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TMI Blog2014 (2) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... s only with reference to the hospital being run on commercial lines - so long as the income of the trust is applied for charitable purpose, there can be no question of any tax liability on the assessee - If there is any shortcoming in the application of income for charitable purpose, then to that extent the Assessing Officer in the assessment of the assessee, is free to tax such income which is not applied for charitable purpose – thus, canceling the registration u/s. 12AA of the Act would not be the appropriate course of action for the revenue - the order u/s. 12AA(3) of the Act deserves to be cancelled – thus, the order for restoring registration u/s. 12AA of the Act, recognition granted u/s. 80G of the Act should also be restored – Decided in favour of Assessee. - ITA Nos. 1195 & 1196/Bang/2012 - - - Dated:- 7-2-2014 - Shri N. V. Vasudevan And Shri Jason P. Boaz,JJ. For the Appellant : Ms. Sheetal Borkar, Advocate For the Respondent : Shri Ronmoy Das, CIT-I (DR) ORDER Per N.V. Vasudevan, Judicial Member These two appeals are by the assessee against the two separate orders of the Commissioner of Income Tax (CIT), Hubli. ITA No.1195/B/12 is an appeal against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity" (b) According to the CIT, as per the proviso introduced by the Finance Act, 2008, if a trust or other charitable institution has its objects falling in the category of "any other object of general public utility" given in Sec.2(15) of the Act, and if in carrying out its objects, it carries on activities in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business; then the activities carried on by the Assessee cannot be regarded as 'charitable'. (c) Thereafter, the CIT referred to the fact that the assessee was charging much more than what private hospitals were charging in the very same area and in this regard has given a comparative chart of charges in para 3.5 of his order. (d) The CIT was also of the view that the assessee was ploughing back its income in purchase of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement u/s. 2(15) of the Act that "medical relief" should be provided at a concessional rate or free of cost to be regarded as "Charitable Purpose". It was further submitted that proviso to section 2(15) of the Act prohibiting a charitable organization from carrying on business is applicable only when the charitable organization exists for 'any other objects of general public utility'. It was submitted that since the assessee in the present case was doing a charitable activity of "medical relief", proviso to section 2(15) of the Act will not be applicable. 10. The ld. counsel for the assessee then drew our attention to the provisions of section 12AA(3) of the Act and submitted that the registration granted can be cancelled only where the trust or institution is not genuine or the activities are not being carried out in accordance with the objects of the trust or institution. It was her submission that in the present case, there is no such complaint by the DIT in the impugned order. It was submitted that the CIT has admitted the fact that the assessee provides "medical relief", but the only complaint of the revenue is that "medical relief" was provided on commercial lines. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons given by the DIT(E) in the order u/s 12AA(3) of the Act, do not make out any case, which can show the activities of the assessee are not genuine or that the activities of the assessee are not being carried out in accordance with the objects of the trust or institution. The fact that the Assessee was paying commission to persons who solicit students for studying in the Assessee's institution cannot lead to the conclusion that the Assessee is not imparting education. Similarly purchase of a BMW car, borrowing of loans from Sindhi Financiers, non maintenance of regular books of accounts, violations of provisions of Sec.13(1)( c) of the Act in as much as the trustees were paid enormous salary are all by way of passing reference having no relevance to whether or not the Assessee was pursuing education as its main object. There are no facts brought out in the impugned order regarding the genuineness of the activities of the trust or as to whether the object of education was not pursued by the Assessee as its main and predominant activity. In fact, the order of the DIT(E) does not anywhere show that the assessee is not imparting education. The complaint of the revenue seems to be tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act to a charitable organization providing 'medical relief', held that profitability is not the sole criterion to judge charitable nature of the society. 14. The ld. DR relied on the order of the CIT. 15. We have considered the rival submissions. We are in agreement with the arguments put forth on behalf of the assessee. As rightly contended by the ld. counsel for the assessee, the definition of 'charitable purpose' has several limbs viz., (i) relief of the poor, (ii) education, (iii) medical relief, (iv) preservation of environment (including watershed, forest wildlife), (v) preservation of monuments or places or objects of artistic or historic interest, and (vi) advancement of any other object of general public utility. Proviso to section 2(15) of the Act is applicable only in respect of a charitable institution which has the object of 'any other object of general public utility'. The assessee, admittedly, is running a hospital and even as per the objects, the trust was established for the purpose of providing "medical relief". Therefore proviso to section 2(15) of the Act will not be applicable. It is further seen that this Tribunal in the case of Krupanidhi Educational T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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