TaxTMI 
TaxTMI 
2025 (3) TMI 37
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....in Form 10AD rejecting the application seeking permanent registration of the assessee on the ground that the assessee does not possess the registration for running charitable activities of hospital. The ld CIT(E) also relied on the decision of the Hon'ble Supreme Court in the case of New Noble Educational Society Vs. DCIT in Civil Appeal No. 3795/2014 in support of his contention. The assessee is a registered charitable society under the MP Society Registrikaran Adhiniyam, 1973 w.e.f. 10.05.2022. The primary object of the assessee society is to promote healthcare. The assessee applied for provisional registration u/s 12A(1)(ac)(vi) of the Act on 11.03.2022 by filing Form 10A. Provisional registration was granted in Form 10AC for AYs 2022-23 to 2024-25 w.e.f. 18.03.2022. On 29.09.2023, the assessee filed Form 10AB for final registration u/s 12A(1)(ac)(iii) of the Act. 4. It is not in dispute that assessee had filed its return of income together with audit report in Form 10B and audited balance sheet. The assessee for the year ended on 31.03.2022 had stated that a sum of Rs. 66,51,422/- has been applied for charitable purposes during that year and had also set apart a sum of Rs.....
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.... The assessee from its side before us had filed an affidavit from the doctors and income tax returns of the doctors for FY 2021-22 (AY 2022-23) together with TDS certificates issued by the assessee. In any case, non submission of supporting evidences, if any, for professional fees payment cannot be a ground for rejection of permanent registration u/s 12AB. If there is any infirmity in those professional fees payment, the same could be looked into at the time of assessment proceedings. In any event, the ld CIT(E) does not even whisper or even doubt that the said professional payments were made to the parties specified u/s 13(3) of the Act. Hence, drawing adverse inference on this account and rejecting the permanent registration u/s 12AB, in our considered opinion, is not in order. 6. With regard to other receipts shown in FY 2022-23 in the total sum of Rs. 4,46,24,430/- which was found to be excessive by the ld CIT(E) when compared to that in the earlier two years, it was explained that the hospital adopts cash basis of accounting and the receipts are accounted as and when they are actually received. Since, the receipts were actually received during the FY 2022-23 in respect of ser....
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....e Act. The ld AR before us duly clarified that assessee still runs the hospital and affiliation has been cancelled only for running the nursing college. Nowhere the activities of running hospital was construed to be non charitable by the ld CIT(E). We find force in the said arguments advanced by the ld AR and accordingly, we hold that cancellation of registration on this count cannot be held to be justified. The treatment of college fees received in the sum of Rs. 14,60,000/- had to be looked into at the time of assessment proceedings and that does not stand as a hindrance while considering the recognition for registration u/s 12AB of the Act. 9. With regard to the next query raised by the ld CIT(E) that seeking of details of salary paid during the last three financial years by the assessee, the entire details of the sum were duly furnished by the assessee before the ld CIT(E) by furnishing the ledger account and the name of the persons to whom payments were made. The assessee had also submitted comprehensive details of doctors and employees employed with the society during the FYs 2020-23 together with their designation in separate annexures before the ld CIT(E). Despite this, th....
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....activity as long as such surplus is not distributed to the private individuals or persons connected with the assessee society. There is always a huge difference between the concept of "public profit‟ and "private profit‟ and grant of exemption u/s 11 of the Act would be in jeopardy only when there is "private profit‟ i.e. profit being distributed to the trustees as dividend or in any other form. Once there is "public profit‟ i.e. profit/ surplus earned by a trust which are being ploughed back into coffers of the trust for future charitable activities are certainly permitted. Even the provisions of section 11 to 13 permit earning of profit of 15% and in the event of any trust deriving profit in excess of 15%, then the Income Tax Act itself permits for accumulation in terms of section 11(2) of the Act to be utilized in future. Hence, in our considered opinion, surplus earning is not a sinful activity and in any manner does not hinder the concept of charity or charitable activities. Accordingly, the observations made by the ld CIT(E) in this regard are hereby dismissed as devoid of merit. 12. With regard to next query raised by the ld CIT(E) seeking copy of la....