TMI Blog2010 (2) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 on the following ground of appeal:- "That on the facts and in the circumstances of the case, the learned CIT-I, has erred in refusing the renewal of exemption under s. 80G for the asst. yrs. 2010-11 to 2014-15. The submissions made, the factual position and the legal provisions have not been properly appreciated." 2. The assessee-trust filed application for renewal of exemption under s. 80G of the IT Act, 1961 on 23rd March, 2009 for a period of five years commencing from the asst. yr. 2010-11. The learned CIT-I, Jalandhar examined the assessment records of the trust and found that the trust was charging fee etc. for the services rendered and there was excess of income over expenditure after the claim of depreciation. The learned CIT-I, Jalandhar also observed that there was surplus of income in the institutions, namely, nursing education (school), nursing education (college) and Gulab Devi Memorial Hospital Trust, Jalandhar even after claim of depreciation as business expenditure which gives clear indication of substantial surplus/profits are being generated systematically for the purpose of business of the trust. The learned CIT-I also examined detail of donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surplus on account of excess income for nursing school and nursing college for the year ending 31st March, 2008. He stated that the figures mentioned by the learned CIT-I, Jalandhar have not been correctly mentioned. He further stated that the learned CIT-I, Jalandhar also has not correctly mentioned the figures of free treatment and figure of receipt of diet for the year ending 31st March, 2007 and 31st March, 2008 respectively. Merely because there is a revenue surplus is no reason to doubt the charitable nature of activities carried on by the assessee-trust. The surplus, if any, has also to be viewed from the point of view of gross receipt as provided in the Act itself. He further stated that the learned CIT-I, Jalandhar has not appreciated the correct position of income and expenditure on the basis of documentary evidence produced by the assessee to him, which clearly shows that the funds of the institution have been almost fully utilised or in fact utilised even out of the earlier savings. Therefore, keeping in view the income and expenditure of the assessee, the capital expenditure has to be considered as application of income. To support his arguments, he cited the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a very old one and the cost of infrastructure most of which is old and created over a period of time is very low. Secondly, the assessee-trust does not have heavy interest burden which is a case of most of the commercial institutions and even the administrative cost is well within control. He stated that the assessee-trust is not in anyway profiteering at all. In fact, if the assessee-trust is charging very less and has generated some surplus, it should be an example for the other institutions. Regarding the observation of the learned CIT-I, Jalandhar that the trust is not using the fund for charitable purposes, the learned counsel for the assessee submitted that the word has been defined in the Act at s. 2(15) itself and includes "relief of the poor, education, medical relief............................" Thus, it cannot be said that the assessee is not using the fund for charitable purposes as the funds are being used only for the above purposes but the objection of the learned CIT-I, Jalandhar is that the assessee-trust having certain surpluses. The learned counsel for the assessee stated that the surplus is not fatal to being treated as charitable institution. In support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by the learned counsel for the assessee in the written submissions dt. 16th Sept., 2009 filed before him. As per record of the present case, the assessee, namely, Gulab Devi Memorial Hospital Trust, Jalandhar was constituted by the trust deed dt. 26th April, 1927 and filed an application on 19th April, 1977 for registration under s. 12A(a) of the IT Act, 1977 in the prescribed form. The said application was late by 3 years 8 months and 4 days and keeping in view the facts and the circumstances at that time, the learned CIT, Jalandhar condoned the delay and granted the registration under s. 12A(a) of the IT Act, 1961 to the assessee-trust on 14th/16th July, 1977. Simultaneously, the learned CIT-I, Jalandhar has also granted exemption under s. 80G of the IT Act, 1961 on the same day stating that donations made to Gulab Devi Memorial Hospital Trust, Jalandhar will qualify for exemption under s. 80G of the IT Act, 1961 in the hands of the donors subject to the limits and conditions prescribed therein. It will be valid for the years ending 31st March, 1977 and 31st March, 1978, relevant to the asst. yrs. 1977-78 and 1978-79. Later on, the learned CIT, Jalandhar also granted exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d even after claiming the depreciation the assessee having surplus funds and denial of the exemption under s. 80G of the IT Act, 1961 is not tenable in the eyes of law. The view taken by the learned CIT-I, Jalandhar in the impugned order by holding that the assessee ought to make profit and was not carrying out any charitable purposes according to the objects of the assessee trust mentioned in the trust deed is not sustainable because apart from Gulab Devi Memorial Hospital the assessee-trust is also running nursing schools and nursing colleges at Jalandhar and claiming the depreciation which is admissible under the law. If the depreciation in such case is not allowed as a necessary deduction by computing the income of the assessee, there will be no way to preserve the corpus of the trust. Merely claiming the depreciation by the assessee trust is no ground for denial of exemption under s. 80G of the IT Act, 1961 and also holding that the activity of the assessee trust is not charitable. 10. This view has also been followed by the Tribunal, Amritsar Bench, Amritsar in various cases, one of the case is ITA No. 273/Asr/2005 in the case of Smt. Maya Devi Sachdev Educational Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (supra) wherein while dealing with s. 11 of the IT Act, 1961 it was held that the capital expenditure has also been considered as application of income. This view has been affirmed by the Hon'ble Supreme Court of India in the case of S.RM.M.CT.M. Tiruppani Trust vs. CIT (supra). There is thus no doubt on the issue that as far as exemption under s. 12A is concerned, the capital expenditure has to be considered as application of funds. Having a surplus thus not fatal to the exemption unless the conditions prescribed in the section are not met. Keeping in view the facts and the circumstances discussed above, we are of the considered opinion that the application for capital purposes shall also be considered as application of funds. The learned CIT-I, Jalandhar has not mentioned even a single word in the impugned order that the assessee trust has been misutilising the funds. The law anticipated that service would be generated and it is for this reason that the provisions of ss. 11 and 12 were incurred (sic inserted) in the IT Act, 1961. Exemption contemplates profits/surplus. If an institution is not expected to make any surplus or generate any income there was no need for providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,000 Cholycystectomy (removal of gall bladder) 3,000 Meningomyelocele(Gytictumor of spinal cord) 3,000 Pneumonectomy (removal of lung) 3,000 Thyroidectomy (removal of thyroid) 3,000 Laparotomy (opening of abdomen and exploration) 3,000 Hysteromy (removal of uterus) 3,000 Cholcystojeinostomy (intestinal bye pass) 3,000 Hysteratomy (opening of uterus with removal of contents) 3,000 Ovarian cyst (removal of cyst of ovary) 3,000 (b) Minor operations:- Appendectomy (removal of Appendix) 1,800 Hernia (hernia operation) 1,800 Vericocal (swelling of scrotum) 1,800 Thyroid nodule (thyroid swelling) 1,800 Fistula in ano (disease of ano-rectal region) 1,800 Hydropcele (fluid in scrotal sac) 1,800 (c) Other charges:- Advance laparoscopic surgery (operation by lapropscopy) 5,500 Chest inutubatioin insertion of tube in chest) 600 + 60 Biopsy 600 + 60 Abscess major 600 + 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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