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TMI Blog2009 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer had issued notice under section 143(2) of the Act to the assessee and scrutinized the accounts. On perusal of details pertaining the last five years submitted by the assessee, ld. Assessing Officer find that there is substantial increase in the total receipt of the assessee and also in terms of profit. He took cognizance the total receipt received by the assessee since assessment year 1998-99 up to 2001-02, total expenditure incurred by it and net income accrued to the assessee. On an analysis of these total receipts/total expenditure he observed that in assessment year 1998-99 there was a profit of 13.14 per cent which arose to 20.62 in assessment year 2001-02. On the basis of this growth, he has formed an opinion that assessee was running the hospital as a profit earning concern. The Assessing Officer called for the details about the room charges, the rates of various vaccinations given by the hospital to the public and also perused the contract for appointment of doctors. He has reproduced certain terms of contracts executed between the assessee and the doctors. He also examined the expenses incurred by the assessee on the charity work and in that stride he reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining whether a trust is created or an institution is established for a charitable purpose is by examining the real purpose of the trust and not by the circumstances that the income derived can be assessed by standards usually applicable to a commercial activity. The quantum of income is no test in itself. It may be the result of an activity permissible under a truly charitable purpose. A profitable activity in working out the charitable purpose is not excluded. The assessee has further relied upon decision of Hon'ble Andhra Pradesh High Court in Governing Body of Rangaraya Medical Collage v. ITO [1979] 117 ITR 284 and of Hon'ble Supreme Court's judgment in the case of Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR 3102. It has produced comparative statement of room charges by other hospitals who were enjoying similar status in Delhi. In that way assessee has produced the room rent with Batra Hospital, Sir Ganga Ram Hospital etc. On the strength of such comparison it was pointed out by the assessee that the circumstances of charging higher room rent considered by the assessee for drawing adverse inference are not available. The room rent of the assessee are much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re expansion of the hospital and its other activities including research activities. It cannot be said that the hospital is being run for the purposes of profit since none of the members or the trustees/office bearers is entitled to any share in the surplus arising to the society. It has been held in the case of Surat Art Silk Cloth Manufacturers Associations 121 ITR Page 1 Supreme Court that the quantum of income is no test in itself and the question whether a trust is created or an institution is established for a charitable purpose is required to be determined with reference to the real purpose of the trust or the institution and that a profitable activity in working out the charitable purposes is not excluded. The Hon'ble Andhra Pradesh High Court in the case of Governing Body of Rangarao Medical College v. Income-tax Officer 117 TTR 284 have held that merely because some surplus arose from the society's operations it cannot be held that the institution was run for purposes of profit so long as no person or individual was entitled to any portion of the said profit and the said profit was utilized for the purpose and for the promotion of the objects of the institution. In the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees, State Govt. employees and Defence personnel for whom 30/40 per cent rebate is allowed. It has also been clarified by them that the particular clause to which the Assessing Officer has objected in the agreements with the doctors were purely for the reasons of discipline and to dissuade them from taking away patients to smaller nursing homes for the purposes of their personal benefit. The Assessing Officer has also not pointed out any violation of the provisions of section 13 of the Income-tax Act, 1961. It is noticed that no trustee/members or office bearer is entitled to get any part of the profit/surplus arising to the society. It is also noticed that the surplus arising to the society has also been applied towards achieving its charitable objects which are for the welfare of the general public." 4. The ld. DR while impugning the order of ld. CIT(A) contended that assessee has not carried out any charitable activity and it was running the hospital on commercial basis, with a view to earn profit. The charges for private and general rooms are quite exorbitant. He also took us through finding of the Assessing Officer on page No. 4 and pointed out as to how assessee used to ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . List of such patients is available at page No. 83 of the paper book. In the last ld. counsel for the assessee submitted that in the earlier assessment years benefit of sections 11 and 12 was not denied to the assessee even in the subsequent assessment year 2003-04 assessment was made under section 143(3) and this benefit has not been denied. He drew our attention towards the assessment order passed in 2003-04 whose copy is available at pages 114-115 of the paper book. 5. We have duly considered the rival contentions and gone through the record carefully. The asssesee's society came into existence in 1990. It was granted registration under section 12A of the Act. Registration under section 80G has also been granted to the assessee. It is enjoying status of a scientific research center within the meaning of section 35(1)(ii) of the Act. In earlier as well as subsequent assessment years benefit of sections 11 and 12 were granted to the assessee. In the present year such benefit has been denied to the assessee by the Assessing Officer merely by drawing adverse inference on two counts namely the hospital charges were on the higher side and were comparable on hospital run on commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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