SOCIETY ON PROMOTHI ACTIVATION & RESEARCH FOR SCIENTIFIC SOCIAL HELPS,NEW DELHI vs. CIT EXEMPTION , DELHI

3. On perusal of the documents and financials filed by the applicant, it is noted that the main expenses incurred by applicant trust is on seminar & camp, which is not mentioned in its objects and also not in nature of charity. Further the bills submitted are mainly raised by hotels/resorts on account of food/banquet/rooms etc, which are again not in nature of charity. Further, the trustees as per submission made are medical practitioners and doctors. At the same time donors are all pharmaceutical companies and they have deducted TDS u/s 194C on the payment made to the assessee trust. Thus it has failed to prove that activities for charitable purpose, as mentioned in section 2(15) of IT Act, are actually being undertaken by it.

4. In light of the above, the application filed in Form 10AB for grant of registration u/s 12A(1 )(ac)(iii) is hereby rejected.

5. Since, the application filed in Form 10AB seeking registration u/s 12A(1 )(ac)(iii) is rejected, the provisional registration granted vide order dated 23.01.2024 having Unique Registration Number AAQTS7319JE20221 issued for the period from A. Y. 2023-24 to A.Y. 2025-26 is also cancelled.

3.1 Thus, it is seen that the AO for the reason mainly mentioned in Para 3 of his order rejected the application filed in Form No. 10AB for grant of registration u/s 12A(1)(ac)(iii) of the Act, by holding that the assessee failed to prove that activities for charitable purpose as mentioned in section 2(15) of the Act were actually undertaken by it.

“That under the facts and circumstances, ld. CIT(Exemption) grossly erred in law as well as on merits in holding that the assessee has failed to prove that the activities of trust are for charitable purposes as per Sec.2(15) of the I.T. Act and consequently erred in rejecting the application filed in Form- 10AB seeking registration u/s 12A(1)(ac)(iii)”.

“Denial of exemption certificate U/S.12A The assessee, a charitable society, came into existence vide trust deed Dtd. 18.04.15, got registered on 30.12.15 with Sub-Registrar. - The founder of the trust deed are 03 doctors as under:- i. Dr. Sushant Gupta (MBBS, M.D., DM) Oncology, Director Balaji Action Cancer Hospital. ii. Dr. Samit Purohit (MBBS, M.D., DM) Oncology, Director Balaji Action Cancer Hospital. iii. Dr. Hari Goyal (MBBS, M.D., DM) Oncology, Director Max Cancer Hospital. The objects of the trust deed are as per trust deed including: - (5-8) (192, 187) • To organize seminars, conferences, continuing medical education. • To provide medicines to poor and needy. • To provide Tarpaulin for making tent for homeless people. • To provide financial help for treatment of poor and needy people. • To provide donation to other registered trust. The provisional registration U/S.12A granted by provisional registration certificate Dtd.23.01.23. (18-19) - However the application for final registration U/s. l2A stood rejected by CIT(E) for the following reasons:- (Para-3 of order) • Main expn. incurred on seminar and camp, which is not mentioned in objects and not in nature of charity.

• Bills submitted are mainly raised by hotels and resorts for food/banquet/rooms which is not in the nature of charity. • Donors are pharmaceuticals companies who have deducted TDS U/S.194C. BRIEF CONTENTIONS The trust is constituted undisputedly for charitable purposes; therefore, provisional registration has been granted. All the three reasons (as above), for not granting the registration are legally as well as factually incorrect and untenable as under:- • Seminar Expn. And • Hotel And Resorts Bills For Conferences - Seminars are for continuing education of doctors for educating them for better treatment and welfare of patients with latest techniques and researches and medical relief. (107-151) Seminars are integrated part of object for medical relief, hence seminar expn. are necessary for the best possible treatment of the patients with latest knowledge and techniques. In the absence of medical education, the welfare and required treatment of patients is not possible. No commercial charges/benefit has been derived by the trust/authors/trustees by incurring these expn. All these activities are specifically part of objects No.l to 4 directly, purely charitable in nature and necessary for achieving the objects. (5) Further, the conferences are lectured by highly professionally rated faculties and professionally qualified doctors. (136-151) These faculties and the participants, had to be accommodated only in appropriate accommodations with good fooding etc. These expn. are not for the pleasure of the doctors but necessary to organize conferences in reasonable hotels etc, hence an integral part for obtaining the objects. Thus, hotel, fooding expn. are part and partial of conference expn. The A.O. is wrong in mentioning that conferences and seminars are not mentioned in objects, it is specifically provided in object No.26.

