Income Tax Appellate Tribunal - Chennai
Cardiac Sugical Academic And Research ... vs Assessee on 4 February, 2013
IN THE INCOME-TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI.
Before Shri N.S. Saini, Accountant Member &
Shri S.S. Godara, Judicial Member
I.T.A. No.2047/Mds/2012
Cardiac Surgical Academic and The Commissioner of Income Tax - I,
Research Trust, Vs. Coimbatore.
No. 12, Ramanathapuram Co-
operative Colony Uppilipalayam,
Rajiv Gandhi Nagar,
Coimbatore 641 045.
[PAN:AACTC3383M]
(Appellant) (Respondent)
Appellant by : Shri K. Raghu, C.A.
Respondent by : Shri Shaji P. Jacob, Addl. CIT
Date of Hearing : 04.02.2013
Date of pronouncement : 08.02.2013
ORDER
PER S.S. Godara, Judicial Member
In this appeal, the assessee has challenged the order dated 25.09.2012 passed by the Commissioner of Income Tax -I, Coimbatore rejecting its application for registration under section 12AA of the Income Tax Act 1961 [in short the "Act"].
2. The assessee has raised the following grounds in the appeal:
"1. The learned CIT-I, Coimbatore, has erred in law as well as on facts, in rejecting the application of the appellant, for registration u/s 12A of the Income Tax Act, 1961.2 I.T.A. No.
No. 2047/M/ 2047/M/12 /M/12
2. The learned CIT-I, Coimbatore, has failed to appreciate that the appellant Trust fulfilled the conditions necessary and qualified for registration, the objects of the Trust fall within the definition of "charitable purposes", defined u/s 2(15) of the Income Tax Act, 1961, in the facts and the circumstances of the case and in law.
3. The order of the CIT-I, Coimbatore, is purely on subjective considerations, arbitrary and unjustifiable, in law as well as on facts.
4. The learned CIT-I, Coimbatore, ought to have appreciated that seminars and conferences are 'continuing educational programme' and considering the dominant intention of the appellant, it cannot be held to be a non-charitable activity, in the facts and the circumstances of the case and in law.
5. The learned CIT-I, Coimbatore, has grossly erred, in his analysis to conclude that the activities of the appellant Trust cannot be called charitable activity, in the facts and the circumstances of the case and in his decision to reject the application filed seeking registration u/s 12A of the Income Tax Act, 1961, in the facts and the circumstances of the case and in law.
6. For these and other additional grounds of appeal that may be adduced at the time of hearing, the order of the Commissioner of Income Tax-I, Coimbatore, is opposed to law and unsustainable in the facts and the circumstances of the case."
3. Reiterating the pleadings made in the above said ground, the assessee contends before us that the CIT has wrongly rejected its application for registration under section 12A of the "Act". By placing reliance on the case law of Yodha Samarak Samiti v. CIT in ITA No. 422(CHD) of 2010, the AR has prayed for acceptance of the appeal.
4. Per contra, the DR representing the Revenue strongly supports the order of the CIT in question.
3 I.T.A. No.
No. 2047/M/ 2047/M/12 /M/12
5. Undisputed facts of the case are that he assessee is a Trust constituted by trust deed executed on 28.10.2011. Its trustees are its author, (a cardiac surgeon), his wife and a Doctor. On 30.03.2012, it moved an application seeking registration under section 12A of the "Act" before the CIT, Coimbatore. We notice from the impugned order that after examining assessee's objects, balance sheet, the CIT has turn down the application of registration sought by the assessee for the following reasons:
"3.0. The stated objects of the trust are:
3.1. Object: To collect Information, study material and papers presented In various seminars and conferences for the purpose of ,advancement of knowledge in science of cardiothorasic: This object essentially is publication issue: for, the trust intends to collect the information pertaining to cardiothorasic. Collection of information can not be passed off as a charitable activity. Moreover, this job is done by any publishing houses of medical journals or by the institutions engaged in medical services, as required by them. Therefore, no element of charity is found in said object to hold it as of charitable nature.
3.2 Object: To hold seminar, discussion at various places in India and spreading of latest development in the field of cardiothorasic surgery: It is seen that holding a seminar and group-discussion is done by medical institutes, pharmacological companies, Medical Council of India for the purposes of exchanging the information and ideas in medical profession. Such an activity is essentially professional in nature; and, therefore, there is no element of charity, thereof.
