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2019 (9) TMI 459

..... annot be expected that the society must do some charitable work before seeking grant of registration u/s 12AA of the Act and consequently consideration of genuineness of the activities by the Ld. CIT does not arise. In the instant case the Ld. CIT(E) has that no charitable activity has been conducted by the applicant society since its inception except purchasing land. We have given our thoughtful consideration to this reason of rejection. Though the assessee society though has not started construction of its hospital yet but it is a case that the assessee society has been formed only on 19.08.2016 and has already purchased the land and is in the process of constructing hospital for which site plan has already been prepared and placed before the CIE(E) as well as before us for perusal which further strengthen the contention of the assessee that the purchase of land for construction of Hospital and starting process for construction of Hospital is certainly in pursuance to the aims and objections of the society and sought registration u/s 12AA Thus the assessee society is at nascent stage but even otherwise carried out small charitable activities such as providing medical aid and Lang .....

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..... 2019. On perusal of the submissions made by the society, it was observed that the society claims to create a state of the art multispecialty charitable hospital in Ludhiana. The society has purchased land for the construction of hospital at Civil City, Chander Nagar, Ludhiana. The land bought for construction of charitable hospital has been funded in the form of loan to the tune of ₹ 1,19,72,865/- by the M/s. International Marketing Corporation Pvt. Ltd. which is interest bearing. The applicant society has purchased land on 24.04.2017 for the construction of hospital at Ludhiana. The applicant society has received donations to the tune of ₹ 10,33,850/- during the F.Y. 2017-18. In order to verify the claims of the applicant society the following additional queries were asked vide e-mail to manageraccounts@imcbusiness.com on 09.04.2019 requesting them to submit the details on 15.04.2019. 1. Please clarify whether the applicant society has been formed to redeem CSR functions of the M/s. International Marketing Corporations Limited. 2. On perusal of the land' deed it was observed that the ownership of land purchased is with M/s. International Marketing Corporations Limi .....

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..... not provided any documentary evidences regarding expenses incurred or Langer & education aid. In the absence of the documentary evidences regarding donations received and expenditure incurred on charitable activities for the F.Y. 2017-18 the genuineness of the activities cannot be ascertained in this case. 8. Further, perusal of MoA reveals that as per object clause no. 3(v) and (vi) that the applicant intends to conduct its operation internationally as well. It is pertinent to mention here that the applicability of section 11 & 12 of the Act is restricted to India. To that effect its objects w.r.t. International operations are not in compliant with this Restriction. Given that scenario, it is clear that the essential elements necessary for proper constitution of a public charitable society are missing. Moreover, the applicant society has merely provided a copy of amended MOA and Bye- Laws. It is pertinent to mention here that same cannot be amenable as the provided MOA has not been approved with any competent authority. Neither erstwhile MoA has been provided, in the absence of which, the changes made by the applicant cannot be ascertained. Such arrangement clearly impinge .....

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..... age No. 46 to 52 of PB] wherefrom it reflects that the assessee Society is in the process to construct the hospital. The Ld. AR has also drawn our attention to the financial statement such as income and expenditure account in the year ended 31st March, 2017 wherein ₹ 10,000/- has been spent on medical aid and 13,420/- has been spent for Langer for needy people. Further in year ended July, 31, 2017 the assessee has spent ₹ 88,170/- qua food/meal help to needy persons, therefore, it cannot be ruled out that the assessee is not doing any charitable activities as reasoned by the Ld. CIT(E). While considering the application and aforesaid documents as referred by us were also available with the CIT(E) as stated by the Ld. AR, therefore, the observation of the Ld. CIT(E) to the effect that the applicant has not provided any documentary evidence regarding expenses incurred on the Langer and Education aid, is also not sustainable. 4.1 The CIT(E) also observed that as per object clause no.3(v) and (vi), the applicant intends to conduct its operation internationally as well, whereas the applicability of section 11 & 12 of the Act is restricted to India, therefore, to that eff .....