This activity is clearly a charitable activity, eligible for Sec.l2A. CASE LAW - Seminar/Conference Expn. In Medical Paediatric Pulmonology Programme Trust Vs. CIT [2015] 60 taxmann.com 158 (Chandigarh - Trib.) (Now Filed) Section 2(15), r.w.s. 12A and 12AA, of the Income-tax Act, 1961 - Charitable purpose (Medical relief) - Assessee-trust filed application for registration U/S.12AA - Commissioner refused to grant registration by holding that activities of assessee-trust were nothing but adventure in nature of trade and would not fall in definition of 'charity' - It was found that aims and objects of assessee-trust clearly showed that it came into existence for providing medical assistance to poor patients and to promote research work on medical site and to hold conference etc., to create awareness and educating doctors especially paediatricians about respiratory disorders/diseases of children, etc - Further, accounts alsoshowed that expenses were incurred for conferences and medicines for poor patients which were directly connected to achieve aims and objects of assessee-trust - Whether since assessee-trust existed for charitab.e purp se only, assessee would be eligible for deduction U/S.12AA - Heid. ;es ’Para [In favour of assessee] • TPS deducted by donors U/s.l94C - The A.O. rejected 12A for the reason that donors deducted TDS U/s.l94C from the donation. (31-34) - This cannot be a reason for denial of registration. - The PCIT is not disputing that the assessee reed, donation. - His only objection is that the donor has deducted TDS U/S.194C on TDS. - Deduction of TDS U/s. 194C by the donor do not change the character of donation in the hands of assessee. - As per settled law of Hon’ble Delhi High Court deduction of TDS U/S.194C by the donor cannot be a reason for denial of registration. CASE LAW -Exemption U/s 11 and 12, merely because donors had deducted TDS (Now Filed) Aroh Foundation vs CIT(E) [2024] 159 taxmann.com 608 (Delhi)

INCOME TAX : Where assessee, charitable society, received grants from donors towards its charitable activities and claimed same as exemption U/s. 11 & 12, merely because donors had deducted TDS U/s.l94C & 194J while allocating grants, said fact would not be determinative factor for denial of benefits to assessee U/s. 11 & 12, and receipts could not be treated as income of assessee unless specifically hit by proviso to Sec.2(15) Further, apart from conference and seminar expn., trust is also incurring huge expenditure for followings, which are also of charity nature and not in dispute Head F.Y.2022-23 F.Y.2023-24 P/B Pg. Nos.

Medical relief 53,27,904/- 20,24,741/- (26)(72-06)(152- expn. 186) Donation to 15,00,000/- 22,00,000/- (29)(72-06)(152- similar trust 186) Total 68,27,904/- 42,24,741/- ….

Thus, Ld. PCIT(E) should had granted certificate U/s.l2A. 6. The CIT DR supported the order of the ld. CIT(E), Delhi.

7.1 The assessee has mentioned 24 other objects of the trust which varies from medical treatment to as diverse an issue to advocate the cause of peace with government, international agencies and private bodies. Thus it can be said that in the given facts of the case, the other objects are a part of standard format of a trust deed whereas the main focus of the trust relates to the main objects of the trust i.e. to run hospital/nursing home, other medical relief, education, other relief of the poor.

7.2 Further clause 25 of the objects of the trust deed states that the Trust will do all other acts and things that are conducive or helpful to the advancement and fulfillment of the principal and other objects as mentioned at Sl. No. 1 to 24 of the trust.

7.3 Further clause 26 of the Trust deed wherein, ‘conference and seminars’ is mentioned as one of the object of the trust deed inter-alia states that in furtherance of the object of the trust, the society will undertake, ‘conferences and seminars’. Clause 26 of the Trust deed is reproduced for ready reference as under:-

26) For above purpose and or in pursuance thereof undertake, execute, support and assist any programe(s) or project(s) with no profit motive designed to provide: research and studies into the problems of the marginalized, publishing of books, magazines, periodicals, pamphlets, brochures etc, in furtherance of the object of the society, study circles, conferences and seminars. 7.4 In the written submissions filed before us, the objects of the trust have been mentioned as under:

• To organize seminars, conferences, continuing medical education. • To provide medicines to poor and needy. • To provide Tarpaulin for making tent for homeless people. • To provide financial help for treatment of poor and needy people.

