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TMI Blog2015 (9) TMI 1550X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 1961 as the two provisions are applicable in different spheres. 4. That the show cause notice dated 04/06/2013 issued by Commissioner of Income Tax, Jalandhar is vague inasmuch as it does not mention the years in which the activities of the Trust were allegedly not genuine and the same wee not carried out as per the objects of the Trust. 5. That the order passed by the learned Commissioner of Income Tax, Jalandhar cancelling the registration retrospectively from assessment year 2004-05 has been passed with the sole objective of supporting the appeal of the department for assessment year 2006- 07 before the Hon'ble ITAT, Amritsar Bench, Amritsar. 6. a) That the learned Commissioner of Income Tax, Jalandhar has failed to appreciate that the tripartite concession agreement was done by the appellant and Government of Punjab with Charitable Society registered under Section 12AA of the Income Tax Act, 1961. b) That the Learned Commissioner of Income Tax, Jalandhar has also failed to appreciate that the tripartite concession agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax, Jalandhar in the case of appellant is patently invalid, contrary to provision of law, contrary to all canons of natural justice and is void an initio. 11. That the appellant craves leave to alter/modify grounds of appeal at the time of hearing." 2. Grounds No. 3, 6(c), 6(d), 6(e), 6(f) and 7 of the appeal are not pressed, therefore, the same are dismissed as not pressed. 3. All the remaining grounds of appeal are against cancellation of registration in respect of registration granted U/s 12A of the Income Tax Act, 1961 (hereinafter referred as the Act) by the C.I.T., Jalandhar. The brief facts of the case are that the assessee society was granted registration No. 12AA of the Act w.e.f. 06/04/1994 vide order dated 20/05/1994 passed by the then Commissioner of Income Tax, Jalandhar. The main objects of the Society are as under:- a) To establish and carry on the administration and management of Punjab Institute of Medical Sciences, Jalandhar. b) 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This shows that the intention of the institution is to earn profits without applying the surpluses available for philanthropic purposes. The ld CIT further observed that the assessee has also violated provisions of Section 11(5) of the Act during certain years. In assessment year 2006-07,the Assessing Officer has held that the society has not applied any part of its income of the year for charitable purposes and therefore it does not qualify for exemption U/s11 of the Act. However, the ld CIT(A) has held that the society is eligible for exemption U/s 11(I) (a)once it is registered U/s 12AA.The society had made investment of Rs. 6.5 crores in the modes prescribed U/s 11(5) of the Act. In view thereof, the society has leased out its infrastructure to M/s NRI Academy of Sciences for 99 years. The assessee filed copy of concession agreement under PPF mode and also filed written reply before the ld CIT, which has been reproduced by him at pages 4 to 7 of his order. The DCIT, ITAT, Amritsar also made request to the CIT for cancellation of registration U/s 12AA(3) vide letter No. 289 dated 07/01/2012, which has been reproduced at page No. 8-9 of the impugned order. Further a letter ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more of a funding/landing body rather than a hospital. He relied on the decision in the case of D.R. Ranka Charitable Trust Vs DIT (Exem.) (ITAT Bangalore) reported at 3ITR 151 wherein it is held that Trust establish for carrying out medical and educational activities constructing building and letting it out to the educational institution not part of charitable activity therefore denial of renewal of registration U/s 12AA is justified. He further observed that moreover, the only object as per clause 3(i) of the Memorandum of Association for which the assessee society had been created is to establish and to carry on the administration and management of Punjab Institute of Medical Sciences, Jalandhar. Since the said institute has never been run by the assessee society and is being presently run by PIMS Medical & Education Charitable Society, Garha Road, Jalandhar under the tripartite concession agreement in the PPP mode. Therefore, the assessee society is not entitled for registration granted under section 12AA(3) as the assessee society is not existing and working for the object for which it was created as per its Memorandum of Association. The ld CIT-II, Jalandhar was satisfied wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document was prepared in July 2008 with a minimum reserve price of Rs. 120 crore by PIDB. A suitable private partner M/s NRI of academy of sciences and others consortium which later formed PIMS Medical and Education charitable society was finalized for PPP model at upfront consideration of Rs. 131 crores and annual concession fees of 5% of the upfront consideration payable from the 8th year from the proposal acceptance date. Concession agreement was signed by the parties on 28/08/2009. The handing over of the main building was completed to the concessionaire in February, 2010. The payment amounting to Rs. 6 crores was received in A.Y. 2009-10, 61.23 crores in A.Y. 2010-11 and 47.42 crores in A.Y. 2011-12. The PIMS had amended by adding a new object in October, 2009 i.e. to set up, establish, promote, manage, 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 aided at enhancing the quality of patient care. He further argued that power to cancel registration in respect of registration granted U/s 12A was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtite concession agreement was done by the appellant and the Government of Punjab with a charitable society registered U/s 12AA of the Act. He has drawn out attention on the copy of Memorandum of Association of PIMS Medical & Education Charitable Society (Concessionaire) at page Nos. 323 to 341 of the paper book and also registration U/s 12AA of the Act. It is further argued that concession agreement on PPP mode was done on the recommendation of Government of India, the copy of letter received from Government of India suggesting PPP mode and relevant correspondence are also placed in the paper book for consideration of Bench. There was new clause in the objects of the society was also added. The AR further argued that the assessee has complied the provisions of Section 11(2) and applied set apart funds in furtherance of its objects within stipulated time. The ld CIT had not pointed out any defect in the computation made by the assessee society at the time of hearing but he has taken figures from the income and expenditure account for which he has drawn our attention on page Nos. 31 to 58 of the paper book and prayed to set aside the order of the ld CIT-II, Jalandhar. 5. At the out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT has upheld the order of the ld CIT, Jalandhar for cancellation of registration in case of Ram Saram Dass Kihori Lal Charitable Trust vide its order in ITA No. 33/Asr/2009 dated 26/06/2009. It is further submitted that the Hon'ble ITAT had dismissed the appeal of the assessee for assessment year 2006-07 and allowed the appeal of the department by holding that the assessee is not engaged in any charitable activity as per its stated object in ITA No. 504/Asr/2009 and ITA No. 515/Asr/2009 dated 31/12/2013 wherein the Hon'ble ITAT has held that the assessee had not proved its case for seeking exemption U/s 11 of the Act by producing any details of expenditure incurred to the assessee- Trust on various activities undertaken to achieve its objects the revenue authorities as well as before us till the closing of hearing present appeals. The assessee had never undertaken any activities in furtherance of its stated objects. The assessee had leased the building and the land to the lease i.e. the NRI Academy of Science which managed the administration of the hospital and the all doctors and para medical staff was employed by the NRI Academy of Science (lessee). The lessee had made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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