TaxTMI 
TaxTMI 
2013 (12) TMI 1542
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....A) deserves to be deleted. iii. That the CIT(A) was not justified in treating Rs. 10 crores received by the assessee during the year out of the total Rs. 25 crores as assistance received from the Central Government as income as the same was clearly a loan granted by the Central Government. iv. That the CIT(A) was not justified in sustaining the disallowance of Rs. 1004252/- out of Rs. 1098101/- made by the A.O. on account of running of vehicles on the on the ground that expenditure was excessive and not for the purpose of the Trust. v. The order of the CIT(A) and A.O. is against law and facts of the case. 2. Grounds of appeal raised by the Revenue in I.T.A. No. 515(Asr)/2009 are as under: i. That the learned Commissioner of Income Tax(Appeals) has erred in restricting the disallowance at Rs. 10,04,252/- out of total disallowance of Rs. 10,98,101/- made on account of expenditure of vehicle. ii. That the learned Commissioner of Income Tax(Appeals) has erred in restricting the addition at Rs. 6.5 crore out of total addition of Rs. 25 crore made on account of capital receipts which was claimed exempt by the assessee firm. iii. Th....
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.... the purpose of formation of society/trust and above all its registration under the Income Tax Act, 1961 by the CIT, Chandigarh. The Assessing Officer held that the trust is not eligible for exemption under Section 11 of the Act for the year under assessment. The Assessing Officer, in para no. 4 at page 3, confronted with the newspaper's report dated 20.12.2008 in the Hindustan Times of 21.12.2008, in which the opposition parties led by Congress asked Chief Minister Sh. Prakash Singh Badal to justify the decision to strike a "lease out deal" despite the Punjab Institute of Medical Sciences' (PIMS) capacity to generate Rs. 350 crore on its own. The Assessing Office reproduced the news item at page no. 4 and 5 of the assessment order and asked the assessee for its defence on 26.12.2008 at 11 a.m. The Assessing Officer thoroughly examined the reply filed by the assessee on 19.12.2008 by distinguishing the citation cited by the assessee in its reply and was of the view that whether there is a sincere move in the direction of the main objects contained in clause 3.i.a to 3.i.t of the MOA-attainment of which will follow as a result of such sincere moves/karam- has been made and executed.....
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....s of Rs. 20,84,373.76/- for the period from 10.10.94 to 31.03.05 on account of non-furnishing of required information by the assessee. In the end, the Assessing Officer has held that the assessee-trust has not applied any part of the income of the year for charitable purposes and as such does not deserve exemption of its income for the year under assessment and he rejected the claim of the assessee and initiated the proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income for the assessment year in dispute and made the addition of Rs. 1,72,80,372/- for interest income; Rs. 36,282/- for other receipts; Rs. 25,00,00,000/- for capital receipts; Rs. 1,00,00,000/- for excess deposits with Capital Local Area Bank, Jal; and Rs. 10,98,101/- for expenses on vehicles; totaling Rs. 27,84,14,760/- and completed the assessment under Section 143(3) of the Act on 30.12.2008. 5. Aggrieved by the assessment order dated 30.12.2008, the assessee filed an appeal before learned CIT(A), Jalandhar, who vide impugned order dated 25.09.2009, partly allowed the appeal. Now, the assessee being aggrieved with the impugned order, filed the present appeal i.e. I.T.A. No.....
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.... available on page no. 7 of the Paper Book. iii. The assessee has been filing its return of income in the status of a Registered Charitable Trust at Nil income which has been accepted by the department till Assessment Year 2006-07 which is the year under appeal. iv. Thus the main objective of the Trust was to establish 500 bedded hospital and Medical College for 100 students for which the Government transferred land measuring 104 Acres and 5 Kanals to the Society after paying compensation of Rs. 15 Crores to Pb. Agriculture University. The construction of the hospital started in the year 2001. 3. While framing the assessment the A.O. in para 2 of page 3 has given a finding that since the Trust has only been carrying on construction of the building although the same is charitable in nature but since construction was going on for a long period, therefore he held that the trust was not eligible for exemption u/s 11 for the year under assessment. Thus he tried to interfere into the registration granted by the CIT to the Trust as a Charitable Trust. 4. In para 3 & 4 on pages 3,4,5 & 6 of the assessment order the A.O. has reproduced certain newspaper r....
