Income Tax Appellate Tribunal - Amritsar
Care And Share Welfare Society, ... vs Cit, (Exemptions), Chandigarh on 3 September, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
ITA No.404(Asr)/2019
Assessment Year:2017-18
Care & Share Welfare Society Vs. CIT(Exemptions),
C/o International Marketing Central Revenue Building,
Corporation, Guru Nanak Dev Sector-17, Chandigarh.
Bhawan, Near Bharat Nagar
Chowk, Ludhiana.
[PAN:AACAC 6608D]
(Appellant) (Respondent)
Appellant by:Sh. S.K.Mukhi, Abhay Sethi, (Ld. Adv.
& Sanjeev Jain (Ld. CA)
Respondent by: Smt. Abha Rani Singh (Ld. CIT-DR)
Date of hearing: 24.07.2019
Date of pronouncement: 03.09.2019
ORDER
PER N.K.CHOUDHRY, JM:
The assessee society has filed this appeal against the order dated 30/04/2019 impugned herein passed by the Ld. CIT(Exemptions), Chandigarh whereby the Ld. CIT(Exemptions) rejected the application filed u/s 12AA of the Income Tax Act, 1961 (hereinafter called as the 'Act').
2. The brief facts of the case are that an application for registration u/s 12AA of the Act was filed by the assessee society before the Ld. CIT(E) on dated 10.10.2018 by disclosing 2 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) the facts that the assessee society is an ongoing entity since 19th August, 2016 and having following aims and objects.
To open educational/medical and research institutions/hospitals for the health and welfare of mankind, "Hospital will be charitable only and not for commercial gains, to impart education for all classes particularly vocational education by opening schools and colleges/medical or research centers/institutes, to give grant and economic assistance for the pursuit of higher education to the needy, poor and deserving students. The society will honour the brilliant students at national and international levels who have distinguished themselves in any filed particularly education, to open branches of the society at the village, tehsil, District, Regional, State, National and International levels and to get them affiliated with the required authorities.
While considering the application of the assessee society, vide questionnaire dated 01.02.2019 an opportunity of personal hearing was accorded to the assessee society with a request to provide clarifications to queries raised on 12.02.2019 as mentioned in para No.5 of the order, against which the assessee submitted the reply on dated 12.02.2019, thereafter, the application of the applicant society was rejected by the CIT(E) by holding as under:
"6. In response to the fixation letter dated 01.02.2019 the applicant society submitted the reply on 12.02.2019. On perusal of the submissions made by the society, it was observed that the society claims to create a state of the art multispecialty charitable hospital in Ludhiana. The society has purchased land for the construction of hospital at Civil City, Chander Nagar, Ludhiana. The land bought for construction of charitable hospital has been funded in the form of loan to the tune of Rs1,19,72,865/- by the M/s. International Marketing Corporation Pvt. Ltd. which is interest bearing. The applicant society has purchased land on 24.04.2017 for the construction of hospital at Ludhiana. The applicant society has received donations to the tune of Rs.10,33,850/- during the F.Y. 2017-18. In order to verify the claims of the applicant society the following additional queries were asked vide e-mail to [email protected] on 09.04.2019 requesting them to submit the details on 15.04.2019.3 ITA No.404/Asr/2019 (A.Y.2017-18)
Care & Share Welfare Society vs. CIT(E)
1. Please clarify whether the applicant society has been formed to redeem CSR functions of the M/s. International Marketing Corporations Limited.
2. On perusal of the land' deed it was observed that the ownership of land purchased is with M/s. International Marketing Corporations Limited who has funded the land in the form of Loan which is interest bearing to Care & share Charitable Society. As Mrs. Veena Bhatia, (President of Care & share Charitable Society) is the W/o Sh. Ashok Bhatia (Managing Director of M/s. International Marketing Corporations Limited) this point attracts section 13(3) of the I.T. Act which is any part of its property or income is used or applied or ensures directly or indirectly for the benefit of any persons specified u/s 13(3) of the I. T. Act. Please comment.
3. Please justify the outstanding unsecured loan of Rs. 1,19,72,865/- as at March 31,2018 as you have stated that this aMOUnt of unsecured loan is on account of land bought for the construction of Charitable Hospital whereas the ownership of the land is with the company M/s. International Marketing Corporations Limited.
