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TMI Blog2019 (7) TMI 1914X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that activities of the trust are not as per its objects and therefore not genuine. 2. The appellant craves to alter, amend and modify any ground of appeal. 3. Necessary cost be awarded to the assessee. 2. The assessee trust was constituted on 16.05.2015 and was granted registration under section 12AA by the ld. CIT (Exemptions) vide order dated 17.12.2015. During the year under consideration the assessee filed an application dated 25th April, 2018 for approval of exemption under section 80G of the IT Act. In the course of proceedings, the ld. CIT (Exemptions) observed that the assessee is indulging in the activity of conducting clinical trial sponsored by various multi- national pharmaceutical companies which is at the instance of such MNCs and not from volition of the Trust. Accordingly, the ld. CIT (Exemptions) issued a show cause notice dated 24.10.2018 as to why the impugned clinical trials shall not be treated as non-charitable activity and also an activity not as per the objects of the assessee Trust and consequently the registration granted under section 12AA shall not be cancelled under section 12AA(3) of the Act. In response, the assessee filed a detailed rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eatment of incurable diseases is not a philanthropic activity. In support of his contention he has relied upon the decision of Agra Bench of the Tribunal in case of Samarpan Samiti vs. CIT, 54 SOT 30 (URO). The ld. A/R has further contended that the decision in case of CIT vs. Annadan Trust, 258 Taxman 54 (Kerala) as relied upon by the ld. CIT (Exemptions) is not applicable on the facts of the assessee's case. Thus he prayed that the impugned order may be set aside as the activities of the assessee are charitable and philanthropic in nature. 4. On the other hand, the ld. D/R has submitted that the assessee has not carried out these activities on its own but these were conducted on behalf of the MNCs which are pharmaceutical companies and therefore, the entire activities of conducting of clinical trials were sponsored by the MNCs with the purpose that the end product of such trials would be owned by the MNCs. When the assessee is not getting anything out of the clinical trials except the payment made by the MNCs and the end product belongs to MNCs then the assessee is involved in the activities which are in the nature of business or commercial though on behalf of the MNCs. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutions or funds for the relief of any form of poverty. (b) Medical relief particularly :- To grant aid for medical relief to poor persons including free distribution of drugs and medicines and establishment maintenance or support to institutions such as hospitals, dispensaries and centres for yogic/treatment or blind relief and other medical projects which may help and elevate human suffering solely for philanthropic purpose. (c) Advancement of educational particularly :- (i) To establish and run library, reading room, research centers and other institutions for medical, educational, cultural and spiritual purposes and not for purposes of profit within the meaning of Sec. 10(23)(c) of the Income Tax Act, 1961 as amended from time to time. (ii) To promote, to set up, held or subsidise institutions and persons and societies for study and research in literature, art, humanities, social sciences, dance and musical performances or for any other benevolent purposes. (iii) To promote, encourage aid or conduct study courses, seminars, lectures or camps for literary studies, human welfare, ancient culture, folk arts and other sciences in its widest and most comprehensive sense. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clinical trials were made by these MNCs to various persons including the Investigator and assessee trust though in the agreement the assessee was not referred as a party. For ready reference, we reproduce clauses 16 & 17 of the Agreement as under :- " 16. All rights, title and interests including the rights to any intellectual property in all documentation used or supplied by the Sponsor, all the data, inventions, discoveries and results arising out of or in connection with this Agreement and the clinical trial and in the know-how incidental thereto and any patent applications and resultant patents derived therefrom shall be owned and be the exclusive property of the Sponsor. The Sponsor may use this information in any way it deems fit. The Investigator and the Institution agree and undertake to cause their employees to execute promptly all documents and take all such other action as may reasonably be requested by the Sponsor to permit the Sponsor to obtain the benefit of its rights under this Agreement. This includes without limitation taking all necessary steps for the transfer/assignment of ownership of all data, information, documents, inventions and discoveries to the Spon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire receipt is from clinical trial activity and major expenditure incurred by the assessee during these years is also in respect of the clinical trial activity. Therefore, except the clinical trial and related activities, the assessee has not carried out any other charitable activity. Once registration is granted under section 12AA based on the charitable nature of the objects of the assessee trust and subsequently if it is found that the activities of the assessee are not carried out as per the objects and the said activities are also not in the nature of charitable, then the ld. CIT (Exemptions) is empowered and authorized to cancel/withdraw the registration as per the provisions of section 12AA(3)/(4) of the IT Act. The ld. CIT (Exemptions) has considered all these relevant facts and after a detailed discussion has cancelled/withdrawn the registration as under :- " Applicant trust has specifically contended vide submission letter dated 24.10.2018 that the impugned clinical trials have been carried out for achievements of the objects of Trust and advancement of medical health of society at large and therefore are charitable activities. However, the contention is not tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A comparison table is mentioned hereunder :- Particulars F.Y. 2015-16 2016-17 2017-18 Amount in Rs. Spent for Medical camps for human welfare NIL 751.18 19797.95 Total Receipts (Income) 20000 1564038 9734530 % in respect of total receipts NIL .04% .00002% Here, in the instant case of applicant trust, it is clerly evident that the income derived by the Trust does not enure for the benefit of the public instead the Trust is performing activities in order to maximize the profits of Multinational Pharmaceutical companies (SPONSORS). The main activity of the applicant is in direct contravention of the object (b) (supra) which stipulates carrying on of "medical projects which may help and alleviate human suffering solely for philanthropic purpose." 06. Based on aforesaid discussions, it can be concluded that the activities of the trust are not as per the objects of the trust and, therefore, are not genuine. Therefore the provisions of section 12AA(3) are attracted. In view of these provisions, registration granted vide Unique Registration No. (URN) AAATE6375J/08/15-16/T- 0193/12AA is hereby cancelled." Thus the ld. CIT (Exemptions) has followed the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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