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2015 (5) TMI 226 - BOMBAY HIGH COURT

2015 (5) TMI 226 - BOMBAY HIGH COURT - [2015] 377 ITR 138 (Bom) - Exemption u/s.11 - Assessing Officer pointed out specific defects in treating the income earned by levying surcharge at a specific rate for the bills raised on patients and doctors on the fees paid to them and treating them as corpus donation instead of income earned from the activities of the trust - ITAT allowed exemption - Whether ITAT is justified in ignoring the fact that application of the assessee u/s.10(23C)(via) has been .....

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ns requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit. In relation to that, we find that the Commissioner passed an order denying the exemption and that order of the Commissioner has been challenged by the assessee by filing a Writ Petition in this Court and that is pending. In the present case, neither the Commissioner nor the Tribunal has decided anything by which it can be gathered that above exemption or the order in relat .....

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ts earlier order dated 10th January, 2005. The Tribunal, therefore, found that when the facts are identical to the Assessment order under consideration, then, there is no difficulty in applying and following its views for the earlier assessment years. No substantial question of law.

The argument of Mr.Malhotra that the levy of surcharge on patients and doctors ought not to have been treated as income earned from the activities of the trust but a corpus donation, need not detain us. Mr .....

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ty Commissioner, the revenue can insist that the amounts charged or sur-charges levied should not be treated as income from the activities of the trust. The authorities under the Income Tax Act are suppose to scrutinise the papers and related documents of the trust or the assessee so as to bring the income to tax and in accordance with the I.T. Act. - Decided against revenue. - ITA No. 1625 of 2013 - Dated:- 20-4-2015 - S. C. Dharmadhikari And A. K. Menon,JJ. For the Petitioner : Mr A R Malhotra .....

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Tax Act, B. Whether, on the facts and circumstance of the case and in law, the Hon'ble Tribunal is justified in allowing the claim of the assessee for exemption u/s.11 ignoring the fact that the Assessing Officer in his order has pointed out specific defects in treating the income earned by levying surcharge at a specific rate for the bills raised on patients and doctors on the fees paid to them and treating them as corpus donation instead of income earned from the activities of the trust ? .....

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assessee is notified Scientific Research Association under section 35(1)(ii) of the I.T. Act. The assessee applied for exemption under section 10(23C)(vi-A) of the I.T. Act. However, that exemption was denied. 4. In the present case, when the assesee filed the return of income for assessment year 2005-06 it declared total income at Nil. The assessing officer found that the assesee levied surcharge of 20% on the bills given to the indoor patients and also recovers 25% of the fees paid to the Hono .....

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sment year 1995-96 and 2001-02. 6. Mr.Malhotra while fairly conceded that there is no material indicating that the tribunal's order for prior assessment year have been questioned by the revenue and any appeals are pending in this Court, still, it is clear that the observations of the Commissioner while denying exemption under section 10(23C) of the I.T. Act cannot be confined to that case. Mr.Malhotra has taken us through the assessment order and particularly the paragraphs wherein it has be .....

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ot meet that object and purpose. Therefore, independent of the observations and conclusions recorded earlier, this is a fit case where the Tribunal's order should be examined and minutely by this Court. 7. We are unable to agree with Mr.Malhotra for more than one reason. The definition of the term "charitable purpose" is appearing in section 2(15) of the Income Tax Act, 1961 and which includes medical relief. 8. Insofar as section 10(23C) is concerned, that pertains to any income r .....

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d by the assessee by filing a Writ Petition in this Court being Writ Petition No.323 of 2010 and that is pending. 9. In the present case, neither the Commissioner nor the Tribunal has decided anything by which it can be gathered that above exemption or the order in relation thereto forms the basis for the conclusion reached by the Commissioner and Tribunal concurrently. The question No.C, therefore, does not arise from the Tribunal's order at all. 10. Insofar as exemption under section 11 is .....

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we cannot fault the Tribunal or Commissioner for applying them. It is clear from the Tribunal's order that there was no issue before the Commissioner in respect of any exemption under section 10(21) and 10(23C). The assessing officer had disallowed the claim of exemption under section 11 of the I.T. Act. The Tribunal's earlier orders are in relation to this exemption. The Tribunal concurred with its earlier order dated 10th January, 2005. The Tribunal, therefore, found that when the fact .....

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f surcharge on patients and doctors ought not to have been treated as income earned from the activities of the trust but a corpus donation, need not detain us. Mr.Malhotra himself had pointed to us that certain directions were issued to the Assessee by the Charity Commissioner of the State in exercise of his powers under section 34 of the Bombay Public Trust Act, 1950. They have been referred to in the order of the assessing officer as well. The argument that the revenue can examine this aspect .....

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