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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. SANJAY ARORA & SH. N.K.CHOUDHRY
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA No.364(Asr)/2017 Assessment Year:
Ujjagar Singh Aulakh Vs. CIT(Exemptions), Memorial Trust Chandigarh Village Kup Kalan Tehsil, Malerkotla PAN:AAATU6533E (Appellant) (Respondent) Appellant by: Sh. Yash Pal Goyal (Ld. Adv.) Respondent by: Sh. Alok Kumar (Ld. DR) Date of hearing: 26.03.2018 Date of pronouncement: 12.04.2018 ORDER PER N.K.CHOUDHRY, JM: The instant appeal has been preferred by the Assessee/Appellant, on feeling aggrieved against the order dated 28.03.2017 passed by the Ld. CIT(Exemption), Chandigarh u/s 12AA(1)(b)(ii) of the I.T. Act, 1961 (hereinafter called as ‘the Act’).
The assessee has raised the following grounds of appeal. “1. That the order dated 28.03.2017 passed under section 12AA of the Income Tax Act 1961 is against law and facts on the file.
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That CIT (Exemptions) erred in making observations in Para 2 of the order “that none of the stated objects seems to have been pursued by the applicant trust”. Learned CIT (Exemptions) states in Para 6 of the order that income and expenditure account for the F.Y. 2015-2016 reveals that approximately 86% of the total receipts has been spent under the head “To Uiiaqar Singh Aulakh Hospital” apart from other heads of expenditure of general nature”. Observation in Para 2 of the order is against facts and law. 3. That learned CIT (Exemptions) has failed to appreciate factual written submissions and documentary evidence in support of charitable activities produced during registration proceedings. 4. That learned CIT (Exemptions) has refused registration on mere presumptions and has thus acted arbitrarily without making any enquiry and thus the order is against the well laid down provisions of law for grant of registration.”
The brief facts of the case are that in the instant case, an application for registration u/s 12A of the Act was filed on 26.09.2016 before the Ld. CIT(E), Chandigarh, while considering the aims and objects of the society, it was observed by Ld. CIT(E) that none of the stated objects seems to have been pursued by the applicant trust. The appellant was also asked to submit some documents and clarifications by fixing the case for hearing on 19th January, 2017, which was responded by the appellant herein by filing the required documents as well as reply in response to the aforesaid show cause. After perusing the material on record, it was observed by the Ld. CIT(E) that immovable property of the hospital was owned by one of the trustee Sh. Joginder Singh Aulakh and one of the trustee Dr. Sukhmanpreet Kaur Aulakh, runs clinic in the hospital namely Sh. Ujjagar Sigh Aulakh, Hospital since financial Year: 2013-14,
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however, the trust was created later on 1st April, 2015 and it was claimed primarily to be arranging funds for the payments to the specialist doctor visiting the hospital. Although, the applicant submitted copes of letters received from various doctors for reimbursement of visiting fees to the aforesaid hospital during the year: 2016-17 till 10.02.2017, however, it was observed by the Ld. CIT(E) that all the thirty two letters are handwritten by the same person and is severally dated from 13th April, 2016 to 10th February, 2017 which clearly shows that the letters have been framed to cover the specific queries raised on the relationship between the applicant trust and hospital because no other evidence in support of the claim has been submitted. Similarly self-generated letters have been submitted by the applicant trust for the year 2015-16 detailing list of patients, who got treated in the hospital. It was further observed by the Ld. CIT(E) that although the aforesaid aspects have not been evidenced by further confirmations from the beneficiaries or the doctors. Finally, it was observed by the Ld. CIT(E), that it is established that there is an intricate link between the applicant trust and the hospital which is being run separately on commercial basis, admittedly not having any exemption and the evidence in respect of fees given to the trust and free treatments are self-generated and not confirmed by any way by both the beneficiaries of the trust or the doctors, which seems to be a method to create goodwill for the hospital which is in the initial stages and run by the trustees separately including the
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daughter Dr. Sukhmanpreet Kaur Aulakh who is a dental surgeon. Finally the Ld. CIT(E) rejected the registration u/s 12AA of the Act in view of the fact that neither the objects have been pursued nor the activities of the trust get corroborated.
The appellant trust on feeling aggrieved, filed the instant appeal and in support its case not only argued at length but also drawn our attention to various documents already filed before Ld. CIT(E). On the contrary Ld CIT(DR) vehemently argued in favour of the impugned order as specifically submitted that order under challenge does not suffers from any illegality, perversity and impropriety , therefore does not requires any interference by this Court.
We have heard the parties and perused the material on record, which includes details of visiting fees paid through cheques to different specialist doctors during the financial year 2015-16, which is not in controversy and list of the patient also supports the assessee case that the poor patients are being treated at the hospital, therefore we have failed to understand as to what evidences, the Ld. CIT(E) required for further confirmation from the beneficiaries of the trust.
In the instant case, the objects of the trust are not in controversy which is first consideration for grant of registration u/s 12AA of the Act. Secondly, the trust is at nascent stage and during the Financial Year 2015-16 having received donation to
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the extent of Rs. 1,12,000/- only and maximum of (Rs. 1,03,250/-), which has already been utilized for the charitable purposes as it reflects from the visiting fees paid to the various doctors for giving free consultations/treatments, which even otherwise not refuted by the Revenue Department and aforesaid facts favours the pursuing of objects . Considering the facts and circumstances that the applicant trust has been formed only first day of April, 2015 which certainly at the nascent stage and application for registration u/s 12AA was filed on 26.09.2016 and the assessee trust do not have much fund at the initial stage to pursue its objections, however, from the records available in file, we do not have any hesitation to say that the some of the stated object vis-a-vis treatment for poor and weaker sections of the society, irrespective of their caste or creed and religion, have already been persuaded by the applicant trust, therefore, the main reason for rejection of the registration as given by the Ld. CIT(E) that neither the objects are seems to have been persuaded nor the activities of the trust got corroborated, having no substance and can not be considered as logical reasoning and hence the order impugned herein is perverse, improper and illogical and liable to be set aside.
On the aforesaid consideration and observation, we set the order passed by the Ld. CIT(A) and direct the Ld. CIT(E) to grant registration u/s 12AA of the Act to the appellant society, henceforth, however, the grant of registration can be subjected
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to condition, if any, which the Ld. CIT(E) deems fit and proper under the law.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 12.04.2018.
Sd/- Sd/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12.04.2018 /PK/ Ps. Copy of the order forwarded to: (1) M/s Ujjagar Singh Aulakh Memorial Trust, Malerkotla (2) The CIT(Exemption), Chandigarh (3) The SR DR, I.T.A.T., Amritsar True copy By order