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TMI Blog2022 (12) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... MEMBER AND SH. N.K. BILLAIYA , ACCOUNTANT MEMBER For the Appellant : Sh. P. Praveen Sidharth , CIT DR For the Respondent : Sh. Tarandeep Singh , Advocate ORDER PER N. K. BILLAIYA , AM : ITA No.763/Del/2011 and C.O. No.75/Del/2011 are appeals by the revenue and cross objection by the assessee preferred against the order of the CIT(A)-12, New Delhi dated 25.10.2010 pertaining to A.Y. 2007-08. 2. The appeal and the cross objection were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. The grievance of the revenue read as under :- 1. In the facts 8s in the circumstances of the case, the Ld. CIT (A) erred by treating the amount of Rs. 13.65 Cr. as loan and giving benefit of the same to the assessee, merely on the ground that, it has been taxed as an AOP after denial of exemption u/s 11 8s 12 of the I.T. Act. 2. In the facts 8s in the circumstances of the case, it is apparent fact, the ' trust has deliberately dwindled its property by an amount of Rs 15,76,60,018/-(alongwith interest) by way of transfer in and transfer out of funds (although termed as loan/donations) for an ulterior motive, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been shown at mere Rs.3,352/- which stood as Rs. 5,192/- in the preceding year. The position is similar in respect of the preceding several years. The picture of the charitable medical activities conducted by the assessee trust, over the past period therefore clearly negates the existence of any substantial efforts geared towards the objects of Medical/hospital activities as professed, which in fact never remained a prerogative before the assessee. 7. The crucial fact for the adjudication of the present appeal by the revenue is categorical finding of the AO that the assessee trust procured an unsecured loan of Rs.13,66,50,000/- from one Oscar Pharmaceuticals (P) Ltd. and out of such unsecured loan gave donation amount of Rs.13.65 crores to another associated entity called Dr. Bhai Mohan Singh Foundation. On these facts the AO summarized issues as under :- (i) Whether the assessee is genuinely pursuing the charitable activities as professed in the trust deed and as envisaged in the grant of registration u/s. 12A in terms of section 2(15); and section 11, 12 13 of the I.T. Act. (ii) Whether the shares of RLL of Rs.58,48,281/- held as investment does not represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of' the I.T.Act. I am satisfied that penalty proceedings should be duly initiated in the case. Subject to aforementioned remarks, Income is computed as under : Total Income declared Nil Add: Surplus (Deficit) as per Income Expenditure 13,83,13,436 Add: Income applied to the objects of the Trust (treated as AOP) 2,21,045 Total Income 13,85,34,481 9. Assessee strongly agitated the matter before the CIT(A). It was strongly contended before the CIT(A) that the society to whom the loan has been advanced was registered u/s. 12A of the Act and, therefore, the loan constitute application of income. It was further contended that once the AO himself accept that the assessee has not carried any charitable activity, therefore, its income should be taxed under the regular provisions of the Act then how can the loan taken by the assessee be taxed as income by the same analogy the advancing of loan cannot be regarded as expenditure. The CIT(A) was convinced and directed the AO to delete the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the jurisdiction. For the sake of clarity, section 12AA(3) of the Act is reproduced as under:- 12AA(3). Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner or] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] 8. Another argument of the assessee is that since the assessee trust is also registered u/s 10(23C) of the Act, therefore, provision of section 13(5) of the Act is not applicable. The factum of registration u/s 10(23C) of the Act is not rebutted by the Revenue. The Ld.DIT(E) is empowered to cancel the registration u/s 12AA(3) of the Act if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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