4. Please provide the evidence regarding handover of land to society and its usage by the society.
5. Please provide the details of Donations received to the tune of Rs.10,33,850/- during the F.Y.2017-18 along with the Name, PAN, Address etc. of the donor.
7 In response to the queries raised the applicant society submitted the reply. With regard to first query the applicant stated that the society was never formed to redeem CSR functions of M/s International Marketing Limited. With regard to second query the applicant stated that the society has purchased land at Chander Nagar, Ludhiana in April 2017 in the name of the society. Earlier the applicant society has not submitted the copy of the registered deed the same was submitted by the counsel of the society on 15.04.2019. With regard to fifth query the applicant society stated that the donations above Rs. 5,000/- were already submitted. But on perusal of the submissions it got revealed that the society has submitted details of donations for the F.Y. 2016-17. The applicant has not submitted any detail of donations received to the tune of Rs.10,33,850/- during the F.Y. 2017-18 along with documentary evidences. As the main object of the society is the construction of hospital construction of which is yet to be started. In the absence of the hospital it is necessitated to examine the genuineness of the other activities claimed by the society. In this context the applicant has claimed to incur expenditure on Langer for needy people and education aid. The applicant has not provided any documentary evidences regarding expenses incurred or Langer & education aid. In the absence of the documentary evidences 4 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) regarding donations received and expenditure incurred on charitable activities for the F.Y. 2017-18 the genuineness of the activities cannot be ascertained in this case.
8. Further, perusal of MoA reveals that as per object clause no. 3(v) and (vi) that the applicant intends to conduct its operation internationally as well. It is pertinent to mention here that the applicability of section 11 & 12 of the Act is restricted to India. To that effect its objects w.r.t. International operations are not in compliant with this Restriction. Given that scenario, it is clear that the essential elements necessary for proper constitution of a public charitable society are missing. Moreover, the applicant society has merely provided a copy of amended MOA and Bye- Laws. It is pertinent to mention here that same cannot be amenable as the provided MOA has not been approved with any competent authority. Neither erstwhile MoA has been provided, in the absence of which, the changes made by the applicant cannot be ascertained. Such arrangement clearly impinges upon the genuineness of applicant's activities.
9. The applicant society has not conducted any charitable activity since its inspection except purchasing of land worth Rs.1,04,48,900/- for its future plan for constructing Hospital. The Directors of the company (IMC Pvt. Ltd.) forwarding the loan of Rs. 1.06 crores to the applicant society are Sh. Ashok Bhatia & Sh. Satyan Bhatia. Smt. Veena Bhatia, W/o Sh. Ashok Bhatia is the president of the applicant society and Smt. Anshul Bhatia, W/o Sh. Satyan Bhatia is the Finance secretary of the applicant society. The whole business of creating a society, transferring a huge sum of Rs. 1.06 crores and purchase of land with involvement of family members without carrying out any of the claimed charitable activities as per object clause of the MoA do not enthuse confidence for the grant of approval u/s 12AA of the Income tax Act, 1961 at this stage.
10. In light to all of the above no satisfaction about the genuineness of charitable activities can be recorded in the case."
The application for registration u/s 12AA of the Act, with the present state of affairs, is accordingly rejected."
3. On aggrieved, the assessee society is in appeal before us against the impugned order.
4. Having heard the parties at length and perused the material available on record. The Ld. CIT(E) rejected the 5 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) application of the assessee society on the grounds that the applicant has not submitted any details of donations received to the tune of Rs.10,33,850/- during the F.Y.2017-18 along with documentary evidences. As the main object of the assessee society is construction of hospital, construction of which is yet to be started. In the absence of the hospital it is necessitated to examine the genuineness of the other activities claimed by the assessee. In this context the applicant has claimed to incur expenditure on Langer for needy people and education aid. The applicant has not provided any documentary evidences regarding expenses incurred on Langer and education aid. In the absence of documentary evidences regarding donations received and expenditure incurred on charitable activities for the F.Y.2017-18, therefore, the genuineness of the activities cannot be ascertained in this case.