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....uliar fact is that the A.O. has admitted that the objects for which the society is established are to establish land carry on the administration and management of PIMS Jalandhar. Further, he has referred to the various charitable function of the society in his comments. The rejoinder to A.O.'s comments was also filed by the assessee which have been reproduced by the CIT(A) in para 2.3 to 2.14 on page 13 to 16 of the CIT(A) order. 8. The CIT(A) has given his findings in this regard on page 18 of his order and has given a clear finding that once a Commissioner has granted a registration u/s 12AA by looking into the objects of institutions and its genuineness of activities the institution is eligible of exemption u/s 11. He further relied on the order of the Hon'ble Supreme Court in ACIT Vs. Surat City Gymkhana, reported in 300 ITR 214 (copy enclosed) Page No. 33 to 35 which was cited before him by the assessee in this regard and thereafter in the law lines of para 3.2 he gave a finding that: "The Hon'ble Supreme Court has also held in the case of ACIT Vs. Surat City Gymkhana 300 ITR 214(SC) that registration u/s 12A was fait accompli to hold the A.O. back fr....
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....11 of the Act and it is entitled to exemption u/s 11(1A) in respect of the expenditure incurred for construction of the institute of building. 11. The learned DR had argued that as per the newspaper report mentioned in assessment order the order of the A.O. deserves to be sustained, in this regard it is submitted that the A.O. himself has admitted in his order that no cognizance is being taken by him on these newspaper reports. Hence neither the DR nor the bench can take the cognizance of the newspaper report reproduced by him. Further, the DR has argued that in the subsequent year after the completion of the settling up of the college and hospital it was given to another society for running it on public private partnership basis, therefore exemption of the income should not be granted. In this regard it is submitted that firstly the subsequent events cannot be taken into consideration in the year under appeal because the only question disputed by the department is that firstly the trust does not deserve registration which has been granted by the CIT and secondly the amount spent on the construction of the institution does not amount to applying the funds for charitable ac....
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....pheld/made this addition of Rs. 6.50 crores without appreciating the provisions of the law. If you go through the provisions of sec. 13 it clearly states that nothing contained in sec. 11 or sec. 12 shall operate so as to exclude from the total income of the previous year in receipt thereof- Further sub sec. 13(1)(d) also states that in the case of a trust for charitable and religious purposes, any income thereof if for any period during the previous year. ii. Any funds of trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in sub section (5) of sec. 11 continue to remain so invested or deposited after the 30th day of November 1983. Further sec. 11(1) provides that subject to the provisions of sec. 60 to 63 the following incomes shall not be included into the total income of the previous year of the person in receipt of the income. In clause (d) income in the form of voluntary contribution made with a specific direction that they shall form part of the corpus of the trust/institution. From the above it is very clear that in order to apply the provi....
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....wards the provisions of section 164(3) third proviso which states that in a case where the whole or any part of the relevant income is not exempt u/s 11 or section 12 by virtue of the provisions contained in clause(c) or clause (d) of sub-section (1) of section 13 tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. Hence in case of tax was to be levied at the most it could have been levied on the interest income generated on the FDR of Rs. 6.50 crores and in this regard your kind attention is drawn towards the following judgments: 34 ITD 489(Bombay)(Page 30 to 33 compendium of judgment) 249 R 533(Bombay) (Page 34 to 39 compendium of judgment) v. That even otherwise the Hon'ble Supreme Court in the following judgments has held that 85% of the income is to be applied for charitable purposes and assessee is allowed to accumulate balance 15% as free income without any restrictions and the same can be invested in any mode. 230 ITR 636 (Page 1 to 8 of compendium of judgment) 216 ITR 697 (Page 40 to 51 of compendium of judgment) In view of the above submissions ground no. 1,2,3 of th....
