2022 (12) TMI 444

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....taining to A.Y. 2007-08. 2. The appeal and the cross objection were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. The grievance of the revenue read as under :- 1. In the facts 8s in the circumstances of the case, the Ld. CIT (A) erred by treating the amount of Rs. 13.65 Cr. as loan and giving benefit of the same to the assessee, merely on the ground that, it has been taxed as an AOP after denial of exemption u/s 11 8s 12 of the I.T. Act. 2. In the facts 8s in the circumstances of the case, it is apparent fact, the ' trust has deliberately dwindled its property by an amount of Rs 15,76,60,018/-(alongwith interest) by way of transfer in and transfer out of funds....

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....n perusal of the financial statements the AO formed a belief that the very insignificant efforts or financial inputs have been made towards the attainment of the basic object of the establishment and maintenance of a hospital or any associated activity in this direction. The AO made following significant observations :- "2.1 To further put into the perspective the issue at hand, it is surprising to see the capital availability of funds as per balance sheet for the charitable activities at a paltry 2,87,000/- as on 31.03.2007 which figure stood at the same amount as on 31.03.2006. The fixed assets stood at the WDV of Rs.2,733/-. On the other hand, the income and expenditure statement shows on the receipts side the OPD fee receipt at....

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....entails rejection of exemption u/s. 11 and 12. (iii) Whether the claim of application/expenditure of Rs.l3,65,00,000/- passed on as donation to another associated trust (with a common author) is not a violation of section 13(3)(a) and therefore, entails rejection of grant of exemption u/s. 12A. More so in view of the fact that, the entire amount was taken as loan, with a huge interest liabilities. (iv) Further, whether the claim of expenditure of this amount of Rs. 13,65,00,000/- does not deserve to be disallowed as application, in absence of any plausible purposes or prudence, being unexplained in nature. 8. Having conclusively satisfied that the donee trust has not carried out any charitable activity nor is in a posit....

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....t, the assessee has willfully concealed its particulars and evaded taxes in terms of Section 271(1 )(c) of' the I.T.Act. I am satisfied that penalty proceedings should be duly initiated in the case. Subject to aforementioned remarks, Income is computed as under : Total Income declared Nil Add: Surplus (Deficit) as per Income & Expenditure 13,83,13,436 Add: Income applied to the objects of the Trust (treated as AOP) 2,21,045 Total Income 13,85,34,481 9. Assessee strongly agitated the matter before the CIT(A). It was strongly contended before the CIT(A) that the society to whom the loan has been advanced was registered u/s. 12A of the Act and, therefore, the loan constitute application of income. It was further ....

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....ces of the present case. Ld. DIT(E) cancelled the registration u/s 12AA of the Act on the ground that the assessee violated the provision of section 13(3) of the Act for taking loan of Rs. 13.65 crores and donating the same to the sister concern without carrying out any charitable activity. It is further observed by Ld. DIT(E) that the donation amount received from assessee trust to foundation has been shown as a corpus and directly credited to the balance sheet and not through Income & Expenditure Account. In the opinion of Ld. DIT(E), it is clearly violation of provision of law to divert the property of assessee trust to others for non-charitable activities. In the opinion of Ld. DIT(E), there was unreasonable and excessive benefit which ....

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....s 10(23C) of the Act, therefore, provision of section 13(5) of the Act is not applicable. The factum of registration u/s 10(23C) of the Act is not rebutted by the Revenue. The Ld.DIT(E) is empowered to cancel the registration u/s 12AA(3) of the Act if he is satisfied that the activities of such trust or institution are not genuine and are not being carried out in accordance with its objectives of the trust/institution as the case may be. However, in the present case, the sole ground of cancellation of registration is that the assessee trust obtained a loan of Rs. 13.65 crores, paid interest thereon and donated this sum to another trust. Admittedly, the other trust was also granted registration u/s 12A of the Act and .its registration has no....