The Ld. AR of the assessee has drawn our attention to the site plan and estimate costs valuation certificate qua construction of hospital [Page No. 46 to 52 of PB] wherefrom it reflects that the assessee Society is in the process to construct the hospital. The Ld. AR has also drawn our attention to the financial statement such as income and expenditure account in the year ended 31st March, 2017 wherein Rs.10,000/- has been spent on medical aid and 13,420/- has been spent for Langer for needy people. Further in year ended July, 31, 2017 the assessee has spent Rs.88,170/- qua food/meal help to needy persons, therefore, it cannot be ruled out that the assessee is not doing any charitable activities as reasoned by the Ld. CIT(E). While considering the application and aforesaid documents as referred by us were also available with the CIT(E) as stated by the Ld. AR, therefore, the observation of the Ld. CIT(E) to the effect that 6 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) the applicant has not provided any documentary evidence regarding expenses incurred on the Langer and Education aid, is also not sustainable.
4.1 The CIT(E) also observed that as per object clause no.3(v) and (vi), the applicant intends to conduct its operation internationally as well, whereas the applicability of section 11 & 12 of the Act is restricted to India, therefore, to that effect, its objects w.r.t International operations are not in compliant with this restriction. Given that scenario, it is clear that the essential elements necessary for proper constitution of a public charitable society are missing. Moreover, the applicant society has merely provided a copy of amended MOA and Bye Laws. It is pertinent to mention here that the same cannot be amenable as the provided MOA has not been approved with any competent authority. Neither erstwhile MOA has been provided, in the absence of which, the amendment made by the applicant cannot be ascertained. Such arrangement clearly impinges upon the genuineness of applicant's activities. From the object clause 3 (v) & (vi) it reflects that the society will honour the brilliant students at national and international levels who have distinguished themselves in any filed particularly education, to open branches of the society at the village, tehsil, District, Regional, State, National and International levels and to get them affiliated with the required authorities. We are of the considered opinion that the Ld. CIT(E) is empowered to put any condition while granting the registration u/s 12AA of the Act and if the Ld. CIT(E) thinks fit and proper then the Ld. CIT(E) shall be at liberty to restrict the assessee society operation in India only, but this ground for rejection of the application is unsustainable.
7 ITA No.404/Asr/2019 (A.Y.2017-18)Care & Share Welfare Society vs. CIT(E) 4.2 The Ld. CIT(E) further observed that the essential elements necessary for proper constitution of public charitable society are missing. From the MOA and aims and objects of the society and activities set out by the assessee society, it does not reflect so, as observed by the Ld. CIT(E), hence, we cannot approve this reason as well.
4.3 The Ld. CIT(E) further observed that the applicant society has merely provided a copy of MOA and bye laws which has not been approved with any competent authority. Neither erstwhile MOA has been provided, in the absence of which, the changes made by the applicant cannot be ascertained. The ld. AR submitted that erstwhile MOA is already on record, since the application under consideration is continuation of the earlier application, which was restored to the file of the Ld. CIT(E) for decision afresh by the Co-ordinate Bench vide its order dated 27.06.2018 passed in ITA No.694/Asr/2017. We have perused the order passed by the Co- ordinate Bench and found the contention of the assessee correct. Even otherwise we realized that the assessee has filed MOA of society with its registration no.20160020623/309 of 2016-17, dated 19.08.2016 (PB Page 1 to 11) and the amended MOA duly certified by the Sub-Registrar, Ludhiana vide its stamp dated 17.01.2018. Considering the facts, we are unable to approve this ground of rejection as well.
4.3 Further, the Ld. CIT(E) has observed in para No.09 that the applicant society has not conducted any charitable activity since its inception except purchasing of land worth of Rs.1,04,48,900/- for its future plan for construction of Hospital. The Directors of Company (IMC Pvt. Ltd.) forwarding the loan of Rs.1,06 cores to the applicant society are Sh. Ashok Bhatia and 8 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) Sh. Satyam Bhatia whereas Smt. Veena Bhatia, w/o Sh. Ashok Bhatia is the present president of the applicant society and Smt. Ansul Bhatia w/o Sh. Satyam Bhatia is the Finance Secretary of the society, whole business of creating a society, transferring of huge sum of Rs.1,06 cores and purchase of land with involvement of family members without carrying out any of the claimed charitable activities as per object clause of the MOA, do not enthuse confident for the grant of approval u/s 12AA of the Income Tax Act, 1961 at this stage. The Co-ordinate Bench at Amritsar, in the case of Sant Ishwar Shiksha Samiti, Jammu and Sant Ishwar Foundation (ITA No.670(Asr)/2015 & ITA No.671 (Asr)/2015, decided on 30-08-2017 ) , while dealing with the similar and identical issue, where the society was at nascent stage, analyzed the position of law as well as issue in hand. Relevant part of the said decision is reproduced herein below for the sake of brevity and ready reference.
