Ita/279/2017 Of Commissioner Of Income Tax (Exemptions), Chandigarh v. M/S Amardeep Educational Society, Amritsar

I.T.A. No. 279 of 2017 (O&M) IN THRE HIGH COURT OR PUNJAB AND HARYANA|WAT CHANDIGARH I.T.A. No. 279 of 2017 (O&M) Date of Decision:27.08.2018 The Commissioner of Income Tax (Exemptions), Chandigarh ....... Appellant )"*%+% M/s Amandeep Educational Society, Amritsar | ...... Respondent CORAM: HON'’BLE MR. JUSTICE AJAY KUMAR MITTAL, JUDGEHON'BLE MR. JUSTICE AVNEESH JHINGAN, JUDGEHON'BLE MR. JUSTICE AVNEESH JHINGAN, JUDGE Present:Mr. Denesh Goyal, Senior standing counsel —for the appellant.for the appellant. Mr. K.L. Goyal, Sr. Advoate withMr. Umang Goel, Advocate|for the respondent. 3333 AVNEESH JHINGAL, J. The Revenue (hereinafter referred to as ‘the appellant’) has filed the present appeal against the order dated 15.03.2016 passed by Income TaxAppellate Tribunal, Amritsar Bench, (for brevity ‘the Tribunal’) allowingthe appeal of the assessee and directing the Commissioner of Income Tax-](for brevity ‘CII") to grant the registration under Section 12AA of theIncome Tax Act, 1961 (for brevity ‘the Act’). ?DAccording to the appellant, following substantial questions oflaw arise for consideration in this appeal: (1) Whether on the facts and circumstances of the case, theorder of the ITAT is not perverse in holding that the CIThas not doubted the objects and genuineness of theactivities of the applicant and thereby directing to grantregistration to the applicant whereas the CIT had clearlyconcluded that the assessee-society was not doing anyorder of the ITAT is not perverse in holding that the CIThas not doubted the objects and genuineness of theactivities of the applicant and thereby directing to grantregistration to the applicant whereas the CIT had clearlyconcluded that the assessee-society was not doing any charitable work, an inference, based on the material onrecord? (ii) Whether on the facts and circumstances of the case, theorder of the ITAT is not perverse in directing CIT to grantregistration without actually addressing the objections ofthe CIT which led to the rejection of application forregistration?order of the ITAT is not perverse in directing CIT to grantregistration without actually addressing the objections ofthe CIT which led to the rejection of application forregistration? (111) Whether on the facts and circumstances of the case, theITAT was justified in directing the CIT to grantregistration on basis of incorrect finding of facts whichwere not relevant for the grant of registration?ITAT was justified in directing the CIT to grantregistration on basis of incorrect finding of facts whichwere not relevant for the grant of registration? (iv)Whether on the facts and circumstances of the case theITAT has erred in directing the registration to be accordedinstead of reverting it back for re-examination withoutitself commenting upon the genuineness of activities andtheir co-relation with the objects of the assessee-societyAITAT has erred in directing the registration to be accordedinstead of reverting it back for re-examination withoutitself commenting upon the genuineness of activities andtheir co-relation with the objects of the assessee-societyA (iv)Whether on the facts and circumstances of the case theITAT has erred in directing the registration to be accordedinstead of reverting it back for re-examination withoutitself commenting upon the genuineness of activities andtheir co-relation with the objects of the assessee-societyAITAT has erred in directing the registration to be accordedinstead of reverting it back for re-examination withoutitself commenting upon the genuineness of activities andtheir co-relation with the objects of the assessee-societyA 3,The assessee-society had been created mainly with the object ofdissemination of knowledge in the field of medical science. The assesseefiled an application under Section 12AA (1) of the Act, on 18.02.2014. TheCIT issued a show cause notice, to which the assessee filed reply. In thereply, the assessee reiterated the objects of the Society. It was further statedthat in furtherance of Clause 11 of the objects of the assessee-society, twodays of residential course on ankle and foot surgery was organized inAmritsar. It was further explained that the assessee-society charged Rs. onelakh as sponsorship fee from Amandeep hospital for sponsoring the twodays