• To provide donation to other registered trust. 7.5 The above submission of the assessee has been carefully perused.

The assessee submits that the object of the trust deed includes ‘to organize seminars, conferences, continuing medical education’. It gives an impression that organizing seminars and conferences is one of the main object of the Trust whereas the reading of the entire trust deed shows that the object to organize seminars and conferences as mentioned at clause- 26 of the Trust deed was for the furtherance of the objects including the main object of the trust and other objects mentioned at Sl. No. 1 to 24 of the trust deed. Therefore, the most important issue in this case for determining whether charitable activities as defined u/s 2(15) of the Act, has been carried out by the Trust is to ascertain the purpose of organizing the seminar and conferences on which the major expenses of the trust has been incurred as per the details available as on 31.03.2021, 31.03.2022, 31.03.2023, as on 31.03.2024, which is reproduced as under:-

Sl. Financial Year Donation Seminar Medical Page no of No. received (in and relief paper book lakhs) Conference expense/ (in lakhs) Donation 1 2020-21 12.07 9.45 NIL 20 2 2021-22 76.98 28.06 NIL 23 3 2022-23 94.50 43.49 53.27 26 15.00 4 2023-24 176.39 70.85 20.24 29 22.00 7.6. Further, the claim of the assessee on ‘medical relief expenditure’ and ‘donation to similar trust’ as per the details submitted in the paper book and in the written submission as reproduced in this order also needs verification. The said verifications have not been done by the ld. CIT(E) wherein by a general remark, the ld. CIT(E) noted that the main expenses was on seminar and conference which according to him is not mentioned in its object and was also not in nature of charity. It was further noted by him that the bill submitted are mainly raised by hotel / resorts on account of food/banquet / rooms which are again not in nature of charity.

7.7. In this regard, the ld. AR has relied upon the decision of the ITAT, Chandigarh ‘B’ Bench in the case of Paediatric Pulmonology Programme Trust vs. CIT [2015] 60 taxmann.com 158 (Chd. Trib.) wherein the financial statements of the cited trust for the year ending 31st March 2014 revealed that except expenses amounting to Rs.11,635/- debited under the head ‘medicine for poor students’, all other expenses debited in the income and expenditure are related to conference only. The Ld. AR relied upon the finding as arrived by the Tribunal in the said case that since the trust existed for the charitable purpose only and held that the assessee trust was eligible for registration u/s 12AA of the Act. The Tribunal in the cited case relied upon the decision of the Hon’ble Punjab & Haryana High Court in IT Appeal No.263 of 2013, vide order dated 28.04.2014 and the relevant discussion of the Tribunal in para no. 7 of the order is reproduced as under:

“7. In this case the learned CIT denied the registration because no activities have yet started. However, the Tribunal followed the decision of the Hon'ble Punjab & Haryana High Court in which the society had not done any charity work and registration has been granted to the assessee. The aims and objects of the assessee trust as reproduced above, clearly show that the assessee trust came into existence for providing medical assistance to the poor patients and to promote research work on medical side and to hold conference, etc., to create awareness and educating the doctors especially Paediatricians about the respiratory disorders/diseases of children which are on a rise these days. The aims and objects of the assessee and explanation given before the learned CIT clearly support the contention of learned counsel for assessee that the assessee trust is created for charitable purpose only. The definition under s. 2(15) of the Act provides the definition of charitable purpose which includes relief to poor, education and medical relief. The learned CIT instead of considering the same has referred to the proviso of the same section and held the activities of the assessee to be adventure in nature without bringing any material on record as to how the assessee trust has entered into any business activities which are adventure in nature of trade. The aims and objects of the assessee are, therefore, clearly charitable in nature. The accounts for year ending 31st March, 2014 show that the expenses are incurred for conferences and medicines for the poor patients which are directly connected to achieve the aims and objects of the assessee trust. The learned counsel for assessee also filed copies of aims and objects of the similar societies in which the learned CIT, Chandigarh has granted registration under s. 12AA of the Act. Copy of registration granted under s. 12AA of the Act in respect of Society of AROI-2001, Department of Radiotherapy, PGI, Chandigarh-PB-59 and order of CIT, Chandigarh granting registration under s. 12AA of the Act of Charitable Hematology Education & Research Trust of Chandigarh-PB-68. When the learned CIT had granted registration under s. 12AA to these societies, the learned CIT should not distinguish the case of the assessee from the similarly situated assessees. Considering the above discussion in the light of the aims and objects of the trust, it is clear that the assessee trust existed for charitable purpose only and had done some activities in achieving its aims and objects also. Therefore, the assessee trust is eligible for registration under s. 12AA of the Act. In view of the above discussion, we set side the order of the learned CIT-I, Chandigarh and direct him to grant registration under s. 12AA of the Act in accordance with law within one month from the date of receipt of the order.” (Emphasis supplied) 7.8. Thus, we note that Chandigarh Bench of the Tribunal in arriving at the above decision for granting of registration to the society inter-alia noted that expenses were incurred for conferences and medicines for poor patients, which were directly connected to achieve the aims and objects of the assessee trust. However, the ld. CIT(E) has not made any such examination /verification of the details filed by the assessee before the Ld.