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..... he contention of the assessee correct. Even otherwise we realized that the assessee has filed MOA of society with its registration no.20160020623/309 of 2016-17, dated 19.08.2016 (PB Page 1 to 11) and the amended MOA duly certified by the Sub-Registrar, Ludhiana vide its stamp dated 17.01.2018. Considering the facts, we are unable to approve this ground of rejection as well. 4.3 Further, the Ld. CIT(E) has observed in para No.09 that the applicant society has not conducted any charitable activity since its inception except purchasing of land worth of ₹ 1,04,48,900/- for its future plan for construction of Hospital. The Directors of Company (IMC Pvt. Ltd.) forwarding the loan of ₹ 1,06 cores to the applicant society are Sh. Ashok Bhatia and Sh. Satyam Bhatia whereas Smt. Veena Bhatia, w/o Sh. Ashok Bhatia is the present president of the applicant society and Smt. Ansul Bhatia w/o Sh. Satyam Bhatia is the Finance Secretary of the society, whole business of creating a society, transferring of huge sum of ₹ 1,06 cores and purchase of land with involvement of family members without carrying out any of the claimed charitable activities as per object clause of the MOA, d .....

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..... a) of section 12A.] From the contents of the Sec.12AA, it encompass that the Ld. CIT(E) in order to satisfy himself about the genuineness of the activities of the trust or institution can call for such documents or information from the trust or institution as he thinks necessary and also empowered to make such enquiry as he may deem fit necessary in this behalf. Second Clause deals with that after satisfying himself about the object of the trust or institution and the genuineness of the activities, he shall pass order in writing either to register or refusing to register the trust or institutions. Let us to consider judicial verdicts on the issues in hand : Delhi High Court in the case of DIT Vs. Foundation of Opthalmic & Optometry Research Education Center, in ITA No.1687/2010 , decided on dated 16.08.2012 dealt with the same situation and observed as under: That the concern CIT is not required to examine the question whether the Trust has actually commenced and has, in fact, carried on charitable activities ? Gujrat High Court in the case of CIT -1, vs. Kutchi Dasa Oswal Moto Pariwar Ambama Trust (2014 271 CTR 0595 was pleased to held that "While considering the applicat .....

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..... but later purchased land for school at Niabhat, Nagrota , in our view , the trust that time was un-doubtly at nascent stage and has not carried out any activity except to make efforts for procuring land for school , however later on purchased the land for school at Niabhat, Nagrota , which clearly shows the intention of the trust as the main object of the trust is to establish schools etc. and to provide education, therefore, one can expect from the trust to do activity of the charity immediately and in that situation the authority cannot come to the conclusion that the intent contained in the objects of the trust do not find corroboration in the shape of any positive action taken towards either education or any of the other objects enunciated in the trust deed , as observed by the ld. CIT (E ) . Third reason that the activities of assessee trust are controlled by one family is only an apprehension of the Ld. CIT (E ) ,which according to our mind can not base rejection of the registration because the Revenue Authority is at liberty to withdraw and/or to cancel the Registration an any time on the specified reasons enumerated in the Act. Further from the documents filed before us, it .....

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..... joint reading of the aforesaid judgments, it can be safely concluded that even otherwise if no activity was carried out by a trust or institution, still registration can be granted by the CIT(E) and even otherwise it is not the case of the Revenue that at the time of consideration of application of the Assessee , the assessee has carried out many activities and their genuineness were in doubt but in the instant case grievance of the CIT(E) is only that there was no activity carried out by the assessee. Although form the documents submitted before us positively reflects that the Assessee trust has carried out many activities in furtherance of objects of the trust, however because the same activities have not been carried out and documents were also not submitted before the LD. CIT (E ) till the date of adjudication of Application , hence we are not taking into consideration the said documents and facts , however in overall consideration of the judicial interpretation , peculiar facts and circumstances and situation, in our considered opinion the Ld. CIT(A) was under obligation to consider the objects of the trust which are available in the trust deed itself. Even otherwise, the conc .....

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..... houghtful consideration to this reason of rejection. Though the assessee society though has not started construction of its hospital yet but it is a case that the assessee society has been formed only on 19.08.2016 and has already purchased the land and is in the process of constructing hospital for which site plan has already been prepared and placed before the Ld. CIE(E) as well as before us for perusal which further strengthen the contention of the assessee that the purchase of land for construction of Hospital and starting process for construction of Hospital is certainly in pursuance to the aims and objections of the society and sought registration u/s 12AA of the Act which was declined on 29th Sep. 2017, against which the assessee society preferred an appeal before the Co-ordinate Bench and Co-ordinate Bench while deciding ITA No.694/Asr/2017 vide its order dated 27.06.2018 remanded the case to the file of the Ld. CIT(E) for decision afresh, thereafter, the impugned order dated 30.04.2019 has been passed. From the peculiar facts and circumstances, we are of the considered opinion that the assessee society is at nascent stage but even otherwise carried out small charitable act .....

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