TMI Blog2009 (8) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 passed by the Chief Commissioner of Income-tax, Mumbai (respondent No. 1) rejecting the petitioner's request for grant of approval under section 10(23C) (via) of the Income-tax Act, 1961 (for short "the Act") for the assessment year 2002 to the assessment year 2008-09 and onwards. 2. The petitioner is a company incorporated and registered under the Companies Act, 1913 whose main object is creating and maintaining a hospital for philanthropic purposes. The petitioner is also registered as a public trust under the Bombay Public Trust Act, 1950. The petitioner was granted exemption under section 10(22A) of the Act for the years 1970-71 to 1995-96. In the year 1996 an issue was raised by the tax authorities whether the petitioner could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(23C)(via) of the assessment years 2008-09 to 2010-11. By an order dated March 31, 2009, the respondent No. 1 rejected all the aforesaid applications wider section 10(23C)(via) for the assessment years 2002-03 to 2010-11. That order is impugned in this petition. 3. Learned counsel for the petitioner submitted that the petitioner was previously granted approval by the Central Board of Direct Taxes for the years 1990-2000 to 2001-02 and even earlier, the petitioner was granted exemption holding that it exists solely for the philanthropic purpose. He therefore submitted that respondent No. 1 could not have taken a contrary view and in the absence of any new material could not have taken a different view in the matter in rejecting the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profit motive. Secondly, respondent No.1 examined and compared the money spent by the petitioner for concessional treatment to the staff members of the hospital run by the petitioner. He held that concessional treatment provided to the staff members could not be regarded as philanthropic purpose. Thirdly, respondent No.1 took exception to the write off the amount of Rs.76,80,723. The petitioner had made certain payments to a stock broker for purchasing trust securities for the employees' provident fund trust. The broker delivered part of the securities but failed to deliver the securities worth Rs.76,80,723 for which the amount was paid. The broker company came under a cloud as it was con trolled by Ketan Parekh who is being prosecuted fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t denied by the respondent. Thus, cumulatively there was no surplus as observed by respondent No. 1. In the notice of hearing dated March 12, 2009 also there was no mention that there was surplus for a certain number of years and no explanation was sought from the petitioner on that count though explanation was sought regarding write off of Rs.76,80,723 as also regarding the fees received for medical examination from USA visa applicants. Had notice been given to the petitioner that their applications were sought to be rejected on the ground that there was surplus of income over expenditure for some years, the petitioner could have explained that there was a Cumulative loss for nearly two decades. The petitioner, therefore, had no opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es received for medical examination of applicants for USA visa, undoubtedly there has been a surplus for seven out of nine years while there was a loss in the remaining two years. But it may be difficult to appropriate every receipt for every activity and medical treatment provided by the petitioner. There may be some surplus in some areas and deficit in other areas. Cross subsidization is not unknown. Even in state function, cross subsidies are provided for. The Hospital under the petitioner is one unit run at one place and it is not the case of the respondent there are multiple units and one unit is subsidizing the other. In the same unit, payment is collected for different services rendered which may result in some cross subsidy. Ultimat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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