CIT(E) and such verification is required before the decision relied by the assessee can be applied to the facts of the case of the assessee.

“19. In the instant case, the sole reason to construe the receipt amounting to Rs. 5,90,42,892/- received by donors under the tax regime is founded on the assumption that the same is towards professional/technical services or contractual income as TDS was deducted under the Sections 194C and 194J of the Act.

The appellant has to submit inter/final progress/work completion reports along with evidences to the funding agencies from time to time. These agreements also include a term that separate audits accounts for the project will be maintained. The unutilized amount has to be refunded back to the funding agencies in most of the cases. All the terms and conditions are simultaneously complied with otherwise the grants are withdrawn. The appellant has to utilize the funds as per the terms and conditions of the grant. If the appellant fails to utilize the grants for the purpose for which grant is sanctioned, the amount is recovered by the funding agency. On the basis of the evidences placed on record, it is seen that the appellant is not free to use the funds voluntarily as per its sweet will and, thus, these are not voluntary contribution as per Section 12 of the Act. These are tied up grants where the appellant acts as a custodian of the funds given by the funding agency to channelize the same in a particular direction. In case of voluntary contribution, the appellant is free to use the money as per its will and neither have to render the account of the same to the donor nor the same is monitored by the donor. The said amount becomes income of the appellant and has to be used for charitable purposes as per its objects. However, in case of specific tied up grants, money is received for specific purposes and is to be utilized for the same.

8. The Commissioner of Income-tax (Appeals) has also referred to the judgment of the Rajasthan High Court in Sukhdeo Charity Estate v. CIT [1984] 149 ITR 470 (Raj.).

9. In view of the aforesaid factual position, the tribunal has upheld the order passed by the Commissioner of Income-tax (Appeals) and has not accepted the appeal filed by the Revenue."

Therefore, in absence of the same the applicability of the above decision of the Hon’ble Delhi High Court cannot be directly made applicable to the facts of the case of the assessee in favour of the assessee. Moreover, as discussed above the purpose of the seminars and conferences held by the assessee and assessee’s claim on medical relief expenditure and donation to similar trust as per the details submitted in the written submission and the paper book has also not been examined by the ld. CIT(E), which requires factual verification by the Ld. CIT(E). Therefore, we are of the considered view that the order of the ld. CIT(E) dated 29.08.2024 rejecting the application of the assessee in Form No. 10 for grant of registration u/s 12A(1)(ac)(iii) cannot be sustained and the same is set aside to his file to pass a fresh order after giving a reasonable opportunity of being heard to the assessee and also keeping in view the above observations as made above and as per law.

10.1. The ground of appeal filed by the assessee is as under:-

“That under the facts and circumstances, Ld. CIT (Exemption) grossly erred in law as well as on merits in holding that the assessee has failed to prove that the activities of trust are for charitable purposes as per Sec.2(15) of the I.T. Act and consequentially erred in rejecting the application filed in Form- 10AB seeking approval U/s.80G(5)(iii).” 10.2. The written submission of the assessee is as under:-

Copy paste order of PCIT(E) for denial of certificate U/s.80G. - It is consequential to the guidance of ITA No.4548/Del/2024.”

10.3. The ld. CIT(DR) supported the order of the Ld. CIT(E).

10.4. We have heard both the parties and perused the materials available on record. The ld. CIT(E) in view of the similar reasons as for rejecting the application u/s 12A(1)(ac)(iii) rejected this application of the assessee and therefore this rejection order of the ld. CIT(E) is consequential in nature.

Order pronounced in the open court on 30th May, 2025.