"6. We have gone through the facts and circumstances of the case and also rival submissions of the parties, relevant dates are very much material in the instant case. The trust was established and registered only on 12th March, 2015 and thereafter, application for registration u/s 12A was filed on 29.04.2015 and main objects of the trust are establishment of educational institution and/or maintenance of educational institution ,meditation and prayer halls, granting of scholarship and financial assistance to needy for educational purposes and establishment of hospitals and nursing homes etc. which are covered under the dimension of Sec.2(15) of the I.T. Act.
Further we feel it appropriate to reproduce herein the contents of Sec.12AA of the Act.
Section 12AA (1) The Chief Commissioner or Commissioner, on receipt of an application for registration of a trust or 9 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) institution made under clause (a) [or clause (aa) of sub-
section (1)] of section 12A, shall--
(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant :
Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.
(2) Every order granting or refusing registration under clause (b) of sub-section which the application was received under clause (a) of section 12A.] From the contents of the Sec.12AA, it encompass that the Ld. CIT(E) in order to satisfy himself about the genuineness of the activities of the trust or institution can call for such documents or information from the trust or institution as he thinks necessary and also empowered to make such enquiry as he may deem fit necessary in this behalf.
Second Clause deals with that after satisfying himself about the object of the trust or institution and the genuineness of the activities, he shall pass order in writing either to register or refusing to register the trust or institutions.
Let us to consider judicial verdicts on the issues in hand :
Delhi High Court in the case of DIT Vs. Foundation of Opthalmic & Optometry Research Education Center, in ITA No.1687/2010 , decided on dated 16.08.2012 dealt with the same situation and observed as under:10 ITA No.404/Asr/2019 (A.Y.2017-18)
Care & Share Welfare Society vs. CIT(E) "That the concern CIT is not required to examine the question whether the Trust has actually commenced and has, in fact, carried on charitable activities ?"
Gujrat High Court in the case of CIT -1, vs. Kutchi Dasa Oswal Moto Pariwar Ambama Trust (2014 271 CTR 0595 was pleased to held that "While considering the application u/s 12AA, the Commissioner has to satisfy himself about the objectives of the trust and genuineness of its activities and for such purposes, he has the power to call for such documents or information from the trust as he think are necessary. However, this does not mean that if the activities of the trust have not commenced the Commissioner has authority to reject its application for registration on the ground that the Trust has failed to convince him about the genuineness of the activities. That is what unfortunately the Commissioner did in the preset case ".
Further, Allahabad High Court in the case of Hardayal Charitable & Educational Trust Vs. Commissioner of Income Tax-II, Agra decided on 15 March, 2013 observed that:
" The preponderance of the judicial opinion of High Courts as well as ITAT is that at the time of registration u/s 12AA of the Act, the CIT is not required to look into the activities, where such activities have not or are in the process of its initiation. Where a trust, set up to achieve its objects of enabling educational institution, is in the process of establishing such institution and receives donations, the registration u/s 12AA cannot be refused, on the ground that the Trust has not yet commenced the charitable or religious activity" .
Further, Co-ordination Bench of ITAT, Amritsar in the case of Ek Umeed Welfare Society, Fazika Vs. Assessee in ITA No.615(Asr)/2013 "Directed to grant registration to the society where the registration was denied by the CIT on ground of negligible activity till the date of registration".
Let us to consider reasons for rejection of Application for grant of registration u/s 12 AA of the Act:11 ITA No.404/Asr/2019 (A.Y.2017-18)
Care & Share Welfare Society vs. CIT(E) First reason for denial of registration by the Ld. CIT was that that the assessee trust has not carried out any activity.
Second reason that the assessee trust has initially decided to construct school & meditation hall at Asar Doda but later purchased land for school at Niabhat, Nagrota Third reason that the activities of assessee trust are controlled by one family .
The reasons given by the Ld. CIT(E ) does not sound good because , one side reasoned that no activity has been carried out by the Assesse Trust , on the other hand has doubted the intents of the objects and further observation that initially the Assessee wanted to construct school & meditation hall at Asar Doda but later purchased land for school at Niabhat, Nagrota , in our view , the trust that time was un-doubtly at nascent stage and has not carried out any activity except to make efforts for procuring land for school , however later on purchased the land for school at Niabhat, Nagrota , which clearly shows the intention of the trust as the main object of the trust is to establish schools etc. and to provide education, therefore, one can expect from the trust to do activity of the charity immediately and in that situation the authority cannot come to the conclusion that the intent contained in the objects of the trust do not find corroboration in the shape of any positive action taken towards either education or any of the other objects enunciated in the trust deed , as observed by the ld. CIT (E ) .
