SREE ANJANEYA MEDICAL TRUST Vs. CIT
INCOME TAX APPELLATE TRIBUNAL
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N.R.S.Ganesan, Member (J) -
(1.) THIS appeal of the assessee is directed against the order of the Administrative Commissioner dated 30 -12 -2011 rejecting the application of the assessee for registration u/s. 12AA of the Act.
(2.) SHRI T.M. Sreedharan, the ld. senior counsel submitted that this is the second round of litigation before this Tribunal. In the first round, this Tribunal remitted back the matter to the file of the Commissioner for reconsideration by an order dated 21 -10 -2011. According to the ld. senior counsel, this Tribunal directed the Commissioner to examine the trust deed and other records said to be filed by the assessee and thereafter decide the matter afresh. The ld. senior counsel further submitted that the Commissioner has not carried out the direction of the Tribunal while re -examining the matter. The Commissioner simply found that the assessee has collected money even before commencement of the medical college and therefore he found that there was a financial irregularity. Accordingly, the registration was rejected. Referring to the statement said to be recorded from the Managing Director, Shri Anil Kumar, the ld. senior counsel submitted that the assessee admittedly collected around Rs. 4 crores from the prospective employees. The assessee has also collected money from four parties and an agreement was entered into to provide admission under NRI quota for medical education. In case the medical seat could not be provided the amount received by the assessee would be returned with 12% interest per annum. According to the ld. senior counsel, the assessee has to mobilize funds for construction of massive building for medical college and hospital before grant of recognition by the Medical Council of India (MCI). Therefore, the assessee has mobilized all the resources under its control for construction of the massive building for the medical college and hospital. According to the ld. senior counsel, since the trust was established for the purpose of education and the medical college was in fact started after getting approval from the MCI, the assessee is entitled for registration u/s. 12AA of the Act. The ld. senior counsel took us through the impugned order passed by the Commissioner and submitted that the Commissioner is not justified in rejecting the claim of the assessee for registration. On the contrary, Smt. Latha V Kumar, the ld. DR submitted that it was found by the department that a huge investment was made even though there was no source for making such investment. During examination, the revenue authorities found that the assessee was collecting money from the prospective employees and the students even before obtaining recognition from the MCI. According to the ld. DR, the assessee has not maintained any books of account for the money collected from the public and the expenditure incurred. Since there was huge financial irregularities, the Commissioner found that merely because the assessee ultimately started the medical college, the end will not justify the means. According to the ld. DR, the assessee collected huge money from the public by throwing all norms to the winds without maintaining any proper records. Since the institution collected money in a commercial manner for admission of the students and for providing employment opportunity to the prospective employees, according to the ld. DR, the institution was established only for the purpose with a profit motive in a commercial manner. Therefore, the assessee is not entitled for registration u/s. 12AA of the Act. The ld. DR placed her reliance on the unreported judgment of the jurisdictional High Court in Dawn Education Trust vs. CIT I.T.A. No. 300 of 2013 judgment dated 12 -02 -2014, copy of which is filed by the ld. DR.
(3.) WE have considered the rival submissions on either side and perused the material available on record including the trust deed. The trust was established by a registered deed dated 27 -05 -2005 by contributing Rs. 10,000 as nucleus of the trust. After establishment of the trust, the assessee acquired huge chunk of loan and started constructing massive building. During the course of construction if vyukdubgs, the revenue authorities found that the assessee has mobilized funds by collecting money from various persons including the so called prospective students assuring admission for medical course. On examination, the managing director of the assessee trust admitted that he collected money to the extent of Rs. 4 crores from the prospective employees and also from 4 prospective students on the assurance that they would be admitted in the medical course after obtaining recognition from the MCI. In fact, Shri V Anil Kumar, the managing director of the assessee trust has admitted as follows:
I have taken payment from prospective employees mostly in demand draft. Roughly I can say that an amount of Rs. 4 crores have been collected till date.;
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