TMI Blog2018 (8) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA of the I.T. Act. Assessee filed its return of income on 28-09-2011 declaring Nil income after claiming exemption u/s.11 of the Act in respect of surplus of ₹ 1,64,83,398/-. In the course of achieving its objects, assessee raised a multi speciality hospital at Ahmednagar. In accordance with the provisions of Bombay Public Trust Act, 1950, 10% of the operational beds needs to be used for treating the patients from the weaker sections of the society. During the year under consideration, the trust was required to spent 2% of the gross receipts, i.e. ₹ 14,65,854/- and however, the trust spent ₹ 1,34,44,118/-. On examination of the various receipts viz, rents received by the trust, consultation fees paid to the various consultants/surgeons, consultation fees paid to the trustees, investments made by the trust and the repayment of secured loan, list of concessions given to IPD/OPD patients (weaker sections), the AO opined that the assessee trust carried the commercial activities which are in the nature of trade or commerce. He further, opined that giving discounts or making remissions in the patients bill is common practice in the medical field and mere conducting fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire facts and circumstances except for the amount of exemption claimed u/s 11 are same and therefore, relying on the findings given in A.Y. 2008-09, 2009-10 and 2010-11 by my Ld. Predecessors and Hon'ble I.T.A.T., Pune, the Assessing Officer is directed to allow the exemption u/s. 11 of I.T. Act. Accordingly, ground No.1 is treated as allowed. 4. Aggrieved with the order of CIT(A) the Revenue is in appeal before us with the following grounds : 1. Whether on the fact and in the circumstances of the case and in law, the Ld.CIT(A) is justified in not appreciating the fact that the Trust had applied its immovable property and the income for the benefit of the Managing Trustee in violation of provisions of section 13(1)(c) of the Act? 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is justified in not appreciating the fact that the Managing Trustee had diverted the income by using Trust s infrastructure for his private gains in violation of the provision of section 13(1)(c) r.w. sec.13(2)(b) 13(2)(g) of the I.T. Act, 1961. 5. Ld. DR for the Revenue submitted that the Ld.CIT(A) has not appreciating the facts that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief to poor, education and medical relief. In other words, where the assessee trust is engaged in activities within the framework of law to pursue its objectives and in turn receives charges for rendering the services in furtherance of its activities, it cannot be said that the trust is not charitable. It has been laid down by various legal propositions that where the predominant object of the trust or institution is to carry out the activities for charitable purposes and not to earn profit, it would not lose its character of being for charitable purpose, merely because some profit arises from the activity. The CBDT in its Circle No.11, dated 19.12.2008 had clarified that where the purpose of trust or institution is relief of the poor, education or medical relief, it would constitute charitable purpose, even if incidentally involves carrying on the commercial activities. In view thereof, where the assessee was engaged in carrying on the activities for attaining the objects of providing medical relief to people at large and surplus was generated from hospital activities for doing charitable work in the hands of the assessee, does not establish the case of the Assessing Officer that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Authorized Representative for the assessee. 19. The Hon ble Supreme Court in CIT (Addl) Vs. Surat Art Silk Cloth Manufacturers Association (supra) had also laid down the proposition that for the accomplishment of object or means to carry out the object, it is not necessary that it should not involve any activity for profit, in cases, where the predominant object of the trust is to carry out the activity for charitable purposes and not to earn profit. Further, it was held that the trust would not lose its character of a charitable purpose merely because some profit arises from the activities. Reference was made to the exclusionary clause applicable at that time and it was held that the same does not require that the activity must be carried on in such a manner that it does not result in any profit. 20. Now, coming to the second aspect of exemption under section 11 of the Act to the assessee, in view of violation of provisions of section 13(1)(c) of the Act. In the facts enumerated herein-in-above and also while making reference to the observations of the Assessing Officer, it has been referred to by us that the assessee trust was settled by Dr. Kandekar, man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultancy fees of only ₹ 47,08,412/-. The balance receipts were attributable to the trust as per the agreement between consultant doctors and the trust, wherein only consultancy fees was transferred to their account and the balance charges received from the patients were transferred to the account of the assessee trust. We also find no merit in the objection of Assessing Officer that Dr. Kandekar had shifted his private practice to the trust hospital. Looking at the remuneration generated by Dr. Kandekar for the assessee trust, it could not be established that he was doing any private practice at the premises of the trust hospital. Another objection of the Assessing Officer was vis- -vis the claim of expenditure of associated doctors by Dr. Kandekar in his return of income, against his consultancy charges, it was explained by the assessee before Assessing Officer that the said associate doctors were engaged by Dr. Kandekar for looking after his patients in the trust hospital and he was paying for their services and claiming the expenditure without utilizing the services of doctors of the hospital trust. The said claim of the assessee has not been rebutted by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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