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TMI Blog2019 (9) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ngthen the contention of the assessee that the purchase of land for construction of Hospital and starting process for construction of Hospital is certainly in pursuance to the aims and objections of the society and sought registration u/s 12AA Thus the assessee society is at nascent stage but even otherwise carried out small charitable activities such as providing medical aid and Langer to the needy people during the F.Y. 2017-18, therefore, the observation of the CIT(E) that the applicant society did not conduct any charitable activity since its inception, is not sustainable.- Decided in favour of assessee - ITA No.404(Asr)/2019 - - - Dated:- 3-9-2019 - Sh. Vikram Singh Yadav, Accountant Member And Sh. N.K. Choudhry, Judicial Member For the Appellant : Sh. S.K.Mukhi, Abhay Sethi, (Ld. Adv. Sanjeev Jain (Ld. CA) For the Respondent : Smt. Abha Rani Singh (Ld. CIT-DR) ORDER PER N.K.CHOUDHRY, JM: The assessee society has filed this appeal against the order dated 30/04/2019 impugned herein passed by the Ld. CIT(Exemptions), Chandigarh whereby the Ld. CIT(Exemptions) rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant society has received donations to the tune of ₹ 10,33,850/- during the F.Y. 2017-18. In order to verify the claims of the applicant society the following additional queries were asked vide e-mail to [email protected] on 09.04.2019 requesting them to submit the details on 15.04.2019. 1. Please clarify whether the applicant society has been formed to redeem CSR functions of the M/s. International Marketing Corporations Limited. 2. On perusal of the land' deed it was observed that the ownership of land purchased is with M/s. International Marketing Corporations Limited who has funded the land in the form of Loan which is interest bearing to Care share Charitable Society. As Mrs. Veena Bhatia, (President of Care share Charitable Society) is the W/o Sh. Ashok Bhatia (Managing Director of M/s. International Marketing Corporations Limited) this point attracts section 13(3) of the I.T. Act which is any part of its property or income is used or applied or ensures directly or indirectly for the benefit of any persons specified u/s 13(3) of the I. T. Act. Please comment. 3. Please justify the outst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inent to mention here that the applicability of section 11 12 of the Act is restricted to India. To that effect its objects w.r.t. International operations are not in compliant with this Restriction. Given that scenario, it is clear that the essential elements necessary for proper constitution of a public charitable society are missing. Moreover, the applicant society has merely provided a copy of amended MOA and Bye- Laws. It is pertinent to mention here that same cannot be amenable as the provided MOA has not been approved with any competent authority. Neither erstwhile MoA has been provided, in the absence of which, the changes made by the applicant cannot be ascertained. Such arrangement clearly impinges upon the genuineness of applicant s activities. 9. The applicant society has not conducted any charitable activity since its inspection except purchasing of land worth ₹ 1,04,48,900/- for its future plan for constructing Hospital. The Directors of the company (IMC Pvt. Ltd.) forwarding the loan of ₹ 1.06 crores to the applicant society are Sh. Ashok Bhatia Sh. Satyan Bhatia. Smt. Veena Bhatia, W/o Sh. Ashok Bhatia is the president of the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n spent for Langer for needy people. Further in year ended July, 31, 2017 the assessee has spent ₹ 88,170/- qua food/meal help to needy persons, therefore, it cannot be ruled out that the assessee is not doing any charitable activities as reasoned by the Ld. CIT(E). While considering the application and aforesaid documents as referred by us were also available with the CIT(E) as stated by the Ld. AR, therefore, the observation of the Ld. CIT(E) to the effect that the applicant has not provided any documentary evidence regarding expenses incurred on the Langer and Education aid, is also not sustainable. 4.1 The CIT(E) also observed that as per object clause no.3(v) and (vi), the applicant intends to conduct its operation internationally as well, whereas the applicability of section 11 12 of the Act is restricted to India, therefore, to that effect, its objects w.r.t International operations are not in compliant with this restriction. Given that scenario, it is clear that the essential elements necessary for proper constitution of a public charitable society are missing. Moreover, the applicant society has merely provided a copy of amended MOA and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Sub-Registrar, Ludhiana vide its stamp dated 17.01.2018. Considering the facts, we are unable to approve this ground of rejection as well. 4.3 Further, the Ld. CIT(E) has observed in para No.09 that the applicant society has not conducted any charitable activity since its inception except purchasing of land worth of ₹ 1,04,48,900/- for its future plan for construction of Hospital. The Directors of Company (IMC Pvt. Ltd.) forwarding the loan of ₹ 1,06 cores to the applicant society are Sh. Ashok Bhatia and Sh. Satyam Bhatia whereas Smt. Veena Bhatia, w/o Sh. Ashok Bhatia is the present president