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2016 (2) TMI 380

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..... itution has an income that the question of not including that income in its total income would arise. Therefore, merely because an institution, which otherwise is established for a charitable purpose, receives income that would not make it any less a charitable institution.” In the present case the Assessing Officer as well as the CIT(A) has ignored this aspect that the assessee’s main activity of providing medical facility at the subsidies rate does amount to charitable purpose. It is admitted that the assessee has violated the provisions of Section 13(1)(d) r/w/s Section 13(3) and Section 11(5) of the Income Tax Act, 1961 and added income of ₹ 2,22,000/- has to be taxed at the maximum marginal rate of tax as per the provision of .....

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..... t u/s 11 12 of the Income Tax Act which has been actually applied for charitable purposes and the trust having been exempted in the past. WITHOUT PREJUDICE TO THE ABOVE. 4. In making an addition of ₹ 2,22,000/- towards notional income of interest on amounts given out of its capital and reserves, if the exemption u/s 11 12 of the IT Act has been denied. 2. The assessee is a charitable trust registered u/s 12A on 29/6/1999 of the I.T Act, 1961 and also registered under Section 80G of the Act on 07.08.2009 for the A.Y. 2010-11. The assessee is involved in pathology for the test of blood and urine etc. and is doing the same at the subsidized rates. The assessee was claiming the benefit of exemption u/s 11(1) as a .....

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..... 0% of the expenses of ₹ 3,41,964/- vide the order of the A.O. 4. The assessee filed appeal against the order of the A.O before CIT(A). The assessee was claimed the benefit of exemption u/s 11(1) being a charitable trust but as per the CIT(A), the assessee was not doing any charity to the public at large under the meaning of Section 11(1) of the Income-tax Act. The CIT(A) dismissed the contention of the assessee related to exemption u/s 11(1) as provided u/s 13(1D) and confirmed the order of the Assessing Officer. The CIT(A) further held that the estimated disallowances @ 10% out of the total expenses are concerned the same has been made on estimated basis without any valid reasons and accordingly the same was deleted. 3. The Ld. .....

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..... purposes and / or any surplus accruing thereto is ploughed back to carry out the charitable activities as envisaged in its trust deed. The trustees do not get any profit or any benefit from the trust in the form of any salary, perks or any concession. The trust is providing free, concessional / subsidized rates, to the needy in the form of medical relief as per the data given at pages 16-25 of the paper book submitted. The activity of the trust falls under the first three limbs of Section 2(15) which is given under board circular no. 11/2008 dated 19.12.2008 (2009) 308 ITR (ST) 5. The Ld. AR relied upon the case of ITO V. Kaushalya Medical foundation (2009) 31 SOT 119 (Mum.)(Tri.) and PIMS Medical and Education Charitable Society V. CIT (20 .....

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..... or the Assessment Year 2010-11 and assessed it as an AOP. He also disallowed 10% of the expenses claimed amounting to ₹ 3,41,964/- on adhoc basis. The CIT(A) while deleting the adhoc addition of ₹ 3,41,964/- in expenses, confirmed the denial of exemption under Section 11 and 12 as done by the Assessing Officer. As regards the denial of exemption u/s. 11 it is submitted that the assessee s activities is related to that of a hospital where medical tests are carried out for giving medical relief to the poor or disadvantaged either free or at a concessional /subsidized rates. The charging of concessional rates does take away the charitable character of the institution. The reliance of the Hon ble Delhi High Court judgment in case of .....

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