This appeal filed by the assessee is directed against the order of learned CIT-I, Chandigarh dt. 31st July, 2014 refusing to grant registration to the assessee under s. 12AA of the IT Act.
2. Briefly, the facts of the case are that the assessee trust filed application in the requisite form for registration under s. 12AA of the Act before the CIT, Chandigarh. The trust has been registered with the SubRegistrar on 6th Jan., 2014. The learned CIT asked the assessee to furnish supporting documents including books of account, etc. The case was discussed with the trustee of the assessee trust. As per memorandum of association, the aims and objects of the trust are as under:
"The objects of the trust are affording, ·without discrimination as to sex, nationality, caste, creed, language, or any other cause, medical relief and encouraging medical research and for that purpose :
(a) To offer medical assistance (drug, investigations, procedures, and infrastructure) to poor patients admitted under Paediatric Pulmonology services of PGI.
(b) To promote research leading to improvement in the health and care of Paediatric Pulmonology patients.
(c) Purchase of books, journal-printed or electronic, or other material for training of post-graduates in Paediatric Pulmonology.
(d) Providing fellowships to physicians interested in Paediatric Pulmonology to visits other Indian/foreign centers of excellence and attend workshops/symposia/conference etc related to Paediatric Pulmonology.
(e) Holding workshops/symposia/conference etc. in Chandigarh in furtherance of the objectives of P3.
(f) Inviting Paediatric Pulmonology of international repute to train local Paediatric Pulmonology and as faculty in continuing medical education programs, symposia, conference etc. organized by P3.
(g) To receive money from donors, philanthropists, other trusts and organizations (including conferences/CME's etc.) for furthering the objectives of P3."
3. The learned CIT, however, noted that the basic requirement for grant of approval under s. 12AA of the Act is that the trust institution or society have been established for the purpose of charity and reproduced s. 2(15) of the Act with regard to the fact that if the activities of the assessee are in the nature of trade, commerce or business, the same cannot be considered as charitable purpose. The assessee trust was to justify as to how the aims and objects of the trust are covered under the clause "charity" as defined under s. 2(15) of the Act. The assessee filed written submission before the learned CIT which is reproduced as under:
"The Paediatric Pulmonology Unit of the Department of Paediatrics conducted one CME and worKshop and once National conference in the financial year 2012-13 under the name of Paediatric Pulmonlogy Programme in the status of AOP. The purpose of conducting these activities was to create awareness and education the doctor especially Paediatricians about the respiratory disorders/diseases of children which are on a rise these days and responsible for a lot of mortality and morbidity amongst children.
Since the above said CME/workshop & conference generated surplus funds and the AOP filed its income-tax return for the year 2012-13 and tax was paid.
Further, these educational activities is ongoing process, therefore to carry forward this objective of continuing to educate the medical fraternity about Paediatric Pulmonology a trust was conceived on 4th Jan., 2014 by the name of Paediatric Pulmonology Programme Trust. The' sum/fund was remaining as surplus was transferred to that trust to fulfil the objectives of the trust.
Another CME/workshop was organized by the trust in the financial year 2013-14 for educating the medical doctors workshops on Asthma & Allergies were organized along with common respiratory disorders in children. Also sponsorship/charity was made in favour of poor patients who could not afford their drugs, to bear the cost of their medications. With the aim to continue with organizing many more education activities and helping the poor and also fulfilling the other objectives of the Paediatric Pulmonology Programme Trust, we strive hard to work for the development of Paediatric Pulmonology" ,
4. The learned CIT on perusal of the reply and documents on record found that the assessee trust came into existence on 6th Jan., 2014 and there are four founder members of the trust, namely, Dr. Meenu Singh, Dr. Joseph L. Methew, Dr. Pankaj C. Vaidya and Dr. Mandeep Walia. All the trustees are on regular payroll of the P.G.I., Chandigarh, which is the Government institution and none of the trustees made any contribution as settlor of the trust. Further, the financial statement for the year ending 31st March, 2014 revealed that except expenses amounting to Rs. 11,635 debited under the head 'medicine for poor patients', all other expenses debited in the income and expenditure are relating to conference only. The assessee failed to produce details of medicine distributed among the poor patients. It was, therefore, found the activitles of the assessee trust are nothing but adventure in nature of the trade and does not fall in the definition of charity. Therefore, the application for registration under s. 12AA of the Act was rejected ..