course. The said fee was received by cheque dated 30.05.2014.4The CIT vide order dated 22.08.2014 rejected the applicationfor registration under Section 12 AA (1) of the Act, on the ground that thework done by the society does not fall within the ambit of Section 2(15) ofthe Act. The CIT relied upon the fact that the assessee-society received asum of Rs.one lakh from Amandeep Hospital on 27.03.2014 and returned I.T.A. No. 279 of 2017 (O&M) the same amount to Amandeep Hospital on 31.05.2014 and no reasons weregiven for raising such a loan. Further, in the international conference heldby the assessee-society, in the invitation brochure, the invitation for theconference was given by some Parekh Family Foundation and AmandeepHospital and Clinics. 5 Aggrieved of the order, the assessee filed an appeal before theTribunal. The Tribunal allowed the appeal vide order dated 15.03.2016 anddirected the CIT to grant registration to the society. 6 We have heard learned counsel for the parties.TiLearned counsel for the appellant contended that the Tribunalerred in recording the finding that the loan taken by the assessee-societyfrom Amandeep Hospital was returned on the very next day. He furthercontended that the Memorandum of Association never empowered theSociety to raise any loan from any member or from any private institutionlike Amandeep Hospital. 8 On the other hand, learned counsel for the assessee argued thatthe object of the assessee is duly covered under Section 2(15) of the Act.The assessee is engaged in charitable activity and two days course was heldin furtherance of the object of the assessee. QOThe contentions raised by learned counsel for the appellant arenot well founded. The Tribunal has given a categorical finding to the effectthat the main object of the assessee is dissemination in the field of medicalscience and two days course was held in furtherance of the object of thesociety. Such a course was organised to make the attending Doctorsknowledgeable in the field of foot and ankle surgery. I.T.A. No. 279 of 2017 (O&M) 10,The relevant portion of the order of Tribunal is reproduced below: 8 On the other hand, learned counsel for the assessee argued thatthe object of the assessee is duly covered under Section 2(15) of the Act.The assessee is engaged in charitable activity and two days course was heldin furtherance of the object of the assessee. QOThe contentions raised by learned counsel for the appellant arenot well founded. The Tribunal has given a categorical finding to the effectthat the main object of the assessee is dissemination in the field of medicalscience and two days course was held in furtherance of the object of thesociety. Such a course was organised to make the attending Doctorsknowledgeable in the field of foot and ankle surgery. I.T.A. No. 279 of 2017 (O&M) 10,The relevant portion of the order of Tribunal is reproduced below: 7. "In the present case, neither the objects, nor thegenuineness of the activities of the assessee have beendoubted by the Id. CIT. The assessee-society was formedmainly with the objective of dissemination of knowledgein the field of medical science. It has not been disputedthat it was in furtherance of its avowed objects, inconsonance with clause 11 of the objects of the society;that it organized a two days residential course in ankle andfoot surgery in Amritsar. This course can by no means besaid to be not in furtherance of the assessee's object ofdissemination in the filed of medical science. Such acourse would obviously make the attending doctorsknowledgeable in the medical science filed of foot andankle surgery. The course was attended by almost 100doctors/delegates.genuineness of the activities of the assessee have beendoubted by the Id. CIT. The assessee-society was formedmainly with the objective of dissemination of knowledgein the field of medical science. It has not been disputedthat it was in furtherance of its avowed objects, inconsonance with clause 11 of the objects of the society;that it organized a two days residential course in ankle andfoot surgery in Amritsar. This course can by no means besaid to be not in furtherance of the assessee's object ofdissemination in the filed of medical science. Such acourse would obviously make the attending doctorsknowledgeable in the medical science filed of foot andankle surgery. The course was attended by almost 100doctors/delegates. 