TMI Blog2019 (1) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. - Decided in favour of assessee - ITA No. 7210/Del/2017 And ITA No. 716/Del/2017 - - - Dated:- 23-1-2019 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Shri V.K.Tulsiyan, Adv For The Revenue : Shri Amit Katoch, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the two appeals filed in the case of India HIV Alliance a company registered u/s 25 of the Companies Act, 1956, one filed by the assessee against the order of the ld CIT (Exemption), New Delhi dated 3-10-2017, wherein the registration already granted under section 12AA of the Act has been withdrawn under section 12 AA(3) of the Act holding that assessee is not carrying on Charitable activities and second by LD Assistant Director of Income tax (Exemption) [ the Ld AO ] against the order of the ld Commissioner of Income tax (Appeals)- 40, New Delhi dated 26/11/2014 for AY 2010-11 where in order of the AO is set aside and assessee was held to be carrying on charitable activities. 2. In the appeal of the assessee in ITA No. 7210/Del/2017 assessee raised following grounds of appeal:- 1. The ld CIT(E) s order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borate with other NGOs for the above objects. 5. For assessment year 2010-11, the return was filed on 28-1-2011 claiming exemption under section 11 and 12 of the Act. The ld AO was of the view that the assessee is not in the field of education, medical relief or relief to poverty but is carrying on object of general public utility‟ as per section 2(15) of the Act. He further noted that assessee has received a grant from international HIV AIDS Alliance, UK and other agencies of ₹ 391074038/-. On receipt of grant , for implementation of projects , assessee also charges management fees from its donor agencies and therefore AO was of the view that activity of charging fee in lieu of execution of projects for donor agencies is like a business activity wherein service charges are taken for rendering services to the donor. Therefore, AO held that assessee is not carrying on any object other than object of general public utility. He further held that assessee is separately charging the donor for salaries of its staff as human resource expenditure, training infrastructure etc and management fee is also charging over and above this. He further held that excess of income over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ld AO for denying exemption u/s 11(1) to the assessee and accordingly the appeal of the assessee is allowed. 7. Aggrieved with the order of the ld CIT(A), ld AO is in appeal before us. 8. Based on a proposal for withdrawal of registration under section 12AA of the Act sent by the ld AO on 15/12/2011, the ld CIT (Exemption) issued notice on 15/3/2007 for withdrawal of registration. The ld CIT after hearing the arguments and the written submission of the assessee vide para 4 to 6 of his order 3-10-2017, concurred with the finding of the ld AO and held that the activities carried out by the applicant are in the nature of contractual work which cannot be considered as a charitable activity. He further held that the assessee is not involved directly into the conduct of charitable activities under section 2(15) of the Act but such activities are in the nature of business or profession. He further held that the assessee has incurred administrative expenditure which is known as application of income but in relation to the execution of the project sanction to it by various agencies. Therefore, registration under section 12AA of the Act originally granted to the assessee was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigate the impact of HIV on children and woman headed households, prevention testing and counseling, care and support for the chronically ill and widening access to treatment and expand access to counseling and testing et cetera. He therefore submitted that the trust is carrying on the object of medical relief. He further stated that the human resource expenditure is the cost pertaining to the fee paid to medical staff, counselor and medical officers. He also referred the infrastructure and equipment expenditure which is a cost for setting up centers for antiretroviral therapy. He also referred that the training expenditure are incurred for the recruitment as per the standardized training and CV developed by the agency adhering to World Health Organization guidelines. On the commodities and product expenditure he stated that these expenditure referred to antiretroviral drugs and health products. With respect to the planning and administration expenditure he stated that these are the program implementation and administration costs incurred by the assessee. On the basis of the above object he stated that it is abundantly clear from the above that the assessee is carrying on the activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging management fees for the various projects and therefore it cannot be held to be an activity for charitable purposes. He therefore relied upon the order of the learned assessing officer as well as the order of the learned CIT exemption and submitted that the both the orders may be upheld. 13. We have carefully considered the rival contention and perused the orders of the lower authorities. Undisputed fact shows that the assessee is a registered charitable institution under section 25 of the companies act 1956 holding registration u/s 12 A of the income tax act vide order dated 17/7/2000 and also enjoys the benefit under section 80 D of the income tax act wide order dated 11/9/2006. The main object of the appellant for which it has been formed are to provide relief to the persons who are suffering from HIV/AIDS by providing financial, technical and managerial assistance to foster the care and community support of those suffering from that disease. It further advances the education of the public concerning the symptoms, prevention and consequences of that disease through improved HIV prevention efforts by creating awareness to gender, sexual health and sexuality. It is also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee receives the grant and also implement the project on behalf of the various organisation for eradication of HIV/AIDS, its activities does not become a business activity or non charitable. Further for the purpose of implementation of each of the project , it charges the management fees to defray all other expenditure and administrative cost of the assessee. Merely charging the management fees does not make the activity of the medical relief of the assessee as business activity. The learned CIT A has also given the similar finding in para number 4.4 of his order for assessment year 2010 11 wherein he has followed his order for assessment year 2009 10 dated 2/1/2014. Further in para number 4.2 of his order where he has recorded the fact that the foreign global fund the donor to the assessee gives 85% of the donation to the government of India for the HIV AIDS which runs the AIDS program in the name of National AIDS control Organisation and it is only about 15% of the total donations which are given to other societies for awareness and treatment to the poor HIV AIDS patients. It is also the fact he has recorded that the assessee spends the whole amount through variou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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