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03-09-2019, Care & Share Welfare, Section 13(3), 11, 12, Tribunal Amritsar

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4 months 1 week ago #10747 by amit
Section - 13(3), 11, 12, 12AA
Order Date - 03-09-2019
Favouring - Assessee
Court - Tribunal Amritsar
Appellant - Care & Share Welfare Society
Respondent - CIT
Citation - 919Taxpundit67
Appeal No. - ITA No.404(Asr)/2019
Asstt. Year - 2017-18



The assessee society has filed this appeal against the order dated 30/04/2019 impugned herein passed by the Ld. CIT(Exemptions), Chandigarh whereby the Ld. CIT(Exemptions) rejected the application filed u/s 12AA of the Income Tax Act, 1961 (hereinafter called as the ‘Act’).

2. The brief facts of the case are that an application for registration u/s 12AA of the Act was filed by the assessee society before the Ld. CIT(E) on dated 10.10.2018 by disclosing the facts that the assessee society is an ongoing entity since 19th August, 2016 and having following aims and objects. To open educational/medical and research institutions/hospitals for the health and welfare of mankind, “Hospital will be charitable only and not for commercial gains, to impart education for all classes particularly vocational education by opening schools and colleges/medical or research centers/institutes, to give grant and economic assistance for the pursuit of higher education to the needy, poor and deserving students. The society will honour the brilliant students at national and international levels who have distinguished themselves in any filed particularly education, to open branches of the society at the village, tehsil, District, Regional, State, National and International levels and to get them affiliated with the required authorities.

While considering the application of the assessee society, vide questionnaire dated 01.02.2019 an oppo tunity of personal hearing was accorded to the assessee society with a request to provide clarifications to queries raised on 12.02.2019 as mentioned in para No.5 of the order, against which the assessee submitted the reply on dated 12.02.2019, thereafter, the application of the applicant society was rejected by the CIT(E) by holding as under:

“6. In response to the fixation letter dated 01.02.2019 the applicant society submitted the reply on 12.02.2019. On perusal of the submissions made by the society, it was observed that the society claims to create a state of the art multispecialty charitable hospital in Ludhiana. The society has purchased land for the construction of hospital at Civil City, Chander Nagar, Ludhiana. The land bought for construction of charitable hospital has been funded in the form of loan to the tune of Rs1,19,72,865/- by the M/s. International Marketing Corporation Pvt. Ltd. which is interest bearing. The applicant society has purchased land on
24.04.2017 for the construction of hospital at Ludhiana. The applicant society has received donations to the tune of Rs.10,33,850/- during the F.Y. 2017-18. In order to verify the claims of the applicant society the following additional queries were asked vide e-mail to This email address is being protected from spambots. You need JavaScript enabled to view it. on 09.04.2019 requesting them to submit the details on 15.04.2019.

1. Please clarify whether the applicant society has been formed to redeem CSR functions of the M/s. International Marketing Corporations Limited.

2. On perusal of the land' deed it was observed that the ownership of land purchased is with M/s. International Marketing Corporations Limited who has funded the land in the form of Loan which is interest bearing to Care & share Charitable Society. As Mrs. Veena Bhatia, (President of Care & share Charitable Society) is the W/o Sh. Ashok Bhatia (Managing Director of M/s. International Marketing Corporations Limited) this point attracts section 13(3) of the I.T. Act which is any part of its property or income is used or applied or ensures directly or indirectly for the benefit of any persons specified u/s 13(3) of the I. T. Act. Please comment.

3. Please justify the outstanding unsecured loan of Rs 1,19 72,865/- as at March 31,2018 as you have stated that this aMOUnt of unsecured loan is on account of land bought for the construction of Charitable Hospital whereas the ownership of the land is with the company M/s. International Marketing Corporations Limited.

4. Please provide the evidence regarding handover of land to society and its usage by the society.

5. Please provide the details of Donations received to the tune of Rs.10,33,850/- during the F.Y.2017-18 along with the Name, PAN, Address etc. of the donor. 7 In response to the queries raised the applicant society submitted the reply With regard to first query the applicant stated that the society was never formed to redeem CSR functions of M/s International Marketing Limited. With regard to second query the applicant stated that the society has purchased land at Chander
Nagar, Ludhiana in April 2017 in the name of the society. Earlier the applicant society has not submitted the copy of the registered deed the same was submitted by the counsel of the society on 15.04.2019. With regard to fifth query the applicant society stated that the donations above Rs. 5,000/- were already submitted. But on perusal of the submissions it got revealed that the society has submitted details of donations for the F.Y. 2016-17. The applicant has not submitted any detail of donations received to the tune of Rs.10,33,850/- during the F.Y. 2017-18 along with documentary evidences. As the main object of the society is the construction of hospital construction of which is yet to be started. In the absence of the hospital it is necessitated to examine the genuineness of the other activities claimed by the society. In this context the applicant has claimed to incur expenditure on Langer for needy people and education aid. The applicant has not provided any documentary evidences regarding expenses incurred or Langer & education aid. In the absence of the documentary evidences

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