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....It is pertinent to recall a very pertinent observation made by the learned CIT(A) that "I am of the view that the disallowance has been made correctly by the A.O. to a large extent". But then the learned CIT(A) had held that the expenditure on car for the director of Institute and for the staff is held to be allowable being reasonable in quantum and being for the purpose of setting up the assessee's institute. It is submitted that the assessee has brought nothing on record that the use of these vehicle by the Director of Institute and the staff had been for the purpose of the assessee's business. Simply because the vehicles have been used by Director of staff, it does not mean that the expenditure has been used for the assessee's objectives. In this regard, it is further submitted that the assessee's registration granted under Section 12AA(3) has been cancelled by the worthy CIT-II, Jalandhar vide his order 24.10.2013 with retrospective effect from the assessment year 2004-05 (Copy enclosed marked as Annexure-A). Thus, this expenditure was not admissible as expenditure as the assessee had done no business during the year besides the assessee's failure to bring on record any evidenc....
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....t registration granted to the assessee has been withdrawn by the Worthy CIT w.e.f. assessment year 2004-05 and construction of institute building assumes the colour of capital expenditure. Ground No. 504/ASR/2000: This is assessee's appeal. Ground-wise submissions are made hereunder: Ground No.1: This ground has become infructuous after the withdrawal of registration by the worthy CIT-II, Jalandhar w.e.f. assessment year 2004-05 (supra). Since registration has been withdrawn, the issue of investing the funds in modes as specified in section 11(5) of the Income Tax Act is not relevant. Therefore, this ground deserves to be rejected in limine. Ground No. 2: In the light of the learned CIT(A) finding that the assessee had been treating Additional Central Assistance as part of its income and seeking its accumulation under Section 11(2) of the Income Tax Act, 1961, it is clearly proves that the assessee has been treating the Assistance as its income and as such the assessee cannot claim in contravention of its own history that it is now a capital receipt. Ground No. 3: This ground is not maintainable in the light of the observation of the lea....
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....ubmissions filed by the DR in the abovesaid appeals he heavily relied upon the order of the Commissioner of Income Tax-II, Jalandhar, dated 24.10.2013 wherein the registration granted to the assessee on 06.04.1994 u/s 12Aa was cancelled u/s 12AA(3). In this regard it is submitted as following: i. The assessee was granted registration u/s 12Aa in the year 1994 as admitted by CIT in his order dated 24.10.2013 w.e.f. 6.4.1994. On the other hand, section 12AA was inserted by the Finance Act No. 2, 1996 w.e.f 1.4.1997 and section 12AA(3) was inserted by Finance Act No. 2, 2004 w.e.f. 01.10.2004. The registration granted to the trust could only be cancelled w.e.f. 01.10.2004 in respect of registration granted u/s 12AA. It is pertinent to mention here and admitted by CIT that registration to the trust has been granted u/s 12Aa w.e.f. 6.4.1994 and hence it could not be cancelled u/s 12AA(3) till 1.6.2010 when Finance Act 2010 made the amendments in section 12AA(3) and covered even the registration granted u/s 12Aa w.e.f. 1.6.2010. Hence without going into the merits of the order of CIT passed u/s 12AAA(3) it is very clear that the registration granted to the assessee trust could n....
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....gainst the law of natural justice and not permissible under law. I.T.A.T. cannot comment on the order without hearing the appeal against that order and without giving opportunity to the assessee for commenting on that order. Conclusion: It is once again reiterated that the assessee was granted registration which was in force during Assessment year 2006-07 and therefore the merits of the case for 2006-07 are to be decided in the light of the fact that registration was granted to the assessee trust during the year under consideration. For Punjab Institute of Medical Sciences Sd/- Y.K. Sud CA Counsel for the assessee 26.11.2013" 10. We have heard both the parties and perused the documentary evidence filed by both the parties as well as the orders passed by the revenue authorities. In the first paper book filed by the learned counsel for the assessee, includes Copy of Written Submissions dated 13.03.2009 filed before the CIT(A) with Annexures (page nos. 1 to 11); Copy of comments of the A.O. to the submissions, dated 20.03.2009 (page nos. 12 to 20); Copy of replication to the comments of A.O. dated 21.04.2009....
