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TMI Blog2019 (4) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 12AA of the Act on 19.01.2010. The Commissioner of Income Tax (Exemptions), [for short 'the CIT(E)] rejected that application vide order dated 23.07.2010. The respondent-assessee challenged that order by filing appeal before the Tribunal which vide order dated 22.07.2011 set aside order dated 23.07.2010 and remanded the matter back to the CIT(E) on the premise that it had not communicated the assessing officer's report to the assessee and therefore restored the issue of registration back on the file of the CIT (E) with direction that the assessee should be given an opportunity before deciding the issue of registration and should be confronted with all the materials which are considered adverse to him. After remand of the matter, the CIT (E) passed fresh order on 09.10.2015 and rejected application of the respondent-assessee holding that the assessee was running the hospital for the benefit of family members of Shri B.L. Ranwa and there was no charity in it. Being aggrieved, the respondent-assessee again filed an appeal before the Tribunal, which was allowed vide impugned judgment dated 28.09.2018. Hence, this appeal. Learned counsel for the appellant submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he specified person covered under Section 13(3) of the Act, the activities cannot be held as genuine charitable activity. The words, "nature of object" and "genuineness of activities" mentioned in Section 12AA of the Act are coupled together and word used in the statue is "and". As the words in the statue are unambiguous, they cannot be given different interpretation. If the assessee satisfies one of the two conditions and violates the other one, then it cannot get the benefit of the provisions of section 12AA of the Act. Learned counsel submitted that once the Act has empowered the authority to cancel the registration with reference to section 13(1), it fundamentally indicates that if at the time of registration any of the conditions mentioned in under Section 13(1) of the Act is noticed then registration may not be granted. Having heard learned counsel for the appellant and perused the material on record, we find that on merits of the case, the Tribunal while passing impugned judgment has held as under: "Therefore, the income which would be deemed to have been used or applied for the benefit of the persons specified under section 13(3) is only to the extent if it was without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is against the consideration or against the services. Therefore, subject to the provisions of section 13(2) of the Act and without conduction a proper enquiry about the fair market rent of the building in question it is not possible to come to the conclusion that the payment of rent of Rs. 50,000/- per month by the assessee society in respect of the hospital building of such a big size or area is in violation of the provisions of section 13 of the Act. Even otherwise, the Tribunal while remanding the matter to the record of the ld. CIT (E) has expressed its inability to determine the issue for want of relevant record. However, once the matter was remanded to the ld. CIT (E), it ought to have first ascertained the fair market rent of the hospital building in question when the constructed area of hospital is not in dispute. Thus when the ld. CIT (E) has not given a finding about the fair market rent of the building in question then giving a finding in the impugned order that the payment of rent is in violation of provisions of section 13(3) read with section 13(1)(c) is based purely on assumption and conjectures and not based on the facts which can show that the rent paid by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee society and, therefore, thereafter there is no question of even alleged benefit or diversion of income to the specified persons. The order in question has been passed in the month of October, 2015 whereas the said shop itself was donated to the hospital on 30.11.2011. In view of these facts, when there is no specific instance of any favour or diversion, then running a shop by the spedified person itself cannot be regarded as a violation of provisions of section 13 of the Act until and unless any benefit is provided in the shape of income applied on such persons. Hence we do not find any merit in the objection reaised by the ld. CIT (E) on this account. 9. The last objection of the ld. CIT (E) is regarding spurt in donation. The ld. CIT (E) recorded the details of the donations received by the assessee from the financial years 2008- 09 to 2011-12 and then observed that there is a sudden increasse in the donations received by the assessee and further the assessee failed to produce the complete details including address, PAN of the donors leading to the finding that the activities carried out by the assessee are not genuine. It is pertinent to note that when the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sahitya Sadawart Samiti (D.B. Income Tax Apeal No. 32/2008 decided on 19.05.2017), the Tribunal held that once the limitation prescribed under Section 12AA of the Act expired and the consequential default on the part of the CIT(E) in deciding the application would result deemed grant of registration is a settled proposition. Therefore, it has been held by the Tribunal that the judgment of the CIT(E) is reversed on merits and registration would stand granted to the assessee by prescription of law made in Section 12AA(2) of the Act. The Tribunal in this behalf relied on the judgment of Lucknow Bench of the Tribunal in Harshit Foundation Vs. CIT (ITA No. 104 & 105/Luck/2012 decided on 28.06.2013) in which case it was held that where the Commissioner does not pass any order even after six months from receipt of Tribunal's order remitting the matter to him, the registration will be deemed to have been granted. This is subject to exercise of Commissioner's power under Section 12AA(3) of the Act in appropriate cases. In view of above, we hardly find any justification in admitting this appeal as in our considered view it does not raise any question of law much less substantial question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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