Income Tax Appellate Tribunal - Delhi
Outcancer Foundation , Delhi vs Assessee on 8 July, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : 'E' NEW DELHI
BEFORE SHRI G.E. VEERABHADRAPPA, HON'BLE PRESIDENT
AND
SHRI RAJPAL YADAV, JUDICIAL MEMBER
I.T.A Nos. 3862,3863/Del/11
Outcancer Foundation, Vs. DIT (Exemption),
209, Natraj Apartment, Delhi.
67, I.P. Extension,
Delhi - 110 092.
(Appellant) (Respondent)
Appellant by: Shri Ved Jain & Mrs. Rano Jain, CAs
Respondent by: Shri R.S. Negi, Sr. DR
ORDER
PER RAJPAL YADAV : JM The present two appeals are directed at the instance of assessee against the separate orders of Ld. Director of Income Tax (Exemption) Delhi dated 8th July, 2011 vide which Ld. DIT has rejected the applications of the assessee for grant of registration u/s 12A as well as u/s 80G(5) of the Income Tax Act.
2 ITA Nos. 3862,3863/Del/11First we take ITA No. 3863/Del/11
2. The grievance of the assessee in this appeal is that Ld. DIT has erred in rejecting the application for registration u/s 12AA (1)(b) of the Income Tax Act. The brief facts of the case are that assessee has filed an application on 5th January, 2011 in Form No. 10A for seeking registration u/s 12A of the Income Tax Act, 1961. Ld. DIT had issued a show cause notice inviting explanation of the assessee vide letter dated 27.1.2011. Such explanation was tobe submitted by 21.2.2011. On 21st February, 2011, the Chartered Accountant of the assessee appeared before the Ld. DIT and took adjournment. According to the Ld. DIT, number of adjournments were taken by the assessee and it failed to submit the details. Whereas case of the assessee is that it has submitted all the requisite details called for by the Ld. DIT namely, it has submitted copy of trust deed, note on registration u/s 12AA and 80G, note on activity of the trust, copy of provisional balance sheet, income and expenditure account as on 31st March, 2011, details of donees and details of aids given. The Ld. DIT has rejected the application of assessee by brief order which include the details 3 ITA Nos. 3862,3863/Del/11 called for and the finding recorded by the Ld. DIT, which read as under :-
1. "Please file the undertaking that there shall be no infringement to the proviso to the section 2 (15) of the IT Act.
2. Please insert a provision relating to the dissolution of the trust/society providing inter alia that in the event of dissolution for funds/assets will be transferred only to some other trust having similar objectives.
3. Copy of accounts of the period since the inception of the Trust/Society or Last years during which the trust has been in existence.
4. Please insert a clause in the deed/MOA providing that the funds /property of the trust will be used only for the objectives of the Trust/Society.
5. A note on activities carried out since inception/last 1/2/3/4 years with supporting documentary evidences.
6. Please justify your claim for registration u/s 12AA & 80G
7. Justify with the bills/vouchers of the income applied for charitable activities along with proof of beneficiaries.
8. Please furnish contact no. & e-mail address of the applicant & its members.
9. On objection certificate from the landlord alongside the proof of ownership/occupancy.
10. A note clarifying what is the focus area of your charitable activities and giving a projection/plan of action for the main charitable activities to be undertaken by you during the next two years.
11. Please furnish the details of donations including corpus donations received & made giving. Name, address, Pan of donors.
12. Copy of I.T. returns last ...........Assessment year Please furnish details regarding .........
1. The concrete documentary evidence w.r.t funds applied to the charity done.4 ITA Nos. 3862,3863/Del/11
2. Regular activities carried out
3. Ultimate beneficiaries
2. On 21.02.2011. Shri Sandeep Gupta, CA and the AR of the assessee appeared and filed PO along with certain details. He was asked to file ownership proof of the present address and asked to submit information as called for vide point No. 6 of the Notice dated 27.01.2011 and the case was adjourned to 7.3.20111. On 7.3.2011 neither anybody attended nor any details were filed. On 15.4.2011 CA of the assessee sent a letter for adjournment of the case and the case was adjourned to 29.4.2011. On 29.4.2011 neither anybody attended nor any further details were filed.
3. On perusal of details filed it is seen that on page 10 & 11 clauses 15 & 16 respectively of the trust deed show that the applicant's activities have a profit motive as leasing out properties on rent and collection of rents effects and profits do not show the intention of charity. It has no dissolution clause also.