Third reason that the activities of assessee trust are controlled by one family is only an apprehension of the Ld. CIT (E ) ,which according to our mind can not base rejection of the registration because the Revenue Authority is at liberty to withdraw and/or to cancel the Registration an any time on the specified reasons enumerated in the Act.
Further from the documents filed before us, it reflects that the assessee trust has already purchased the land which is 9 kanals 19 marlas situated at Village Balian, Teshil Udhampur, and further also got approved sanctioned plan for construction of school from the concerned Executive Engineer of the area , no objection for construction from the concerned Panchayat and 12 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) construction of School is at advance stage and also executed Memorandum of Understanding with the Bhartiya Shiksha Samiti, which is involved in the field of imparting formal education having established a number of Primary and Secondary level Schools in different part of Jammu & Kashmir as submitted .
Further from the cutting of newspapers, it reflects that inauguration for construction and laying stone for establishment of the School has already been done and as per computation of Income of Asst. Year: 2016-17 it reflects that the assessee trust has received Rs.1,80,52,900/- as voluntarily contribution and during the Financial Year the assessee trust has incurred the expenditure of Rs.13089100 and Rs.379000 for the purchase of the land and its construction for School purposes, and further income and expenditure for the period ended 31st March, 2016 shows that the assessee trust has contributed Rs.11,000/- to the P.M. relief fund and Rs. 9,472/- for cleaning moment at Katra and Rs.5,640/- for the environment awareness and Rs.8,548/- for medical care at FDR.
On perusal of records and judgments, it is clear that at the time of registration u/s 12AA of the Act, the Ld. CIT(E) is required to see the objects of the trust or institutions and genuineness of its activities, however, if we come to the instant case, then it is not disputed that the trust was formed and registered only on 12th March, 2015 thereafter, application for registration u/s 12AA was filed on 15.05.2015 and the impugned order was passed on 30th Nov. 2015 and till the disposal of the application the assessee has only received single donation and tried to procure the land for establishment of the School and further because the assessee trust was at nascent stage, therefore, could not carry any activity and according to aforesaid judgments it is clear that statute does not prescribe a waiting period for a newly registered trust to qualify itself for registration under Section 12AA of the act and wait till the activity commence. From the conjoint reading of the aforesaid judgments, it can be safely concluded that even otherwise if no activity was carried out by a trust or institution, still registration can be granted by the CIT(E) and even otherwise it is not the case of the Revenue that at the time of consideration of application of the Assessee , the assessee has carried out many activities and their genuineness were in doubt but in the instant case 13 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) grievance of the CIT(E) is only that there was no activity carried out by the assessee.
Although form the documents submitted before us positively reflects that the Assessee trust has carried out many activities in furtherance of objects of the trust, however because the same activities have not been carried out and documents were also not submitted before the LD. CIT (E ) till the date of adjudication of Application , hence we are not taking into consideration the said documents and facts , however in overall consideration of the judicial interpretation , peculiar facts and circumstances and situation, in our considered opinion the Ld. CIT(A) was under obligation to consider the objects of the trust which are available in the trust deed itself. Even otherwise, the concerned Revenue Authority was empowered to withdraw the registration already granted or cancel the said registration if he came across that factually trust has not conducted any charitable activities.
Although, in the open Court we had shown our inclination to remand the case with direction to the assessee to approach the Ld. CIT(E) with the documents as submitted before this forum because the documents were not available before the CIT(E), however, considering the principles laid down by the various Courts as it is not in controversy that till the adjudication of application u/s 12AA of the Act, the trust was at nascent stage and all the activities which are reflecting from the documents submitted herein are of the later stage, however, in our considered opinion at the time of disposal of application, the Ld. CIT(E) in order to satisfy himself about the genuineness of the activities of the trust or institution can call for such documents or information from the trust or institution as he thinks necessary and also empowered to make such enquiry as he may deem fit necessary in this behalf , secondly that after satisfying himself about the object of the trust or institution and the genuineness of the activities, he shall pass order in writing either register or refusing to register the trust or institutions. In the instant case no activity was carried out therefore question of genuineness did not arise.