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.... Revenue within one month from the date of receipt of certified copy of the order. This office has received the certified copy of the order of Hon'ble High Court on 05.12.2013 vide receipt no. 2125 dated 05.12.2013. 13. It is pertinent to mention here that this Bench has already concluded the argument of learned counsel for the assessee on 28.10.2013 and adjourned the matter for 26.11.2013 on the request of learned DR for his argument. On 26.11.2013, learned DR argued the matter at some length and filed his written submission, in which he has mainly stated that the issue raised by the assessee in the present appeal has become infructuous because learned CIT-II, Jalandhar, vide order dated 24.10.2013, rejected the registration granted to the assessee under Section 12AA(3) of the Act w.e.f. assessment year 2004-05. We have also perused the order dated 24.10.2013 passed by CIT-II, Jalandahar, under Section 12AA(3) of the Act. Copy of the written submission of learned DR, dated 26.11.2013 along with the order dated 24.10.2013 passed under Section 12AA(3) of the Act in the case of assessee, was given by the Bench to the learned counsel for the assessee and he requested that this ....
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....t as the accumulation of income and application of income is from commercial income of the society. The assessee also made it clear in the reply dated 19.12.2008 that the word "income" used in Section 11(1)(a) of the Act does not contain the same meaning as has been assigned to the word "total income" in Section 2(45) of CBDT, Circular No. 5, dated 19.06.1968 and the income of the trust means books income i.e. income in the commercial sense, without reference to the heads of income specified in Section 14. (i) The assessee further stated in the reply dated 19.12.2008 that the medical college of the assessee is still under construction and project implementation stage, the desired staff is still under consideration for recruitment and admission can be made only when project is fully implemented and cleared by MCI. It is wrong to say that none of the objects has been achieved during the year. The building is under construction and completion of the project is under consideration. Even construction of building for the society is part of charitable purpose. In reply to the point raised in D-1, the assessee stated that there is no doubt that the running of medical college and othe....
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....bjects of the trust into such chamber was-perhaps-not the purpose of formation of society/trust and above all its registration under the I.T. Act, 1961 by the C.I.T. Chandigarh." 16. No doubt, the Assessing Officer has referred some news paper report dated 20.12.2008 published in Hindustan Times on 21.12.2008 but the Assessing Officer has not used this report against the assessee, these were only for completing the assessment. 17. The Assessing Officer thoroughly considered the reply dated 15.12.2008 and 19.12.2008 filed by the assessee, and again raised some queries vide notice dated 24.12.2008 giving opportunity to the assessee for reply on 26.12.2008. In response to the same, the assessee-trust has filed a detailed reply dated 26.12.2008 regarding details of term deposit with the bank as on 31.03.2006 amounting to Rs. 6,50,00,000/- as well as the expenditure incurred during the financial year 2005-06; and a copy of some orders of Hon'ble Punjab and Haryana High Court, in support of its claim. 18. Assessing Officer held that the explanation given by the assessee along with the case laws cited by the assessee are not helpful to the assessee and finally held at page 10....
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.... affairs of the trust for the period of 10.10.1994 up-till the start of construction in the year 2002. It is pure case of "God proposes and man disposes". After all, such a project of "awe-inspiring, holistic objects and of divine magnanimity can only be ordained by God Himself" and the same stands disposed by man. There is paucity of words to express the true state of affairs going on from 10.10.94 to 31.03.2006 in the administration of the assessee trust. Perhaps, there is no need. 9. During the year under assessment expenses of Rs. 10,98,101/- have been incurred on running of vehicles as compared to total expenses of Rs. 2084373.76 for the period from 10.10.94 to 31.03.05. As to who travelled in the vehicles, what purposes was served of the assessee trust etc, the information has not been furnished by the assessee. Only figures of amounts of R.C. No. - wise expenses of the cars have been given on a paper. These expenses are disallowed. Penalty proceedings u/s 271(1)(c) are initiated on this issue for furnishing inaccurate particulars of income. The assessee trust/society has not applied any part of the income of the year for charitable purposes and as such does....
