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TMI Blog2013 (6) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 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 Court) - writ petition is dismissed with liberty to the petitioner to file its reply to the show cause notice. - Writ Tax No.-1720 of 2006 - - - Dated:- 3-5-2013 - Prakash Krishna And Manoj Kumar Gupta,JJ. For the Petitioner : S. D. Singh,Vishal Kakkar For the Respondent : S. C.,B. J. Agarwal, R. K. Upadhaya ORDER 1. The petitioner, which is a registered Trust, has filed the instant writ petition for quashing the order dated 4.10.2006 whereby the Commissioner of Income Tax-1, Kanpur (hereinafter referred to as the CIT) has rejected the application for renewal of extension under section 80-G of the Income Tax Act, 1961 (hereinafter referred to as the Act) and a show cause of even date issued by him for cancelling the registration under section 12-A of the Act. 2. The brief facts necessary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site papers on 29.8.2006 followed by written representations dated 8.9.2006 and 3.10.2006. Ultimately the matter relating to renewal of extension under section 80-G was taken into consideration by the CIT and was rejected by the order dated 4.10.2006. The Commissioner of Income Tax-1, Kanpur was of the view that major part of the corpus donation received by the Trust up to 31.3.2005 was utilized in construction and acquisition of commercial property which has been constructed with profit motives. He further held that only meagre amount of the Trust income has been applied for charitable purpose. He concluded that the petitioner is pre-dominantly engaged in the business of constructing commercial property and letting out the same while the charitable activities carried out by the Trust are only its incidental activities and which amounts to violation of mandate of Section 11(4A). He concluded that the objects as mentioned in the Trust deed are of charitable nature but the Trust is not genuinely applying its funds for the said purpose. He accordingly rejected the application for renewal of exemption under section 80-G. On the same date, the Commissioner of Income Tax issued a show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. Rs. 25,000/- 2001-2002 Rs. 3,039/- Rs. 80,000/- 2002-2003 Rs. 1,542/- Rs. 1,00,000/- 2003-3004 Rs. 4,156/- Rs. 61,93,810/- 2004-2005 Rs. 5,271/- Rs. 23,62,501/- It is noticed from the details furnished that the petitioner has purchased property in March/April, 2004 for Rs. 20,11,000/- and has constructed a four story building by spending Rs. 48,80,000/- upto 31.3.2005. A portion (one floor) of the building has been let out with commercial motive. No approval of local authority, Kanpur Development Authority, was taken while constructing the so-called speciality hospital. All these facts were prima facie not in conformity with the charitable objects of the petitioner Trust. Therefore, the CIT issued show cause notice for cancellation of registration u/s 12 A of the Act. At this stage, when merely a show cause notice is issued, it is submitted that extra ordinary jurisdiction of this Hon'ble Court may not be invoked under Article 226 of the Constitution of India." 14. We have considered the rival submissions of the counsel for the parties. It is not in dispute that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that out of corpus donation received by the Trust up till 31.3.2005 which is a sum of Rs. 88,96,311/-, the major portion of it, i.e, Rs. 48,80,000/- has been utilized in construction and acquisition of property No. 24/146, Patkapur, Kanpur. Though there is no prohibition under the Trust deed for acquiring the property for fulfilment of object of the Trust or to generate income which can be harnessed into the corpus of the Trust for fulfilment of its charitable object but at the same time it is to be seen whether exercise in this regard is bonafide or not or a advise to carry out a commercial activities under the cloak of charity. For verifying the claim of the assessee in this regard, the impugned order recites that on 8.9.2006 the assessee was directed to submit the approved plan of the building constructed by it in order to prove that such construction is not for commercial purpose, but for running of a speciality hospital as per its own case. The order further recites that in spite of the opportunity having been given to the petitioner-Trust in this regard, it failed to bring on record the approved plan of the building and other document to prove that the construction raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -G on the ground that the institution has made very low expenses out of total donation received by it. He also placed reliance on (2003) 264 ITR 481 (Patna) Madani Musafir Khana Welfare Society v. CIT in which the application for renewal of exemption under section 80-G was rejected on the ground that the institution has constructed a shopping complex and had not carried other charitable work. 19. There can be no dispute to the broad proposition of law that construction of a building may be even a commercial building by itself cannot be a factor to refuse renewal under section 80-G of the Act. However, it depends upon the facts and circumstances of each case. In the instance case, a cogent and categorical finding has been recorded in the impugned order that although huge amount has been received as donation by the Trust during the previous years, but amount spent for the charitable purpose is merely an eye wash. The claim of the assessee that building constructed by it is for running a charitable hospital has been found to be incorrect as it failed to produce the sanctioned plan and other documents to prove the nature and user of the building constructed by it. Letting out of IIIr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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