8. The assessee society charged Rs.1,00,000/- as sponsorshipfee from Amandeep Hospital for sponsoring the aforesaidcourse. The Ld. CIT has objected that it was the saidAmandeep Hospital which, alongwith one Parekh FamilyFoundation, which gave the invitation for the course(wrongly mentioned by the CIT as a 'conference') and thatonly the bank account of the assessee society was used toreceive fund from the delegates, PG students and foreigndelegates. The CIT has objected that no reason was givenfor raising the loan from Amandeep Hospital; that themethod of accounting of the society does not empower itto raise loans from any of its members or from institutionslike Amandeep Hospital.fee from Amandeep Hospital for sponsoring the aforesaidcourse. The Ld. CIT has objected that it was the saidAmandeep Hospital which, alongwith one Parekh FamilyFoundation, which gave the invitation for the course(wrongly mentioned by the CIT as a 'conference') and thatonly the bank account of the assessee society was used toreceive fund from the delegates, PG students and foreigndelegates. The CIT has objected that no reason was givenfor raising the loan from Amandeep Hospital; that themethod of accounting of the society does not empower itto raise loans from any of its members or from institutionslike Amandeep Hospital. 9. The Ld. CIT has noted that the loan of Rs.1,00,000/- fromAmandeep Hospital was received by the Society, bycheques, on 30.05.2014. The Ld. CIT has also himselfobserved that this amount was returned on the very nextdate. i.e. on 31.05.2014. That being so, there remained noamount with the assessee-society.|Amandeep Hospital was received by the Society, bycheques, on 30.05.2014. The Ld. CIT has also himselfobserved that this amount was returned on the very nextdate. i.e. on 31.05.2014. That being so, there remained noamount with the assessee-society.| 10. Apropos the funds received by the Society from thedelegates, PG students and foreign delegates, these fundshave not been observed by the CIT to have been taken bydelegates, PG students and foreign delegates, these fundshave not been observed by the CIT to have been taken by I.T.A. No. 279 of 2017 (O&M) the society as loans. The Id. CIT has not pointed outanything precluding the society from receiving the funds.11. The Id. CIT has observed that the society has utilized itsfunds for the benefit of interested persons. However, as tohow this is so, has not been elaborated." 11.Learned counsel for the appellant contended that the Tribunalhad erred in accepting the appeal of the assessee after holding that the loanwas returned on the very next day. According to the learned counsel, thisfact was a pointer towards non-genuineness of the activities of the assessee,It has not been disputed that the loan was received by the assessee-societythrough cheque and the amount was returned back to Amandeep Hospital.Though CIT recorded that the sum was received on 27.03.2014 and wasreturned on 31.05.2014, whereas the Tribunal held that the amount wasreceived on 30.05.2014 and returned on 31.05.2014. The important aspect isthat no amount remained with the assessee-society. The sum received fororganizing the two days course was returned by the assessee-society. Thegenuineness of the transaction was never doubted, 12.The objection of the revenue that the society could not haveraised a loan is not sustainable, as the amount was returned back and noamount remained with the society. The objects of the assessee-trust havebeen found to be charitable. The registration to the assessee by the CITcannot be denied on mere suspicion and conjectures. No fault can be foundin the order of the Tribunal directing the grant of registration to theassessee-trust. It is further clarified that in case, subsequently, the revenue isSatisfied that the activities of assessee-trust are not for charitable purpose,the department can always initiate action for cancellation of registrationunder Sub Section (3) of Section 12 AA of the Act, I.T.A. No. 279 of 2017 (O&M) 13,The order of the Tribunal warrants no interference. No error hasbeen pointed out in the findings recorded by the Tribunal much less shownto be perverse. No substantial question of law arises. The appeal is, accordingly, dismissed.| (AJAY KUMAR MITTAL) JUDGE 27.08.2018Tee N (AVNEESH JHINGAN)JUDGE Whether speaking/reasonedWhether Reportable: Yes/NoYes/No