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....sr)/2009 against the deletion of aforesaid additions, for which the details have been mentioned in the grounds of appeal filed by both the parties. 20. After going through the impugned order, we are of the view that learned CIT(A) has concluded the issue in dispute in para nos. 3 to 4.9 at page nos. 16 to 22, which are reproduced as under: 3. I have considered the rival submissions carefully and perused the assessment record. I have asked for information from the appellant about the activities undertaken by it since its inception, the contracts awarded by it, etc. A copy of the all the information submitted by the appellant has been forwarded to the A.O. as and when received for his examination and comments if any. It is apparent from the assessment order and subsequent submission made by the A.O. that he has made the addition on the ground that the assessee was not taking action to attain its ultimate object of providing medical services to the intended beneficiaries. He has taken support from the fact that even though trust was set up on 10.10.94 constructions of the Institute building started only in or around the year 2002 and even thereafter, the construction has n....
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....at 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" Section 13(1) of the Act lists the conditions under which the exemption to the whole or part of the income of the trust or institution will not be allowed. 3.2 Section 11 of the Act grants exemption to trusts and institutions in respect of their income to the extents that the income is applied for charitable purposes. The necessary conditions for grant of the exemption u/s 11 are as under: a) Income should be derived from property held under trusts for charitable or religious purpose; b) Such income is applied to such purposes in India. c) The trustee or institution is registered u/s 12AA. d) The surplus of income of expenditure should be invested in specified assets; e) Income in the form of voluntary c....
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....has been applied for the stated charitable or religious purposes and if there is an excess over 15% of the income not so applied, then whether the other conditions for allowing deduction of the unspent amount have been fulfilled. For this proposition, I draw support from the decision in the case of Madhya Pradesh Madhyan Vs. CIT 256 ITR 277 (MP) in which it has been held that once registration has been granted u/s 12A, IT authorities were bound by the same. The Hon'ble Supreme Court have also held in the case of ACIT vs. Surat City Gymkhana 300 ITR 214 (SC) that registration u/s 12A was a fail accompli to hold the A.O. back from further probe into the objects of the Trust. Considering the facts of the case and the decisions discussing above, I hold that the A.O. is precluded from examining the eligibility of the trust or institution for exemption u/s 11, though he may examine if the income has been applied for charitable purposes. 3.3 The A.O. may and should examine during assessment if any of the conditions of section 13 were attracted so as to deny exemption to the assessee in full or part of its income. The Assessing Officer has not invoked section 13 in the assessm....
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.... Clause 3(ii) of the MOA lists the functions of the society. The relevant portions have been extracted in the A.O.'s submission above (para 2.2). The Society is registered with the Registrar of Societies vide registration dated 10.10.1994. 4.2 It is the appellant's contention that setting up of the Institute was an object of the Society which was registered u/s 12AA and construction of the building was in accordance with this object; hence, the income was being applied for charitable purposes and was therefore exempt. I do not accept this contention about the "objects" of the Society. Construction of building cannot, by itself, be a charitable activity. The definition of charitable activity in section 2(15) of the IT Act is as under: "(15) "charitable purpose" includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility: Provided that....(nor relevant for our purpose); Thus, construction of a building for achieving charitable purposes cannot be a charitable activity in itself u/s 2(15). However, since the Society has been created to set up the Institute, which would provide medical education, an....
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.... to appoint a Director of the Institute on contract basis. The Director was appointed and the Society was registered in 1994. A sum of Rs. 3 crores was granted by the State Govt. to PIMS. In 1996 an architect consulted was appointed to prepare the master plant. In 1997 the Prime Minister announced Additional Central Assistance(ACA) of Rs. 25 crores under the scheme of 100% centrally sponsored schemes of the 9th five year plan Rs. 7.50 crores was received on 23.01.1998; Rs. 7.50 crores was received on 5.5.2000 and the balance Rs. 10 crores was received on 10.03.2006. In 1997 itself, 60.77 acres land was purchases from PAU by PIMS for Rs. 3 crores to set up the medical college and hospital. In 1998 an agreement was made with a contractor to construct an initial building to be used to accommodate some departments of the institute and hospital. The building was completed in 2000. In October, 1999, a master plan of Rs. 80 crores was approved and process of selecting a contractor was started. The plan proposed 150 MBBS students intake each year and an attached hospital of 1000 beds, though in a phased manner. The Society was granted registration u/s 12AA on 1.11.2000. In October, 2001 it....