5. We have considered the rival submissions and perused the material available on record. At the stage of grant of registration under s. 12AA of the Act, the learned CIT shall have to satisfy himself about the objects of the trust, genuineness of its ::J.ctivities. The learned counsel for a,ssessee relied upon the order of the Tribunal, Chandigarh Bench in the case of Shishu Suchinta Educational Society us. CIT, Chandigarh in ITA No. 1326/Chd/2012, in which vide order dt. 15th July, 2014, the Tribunal allowed the registration under s. 12M of the Act following the judgment of the Hon'ble Punjab & Haryana High Court. The findings in paras 5 to 9 of the order of the Tribunal are reproduced as under:
"5. The brief facts of the issue are that the assessee had filed application for registration under s. 12A of the Act on 24th April, 2012. The assessee society was registered under the Societies Registration Act, 1860 with the Add!. Registrar of Societies, SAS Nagar, Mohali vide certification dt. 22nd Feb., 2012. The basic objective of the society was to impart education to all as mentioned in the memorandum of associatidn. The CIT noted that the Shishu Niketan Model School, an existing society already registered under s. 12M since 1968 had been running four schools, two in Chandigarh, one in Mohali and one in Panchkula. The new society (the assessee) proposed to take on lease the management of existing school at Mohali to be run on day to day basis. The assessee did not furnish any account but had furnished balance sheet and income and expenditure of the existing Shishu Niketan School, Mohali along with return submissions before the CIT. The CIT vide para 3.2 observed as under:
'3.2 From the Note on Activities furnished, it is noted that the applicant Society would take on lease the existing school at Mohali being run by ShIShu NIketan School Society. The applicant Society has not yet taken over the school on lease meaning thereby that no activities have yet been carried out. When confronted, the counsel of the Society filed another reply on 19th Oct.., 2012 stating that the applicant Society is taking evening classes for poor and weak students in the premises of Shishu Niketan School, MohalL Balance sheet and income & expenditure account for the year ending 31st March, 2012 have also been filed. Perusal of balance sheet and income & expenditure account shows that corpus fund of Rs. 5000 has been shown in the balance sheet. No receipts have been shown and an expenditure of Rs. 1,520 has been debited in the income & expenditure account. No proof, however, with regard to the claim regarding running of evening classes and expenses debited to the income & expenditure account has been furnished. '
6. The CIT denied the registration to the assessee under s. 12M of the Act observing as under :
'4.1 From the written submission and documents furnished by the counsel of the applicant society, it is seen that the society is only in the preliminary stage of making an application for registration under s. 12M of the Act and is yet to reach the secondary stage of having started charitable activities so as to enable the CIT to come to the conclusion that the activities carried out by it are genuine and in accordance With its objectives. The Hon'ble Kerala High Court, in its decision in Self Employers Service Society us. CIT (2000) 164 CTR (Ker) 449: (2001) 247 ITR 18 (Ker) has held that "to grant registration under s. 12M, the CIT should insist that the society has done charitable work during the first year of its operation itself. When the CIT exercises his' jurisdiction under s. 12M while considering an application for registration under s. 12M, he has to be satisfied of the charitable and religious nature of the objects and genuineness of the activities of the trust or institution. In the present case, admittedly, the society has not done any charitable work during the relevant period. There were no materials before the CIT to be satisfied of the genuineness of the activities of the trust or institution.
4.2 It is seen that the Society has been formed but no activity has been started even upto the date of closure of present proceedings. In the absence of any activities, there is no material before the undersigned to verify the genuineness of objects and activities of the society. In view of the facts discussed above, the applicant Society is not eligible at the stage for grant of registration under s. 12M of the Act being no activity in the nature of charitable activity having been carried out since its inception. The application of the Society for registration under s. 12M of the Act is, therefore, rejected. The society may however, apply again after carrying out charitable activities to meet out its objectives.
7. We find that similar issue of grant of registr", ion under s. 12M of the Act to sister concern Le. Suchinta Education Society where the said society proposed to take over one of the school being run by Shishu Niketan Model School, arose before the Tribunal in ITA No. 1339jChdj2012, Suchinta Educational Society us. CIT and vide order dt. 24th May, 2013 [reported at (2013) 157 ITJ (Chd) 494 : (2013) 92 DTR (Chd)(Trib) 441-Ed.], the same was refused to the assessee. However, the Hon'ble Punjab & Haryana High Court in IT Appeal No. 263 of 2013 vide decision dt. 28th April, 2014 held as under :
'Having heard lea,rned counsel for the parties,' we find that in the judgment referred to by learned counsel for the respondent. the Society in question had not done any charitable work. The activities carried on were found to be only for the purpose of generating income for its members. Therefore, it is not a case where the activities, which were yet to be started, were found to be ingenuine. It could not be disputed that running of a school falls within the scope of activities for which registration can be granted under s. 12M of the Act. In fact, the similar activities carried out by Shishu Niketan Model School have been granted registration, which is running four institutions. The Soci~ty has been established to manage one of such schools. There cannot be any attempt of the assessee to evade tax liability, as Shishu Niktan Model School has been granted registration and availing the benefit of tax.
In view of the above, we find that the orders of the CIT and that of the Tribunal in declining the registration to the appellant are not sustainable in law. Consequently, while answering the substantial question of law in favour of the appellant. the present appeal is allowed.'
·8. The issue arising before us is identical to the issue before the Hon'ble Punjab & Haryana High Court and following the ratio laid down by the Hon'ble High Court we hold that the assessee is entitled to the registration under s. 12M of the Act. The grounds of appeal raised by the assessee are thus allowed.
9. In the result. the appeal filed by the assessee is allowed."
6. 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 assistancee to the poor patients and to promote research work on medical fide and to hold conference, etc., to create awareness and educational the doctors especially Paediatricians about the respiratory disorderse-.t1seases 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 nab: re 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.
7. In the result, the appeal filed by the assessee is allowed .