2021 (3) TMI 807

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....sponsoring multinational pharma companies, its activities cannot be held as Charitable within the meaning of sec. 2(15) of ITA. iii. The Foundation's activities are not charitable but predominantly commercial in nature. iv. Since the Foundation has undertaken only Sponsored programs for which it has been a recipient amounts on which TDS has been deducted and the conditions of which sponsorships prevent the freedom of the Foundation to spend the amounts for any activities on its volitions, such activities undertaken cater to the profit motives of such sponsoring multinational companies and hence its activities cannot be held to be charitable in nature u/s 2(15) of ITA and thus Registration u/s. 12AA to such a Trust/ Foundation cannot be granted. v. The CIT Exemption, while rejecting the Registration has gone by his wrong notion to conclude that such sponsored programs was the sole activities of the Foundation in in doing so ignoring the wide range of charitable object specified in its Charter for formation, all of which are with the ultimate object of charitable activities with no objects of commercial nature. The appellant prays leave to add ....

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.... while interpreting the expression 'sufficient cause' for condonation of delay. In case of Collector, Land Acquisition Vs. Mst. Katiji (1987) 167 ITR 471, the Hon'ble Supreme Court has laid down the principle that the power to condone the delay provided under the statute is to enable the Courts to do substantial justice to the parties by disposing of the matter on merits, therefore, while considering the matters for condonation of delay, the law must be applied in a meaningful manner which subserves ends of justice and technical considerations should not come on the way of cause of substantial justice. There is no quarrel that the explanation and reasons explained for delay must be bonafide and not merely a device to cover an ulterior purpose such as laches on the part of the litigant or an attempt to save limitation in the underhand way. If the party who is seeking condonation of delay has not acted in malafide manner and reasons explained are factually correct then the Court should be liberal in construing the sufficient cause and lean in favour of such party. A justice-oriented approach has to be taken while deciding the matter for condonation of delay. However, this does not me....

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....t of maximizing the profits of the Sponsors/ sponsoring entities and any activities so conducted with such sponsorships cannot be termed as charitable activities. Hence the Trust was not Charitable but predominantly carrying on business on commercial basis. In coming to such finding and conclusion, the learned CIT(E) has not even considered the Objects of the Trust, not for profit basis & intent and also the overall scheme and theme of activities which were actually undertaken to make people at large aware of Cancer Disease, its dangers and what preventive care against the same was possible. 2. The CIT(E) has acting with strong bias against the pharma companies in general that in concluding the issue of registration, has not even bothered to appreciate the jurisprudence on the issue of granting registration on the basis of Objects of the trust and its overall intent and purposes. 3. Commencement of activities not a pre-condition for Granting Registration to a Trust. Thus, commencement or carrying out actual activities and/ or review of such activities to ascertain if factually in the nature of Charitable Object of the Trust is not required nor necessary for grant ....

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....y, merely because the donors were pharmaceutical companies and they deducted TDS from their contributions to the Charitable Trusts, same would not convert a contribution or donation into a commercial receipt in the hands of the recipient charitable organization, on basis of presumptive inference, as long as assessee had credited amount as donations and also issued donation receipts. Reliance placed on the following in support: i. Heart Care Management v. DIT Exemption [2012] 22 taxmann.com 105 (Delhi)" 11. After having gone through the facts of the present case and after hearing the parties at length, we found that while denying the registration U/s 12AA of the Act and coming to the conclusion that nature of contributions made by the pharmaceutical companies and deducting TDS on such sponsorship contributions are largely driven by their Object of maximizing the profits of the Sponsors and therefore, the activities of the assessee were not termed as charitable activities. However, while coming to such conclusion, the ld. CIT(E) has not considered the object of the Trust. As per the objects of the Trust, the same is not on profit basis and the intent and also the overall ....

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....ities are not necessary to be evaluated while granting of registration U/s 12AA of the Act. In this regard, we draw strength from the decision of Hon'ble Supreme Court in the case of Ananda Social & Education Trust (2020) 114 taxmann.com 693 (SC) wherein it was held that "Section 12AA provides for registration of a Trust and such registration can be applied for any a trust which has been in existence for some time and also by a newly registered trust and there is not stipulation that trust should have already been in existence and should have undertaken any activities before making application for registration. 13. We are of the view that holding of Talks and events for Cancer awareness and prevention in different sections of people with sponsorship and contributions from business entities or surplus generated in any charitable activity, is in itself not an activity of/for making profit or in the nature of trade, commerce or business. In this respect, we draw strength from the following decisions: (i) Credai Bengal Vs ITO (Exemption) (2019) 110 taxmann.com 113 (Kolkata Trib) (ii) Fragrance & Flavours Association (2018) 92 taxmann.com 325 (Mumbai Trib) ....