of the applicant society and Smt. Ansul Bhatia w/o Sh. Satyam Bhatia is the Finance Secretary of the society, whole business of creating a society, transferring of huge sum of ₹ 1,06 cores and purchase of land with involvement of family members without carrying out any of the claimed charitable activities as per object clause of the MOA, do not enthuse confident for the grant of approval u/s 12AA of the Income Tax Act, 1961 at this stage. The Co-ordinate Bench at Amritsar, in the case of Sant Ishwar Shiksha Samiti, Jammu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under clause (b) of sub-section which the application was received under clause (a) of section 12A.] From the contents of the Sec.12AA, it encompass that the Ld. CIT(E) in order to satisfy himself about the genuineness of the activities of the trust or institution can call for such documents or information from the trust or institution as he thinks necessary and also empowered to make such enquiry as he may deem fit necessary in this behalf. Second Clause deals with that after satisfying himself about the object of the trust or institution and the genuineness of the activities, he shall pass order in writing either to register or refusing to register the trust or institutions. Let us to consider judicial verdicts on the issues in hand : Delhi High Court in the case of DIT Vs. Foundation of Opthalmic Optometry Research Education Center, in ITA No.1687/2010 , decided on dated 16.08.2012 dealt with the same situation and observed as under: That the concern CIT is not required to examine the question whether the Trust has actually commenced and has, in fact, carried on charita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olled by one family . The reasons given by the Ld. CIT(E ) does not sound good because , one side reasoned that no activity has been carried out by the Assesse Trust , on the other hand has doubted the intents of the objects and further observation that initially the Assessee wanted to construct school meditation hall at Asar Doda but later purchased land for school at Niabhat, Nagrota , in our view , the trust that time was un-doubtly at nascent stage and has not carried out any activity except to make efforts for procuring land for school , however later on purchased the land for school at Niabhat, Nagrota , which clearly shows the intention of the trust as the main object of the trust is to establish schools etc. and to provide education, therefore, one can expect from the trust to do activity of the charity immediately and in that situation the authority cannot come to the conclusion that the intent contained in the objects of the trust do not find corroboration in the shape of any positive action taken towards either education or any of the other objects enunciated in the trust deed , as observed by the ld. CIT (E ) . Third reason that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived single donation and tried to procure the land for establishment of the School and further because the assessee trust was at nascent stage, therefore, could not carry any activity and according to aforesaid judgments it is clear that statute does not prescribe a waiting period for a newly registered trust to qualify itself for registration under Section 12AA of the act and wait till the activity commence. From the conjoint reading of the aforesaid judgments, it can be safely concluded that even otherwise if no activity was carried out by a trust or institution, still registration can be granted by the CIT(E) and even otherwise it is not the case of the Revenue that at the time of consideration of application of the Assessee , the assessee has carried out many activities and their genuineness were in doubt but in the instant case grievance of the CIT(E) is only that there was no activity carried out by the assessee. Although form the documents submitted before us positively reflects that the Assessee trust has carried out many activities in furtherance of objects of the trust, however because the same activities have not been carried out and documents were al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and conclusion drawn by the Co-ordinate Bench, it is trite to say that where the assessee society is at nascent stage then it cannot be expected that the society must do some charitable work before seeking grant of registration u/s 12AA of the Act and consequently consideration of genuineness of the activities by the Ld. CIT does not arise. In the instant case the Ld. CIT(E) has that no charitable activity has been conducted by the applicant society since its inception except purchasing land. We have given our thoughtful consideration to this reason of rejection. Though the assessee society though has not started construction of its hospital yet but it is a case that the assessee society has been formed only on 19.08.2016 and has already purchased the land and is in the process of constructing hospital for which site plan has already been prepared and placed before the Ld. CIE(E) as well as before us for perusal which further strengthen the contention of the assessee that the purchase of land for construction of Hospital and starting process for construction of Hospital is certainly in pursuance to the aims and objections of the society and sought registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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