9911796707
TMI Blog2025 (3) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... those professional fees payment, the same could be looked into at the time of assessment proceedings. In any event, the ld CIT(E) does not even whisper or even doubt that the said professional payments were made to the parties specified u/s 13(3) of the Act. Hence, drawing adverse inference on this account and rejecting the permanent registration u/s 12AB, in our considered opinion, is not in order. Other receipts shown which was found to be excessive by the ld CIT(E) when compared to that in the earlier two years - Since, the receipts were actually received during the FY 2022-23 in respect of services rendered earlier, the same were accounted in FY 2022-23. There is absolutely no dispute to the fact that the assessee is following cash system of accounting. Hence, adverse inference drawn by the ld CIT(E) for rejecting registration on this count, in our considered opinion, cannot be upheld. Payment of incentives expenses - Depending upon the number of treatments completed by him, incentives would be paid to him. These facts are evident from the appointment letter of Dr. Sandeep Saraf itself. In any event, both salary as well as incentive paid to Dr. Sandeep Saraf had been duly sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. Hence, in our considered opinion, surplus earning is not a sinful activity and in any manner does not hinder the concept of charity or charitable activities. Accordingly, the observations made by the ld CIT(E) in this regard are hereby dismissed as devoid of merit. Affiliation of nursing college has been cancelled and accordingly genuineness of the activity of the assessee is not established - The assessee society has been running the hospital with proper approvals from the competent authorities and cancellation of affiliation of nursing college would not in any way hamper the continuation of charitable activities of the assessee society in running the hospital. Hence, the genuineness of the activities cannot be doubted at all qua the hospital. This issue has already been addressed by us while giving out findings with regard to yet another query raised by the ld CIT(E) supra. Assessee had paid monthly rent to Kantialal Saraf HUF who happened to be related person u/s 13(3) - CIT(A) had not even bothered to bring comparable instances to drive home the point that the monthy rent paid by the assessee to Kantilal Saraf HUF is excessive or unreasonable. CIT(E) had not brought any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for provisional registration u/s 12A(1)(ac)(vi) of the Act on 11.03.2022 by filing Form 10A. Provisional registration was granted in Form 10AC for AYs 2022-23 to 2024-25 w.e.f. 18.03.2022. On 29.09.2023, the assessee filed Form 10AB for final registration u/s 12A(1)(ac)(iii) of the Act. 4. It is not in dispute that assessee had filed its return of income together with audit report in Form 10B and audited balance sheet. The assessee for the year ended on 31.03.2022 had stated that a sum of Rs. 66,51,422/- has been applied for charitable purposes during that year and had also set apart a sum of Rs. 96,87,641/- in terms of Section 11(2) of the Act to be applied in future. The various receipts derived by the assessee in the form of dialysis receipts, x-ray receipts, interest receipts etc were applied for meeting out the charitable activities and all these facts are evidenced from audited balance sheet as well as income and expenditure account for the years ended 31.03.2021, 31.03.2022 and 31.03.2023. On perusal of the detailed paperbook filed by the assessee from time to time, we find that the details of loans and advances given by the assessee were sought for and the same were duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the parties specified u/s 13(3) of the Act. Hence, drawing adverse inference on this account and rejecting the permanent registration u/s 12AB, in our considered opinion, is not in order. 6. With regard to other receipts shown in FY 2022-23 in the total sum of Rs. 4,46,24,430/- which was found to be excessive by the ld CIT(E) when compared to that in the earlier two years, it was explained that the hospital adopts cash basis of accounting and the receipts are accounted as and when they are actually received. Since, the receipts were actually received during the FY 2022-23 in respect of services rendered earlier, the same were accounted in FY 2022-23. There is absolutely no dispute to the fact that the assessee is following cash system of accounting. Hence, adverse inference drawn by the ld CIT(E) for rejecting registration on this count, in our considered opinion, cannot be upheld. 7. With regard to payment of incentives expenses of Rs. 10,80,000/- in FY 2022-23, it was explained that the same was paid to Dr Sandeep Saraf who is related person to the assessee society. Dr. Sandeep Saraf is a professional doctor and plays a crucial role in operating the hospital run by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the recognition for registration u/s 12AB of the Act. 9. With regard to the next query raised by the ld CIT(E) that seeking of details of salary paid during the last three financial years by the assessee, the entire details of the sum were duly furnished by the assessee before the ld CIT(E) by furnishing the ledger account and the name of the persons to whom payments were made. The assessee had also submitted comprehensive details of doctors and employees employed with the society during the FYs 2020-23 together with their designation in separate annexures before the ld CIT(E). Despite this, the ld CIT(E) states that no details of the employees and doctors were furnished by the assessee thereby doubting the genuineness of the expenses per se. We are unable to comprehend ourselves to accept to this observation of the ld CIT(E) for more than one reason:- a. The assessee had indeed furnished the complete details of employees and doctors together with their designations in a separate annexure before the ld CIT(E). b. In any event, this can never be a relevant consideration for the purpose of grant of registration u/s 12AB of the Act. c. The activities of running a hospital i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted. Even the provisions of section 11 to 13 permit earning of profit of 15% and in the event of any trust deriving profit in excess of 15%, then the Income Tax Act itself permits for accumulation in terms of section 11(2) of the Act to be utilized in future. Hence, in our considered opinion, surplus earning is not a sinful activity and in any manner does not hinder the concept of charity or charitable activities. Accordingly, the observations made by the ld CIT(E) in this regard are hereby dismissed as devoid of merit. 12. With regard to next query raised by the ld CIT(E) seeking copy of latest permission of running the hospital from the Government, the same was duly furnished by the assessee. The ld CIT(E) simply brushed aside the same and observed that affiliation of nursing college has been cancelled and accordingly genuineness of the activity of the assessee is not established. The assessee had duly clarified that the hospital has been operational over 20 years and nursing college was established in FY 2021-22. The assessee society has been running the hospital with proper approvals from the competent authorities and cancellation of affiliation of nursing college would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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