9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 448 - AT - Income TaxExemption u/s 11 - rejecting the application filed for registration u/s 12AA - CIT not granting the registration for the reason that the appellant is pursuing only Medical Research - assessee argued that Medical Research is a charitable activity as defined u/s.2(15) of the Income Tax Act and hence the registration ought to have been granted - HELD THAT - Application moved u/s 12A of the Act cannot the throttled merely by relying upon selective aims and objects by making observation that there is a possibility that researches being carried out by the applicant within the premises of the settler company would in turn further enhance the commercial potential of the hospital. These are mere perceptions entirely based upon surmises, particularly in view of the undisputed fact that applicant research foundation is inextricably linked with the Artemis Hospital to carry out its research. When it is a harsh reality that medical research being one of the aims and objects of the applicant is to be carried out in the hospital/settler company merely declining the registration u/s 12A of the Act on the ground only does not augur well with the intent and purpose of the Act. Because of all these factors, if applicant is being used for accelerating its commercial activities of the Hospital, the same are to be separately and independently examined by the AO at the time of assessment in the light of the provisions contained u/s 11 12 Section 12AA of the Act provides for procedure for registration as to how ld. CIT (E) will provide registration after getting satisfaction with the aims and objects of the society and not to sit on the chair of AO as all these facts ought to be taken care by the AO at the time of assessment. Declining the registration on the ground that medical research to be carried out in the hospital of settler company would convert the charitable activities into commercial activities is mere surmises, hence not sustainable in the eyes of law. Not only this, sub-section (3) of section 12AA empowers the ld. CIT(E) to cancel the registration of the Trust if activities of Trust are not in consonance with its charitable aims and objects enshrined in the constitution. So, at the stage of according registration u/s 12AA of the Act examining the aims and objects like AO is not permissible. Intention to create global infrastructure is in contravention of section 11(1)(a) of the Act and even after 4 years of incorporation, applicant has not carried out any research/outcase - When applicant has come up with specific aims and objects to carry out medical research as one of the aims and objects which can only be carried out within the premises of the hospital, creating infrastructure is a sine qua non to carry out the research in the medical field. Medical research can always be carried out in the infrastructure created within or near to the hospital which cannot always lead to the conclusion that it is for the purpose of pursue the commercial activities. Because there are numerous aims and objects sought to be pursued by the applicant in order to carry out its charitable activities. Question of carrying out any activities within four years of its incorporation as put forth by the ld. CIT(E) - Applicant has brought on record details of funds in and out since its inception showing that the applicant is at the initial stage and carrying out research activities might not have taken place at full swing because of rejection of the application by the ld. CIT (E) u/s 12A of the Act. Receipt of donations and appropriation of funds show that the applicant Trust is not merely on the paper but keeping its activities alive for further carrying out the charitable activities enshrined in its aims and objects. So, the reason recorded by the ld. CIT (E) is not sustainable to reject the application moved by the applicant. Applicant has failed to bring on record how its activities are meant to percolate down to the public at large - As in the instant case, applicant Trust is not pursuing one activity rather many of charitable aims and objects are there on its Board as enshrined in its constitution. Again, all these facts and queries raised by the ld. CIT(E) are to be taken care of at the time of examining Income-tax return filed by the applicant in due course in the light of sections 11 12 Reject applicant u/s 12A that there is possibility that researches which would be carried out in future within the premises of settler company would in turn further enhance commercial potential of the hospital - again we are of the considered view that all these findings are based on surmises because at this stage commercial angle of any activities can only be assumed but can only be decided during the assessment proceedings. It is a matter of fact that medical research has to be carried out in the premises of Artemis Hospital/settler company and any such medical research would otherwise facilitate the general public to have a specialized treatment in the hospital of their choice. We would like to record that medical research cannot be branded as a mode of advertisement to enhance the profitability of the hospital because both are existing in entirely separate domain. When we examine the issue of delay in the light of the fact that the appeal challenging the order passed by the ld. CIT (E) u/s 12AA of the Act has been filed well within time it can be taken as a bonafide mistake that challenging the rejection of approval u/s 80G is automatic. Even otherwise negligence or indolence on the part of a trained practitioner who has been hired to protect the interest of the applicant, cannot be attributed to the litigant by declining the relief in the interest of justice. So, we find it a reasonable ground to condone the delay and appeal against the order passed u/s 80G is ordered to be registered to be put up for hearing. We are of the considered view that ld. CIT (E) has erred in rejecting the application for registration u/s 12AA of the Act and consequent approval u/s 80G of the Act filed by the applicant, hence ld. CIT(E) is directed to grant registration u/s 12AA of the Act to the assessee/applicant forthwith with approval u/s 80G of the Act. - Decided in favour of assessee.
Issues Involved:
1. Rejection of application for registration under section 12AA of the Income Tax Act. 2. Rejection of application for approval under section 80G(5)(vi) of the Income Tax Act. 3. Procedural fairness and natural justice in the rejection of the application under section 80G(5)(vi). 4. Interrelation between section 12A and section 80G approvals. Issue-wise Detailed Analysis: 1. Rejection of Application for Registration under Section 12AA of the Income Tax Act: The applicant, a Trust registered under the Societies Registration Act, sought registration under section 12A of the Income-tax Act, 1961. The Commissioner of Income-tax (Exemptions) [CIT(E)] rejected the application on several grounds. Firstly, the CIT(E) held that not all medical research qualifies as 'education' as per the definition provided by the Hon'ble Apex Court in the case of Sole Trustee, Loka Sikshan Sansthan 101 ITR 234. The Tribunal, however, found that the applicant trust's aims and objects were not limited to medical research but included various other charitable activities such as establishing professional colleges and health promotion facilities. Therefore, the Tribunal concluded that the application should not be rejected based on selective aims and objects. 2. Rejection of Application for Approval under Section 80G(5)(vi) of the Income Tax Act: The CIT(E) also rejected the application for approval under section 80G(5)(vi) on the grounds that the applicant did not have registration under section 12A. The Tribunal noted that sections 12A and 80G operate separately and the rejection of section 12A approval should not automatically lead to the rejection of section 80G approval. The Tribunal directed the CIT(E) to grant approval under section 80G(5)(vi) as well. 3. Procedural Fairness and Natural Justice in the Rejection of the Application under Section 80G(5)(vi): The applicant argued that the order under section 80G(5)(vi) was passed without any notice of hearing, which is against the principles of natural justice. The Tribunal agreed with this contention and found that the applicant was not given a fair opportunity to present its case. The Tribunal emphasized that procedural fairness is a fundamental aspect of justice and directed the CIT(E) to reconsider the application. 4. Interrelation Between Section 12A and Section 80G Approvals: The Tribunal clarified that the rejection of registration under section 12A should not automatically result in the rejection of approval under section 80G. The Tribunal observed that the CIT(E) had erred in holding that the absence of registration under section 12A disqualified the applicant from approval under section 80G. The Tribunal directed that the CIT(E) should independently assess the application for section 80G approval. Conclusion: The Tribunal concluded that the CIT(E) had erred in rejecting the applications for registration under section 12AA and approval under section 80G. The Tribunal directed the CIT(E) to grant registration under section 12AA and approval under section 80G to the applicant forthwith. The appeals filed by the applicant were allowed, and the order was pronounced in open court on November 24, 2021.
|
