| The Tax Publishers2019 TaxPub(DT) 7301 (Del-Trib) : (2020) 180 ITD 0417 INCOME TAX ACT, 1961
Section 11 Section 2(15) Sections 12A & 12AA
Where assessee had demonstrated clearly that management and control of hospital was always with assessee society and assessee-society had not virtually handed over management of hospital to Max group of concerns and revenue also failed to bring on record any material to suggest that assessee trust had refused any patient from the economically weaker section of society in violation of the guidelines laid down by the Delhi High Court the registration withdrawn by DIT(E) retrospectively was, therefore to be restored with retrospective effect.
|
Charitable trust - Exemption under section 11 - Withdrawal of registration granted under section 12A with retrospective effect -
Director (Exemptions), in the instant case, had withdrawn the registration granted earlier under section 12A on the ground that the assessee foundation had not been operating as a charitable institution as the trust had allowed the property/hospital of the society to be taken over by Max group by creating various financial and legal obligations and had virtually handed over the activity of the hospital to Max group which were corporate bodies established with a clear intention of profit motive which, according to him, is against the basic principles of charitable organizations. Further, it was also his allegation that the assessee trust did not fulfill the minimum notified criteria of providing 25% of OPD and 10% of beds in IPD as free treatment to the economically weaker section.Held: It was crystal clear that the activities of hospital were always under the control and supervision of the management and trustees and Max entities were only service provider/contractor to the extent of activities were agreed with. A perusal of the analysis of the percentage of payment made by the assessee to Max group of companies vis-a-vis the total expenditure incurred by the assessee in various years shows that the same was maximum of 25% in the financial year 2005-06 which had gradually reduced to 20% in financial year 2013-14. The assessee, due to lack of own funds and expertise in the field of construction of hospital and rendering medical services being a highly specialized and technical field, had entered into the agreements with Max group of companies. It was difficult to agree with the allegation of the Director (Exemptions) that there was diversion of the control of the property of the assessee, i.e., the hospital in favour of Max group of companies. The trust had not handed over the management of the hospital to the Max group of concerns. There was nothing on record to suggest that the assessee had refused admission to any person of the economically weaker section nor the government had taken any action against the assessee for such violation. Since there was no allegation by the revenue that the activities of the trust/society were not genuine or were not being carried out in accordance with the objects of the trust and since the assessee had demonstrated clearly that the management and control of the hospital was always with the assessee society and the assessee society had not virtually handed over the management of the hospital to the Max group of concerns which were corporate bodies established with the clear intention of profit motive and since the revenue also failed to bring on record any material to suggest that the assessee trust had refused any patient from the economically weaker section of the society in violation of the guidelines laid down by the Delhi High Court, there was no justification on the part of the Director (Exemptions) for withdrawing the registration granted under section 12AA with retrospective effect. Accordingly the order of the Director (Exemptions) was set aside and registration granted earlier under section 12A was restored.
Relied:Queen's Educational Society v. CIT (2015) 372 ITR 699 (SC) : 2015 TaxPub(DT) 1436 (SC), Director of Income Tax (Exemptions) v. R.B. Seth Jesa Ram and Bros Charitable Hospital Trust vide ITA No. 1721/Del/2008, ITO (E) v. Balaji Medical and Trust Diagnostic Research Centre, vide ITA No. 4317/Del/2012, Delhi Bench of the Tribunal in the case of Dy. CIT v. Wood Stock School, vide ITA No. 3838/Del/2014, Order, dated 25-2-2019 and Delhi and District Cricket Association v. Director of Income Tax (Exemptions) (2015) 38 ITR 326 (Del): 2015 TaxPub(DT) 0771 (Del-Trib).
