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TMI Blog2013 (6) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Thus admitted fact of record reveals that there has been no expansion of any charitable activities. On the other hand, the petitioner-Trust under the guise of constructing a Homeopathic hospital and dispensary has rather constructed shopping complex and major part of it has already been let out. The petitioner-Trust also does not dispute that its expenditure on medicines during successive years had remained static and also could not place any material to show that the figures mentioned in the impugned order relating to the expenditure made in the name of charity is in any manner perverse - CIT had rightly withdrawn the exemption granted under section 80-G of the Act. Challenge the notice u/s 12A (3)- Held that:- Suffice it to say that it is merely a show cause notice and challenge to it at this stage is premature. It is open to the petitioner to file its reply to the show cause notice against purposed action before the CIT and in such proceedings it is open to the petitioner to produce all such evidence which may justify its claim for continuation of its registration as a charitable institution. See Madhya Pradesh Madhyan Vs. CIT.(2002 (2) TMI 56 - MADHYA PRADESH High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the first floor, in order to enable it to raise a building for running a public charitable dispensary. It appears that in pursuance of the aforesaid lease deed, the petitioner Trust instead of raising construction for charitable Homeopathic clinic and dispensary had constructed 12 shops on the first floor and 2 halls and one store room on the second floor. It also appears to have let out certain shops on the first floor and the hall on the second floor. It is an admitted fact that the constructions made by the petitioner-Trust on the first and second floor were not of such nature as could be utilized for running a public charitable dispensary nor, in fact, any such dispensary was opened nor intended to be opened (admitted to the petitioner in its reply dated 7.9.2000; annexure-9). 7. The petitioner Trust soon after it came into existence get itself registered under section 12-A of the Act. It was also granted exemption under section 80-G of the Act vide certificate dated 15.1.1999 and it was renewed on 7.5.2002 and 3.8.2004. It further appears that the petitioner-Trust filed an application dated 24.7.2006 for renewal of exemption under section 80-G of the Act for further period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rs. 9,490/- during the period 2003-2004. He found that the construction of the shopping complex by the petitioner-Trust under the guise of constricting building for running Homeopathic clinic is against the object of the Trust. 11. He further found that letting out of the shops and the halls is with profit motive. He, therefore, concluded that the aforesaid activities cannot be said to be incidental to the attainment of the object of the Trust and after recording the said findings, it refused to extend exemption under section 80-G of the Act and rejected the application. On the same date, the CIT issued a show cause notice dated 3.10.2006 purporting to be under section 12 AA(3) calling upon the petitioner-Trust to show cause why registration granted to it under section 12-A of the Act may not be cancelled. 12. Aggrieved by the aforesaid order of the CIT and the show cause notice dated 3.10.2006, the present writ petition has been filed. 13. We have heard Sri Ashish Bansal, counsel for the petitioner and Sri Shambhu Chopra, counsel for the Income Tax Department. 14. Sri Ashish Bansal, counsel for the petitioner vehemently contended that the construction of the building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le dispensary/hospital but the investment was made for construction of commercial building. The petitioner Trust has not taken permission from the competent authority for constructing said building for the purpose of opening a homeopathic dispensary or hospital. The petitioner Trust let out first and second floor of the building to a company which further strengthens the belief that the said building was not acquired for the purpose of opening a dispensary or hospital." 16. We have considered the rival submission of the counsel for the parties. It is not in dispute that the petitioner-Trust was created by trust deed dated 24.2.1998, a copy whereof has been filed as Annexure-1 to the writ petition. 17. The object of the Trust is to construct, establish, maintain and support charitable hospital, nursing home and dispensaries, to provide educational and vocational support to the poor and needy, to give monetary help to the poor, and the blind and crippled persons, to give money to the persons affected by flood and other natural calamity etc. The original corpus at the time of settlement was Rs. 5000/-only and over the years, it had multiplied several times on account of donati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out. (f) The petitioner-Trust also does not dispute that its expenditure on medicines during successive years had remained static and also could not place any material to show that the figures mentioned in the impugned order relating to the expenditure made in the name of charity ia in any manner perverse. 19. In view of these facts, the CIT has rightly came to the conclusion that under the guise of carrying out charitable activities after obtaining exemption under section 80-G, the petitioner Trust had, in fact, diverted major part of donation received by it till 31.3.2005 in constructing a shopping complex. In these circumstances, the CIT rightly concluded that the petitioner-Trust has mis-utilized the donation received by it on the strength of exemption under section 80-G. Construction of shopping complex cannot be said to be a business incidental to the attainment of the object of the Trust but is being persued as the main activity, under the cloak of carrying out charity. Funds received in the name of charity have been utilised in attainment of a commercial mission. 20. This court also concurs with the findings recorded in this regard by the CIT, as the petitioner has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patients visiting are old and feeble and it will be difficult for them to climb the stairs for consulting the doctor. No such explanation was given by the petitioner before the CIT and it is on the face of it, after thought. Further, it is apparently false, as in the two lease deeds, the petitioner had repeatedly mentioned that the lease is being obtained for construction of a homeopathic hospital and clinic. The first lease is of the year 1998 and the other one of the year 2002 i.e. after a gap of four years. In case it was so , as is being claimed by the petitioner, there was no occasion for the petitioner to obtain another lease after 4 years of the execution of the first lease deed, with the specific recital that the construction thereunder will be of a charitable hospital. It is thus evident on the face of record that the petitioner has only indulged in completing paper work for the purpose of obtaining exemption under section 80-G of the Act so that it may continue to obtain donations under the guise of charity and utilize the same for commercial ventures. It is in these facts and circumstances, that the CIT was fully justified in holding that the activities being carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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