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....o a large extent. The A.O. has referred to the newspaper reports that the Institute was being given to some private persons. However, as noted above, that decision was taken in 2005 itself in principle; though neither were the objects changed during the year, nor was the Institute given to any private person during the relevant previous year. The impact, if any, of the transfer of the Institute to private hands on the exemption of income u/s 11 can be examined only in the year of the transfer. As far as the present appeal is considered, the appellant incurred expenditure on construction of the building for the medical Institute. Since the building was being constructed for the purpose of imparting medical education, the expenditure is held to have been incurred for charitable purpose within the meaning of section 11(1)(a) of the Act. The delay in starting the education though worrisome it may be, will not impact the exemption for the reason that the expenditure is for starting the medical education and the situation is the same as in the year 2000 when the registration u/s 12AA was granted. There was no stipulation while granting the registration u/s 12AA as to when the institute s....
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....s 11 to the Society only after it starts delivering medical education and services, in my opinion the proper forum for exercising this aim is to move the CIT for cancellation of registration u/s 12AA. As discussed earlier, once the Society is registered u/s 12AA, what can be examined is the application of income for charitable purposes. Construction of the Institute building is application of income for such purpose. Constructive interpretation of the Statute and directions to the Govt. for carrying out certain tasks for the betterment of society at large are, in my humble opinion, beyond the scope and the powers of the CIT(A) under the I.T. Act. 4.9 Based on the discussion above, it is held that the appellant is eligible for exemption of its income under the provisions of section 11 of the Act and that it is entitled to exemption u/s 11(1)(a) in respect of the expenditure incurred for construction of the Institute building." 21. Keeping in view the aforesaid finding of learned CIT(A), especially in the second last line of para no. 3.2, in which he has held that the Assessing Officer is precluded from examining the eligibility of the trust or institution for exemption u....
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....MS from PAU for Rs. 15 crores. PUDA would develop and sell the land. In 2001, L&T was selected as the main contractor for the main building and the construction was started. In 2005-06, it was decided by the Governing Body to take the Public Private Partnership (PPP) mode for operationalising and managing the Institute. This has been finally achieved in August, 2009. 23. Keeping in view the facts narrated by learned CIT(A), it is admitted that the assessee-society has not yet started imparting medical education and the expenditure incurred during the year by the society was not for any other purpose other than setting up of the medical institute. He finally held that the expenditure incurred by the assessee-trust is for charitable purpose and the assessee-trust is entitled for exemption under Section 11(1)(a) of the Act in respect of the income applied to such construction, which has to be allowed to the assessee. i) In our view, as per the facts narrated by learned CIT(A) in the aforesaid paragraph that in the year 1998, an agreement was made with a contractor to construct an initial building to be used to accommodate some departments of the institute and hospital. The build....
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....ablished are to establish and to carry on the Administration and management of Punjab Institute of Medical Sciences, Jalandhar. a) to provide for training, instructions and research in such branches of medical education and research & to induct advanced medical knowledge and techniques into our medical education system and to set up Punjab Institute of Medical Sciences at Jalandhar as the Institute may think fit and for the advancement of learning and dissemination of knowledge and patient care in such branches. b) to get affiliation to the Medical Council of Indian or any other affiliating agency for the award of degrees, diplomas and certificates. c) to institute and award fellowships, scholarships, prizes and medals in accordance with the Rules and Bye-laws. d) to confer honorary awards or other distinctions. e) to fix, demand and receive such fees and other charges as may be laid down in the Bye-laws made under the rules of the Society. f) to establish, maintain and manage halls and hostels for the residence of students. g) to provide for the maintenance of units of the National Cadet Corps when established for the ....
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....this prestigious institution was conceived under the overall control of the assessee society/trust is still struggling to made the lofty conception of schemes/designs to move in the direction of their execution from its tired, inert, static, still, stale and sinking state of health. D1. Now the final blow appears to be waiting to strike an snuff any ray of hope, if there is one: As per recent developments as reported in the "The Indian Express"- a national daily considered having good authenticity the lofty concept and project, having holistic designs and objects of imparting medical education if not already suffocated and lying breathless at its embryonic stage itself has finally come within the gravitational pull of "Black Holes" created by the callousness and stoicism of sheer non-action of the society/trust to even made a move in the direction to achieve its objects. This report as appearing in this daily on 11.11.2008 is reproduced as under:- "SUKHDEEP KAUR CHANDIGARH, NOVEMBER 10 It seems to be the first case of its kind. A corporate group asserting in a court of law that a Chief Minister's own men are not heeding his directions. When the h....