Hence, we direct the Ld. CIT(E) to grant the registration u/s 12A of the Act to the assessee and it is 14 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) clarified in case, the assessee does not qualify/satisfy the objects of the trust and/or not involved in genuine activities , then the concerned authority shall be at liberty to withdraw or to cancel the registration u/s 12A of the Act.
Hence, in the aforesaid observations, the appeal filed by the assessee is allowed."
In view of the aforesaid observation and conclusion drawn by the Co-ordinate Bench, it is trite to say that where the assessee society is at nascent stage then it cannot be expected that the society must do some charitable work before seeking grant of registration u/s 12AA of the Act and consequently consideration of genuineness of the activities by the Ld. CIT does not arise.
In the instant case the Ld. CIT(E) has that no charitable activity has been conducted by the applicant society since its inception except purchasing land. We have given our thoughtful consideration to this reason of rejection. Though the assessee society though has not started construction of its hospital yet but it is a case that the assessee society has been formed only on 19.08.2016 and has already purchased the land and is in the process of constructing hospital for which site plan has already been prepared and placed before the Ld. CIE(E) as well as before us for perusal which further strengthen the contention of the assessee that the purchase of land for construction of Hospital and starting process for construction of Hospital is certainly in pursuance to the aims and objections of the society and sought registration u/s 12AA of the Act which was declined on 29th Sep.
2017, against which the assessee society preferred an appeal 15 ITA No.404/Asr/2019 (A.Y.2017-18) Care & Share Welfare Society vs. CIT(E) before the Co-ordinate Bench and Co-ordinate Bench while deciding ITA No.694/Asr/2017 vide its order dated 27.06.2018 remanded the case to the file of the Ld. CIT(E) for decision afresh, thereafter, the impugned order dated 30.04.2019 has been passed. From the peculiar facts and circumstances, we are of the considered opinion that the assessee society is at nascent stage but even otherwise carried out small charitable activities such as providing medical aid and Langer to the needy people during the F.Y. 2017-18, therefore, the observation of the Ld. CIT(E) that the applicant society did not conduct any charitable activity since its inception, is not sustainable.
4.4 The Ld. CIT(E) also raised doubt about the confidence for grant of approval by observing that Directors of the Company (IMC Pvt. Ltd.) have granted the loan of Rs.1,06 cores to the applicant society are relative of the president and Finance Secretary of the applicant society, therefore, involvement of the family members without carrying out any of the claim of charitable activities as per clause of MOA do not enthuse confidence for the grant of approval u/s 12AA of the Income Tax Act. As per section 12 of the Act, at the time of consideration of application u/s 12AA of the Act, the Ld. CIT(E) is at liberty to satisfy himself about the objects of the trust or institution and the genuineness of its activities. As in the instant case, the objects of the society are not in doubt except operation internationally and the assessee has not carried out much activity therefore the genuineness of activities cannot be ascertained at this stage.
16 ITA No.404/Asr/2019 (A.Y.2017-18)Care & Share Welfare Society vs. CIT(E) 4.5 As per act, the Ld. CIT(E) is at liberty to cancel the registration at any time, once he is satisfy that the activity of such trust or institution are not genuine or are not being carried out in accordance with objects of the trust or institution as the case may be, therefore in this case, if the Ld. Commissioner will find in-genuineness of assessee's activities and not in consonance with aims and objects assessee society, then shall be at liberty to cancel the registration.
4.6 Considering over all peculiar facts and circumstances we are inclined to direct the Ld. CIT(E) to grant the registration to the application society. Suffice to say the Ld. CIT(E) shall be at liberty to put any condition(s)/restriction(s) such as the society operation shall be for the welfare of Indian citizens and within the territory of the India only, if find reasonable as per law and also to verify the original MOU and amended MOU of the society.
44 5. In the result, the appeal filed by the assessee stands allowed with the aforesaid observations.
Order pronounced in open court on 03.09.2019.
Sd/- Sd/-
(VIKRAM SINGH YADAV) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 03.09.2019
/PK/ Ps.
Copy of the order forwarded to:
(1) Care & Share Welfare Society International Marketing Corporation, Guru Nanak Dev Bhawan, Near Bharat Nagar Chowk, Ludhiana Park, Jalandhar-144 003 (Punjab) (2) The CIT(Exemptions), Chandigarh (3) The SR DR, I.T.A.T., Amritsar True copy By order