REFERRED : CIT v. Sarvodaya Ilakkiya Pannai, (2012) 343 ITR 300 (Mad) : 2012 TaxPub(DT) 1817 (Mad-HC), CIT v. Marina Social Service Society, (2018) 408 ITR 462 (Karn) : 2018 TaxPub(DT) 7107 (Karn-HC), American Hotel & Lodging Association Educational Institute v. CBDT, (2008) 301 ITR 86 (SC) : 2008 TaxPub(DT) 2007 (SC), St. Michaels Educational Association v. CIT vide Miscellaneous [Appeal No. 438 of 2015, Order, dated 13-8-2019] : 2019 TaxPub(DT) 5293 (Pat-HC), Maharashtra Housing & Area Development Authority v. ADirector of Income Tax (Exemptions): (2013) 58 SOT 196 (Mum.) : 2013 TaxPub(DT) 1951 (Mum-Trib), Urmila Devi Charitable Trust v. CIT(E): ITA No. 4136/Del/2017 (Del Trib.) : 2019 TaxPub(DT) 4529 (Del-Trib), Project Management Institute v. Director of Income Tax (Exemptions): (2013) 142 ITD 239 (Hyd-Trib) : 2013 TaxPub(DT) 1344 (Hyd-Trib), Guru Gobind Singh Educational Society v. CIT (2009) 118 ITD 207 (Asr-Trib) : 2009 TaxPub(DT) 469 (Asr-Trib), Chaturvedi Har Prasad Educational Society v. CIT (2010) 134 TTJ 781 (Luck) : 2010 TaxPub(DT) 2212 (Luck-Trib), H.P. Government Energy Development Agency v. CIT (2010) 134 TTJ 33 (Chd-Trib) : 2010 TaxPub(DT) 2255 (Chd-Trib), Central Board of Direct Taxes (CBDT) Circular No. 11, dated 19-12-2008 reported in (2009) 221 CTR (St) 1 (Bom) : 2009 TaxPub(DT) 1210 (Bom-HC), India Trade Promotion Organization v. Director of Income Tax (Exemptions): (2015) 371 ITR 333 (Del.) : 2015 TaxPub(DT) 623 (Del-HC), Hamdard Laboratories India v. ADIT: (2015) 379 ITR 393 (Del.) : 2015 TaxPub(DT) 3653 (Del-HC), Bureau of Indian Standard v. DGIT(E) : (2013) 358 ITR 78 (Del.) : 2013 TaxPub(DT) 0323 (Del-HC), GS1 India v. DGIT(Exemptions): (2013) 262 CTR 585 (Del.) : 2013 TaxPub(DT) 2791 (Del-HC), Institute of Chartered Accountants of India v. DGIT (Exemptions): (2012) 347 ITR 99 (Del.) : 2012 TaxPub(DT) 253 (Del-HC), DIT (Exemptions) v. Commerce Teachers Association: (2012) 203 Taxman 171 (Del.) : 2012 TaxPub(DT) 236 (Del-HC), CIT v. Sri Magunta Raghava Reddy Charitable Trust: (2016) 395 ITR 663 (Mad.) : 2016 TaxPub(DT) 3522 (Mad-HC), Society for Participatory Research In Asia v. ITO: ITA No. 1553/Del/2015 (Del Trib.) : 2017 TaxPub(DT) 780 (Del-Trib) and India HIV/AIDS Alliance v. CIT (2019) 175 ITD 1 (Del-Trib.) : 2019 TaxPub(DT) 835 (Del-Trib), Queen's Educational Society v. CIT (2015) 372 ITR 699 (SC) : 2015 TaxPub(DT) 1436 (SC), CIT v. Pulikkal Medical Foundation (P) Ltd., (1994) 210 ITR 299 (Ker) : 1994 TaxPub(DT) 489 (Ker-HC), Breach Candy Hospital Trust v. CCIT, (2010) 322 ITR 246 (Bom) : 2010 TaxPub(DT) 0736 (Bom-HC), CIT