KALP-VRIKSH HOSPITAL AND RESEARCH CENTRE FOUNDATION,JHUNJHUNU vs. CIT EXEMPTION, JAIPUR

‘’05. In view of above discussionassessee’s claim of registration section 12AB is liable to be rejected and thus being rejected on followinggrounds:-  Benefit of interested person.  Diversion of income of the trust by trustee and assessee trust is not a separate entity.  Non-Genuineness of activities.

0.6 Further 12AB(1)(b)(ii)(B) of the Income Tax Act, 1961 also state that if CIT is not satisfiedhas to pass order rejecting such application and also cancelling its earlier registration. Thus, it is clarified that applicant’s provisional registration under clause (vi) of clause (ac) of sub-section (1) of Section 12A of the Income Tax Act, 1961 dated 06-10-2021 is also being cancelled. Further assessee has failed to give proper justification for regularization of provisional registration, thus with this order provisional registration is also lapsed and cancelled.’’ 2.2. While hearing, the ld. AR of the assessee mainly submitted that the assessee was not provided proper opportunity of personal hearing by the ld. CIT(E) and thus the order should be quashed being ex-parte order and against the principles of natural justice. The ld.AR of the assessee has advanced the following submission to controvert the findings of the ld. CIT(E) which is reproduced as under:- ‘’Submissions KALP-VRIKSH HOSPITAL AND RESEARCH CENTRE FOUNDATION VS CIT (E), JAIPUR 1. Due to medical reasons, the case could not be represented in a proper manner. At the outset, it is submitted that Ld. CIT (E) has harped on the point that the appellant failed to furnish the requisite documents. Before moving further, it is stated that in this case, the appellant has already given a detailed reply on two occasions Le dated 7.12.2024 (komully refer to page на 33-43, followed by caricus enclosures attached with the same) and then detailed reply dated 19.12.2024 (kindly refer to page no. 256-263, followed by various enclosures attached with the same). The fact of the matter is that the Authorized Representative of the appellant viz., CA Yogesh Kumar Jangid, was suffering from a serious medical condition during the course of the proceedings. He was advised strict bed rest for a period of 40-45 days owing to a severe spinal problem. Despite these unforeseen health constraints, the appellant, along with the Authorized Representative, made sincere efforts to submit the necessary documents and information in a timely manner. A copy of the medical prescription of the Ld. AR is enclosed herewith in support of this submission as Annexure-A. Therefore, due to such conditions, the appellant could not file the requisite replies in the timely manner, as desired by the Ld. CIT (E) and mainly due to this reason, the Ld. CIT (E) was not satisfied 2. Land provided by the director Mrs. Anita Budania for the use of hospital under a MOU: It is submitted that one of the promoters, Mrs. Anita Budania, the lawful owner of the land situated at "Khasra 1357/1035/2, near loharu bye pass road, Pilam, Jhunjhunu, Rajasthan", generously provided the said land for the construction and functioning of the hospital and its research center. At the time of incorporation of the appellant company, it was not financially feasible to obtain banking credit facilities due to the absence of an established financial track record. Consequently, Mrs. Budania leveraged her personal financial credentials and goodwill to secure a loan for the construction of the hospital and research center. A duly executed Memorandum of Understanding (MoU) between the appellant and the promoters evidences this arrangement and outlines all relevant terms and conditions. In view of such MOU the appellant agreed to discharge all financial obligations arising from the loan taken by the Mrs. Anita Budania and hence paid the monthly instalments for the same. It was agreed that the expiry or earlier termination of the said MOU, Mrs. Budania shall reimburse amount equivalent to the residual value of the building, for which financial obligations were paid (EMI of loan or otherwise) by the appellant. It is submitted that before the submission of the said MOU, the rejection order was passed in the matter. The submission is therefore that there was a proper arrangement for use/sharing of the land between the appellant and the directors and it is not, siphoning of any funds, as alleged It shall not be out of placed to mention here that the said arrangement has been duly accepted by the Income Tax Department in the case of Mrs. Budania, and no adverse actions under sections 147/148, 143(3), 263 has been taken her case. Further, the said arrangement has also been accepted by the bank, it is hence reiterated that this cannot be considered as siphoning off funds, by any stretch to imagination. The copy of said MOU is enclosed herewith in support of this submission as Annexure-B.