3.3. Object: To circulate educational newsletter and audio/video cassettes on the subject of cardiothorasic surgery: This again is in nature of advertising of professional skills of particular medical surgery to further profession. I do not find any element of charity in such programme(s).
3.4. Object: To carry on such activity not involving any activity for profits but aimed at providing relief and treatment to persons suffering 4 I.T.A. No. No. 2047/M/ 2047/M/12 /M/12 from cardiac diseases and treatment of persons requiring medical attendance or rehabilitation: The first limb is pronounced in a vague manner, for it has not spell-out the specific nature of such activity which is not for profit. And, the second limb also states that the trust intends to given medical attendance and rehabilitate those suffering from cardio thorasic diseases. But, it has not spelt-out whether, such facilities are free of cost or at concessional rates. In any case, the object is too vague to reflect true altruistic intensions of charity. Thus, there is no element of charity.
3.5. Object: To conduct and sponsor programmes/facilities, for treatment to patients requiring medical attention and care and also for prevention of cardiac related diseases in any hospitals, institutions or public places without profit motive and only for the purpose of medical relief and spreading awareness of facilities available to the general public: It is strange that the trust intends to sponsor programmes and facilities etc. but it is not clear as to why it want to take-up the jobs of medical institutes, super speciality hospitals etc. The only plausible explanation for such an arrangement is with intentions to generate profits without incidence of taxation as, all such activities are likely to be made out to be of charitable nature; though, claimed as without any profit motive. Above all, it has not explained as to how such activities would constitute a charity. The medical institutes, super speciality hospitals and even the governments, spread awareness through advertisements, in accordance with their requirement(s). Therefore, it is not clear as to why such an activity is intended to be duplicated by the trust. Again, only plausible answer could be that, it is so arranged to avoid payment of tax on profits· generated in the process by thrusting a facade of charity.
4.0. The foregoing analyses of the stated objects of the trust reveals the intentions of its author to practice his well experienced profession through the trust to avoid the incidence of tax. The trust is also formed with intentions of extending benefit to author's wife (one of the trustees) and third and last trustee (who is also a doctor). Such an arrangement defeats the legislative intentions of 'Charity Purposes' envisaged in the Sec-2(15) of the Income-tax Act, 1961 (Act). And, though the said definition is an inclusive one the same cannot be interpreted to include any activity, only by calling it as charitable. Thus, it is inferred that the trust is formed with profit motive to extend professional-service on payment basis and in the process generate profits for the benefit of the author and other two trustees. And I do not find any charitable activity in the stated objects of the trust. Therefore, in appreciation of the facts 5 I.T.A. No. No. 2047/M/ 2047/M/12 /M/12 and circumstances of the case, it is decided to reject the application filed seeking registration u/s-12A of the Act.
5.0. Thus, in the light of the foregoing information, the registration u/s-12A of the Act is hereby refused."
In this backdrop, the assessee is in appeal.
6. We have given our thoughtful consideration to the submissions made by both parties and also perused CIT's order as well as case law quoted by the assessee. As already reproduced hereinabove, one of the reason given by the CIT in the impugned order is that the trust has been formed with the intention of giving benefit to the wife of the author, which defeats the very concept of charitable purpose as defined under section 2(15) of the "Act". Before us, no cogent material has been filed by the assessee so as to rebut the findings under challenge. In our opinion, merely a bald assertion carries no wait in the absence of cogent documentary evidence. In view of these facts, we hold that since the findings of the CIT have not been controverted, the same are liable to be upheld.
7. So far as the case law cited by the assessee is concerned (supra), we notice that the trust in question had filed its trust deed before the 'Tribunal' and therefore, only after examining in detail the objects of the said trust, its application seeking registration had been accepted. When we apply the facts of the said case vis-à-vis the case in hand, we are unable to grant relief sought by the assessee in the absence of trust deed before us. Therefore, 6 I.T.A. No. No. 2047/M/ 2047/M/12 /M/12 we uphold the CIT's order under challenge and reject assessee's contention.
8. As sequel to above discussion, the appeal filed by the assessee stands dismissed.
Order pronounced on Friday, the 8th of February, 2013 at Chennai.
Sd/- Sd/- (N.S. SAINI) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, the 08.02.2013 Vm/- To: The assessee//A.O./CIT(A)/CIT/D.R.