v. Bar Council of Maharashtra, (1981) 130 ITR 28 (SC) : 1981 TaxPub(DT) 0948 (SC); CIT v. Andhra Pradesh State Road Transport Corporation: (1986) 159 ITR 1 (SC) : 1986 TaxPub(DT) 1395 (SC), Victoria Technical Institute v. CIT (1991) 188 ITR 57 (SC) : 1991 TaxPub(DT) 0774 (SC) Aditanar Educational Institution v. ACIT (1997) 224 ITR 310 (SC) : 1997 TaxPub(DT) 1051 (SC), Samaritan Society v. CIT : (1997) 225 ITR 652 (SC) : 1997 TaxPub(DT) 820 (SC), Thiagarajar Charities v. Addl. CIT: (1997) 225 ITR 1010, 1026 (SC) : 1997 TaxPub(DT) 1235 (SC), CIT v. St. Peter's Educational Society: (2016) 385 ITR 66 (SC) : 2016 TaxPub(DT) 2891 (SC), Tolani Education Society v. Dy. DIT(Exemptions)-(2013) 351 ITR 184 (Bom.) : 2013 TaxPub(DT) 0767 (Bom-HC), SC Queen's Educational Society v CIT (2015) 372 ITR 699 (SC) : 2015 TaxPub(DT) 1436 (SC), CIT v Delhi Kannada Education Society: (2000) 246 ITR 73 (Del.) : 2000 TaxPub(DT) 1513 (Del-HC), CIT v. Krishi Utpadan Mandi Samiti, Purva, Unnao: (2011) 186 Taxman 460 (All.) : 2011 TaxPub(DT) 0117 (All-HC), Shree Kamdar Education trust v. ITO : (2016) 243 Taxman 76 (Guj.) : 2016 TaxPub(DT) 4687 (Guj-HC), Saint Kabir Education Society v. CIT(E): ITA No. 6449/Del/2017 (Del Trib.), Aryan Educational Society v. CIT (2006) 94 TTJ 462 (Del Trib.) : 2006 TaxPub(DT) 0194 (Del-Trib), O.P. Jindal Global University v. CIT (2010) 127 ITD 164 (Del Trib.) : 2010 TaxPub(DT) 1970 (Del-Trib), Gaur Brahmin Vidya Pracharini Sabha v. CIT (2019) 34 SOT 371(Del Trib.) : 2010 TaxPub(DT) 806 (Del-Trib), ITO v. Trilok Tirath Vidyavati Chuttani Charitable Trust: (2004) 90 ITD 569 (Chd.) : 2004 TaxPub(DT) 1221 (Chd-Trib), Indo American Society v. ADirector of Income Tax (Exemptions): (2005) 96 TTJ 578 (Mum Trib.) : 2005 TaxPub(DT) 239 (Mum-Trib), CIT v. Rajneesh Foundation: (2006) 148 Taxman 396 (Pune Trib.) : 2006 TaxPub(DT) 585 (Bom-HC), DDIT v. Willingdon Charitable Trust (Chen): (2007) 107 ITD 493 (Chen. Trib.) : 2007 TaxPub(DT) 1683 (Chen-Trib) and Dy.CIT v. Vellore Institute of Technology: (2019) 46 SOT 224 (Chen-Trib.) : 2019 TaxPub(DT) 1901 (Chen-Trib), ITO (E) v. Balaji Medical and Trust Diagnostic Research Centre, ITA No. 4317/Del/2012, Dy. CIT v. Wood Stock School ITA No. 3838/Del/2014, Order, dated 25-2-2019] : 2019 TaxPub(DT) 2331 (Del-Trib), Asstt. CIT v. Agra Development Authority, (2018) 407 ITR 462 (All) : 2018 TaxPub(DT) 739 (All-HC), Auro Lab v. ITO (2019) 411 ITR 308 (Mad) : 2019 TaxPub(DT) 1007 (Mad-HC), Urmila Devi Charitable Trust v. CIT(E) vide ITA No. 4136/Del/2017 (Del Trib.) : 2019 TaxPub(DT) 4529 (Del-Trib).
 SUBSCRIBE FOR FULL CONTENT
|