KALP-VRIKSH HOSPITAL AND RESEARCH CENTRE FOUNDATION VS CIT (E), JAIPUR 3. The assets of the appellant hospital are not used for personal use, as alleged: In this regard, it is submitted that both promoters, Mrs. Anita Budania and Mr. Karan Singh, are qualified and practicing medical professionals with over 15 years of experience in the field. They are actively rendering professional services within the appellant hospital and are receiving professional fees accordingly It is to be noted that both the promoters are practicing as medical professionals under the umbrella of the Kalp-Vriksh Hospital and Research Centre Foundation and further the billing is also done in the name of the hospital. The Ld. CIT (E) has therefore erred in observing that in this case, the assets are being used for 'personal purpose No hospital's medical equipment or infrastructure has been used for any personal or unrelated purposes. The Ld. CIT (E) observed that the directors are mentioning in their income tax return "income from medical practice" by running from medical nursing home. The same is actually the income, which is being paid by the appellant only after duly deducting the tax at source U/s 194 JB of the Income Tax Act, 1961. The fact is that besides being getting the income from the hospital there is no other income of the said two directors. Even otherwise, only for the sake for argument, and without admitting, it is submitted that there is no bar under the provisions of section 12 r.w.s 13 with respect to the private medical practice for a doctor, which is a promoter and director of a company incorporated U/s 8 of the Companies Act. 3.1 It may be clarified that additionally, Mrs. Budania operates a medical shop within the hospital premises under her own proprietorship. The right to operate this medical shop is clearly stipulated in the MoU executed between the hospital and her. With respect to the observation made by the Ld. CIT (E) pertaining to the use of hospital medical equipment by Mrs. Anita Budania for operating Aakriti IVF Center, it is humbly submitted that AakritiIVF Center, duly registered section 16(1) of the Assisted Reproductive Technology (Regulation) Act, 2021 by the State Appropriate Authority Rajasthan, Jaipur on 31st July, 2023 for 5 years under registration number RJ/AC/2023/14260/L-2/Jhunjhunu/122. Aakriti IVF Center is the name of Art Clinic (for carrying out Assisted Reproductive Technology procedure) operated and run by the hospital. The income generated from the said center is duly included in the total income of the appellant. 3.2 It is also stated that in this case the Ld. CIT (E) while making adverse objections against the appellant was of the view that while signing some MOU with the government(s), Mr. Karan Singh is show as the "owner" of the Kalp- VrikshHospital and Research Centre Foundation. In other words, the view of the Ld. CIT (E) is that actually Mr. Karan Singh is the "owner" of the appellant and the same is therefore used for his personal purposes. In this regard, it is submitted that the Ld. CIT (E) has not appreciated that the word "owner" is being mentioned for the purpose of signing and facilitation of the MOU to avail the benefit of the government schemes at large and merely using the word "owner" does not change the fact that appellant is undertaking medical facilities for charitable purpose for the benefit of public at large. The view taken by the Ld. CIT (E) is therefore hyper technical and he has not appreciated that the language and draft of such KALP-VRIKSH HOSPITAL AND RESEARCH CENTRE FOUNDATION VS CIT (E), JAIPUR government MOU are already pre-filed and they use standard language, which cannot be altered.

As the ld. AR of the assessee submitted before us that the counsel was ill who was supposed to file all the details before the ld. CIT(E) and therefore, there was non-compliance in submitting the desired details before the ld. CIT(E). Based on this submission, we are of the considered view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing the opportunity of being heard to the assessee and thereby the principles of natural justice to be followed. Looking to that aspect of the matter we direct the assessee trust to provide details / justification for registration before the ld. CIT(E)and also in all these circumstances of the facts and circumstances of the case, the Bench restores the matter back to the file of the ld. CIT(E) to decide the issue (supra) afresh in accordance with law. Since, we have restored the matter to the file of ld. CIT(E), the provisional registration which is otherwise valid will survive till the ld. CIT(E) decide the issue. 2.5. Before parting, we may make it clear that our decision to restore the matter back (supra) to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the KALP-VRIKSH HOSPITAL AND RESEARCH CENTRE FOUNDATION VS CIT (E), JAIPUR merits of the dispute, which shall be adjudicated by the ld. CIT(E) independently in accordance with law.