The main objects as per trust deed is to maintain, set up and run cancer research centres to carry out medical research in the field of oncology and other medical facilities which requires a good infrastructures and expertise on the part of people associated with it is found missing in this case. It has not disclosed the method of attaining the said objects. The applicant has submitted that it will take up some time to start its activities. It also stated that ground level activities like lie up (i) with hospital & medicals Institute (ii) NGOS and other charitable Institutes for cancer and (iii) spreading awareness is being performed but no concrete evidence has been furnished in its support. Therefore, in view of the above facts the trust is held to be not genuine with respect to its aims and objects.
4. The provisions of section 12AA stipulate the following conditions for registration u/s 12A of the I.T. Act, 1961 :-
(i) The objects of the society should be
charitable in nature;
(ii) The activities of the society should be
genuine.
Therefore, one of the conditions for granting registration u/s 12AA is also not satisfied.
5. Since the applicant has failed to establish its genuineness as discussed in the preceding paras in the light of the amended 5 ITA Nos. 3862,3863/Del/11 provisions of the Act the application filed for registration cannot be considered favourably. Accordingly, the application filed by the applicant for grant of registration u/s 12AA is hereby rejected."
3. The Ld. Counsel for the assessee while impugning the order of Ld. DIT submitted that in paragraph 3, the first reason assigned by the Ld. DIT is that clauses No. 15 & 16 of the trust deed would show that assesee's activities have a profit motive, because it will earn rent etc. on leasing out of the property which does not show any intention of charity. He took us through clause 15 of the trust deed and pointed out that it is an ancillary clause to enable the trustees to manage the trust property. It is not the primary aims and objects of the trust. He further contended that the second reason assigned by the Ld. DIT is that there is no demonstrative proof on the record in support of the activities carried out by the assessee. Ld. Counsel submitted that there has been changes in section 12A of the Income Tax Act. Earlier if a person is in receipt of the income and has made an application for registration of the trust in the prescribed form and in the prescribed manner to the Commissioner before the first day of July 1973 or before expiry of period of one year from the day of the creation of the trust, 6 ITA Nos. 3862,3863/Del/11 then registration would be granted u/s 12A from the date which is later. The proviso appended to sub section 1 of section 12A further empower the commission to condone the delay on submission of an application, if there exist reasonable cause. But after first day of June, 2007, no such power exist with the Commissioner. Thus, the trust has to make the application immediately after its creation. Otherwise, whatever donations received by it would be taxable in the absence of the registration. He further pointed out that section 12AA sub section 3 has also been amended. It empowered the Ld. Commissioner to withdraw registration granted earlier, if it is established that activities of such trust are not genuine or are not carried out in accordance with the objects of the trust. In the old scheme this power was not there. According to the Ld. Counsel for the assessee, the scheme of section 12A and 12AA suggest that Ld. Commissioner has to see prime facie genuineness of the activities as well as aims and objects contained in the trust deed. The Ld. Counsel further submitted that charitable institutes are being caught in such a position that if they received donation and try to start the activities then in the absence of registration the receipt would be taxable. 7 ITA Nos. 3862,3863/Del/11 Because benefit of 11 & 12 will not be there, but if an assessee applied for grant of registration u/s 12A, then Ld. Revenue Authority would emphasis first start the activities, demonstrate how the activities are genuine and of charitable nature. He relied upon the decision of Hon'ble Karnataka High Court in the case of DIT vs. Garden City Educational Trust reported in 191 Taxman page 238 and submitted that Hon'ble Court has observed that registration u/s 12A is one of the procedural aspect for claiming benefit u/s 11& 12 of the Income Tax Act. The issues whether assessee would earn income, it will apply its income for the purpose of its activity or not are relevant while assessing the income of the assessee. For registration U/s 12A, Ld. Commissioner is required to look into prime facie about the genuineness of the activities of the assessee. The activities reported in the aims and objects should be in accordance with law. They should not for the purpose of carrying out any illegal activities. He preyed that aims and objects of the assessee are of charitable nature. Therefore, registration u/s 12A should be granted to the assessee by passing an order u/s 12AA (1)(b). Ld. DR, on the other hand relied upon the order of Ld. Commissioner. He submitted that 8 ITA Nos. 3862,3863/Del/11 assessee has received a very nominal donation. The corpus fund is of ` 88,100/- . It has given a very small aid. He took us through the details available on pages No. 21 to 26 of the paper book. From these details, it is not discernable that assessee's activities are in the direction of fulfilment of its aims and objects.
