The Commissioner Of Income Tax v. Paramount Charity Trust

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 1035 of 2018 =============================================================THE COMMISSIONER OF INCOME TAXVersusPARAMOUNT CHARITY TRUST ============================================================= Appearance : Mrs MAUNA M BHATT, Advocate for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHIandHONOURABLE Mr. JUSTICE B.N. KARIA21[st] August 2018 ORAL ORDER(PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for short] dated 27[th] February 2018, raising following question for our consideration : “Whether the Appellate Tribunal is justified in allowing registration to the assessee disregarding the fact that the assessee trust is not a charitable organization, as the Trust has not fulfilled the conditions laid down for registration in Section 12AA of the Act, 1961 and Rule 17A of the Income Tax Rules, 1962 ?” The respondent, a registered public trust, had applied for and was granted registration under Section 12A of the Income-tax Act, 1961 [“the Act” for short]. Initially, the object of the Trust had eleven clauses which inter alia included education purpose; research; relief to poor; medical aid in form of donations to the hospitals, dispensaries, convalescent homes, asylums, nursing homes and other public institutes for administering medical relief to the poor and to organize relief works in normal times as well as during natural catastrophes. The trust deed authorize the trustees to amend the objects as long as the same were for public charitable purpose. This trust deed was amended so as to include providing all kinds of medical, diagnostic, family welfare and general health facilities and treatment to the patients, in the field of allopathy, Homeopathy or Ayurved, without any distinction of castes, creed, race, religion or language basis, either on free of charge or no profit basis. Yet another object added was to buy, acquire, hire, take on lease, import medical or diagnostic machineries and equipments to run a hospital, dispensary, maternity home, etc. It was provided that such diagnostic treatment center would be providing service either on free of charge or no profit basis. The Commissioner was of the opinion that insertion of these clauses were not informed to him and they mutilated the charitable objects of the trust. On such basis, he proposed to cancel the registration in exercise of powers under Section 12AA of the Act. He eventually passed an order cancelling the registration. In the process, he rejected the assessee’s contention that the existing clauses already enable the Trust to open diagnostic center and that therefore, there was no deviation from the charitable objects. He concluded that by no stretch of imagination, the existing objects would cover “providing medical diagnostic center ”. In appeal, the Tribunal reversed the contention of the Commissioner. By the impugned judgment, Tribunal was of the opinion that non communication of the amendment in the trust deed was a mere irregularity and would not be a ground for cancellation of registration already granted. The Tribunal did not agree with the Commissioner that running of a diagnostic center was a commercial venture. The Tribunal also held that the existing objects sufficiently cover the purpose also. In appeal, the Tribunal reversed the contention of the Commissioner. By the impugned judgment, Tribunal was of the opinion that non communication of the amendment in the trust deed was a mere irregularity and would not be a ground for cancellation of registration already granted. The Tribunal did not agree with the Commissioner that running of a diagnostic center was a commercial venture. The Tribunal also held that the existing objects sufficiently cover the purpose also. We are in broad agreement with the view of the Tribunal. We have noted existing objects as well as those which were added by an amendment in the trust deed. The objects in the original trust deed were sufficiently wide and cover range of charitable activities relateable to education, medical aid and help to poor in times of calamities. The existing objects would have enabled the Trust to support the diagnostic center as long as it was done for charitable purpose. The amended objects clarify that such center would be run on no charge, or at any rate on no profit basis. It is difficult to see how the Commissioner thought such center would be a commercial venture. In the result, Tax Appeal is dismissed. Prakash [Akil Kureshi, J.][B.N Karia, J.]