No denial of Sec. 12A registration just because carrying out research in settler’s hospital would lead to commercial activity

Case details: Artemis Education & Research Foundation v. CIT (Exemptions) - [2021] 132 taxmann.com 277 (Delhi - Trib.)

Judiciary and Counsel Details

• • Kuldip Singh, Judicial Member and R.K. PANDA, Accountant Member
  • R.S. Ahuja, CA for the Appellant.
  • Satpal Gulati, CIT DR for the Respondent.

Applicant was a trust registered under Societies Registration Act. It filed an application in Form No. 10A seeking registration under section 12A and for approval under section 80G. The CIT(E) rejected the application on the ground medical research to be carried out in the hospital of settler company. Thus it would convert the charitable activities into commercial activities. Aggrieved-applicant filed the instant appeal before the Delhi Tribunal.

ITAT Held

The Delhi Tribunal held that application moved under section 12A cannot be throttled merely by relying upon selective aims and objects by observing that there is a possibility that researches being carried out by the applicant within the premises of the settler company would in turn further enhance the commercial potential of the hospital.
These are mere perceptions entirely based upon surmises, particularly in view of the undisputed fact that applicant research foundation is inextricably linked with the Artemis Hospital to carry out its research.

Suppose the applicant is being used for accelerating its commercial activities of the hospital. In that case, the same is to be separately and independently examined by the Assessing Officer at the time of assessment in the light of the provisions contained under sections 11 & 12 of the Act.

Section 12AA of the Act provides for a procedure for registration as to how CIT (E) will provide registration after getting satisfaction with the aims and objects of the society. Thus, he cannot sit on the chair of AO and decline registration on the ground that medical research to be carried out in the Hospital of Settler Company would convert the charitable activities into commercial activities.