TaxTMI 
TaxTMI 
2012 (10) TMI 1043
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rejected only on surmises and on whimsical grounds. 3. That any other ground may kindly be allowed to be taken at the time of hearing." 3. In the course of present appellate proceedings, ld. 'AR' vehemently contended that ld. CIT has declined registration, to the appellant, u/s 12AA of the Act, vide order, dated 29.03.2012, on the foundation of irrelevant considerations by invoking the provisions of Section 11 & 12 of the Act. The issue of registration u/s 12AA of the Act, has to be considered, in the light of the statutory provisions, as contained u/s 12A read with Section 12AA of the Act and not in the context of Section 11 & 12 of the Act. He was of the opinion that registration proceedings u/s 12AA of the Act and assessment proceedings of the Institution or Trust are exclusive, different and independent proceedings. Ld. 'AR' contended that the appellant society is running a hospital and rendering other services, within the meaning of Section 2(15) of the Act. Members of the society are qualified doctors, as is evident from page 31 of the Paper Book. Ld. 'AR' narrated factual history of the case and, further, stated that the hospital is r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atients a day and the IPD mark touching 17,000 patients. An extremely dedicated team of professional doctors, nurses and technicians have performed approximately 6,700 surgeries with well equipped ICU, ICCU and NICU unit. PIMS is also providing oncology treatment at 15% discount and has a well equipped dialysis unit providing treatment at subsidized cost. 3(ii) Jalandhar, being the heart of Doaba, has the highest number of hospitals in the continent, but PIMS stand out due to its medical care affordability. The main aim of the hospital is to provide treatment to all sections of society at subsidized rates. This thought was nurtured by a group of promoters which includes very prominent doctors, businessmen and industrialists. Dr. APPA RAO MUKKAMALA, MD, FACR, Clinical Professor in Radiology is a board-certified radiologist and has been in private practice in Flint, Michigan (USA) for over 30 years. He is one of the prime promoters of the hospital and medical college. Dr. Suresh Anne, MD, FACP, FAAAAI, FACAAI, who practices Allergy and Clinical Immunology in Flint, MI (USA)has a standing of over 25 years in his field. Dr. Devinder Mahajan is also one of the promoters who is a know....
X X X X Extracts X X X X
X X X X Extracts X X X X
....age hospitals, health clubs, hostels, recuperation centers, orphanages, old people's homes, shelters for needy/poor, shelters for widows or destitute women and provide transport for students, faculty, patients or staff etc. 6(i) Ld. 'AR' placed reliance, on the decision, of the Chandigarh Bench, in ITA No. 253/Chd/2011 dated 31.05.2012 in the case of Sandhya Educational Trust, Sector 37, Chandigarh V CIT-II, Chandigarh. He also placed reliance on the decision, as reported in 69 DTR 315, in the case of Pine Grove International Charitable Trust V Union of India & others (2010) 327 ITR 73 (P&H). 7. Ld. 'DR', on the other hand, placed reliance on the order passed by the CIT. 8. We have carefully perused the rival submissions, facts of the case and the relevant records, as also the judicial precedents relied upon by ld. 'AR'. The assessee appellant PIMS Medical & Education Charitable Society filed an application dated 16.09.2011, for registration u/s 12A read with Section 12AA of the Act. The competent authority, CIT II Chandigarh, made enquiries through AO and the Addl.CIT to verify the genuineness of society and its activities. The ld. CIT observed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cannot be performed, in accordance with the objects, for which had been set up, and the same has been set up for, the purpose of carrying and running the Institution, for profit and on commercial lines. The CIT found that it is not a case where society is carrying on charitable activities. Ld. CIT, further, observed that veracity and genuineness of the society is in doubt. After referring to the provisions of Section 12AA of the Act, ld. CIT observed that it can be deduced that the project has not been conceived or developed for charity, instead, it is to be run on entirely commercial lines. The CIT, further, noticed that the society, though established and incorporated under the Societies Act, 1860, does not have the stated purpose of 'no profit'. In the final analysis, findings of the CIT as contained in para 13 of the order is reproduced hereunder : "13. Keeping in view the entire correspondence available on file, it can be unambiguously concluded that the applicant society has not proved its case that the project is to be run under its name in a charitable manner. It has miserably failed to prove the genuineness of its financial activities. It is held that the society has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tivity in the nature of trade, commerce or business b) any activity of rendering any service in relation to trade, commerce or business c) if fee or cess or any other consideration, irrespective of the nature of use or application or retention of such income by the concerned entity. The aforesaid proviso will be operative from 1.4.2009 and will accordingly apply in relation to assessment year 2009-10 and subsequent assessment years. 13. The Finance Minister has amended the definition of 'charitable purpose' provided under Section 2(15) of the Act by the Finance Act,2008, with effect from 1.4.2009, by adding a proviso, to the Section of just five lines, which will affect the exemption of charitable trusts for "advancement of any other object of general public utility" very substantially. 14. In Para 180 of the Budget speech, the Finance Minister stated as follows: "Charitable purpose" includes relief of the poor, education, medical relief and any other object of general public utility. These activities are tax exempt, as they should be. However, some entities carrying on regular trade, commerce or business or providing services in relation to any trade commerce or bus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontext, the CIT, is required to appreciate the real activities and objects but not the enabling powers to achieve the objects. 17. The assessee relied on the decision, in the case of Pinegrove International Charitable Trust V Union of India (supra), the Hon'ble Punjab & Haryana High Court where it was held as under: "Even after the new dispensation from April 1,1999, the test of pre-dominant object of the activity continues to apply as under Section 1-(22) of the Act. As long as an institution exists solely for educational purposes, it would qualify for grant of exemption u/s 10(23C)(vi) of the Act. Merely because profits have resulted from the activity of imparting education, that would not change the character of the institution existing solely for educational purpose. At the initial stage, when the application for exemption is filed by an educational institution, the scope of inquiry is restricted only to ascertaining the genuineness of the activities of such an institution. Such an inquiry may even extend to the examination of accounts of the institution, application of its income to the object and purposes of education and the other cognate aspects. Once on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act, would not render the activities of the appellant society, as non-genuine, and non-charitable as construed by the ld. CIT, in the instant case. This proposition is fortified by the decision of the jurisdictional High Court in the case of Pine Grove International Charitable Trust (supra). 20. The satisfaction of statutory conditions of Sections 11, 12 & 13 of the Act, for the purpose of grant of registration u/s 12A r.w. Section 12AA of the Act, are not relevant. However, the ld. CIT heavily relied on the issue of corpus fund and secured loans, raised by the appellant society, in concluding the activities of the appellant as non-genuine. The nature and source of corpus funds and secured loans are required to be examined by the AO, in the light of the provisions of Section 11, 12, 13 r.w. Sections 2(24) (iia) and Section 15 BBC of the Act. It is incumbent upon the CIT, to decide the issue of granting or decline of registration, only within statutory preconditions as laid down u/s 12A read with Section 12AA of the Act. Needless to state here that registration proceedings u/s 12A r.w. Section 12AA of the Act before the CIT, are not the same as assessment proceedi....