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.... into managing education in a profitable matter." D2. Imparting of education comes within the scope of charitable purposes. Since no worthwhile move/effort has been made in this direction-and if any made at all, which is only construction of building and that too is no functional for purposes of imparting education even after 14 years of the formation of the assessee society- and the grand project is under the process of auction in view of the newspaper report relied upon, therefore, objects of the society on the basis and for fulfillment of which it was registered and given the status of a trust, has been totally neglected and ignored. Benefit of exemption of income u/s 11 of the Act from taxation, till now the only source of income i.e. interest, has been wrongly and illegally claimed and enjoyed for many years and the year under assessment. The construction of building is undoubtedly a prerequisite of foremost priority for running an educational institution. Should this foremost priority - rather the only priority and objective for more than 14 years of the inception of the society/trust with hardly any worthwhile effort made in the direction of moving towards education....
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....stions from the assessee as well as the reply of the assessee dated 19.12.2008, which we have reproduced above, we are of the view that the assessee-trust itself admitted in its reply dated 19.12.2008 that running of medical college and other facilities on private public participation is under consideration as one of the proposal. The assessee is also of the view that there is no harm in running the medical college and other facilities on private public participation and it has become need of the hour. Keeping in view the admitted position by the assessee in reply dated 19.12.2008 reproduced above, we are of the view that the motive of the assessee in prolonging the construction work of building of medical institution, is to give the assessee trust to run the medical college and other facilities on private public participation which the assessee-trust has achieved later on. Therefore, the assessee-trust has not applied any part of its income of the year for charitable purpose. Thus, the assessee trust is not entitled for any exemption, as claimed. 25. Learned counsel for the assessee has filed his written submission in both the appeals, which we have reproduced in the above para....
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.... explanation as to why it has not taken any step for about 8 years from 10.10.1994 to 2002 to achieve the objects of the assessee-trust and also has not given any explanation regarding any charitable activities done by the assessee during these period except to spending time in construction of building for medical institute. As per para no. 4.4 at page 20 of the impugned order as well as the reply dated 19.12.2008 filed in response to the notice dated 08.12.2008, the assessee itself admitted that in 2005-06, it was decided by the Governing Body to take Public Private Partnership (PPP) mode for operationalising and managing the Institute and this was finally achieved in August, 2009, as informed by the assessee. The intention of the assessee clearly shows the motive behind spending a long period for construction of building of medical college which is certainly not for charitable purpose to achieve the objects of the assessee-society. Secondly, if the assessee-trust was granted registration under Section 12AA of the Act, it does not mean that the assessee is automatically entitled for the exemption under Section 11 of the Act. We hold that the Assessing Officer will not be precluded....
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....he Assessing Officer, at the time when the assessment proceedings are to be taken. 29. Learned DR in his written submission mainly emphasized that the registration granted to the assessee on 20.05.1994 under Section 12AA of the Act has been cancelled by the worthy Commissioner of Income Tax-II, Jalandhar, vide his order dated 24.10.2013 w.e.f. assessment year 2004-05. He has also filed a copy of the order dated 24.10.2013. He stated that the assessment year in dispute i.e. 2006-07 has been covered by order dated 24.10.2013, meaning thereby, there is no registration under Section 12AA of the Act with the assessee-trust for the assessment year in dispute and thus, the assessee-trust is not entitled for any exemption, as claimed by the assessee under Section 11 of the Act. 30. After hearing both the parties and perusing the relevant records available with us, especially the written submission filed by both the parties on this issue, we are of the view that the order dated 24.10.2013 passed by worthy Commissioner of Income Tax-II, Jalandhar, under Section 12AA(3), is not under-challenged before use, therefore, we cannot comment upon the order dated 24.10.2013, as stated by learne....