The Commissioner Of Income Tax (Exemptions), Chandigarh v. M/S Ujjagar Singh Aulakh Memorial Trust

ITA-488-2018 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-488-2018 Date of Decision: 27.3.2019 The Commissioner of Income Tax (Exemptions), Chandigarh Versus ....Appellant. M/s Ujjagar Singh Aulakh Memorial Trust ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL. PRESENT: Mr. Denesh Goyal, Senior Standing Counsel,for the appellant.for the appellant. *** AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the revenue under Section 260Aof the Income Tax Act, 1961 (in short “the Act”) against the order dated12.4.2018 (Annexure A-2) passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITANo. 364/(Asr)/2017, claiming the following substantial questions of law:- (i)Whether on the facts and circumstances of thecase, the ITAT has erred in directing theregistration to be accorded instead of reverting itback for re-examination in the light of judgment ofthe Hon'ble Allahabad High Court in appeal No.112 of 2013 in the case of CIT, Meerut Vs. M/scase, the ITAT has erred in directing theregistration to be accorded instead of reverting itback for re-examination in the light of judgment ofthe Hon'ble Allahabad High Court in appeal No.112 of 2013 in the case of CIT, Meerut Vs. M/s A.R. Trust, Meerut, wherein it was held that theTribunal could have ordered for setting aside theorder of Registering Authority refusing registrationbut it could not have directed for registrationstraight away inasmuch as there has to besatisfaction recorded by the Registering Authoritywhich was lacking? (ii)Whether on the facts and circumstances of thecase, the Hon'ble ITAT was correct in disregardingthe fact that the activities of the trust wereintricately linked with the hospital, which werebeing run separately on commercial basis andseemingly was a method for creating goodwill forthe hospital run on commercial principles?case, the Hon'ble ITAT was correct in disregardingthe fact that the activities of the trust wereintricately linked with the hospital, which werebeing run separately on commercial basis andseemingly was a method for creating goodwill forthe hospital run on commercial principles? (iii)Whether on the facts and circumstances of thecase, the Hon'ble ITAT was correct in disregardingthe fact that the receipts of the applicant trust werethrough donations from author and trustee andabout 86% of the total receipt had been spentunder the head “Ujjagar Singh Aulakh Hospital”apart from the other heads of expenditure ofgeneral nature?case, the Hon'ble ITAT was correct in disregardingthe fact that the receipts of the applicant trust werethrough donations from author and trustee andabout 86% of the total receipt had been spentunder the head “Ujjagar Singh Aulakh Hospital”apart from the other heads of expenditure ofgeneral nature? (iv)Whether on the facts and circumstances of the casethe Hon'ble ITAT was correct in disregarding thefact that the applicant society did not produced anyevidence in support of reimbursement of visitingthe Hon'ble ITAT was correct in disregarding thefact that the applicant society did not produced anyevidence in support of reimbursement of visiting ITA-488-2018 -3- fees to the 'Ujjagar Singh Aulakh Hospital'? (v)Whether on the facts and circumstances of thecase, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, perverse?case, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, perverse? (iv)Whether on the facts and circumstances of the casethe Hon'ble ITAT was correct in disregarding thefact that the applicant society did not produced anyevidence in support of reimbursement of visitingthe Hon'ble ITAT was correct in disregarding thefact that the applicant society did not produced anyevidence in support of reimbursement of visiting ITA-488-2018 -3- fees to the 'Ujjagar Singh Aulakh Hospital'? (v)Whether on the facts and circumstances of thecase, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, perverse?case, the order of the Appellate Tribunal iscontrary to the evidence and material on the recordof the case and, therefore, perverse? 2.Briefly stated, the facts necessary for adjudication of the instantappeal as narrated therein may be noticed. An application in Form 10A wasfiled before the Commissioner of Income Tax (Exemptions) [for brevity“the CIT(E)”] on 26.9.2016 for registration under Section 12AA of the Act.The CIT(E) vide order dated 28.3.2017 (Annexure A-1) rejected the saidapplication holding that the immovable property of the hospital was ownedby one of the trustees, namely, Shri Joginder Singh Aulakh and since thefinancial year 2013-14, Dr. Sukhmanpreet Kaur Aulakh, one of the trustees,is running clinic in Shri Ujjagar Singh Aulakh Hospital and the trust wascreated later on 1.4.2015 primarily to arrange funds for the payments to thespecialist doctors visiting the hospital. Further, it was observed that all thethirty two letters were handwritten by the same person and were dated from13.4.2016 to 10.2.2017 which had been framed to cover the queries raisedon the relationship between the assessee-Trust and the hospital as no otherevidence in support thereof was furnished. Similarly self-generated lettershad been submitted by the trust for the year 2015-16 detailing list of patientswho got treated in the hospital which had not been evidenced by furtherconfirmations from the beneficiaries or the doctors. It was further held thatthere was an intricate link between the assessee and the hospital which wasbeing run separately on commercial basis, admittedly not having anyexemption and the evidence qua the fees given to the assessee and the free ITA-488-2018 -4- treatments were self-generated and not confirmed by the beneficiaries of thetrust or the doctors. The CIT(E) rejected the registration under Section12AA of the Act that neither the objects have been pursued nor the activitiesof the trust got corroborated. Feeling aggrieved by the order, Annexure A-1, the assessee filed an appeal before the Tribunal. The Tribunal vide orderdated 12.4.2018 (Annexure A-2) allowed the appeal and directed the CIT(E)to grant registration under Section 12AA of the Act to the assessee. Hence,the present appeal. 