) of the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steering committee were from appellant and Government of Punjab. 7. That the learned CIT-II, Jalandhar further failed to appreciate that the appellant has undertaken charitable projects for furtherance of its objects which include upgradation of different medical colleges, setting up of cancer diagnostic treatment centres, drug de-addiction centres in Punjab and had applied an amount of ₹ 78.67 crore till 22/11/2012 towards the same. 8. That the CIT-II, Jalandhar has grossly erred in not appreciating that the society had complied with the provisions of Section 11(2) and applied set apart funds in furtherance of its objects within the stipulated time. 9. That the CIT-II, Jalandhar has failed to appreciate that assessments for assessment years 2003-04, 2004-05, 2008-09 and 2010-11 were made U/s 143(3) of Income Tax Act, 1961 and Assessing Officers has held the society to be genuine carrying out its activities in furtherance of its objects in all these years. 10. That the impugned order U/s 12AA(3) passed by the learned Commissioner of Income Tax, Jalandhar in the case of appellant is patently invalid, contrary to provision of law, contrary to all canons of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f running and managing the hospital and further claim exemption U/s 10(23C)(vi). Also that the receipts of assessee society are not from the reception and treatment of persons suffering from diseased but only from the interest on FDRs which has been earned from the sale proceeds of land (through PUDA). Also there is no expenditure incurred by the assessee's society on the day to day running of the hospital like salary to doctors, paramedical staff etc. So the assessee society nowhere qualifies for the claim of exemption U/s 10(23C)(vi) as it is neither running a hospital nor is receiving any patients for treatment of any disease. He further observed that the assessee society was having surplus in excess of 15% of its gross receipt from F.Y. 31/03/2007 to 31/03/2011. The assessee concern has earned systematic profits regularly since last many years. As shall be seen further in the order, regularly profits have been earned in all the years by the institution. Also accumulated surplus has been invested in FDRs the amount of which has steadily increased over the years. This shows that the intention of the institution is to earn profits without applying the surpluses available for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en earned from the sale proceeds of land (through PUDA). There is no expenditure incurred by the assessee's society on the day to day running of the hospital like salary to doctors, paramedical staff etc. The surplus earned has been tabulated as under:- F.Y. %age of surplus 31/03/2011 94.59 31/03/2010 99.78 31/03/2009 71.87 31/03/2008 81.36 31/03/2007 77.78 The assessee concerned had earned systematic profits regularly since last many years. Regular profits have been earned in all years by the institution and the accumulated surplus had been invested in FDRs the amount in which has steadily increased over the year. This shows that the intention of the institution is to earn profits without applying the surpluses available for philanthropic purposes. The facts of investment are not verifiable from the balance sheet for the year ending 31/3/2011 where no such investment/movement of funds are visible The investment till the year en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining, research and related infrastructure in various branches of health sciences and working for the advancement of scientific knowledge aimed at enhancing the quality of patient care. He further argued that in financial year 2009-10, the PIMS was established. Thereafter notice of commencement was issued on 04/6/2010 to the PIMS Medical Education Charitable (PMEC) Society being concessionaire and the hospital was started functioning since then. The medical college also starts from academic session 2011-12. Even since PIMS society is functioning as concessioning authority as per Concession Agreement. The society to set up, establish, promote, manage or associate with, any other institution or centre in the State of Punjab devoted to education, training, research and related infrastructure in various branches of health sciences and working for the advancement of scientific knowledge aimed at enhancing the quality of patient care. The society has undertaken government hospitals and medical universities/colleges as per object at various placed in the State of Punjab. In financial year 2005-06 the governing body held various meetings to look for best suited model for running the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s introduced in the statute books only with effect from 01/06/2010 i.e. its function shall only be prospective and it cannot be applied retrospectively. Similar view has also held by the various Hon'ble ITATs in above cited subject, therefore, order passed by the ld CIT-II, Jalandhar is required to be set aside. There is no bearing on the cancellation of registration passed by the ld CIT that CCIT has rejected the assessee's application U/s 10(23C)(vi) of the Act for which he also relied on the following case laws:- (i) Sunbeam English School Society Vs. CIT (2011) 139 TTJ(All) 81. (ii) CIT Vs Rao Bahadur Calavala Cumman Chetty Charities (1982) 135 ITR 485 (Mad). The ld CIT has not given clear cut finding on non-genuine activities of the assessee society and there was no show cause notice to the assessee for withdrawal of registration w.e.f. A.Y. 2004-05 for which he relied on the decision in the case of Kalinga Institute of Industrial Technology Vs. CIT Anr. (2011) 336 ITR 389 wherein it has been held by the Hon'ble High Court that the CIT should have clear cut satisfaction of the circumstances for exercise of such power. The ld CIT also considered in passin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally mentioned in Section 12AA of the Act. Therefore, Section 12AA had been amended to provide that the Commissioner can also cancel the registration obtained U/s 12A as it stood bare amendment by Finance Act as it is not specifically mentioned in Section 12AA. It is further argued that intention of amendment of Section 12AA was not brought to the notice of above mentioned Tribunals and the Hon'ble Delhi High Court, if the amended provision would make applicable w.e.f. 01/6/2010, it means that the CIT cannot cancel the registration granted prior to his date, which makes the amendment as redundant. Therefore, the above judgments are per in-curium and same should not be followed. He further relied on the decision in the case of Lalit Hosiery ors. Vs. Union of India ors. 221 CTR (P H) 692 on surcharge on block assessment tax and amendment made in statute. The interpretation of the statute has to be done as such as manner as may further cause of the Legislation and manner. The interpretation has been made in the decision of Hon'ble ITAT and Hon'ble Delhi High Court clearly are not supportive of the intendment of the enactment which came to be ignored in the above judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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