4. We have duly considered the rival contention and gone through the record carefully. Ld. DIT has called for a note on the activities to be taken up by the foundation. The assessee has given the note which read as under :-
Note on activities to be taken up by the foundation over the next 2 years :
The Outcancer Foundation will earnestly work towards achieving its primary and other objectives and in this regard will do a focused work on the following activities over the next years:
To tie up with leading Cancer care hospitals in India (particularly in Northern and Western parts) to promote the programs relating to spreading awareness about cancer risks, early detection and possible treatments.
To collaborate with leading cancer care hospitals and healthcare chains providing cancer treatments to facilitate designing and setting up cancer treatment programs which are focused on providing both curative as well as palliative cancer care for the needy and poor segments of society;
To establish or promote or provide help and aid in establishing charitable healthcare centers, sanatoriums and similar institutions for promotion of research and education activities relating to the field of oncology;9 ITA Nos. 3862,3863/Del/11
To promote and sponsor programs for fund raising for supporting (a) treatment of cancer patients particularly those belonging to poor strata of society (b) cancer detection programs and awareness rallies and (c) research programs on improving cancer treatment methods;
5. Ld. DIT observed that in order to fulfil these aims and objects, assessee was enable to produce supporting materials. Therefore, its activities are not genuine. Thus the substance of the order is that assessee failed to bring concrete evidence in support of its activities required to be performed. In the paper book, assessee has placed on record the details of aids given by it to the needy persons for conducting the investigation of cancer. One of the beneficiary is Mrs. Sushma Chaudhary, B-86, Nand Gram, Sarkari Colony, Ghaziabad and other one is Mr. Murli Dhar, H. No. 190 Noida, UP. They indicate that whatever little means that assessee has, it is performing its work in the direction of its aims and objects. Therefore, on an analysis of all these details, we are of the view that for the purpose of granting registration u/s 12A, Ld. DIT has to form a prima facie opinion as suggested by the Hon'ble Karnataka High Court. The Hon'ble Karnataka High Court has again considered this aspect in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust vs. DIT reported in 285 ITR 327. The aims and objects of 10 ITA Nos. 3862,3863/Del/11 the assessee are prime facie charitable in nature. Therefore, it deserves a registration u/s 12A, we direct the Ld. DIT to grant registration admissible as per rules.
Now we take ITA No. 3862/D/2011
6. Ld. DIT has made reference of his order passed u/s 12AA (1)(b) of the Income Tax Act. Whereby he refused registration to the assessee u/s 12A. He made a reference to the decision of Hon'ble Kerala High Court rendered in the case of Self Employers Service Society vs. CIT reported in 247 ITR page 18. On the strength of this decision, Ld. Commissioner has observed that genuineness of the activities could not be established by the assessee. With the assistance of Ld. Representative, we have gone through the record carefully. The reference made to the decision of Hon'ble Kerla High Court in the case of Self Employers Service Society is concerned, we find that Hon'ble Karnataka High Court has observed in that case that Ld. Commissioner while exercising his jurisdiction u/s 12AA for grant of registration u/s 12A, has to be satisfied all the charitable and religious nature of the objects and genuineness of the activities of the trust or institution. In that case, the 11 ITA Nos. 3862,3863/Del/11 society has not done any charitable work during the relevant period. On the other hand, activities which society had carried out were only for the purpose of generating income for its member. According to the Hon'ble High Court, there was no material before the Commissioner to be satisfied of the genuineness of the activities of the trust or institution. We find that such facts are not available in the present case. The aims and objects extracted supra do indicate that they are charitable in nature. The assessee has taken steps for fulfilment these objects. It has placed on record the details of aids given by the patients. Moreover, the registration granted to the assessee could be withdrawn if it was found that it is not acting in accordance with aims and objects and consequently other exemption could also be withdrawn. Thus, in view of our finding in ITA No. 3863/Del/11 i.e in the case of grant of registration u/s 12A, we are of the view that activities are of charitable nature. It is a genuine trust. It deserves to an exemption u/s 80G also, so that it can receive maximum aids and donations. Otherwise, no person would like to extend the benefit to an institution who does not enjoy registration u/s 80G. 12 ITA Nos. 3862,3863/Del/11
7. In the result, we allow both the appeals and direct the Ld. DIT to grant registration u/s 12A as well as u/s 80G (5) of the Income Tax Act 1964.
Order pronounced in the open court on 2nd December, 2011.
Sd/- sd/-
[G.E.VEERABHADRAPPA] [RAJPAL YADAV]
PRESIDENT JUDICIAL MEMBER
Dated: 2.12.2011
Veena
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A)
5. DR, ITAT
TRUE COPY By Order,
Deputy Registrar,
ITAT, Delhi Benches