3.After hearing learned counsel for the appellant, we do not findany merit in the appeal. ITA-488-2018 -4- treatments were self-generated and not confirmed by the beneficiaries of thetrust or the doctors. The CIT(E) rejected the registration under Section12AA of the Act that neither the objects have been pursued nor the activitiesof the trust got corroborated. Feeling aggrieved by the order, Annexure A-1, the assessee filed an appeal before the Tribunal. The Tribunal vide orderdated 12.4.2018 (Annexure A-2) allowed the appeal and directed the CIT(E)to grant registration under Section 12AA of the Act to the assessee. Hence,the present appeal. 3.After hearing learned counsel for the appellant, we do not findany merit in the appeal. 4.The Tribunal had noticed that the poor patients were beingtreated at the hospital and the said fact was supported from the list of thepatients and the CIT(E) was not required for further confirmation from thebeneficiaries of the trust. During the financial year 2015-16, the trust was atnascent stage having received donations of ` 1,12,000/- only and maximumof ` 1,03,250/- which had already been utilized for the charitable purposesas was clear from the visiting fees paid to various doctors for giving freeconsultations/treatments which was not even controverted by the revenue.Further, the trust was created on 1.4.2015 and the application forregistration under Section 12AA of the Act was filed on 26.9.2016. It wasfurther noticed that the assessee does not have much funds at the initialstage to pursue its objects, however, some of the objects, i.e. treatment ofpoor and weaker sections of the society, irrespective of their caste or creedand religion, were undertaken by the assessee and the reasoning of the CIT(E) that neither the objects seemed to have been pursued nor the activitiesGURBACHAN SINGHof the trust got corroborated cannot be considered as logical reasoning.2019.04.25 12:44I attest to the accuracy andintegrity of this document ITA-488-2018 Accordingly, the Tribunal directed the CIT(E) to grant registration to theassessee under Section 12AA of the Act. The relevant findings recorded bythe Tribunal read thus:- “5.We have heard the parties and perused the materialon record, which includes details of visiting fees paidthrough cheques to different specialist doctors during thefinancial year 2015-16, which is not in controversy andlist of the patient also supports the assessee case that thepoor patients are being treated at the hospital, therefore,we have failed to understand as to what evidences, theLd. CIT(E) required for further confirmation form thebeneficiaries of the trust. In the instant case, the objects of the trust are notin controversy which is first consideration for grant ofregistration u/s 12AA of the Act. Secondly, the trust is atnascent stage and during the Financial Year 2015-16having received donation to the extent of ` 1,12,000/-only and maximum of ` 1,03,250/-, which has alreadybeen utilized for the charitable purposes as it reflectsfrom the visiting fees paid to various doctors for givingfree consultations/treatments, which even otherwise notrefuted by the Revenue Department and aforesaid factsfavours the pursing of objects. Considering the facts andcircumstances that the applicant trust has been formedonly first day of April, 2015 which certainly is at nascentstage and application for registration u/s 12AA was filed -6- In the instant case, the objects of the trust are notin controversy which is first consideration for grant ofregistration u/s 12AA of the Act. Secondly, the trust is atnascent stage and during the Financial Year 2015-16having received donation to the extent of ` 1,12,000/-only and maximum of ` 1,03,250/-, which has alreadybeen utilized for the charitable purposes as it reflectsfrom the visiting fees paid to various doctors for givingfree consultations/treatments, which even otherwise notrefuted by the Revenue Department and aforesaid factsfavours the pursing of objects. Considering the facts andcircumstances that the applicant trust has been formedonly first day of April, 2015 which certainly is at nascentstage and application for registration u/s 12AA was filed -6- on 26.9.2016 and the assessee trust do not have muchfunds at the initial stage to pursue its objects, however,from the records available in file, we do not have anyhesitation to say that some of the stated objects vis-a-vistreatment for poor and weaker sections of the society,irrespective of their caste or creed and religion, havealready been pursued by the applicant trust, therefore, themain reason for rejection of the registration as given bythe Ld. CIT(E) that neither the objects are seems to havebeen pursued nor the activities of the trust gotcorroborated, have no substance and cannot beconsidered as logical reasoning. Hence the orderimpugned herein is perverse, improper and illogical andliable to be set aside. On the aforesaid consideration and observation, weset aside the order passed by the Ld. CIT(E) and directthe Ld. CIT(E) to grant registration u/s 12AA of the Actto the appellant society, henceforth, however, the grant ofregistration can be subjected to condition, if any, whichthe Ld. CIT(E) deems fit and proper under the law.” 5.In view of the above, no error could be pointed out by learnedcounsel for the revenue in the findings recorded by the Tribunal which maywarrant interference by this Court. No question of law, much less,substantial question of law arise in the appeal. Consequently, finding nomerit in the appeal, the same is hereby dismissed. Needless to say, it shallbe open for the revenue to initiate action under sub-section (3) to Section ITA-488-2018 12AA of the Act for withdrawal/cancellation of the registration grantedhereinabove, in case it comes to the notice of the revenue that the activitiesundertaken by the assessee are not genuine or are not being carried out inaccordance with the objects of the trust or Institution or are not charitable innature in terms of the provisions of the Act.