Maternity homes facilitating delivery is eligible for benefit of S. 10(23C) as a hospital or medical institution – a very narrow view taken by all lower authorities reversed by High Court and relief allowed.

[CA DEV KUMAR KOTHARI]

Nehru Prasutika Aspatal Samiti v. Commissioner of Income-tax (2014 (1) TMI 556 - ALLAHABAD HIGH COURT)

General discussion:

Many ailment, disorders, sickness or illness can be considered as natural process some of which can be naturally treated naturally over passage of time , natural factors, and some precautions. When medical facility is not available, one has to rely on natural healing. We can go to say that most of animals are generally treated naturally and without any medical attention. Even human being can be cured by natural process. Author knows some doctors who themselves try to get cured of some sicknesses by natural process by allowing some time to be cured because in our body there is system of cleaning of elements causing sickness. Sometimes attempt is made for curing by adopting some natural ways of eating some things which are considered useful or avoiding something which are considered harmful. Even taking or not taking any particular food is a part and parcel of treatment of illness. For example, when we have stomach ache, we may avoid one meal or may take very light food to give rest to stomach to set it right. This is also a process of treatment of illness. A doctor may simply suggest (without any medicine) to drink lemon juice and a do not take any other food for six hours. This will also be a course of treatment of illness.

Natural process of god:

In our body we have numerous processes which go on continuously. A disturbance, irregularity, or non-functioning of any process may cause sickness. A body of human being can be considered as most complex chemical process house in which chemical processes are influenced by numerous factors including chemical and physical composition of body, inputs, processes going on in body. Even some psychological processes or changes can cause changes in overall chemical and other processes in the body. Different inputs (intended- voluntary or unintended or forceful e.g pollution) causes different reactions in different persons because the chemical composition is different.

Medical attention is required for treatment and prevention f sickness:

Medical attention is required for treatment of sickness as well as prevention of sickness.

Child birth is a natural process still it need medical attention:

Though child birth is a natural process still the process and during pregnancy and child birth several factors changes from time to time , many extra processes take place. Therefore, body of mother require medical attention to keep her fit not for herself but also the growing child within her womb. Proper treatment through various inputs (diet, dietary supplements and medicines) is very important for proper passage of pregnancy period and then delivery for the mother and child both. Pregnancy, though natural process cannot be called a usual process in life of mother. This is very special process and is of a casual nature in life of any woman, particularly when these days birth of few children takes place.

Case before Allahabad High Court - Nehru Prasutika Aspatal Samiti:

Substantial question of law considered:

"Whether ,upon the facts and circumstances of the case, the Hon'ble Tribunal was justified in holding that the appellant's maternity hospital facilitating the deliveries is a natural process of god and cannot said to be any illness to be treated in appellant's hospital as envisaged under section 10(23C) (iiiae) of the Act."

In this case the Assessing Officer completed the assessment under Section 143(3) of the Income Tax Act, 1961 he assessed the total taxable income of the assessee at Rs.11,32,800 denying exemption u/s 10(23C)(iiiae) to the Maternity Hospital taking view that child birth is a natural process and activities of assessee does not involve treatment of sickness or ailment. On appeal the CIT (A) also rejected the claim. The CIT(A) observed on the following lines:

1. reading of provision of Section 10(23C) (iiiae) do not match with the appellant's activity.
2. The appellant hospital is a general hospital pertaining to maternity,
3. hospital/institution, as envisaged in section 10(23C)(iiiae) is in respect of mental diseases or illness rehabilitation and also to exist solely for philanthropic purposes.
4. The appellant hospital has not proved any of these ingredients/requirements being fulfilled in its case."

On further appeal the Tribunal held that that the appellant was not entitled to the benefit of the provisions of 10(23C)(iiiae). Tribunal observed on the following lines:

1. that the child birth is the natural process of God and it is certainly the God's grace which is extended to sustain us through it.
2. It is the act of God who designs a child conceived in the womb to be born into this world.
3. In olden days deliveries of children were perfectly conducted by midwives at home,
4. in the modern age, it is only because the anxiety of people that they would not be able to manage the discomfort or pains during labor,
5. To avoid labor pains discomfort, people choose to take better facilities in the hospitals in presence of Doctors for this purpose.
6. That the assessee's maternity hospital in the instant case would have been facilitating the deliveries, i.e. a natural process of God.
7. In no way it can be said to be any illness to be treated in the assessee's hospital as envisaged u/s. 10(23C)(iiiae).
8. Therefore, the ingredients of section 10(23C)(iiiae) being not fulfilled, the ld. CIT(A) has rightly disallowed the claim of assessee."

On appeal before High Court:

The High Court rejected the contentions and views taken by the AO, CIT(A) and Tribunal and allowed appeal of the assessee in its favor. The Court took views on the following lines:

Sub clause (iiiae) is as follows (highlights added by author):

   "any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed; "

On reading of provision, court observed that the expression 'medical attention' in section 10(23C)(iiiae) cannot be read to be confined to medical treatment of persons who are only suffering from an illness or a mental disability.

View of Tribunal confirming that of lower authorities, that patients choose hospitals "only to be relieved of discomfort or pain during labor" cannot be accepted.

The sub clause specifically refers to reception and treatment of persons during convalescence; or of persons requiring medical attention or rehabilitation.

There is considerable reduction of maternal mortality due to availability of expert medical care.

Therefore, maternity hospitals which exist solely for philanthropic purposes and not for profit entitled to tax exemption under section 10(23C).