TMI Blog2019 (4) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee trust, it cannot be held to be for the direct or indirect benefit of trustees. We find no merit in the orders of authorities below in invoking provisions of section 13(1)(c) in the present set of facts. Accordingly, we hold that professional fees paid to two trustees is to be allowed as deduction. Disallowance of utilization fees paid to the trustees - payment against equipment and assets owned by trustees, but used by trust - HELD THAT:- There is no finding that utilization fees paid is excessive or is for the direct or indirect benefit of any person. In the absence of the same and where the facilities of using equipment and services were provided by the trustees to the assessee trust, then utilization fees linked to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the professional charges to the above two trustees and hence, the payment thereof resulted in granting undue benefit to the trustees and hence, there was a clear violation of the provisions of section 13(1)(c). 3] The learned CIT(A) failed to appreciate that the professional charges paid to the above two trustees were on account of the actual professional services rendered by the above two trustees and therefore, there was no question of holding that the said payment resulted in violation of section 13(1)(c) as there was no undue benefit granted by the appellant trust to the above two trustees. 4] The learned CIT(A) failed to appreciate that there was no bar for the appellant trust to pay professional charges to the trustees o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is against denial of deduction of professional charges paid to trustees namely Dr. Alimiya Parkar and Dr. Mumtaz Parkar amounting to ₹ 6,52,748/-, applying the provisions of section 13(1)(c) of the Act. The issue raised in grounds of appeal No.5 to 8 is against denial of utilization charges paid of ₹ 75,000/- to Dr.Alimiya Parkar and ₹ 1,20,000/- paid to Dr. Mumtaz Parkar. 5. Briefly, in the facts of the case, the assessee was registered trust and was granted registration under section 12A of the Act. The case of assessee was reopened under section 147/148 of the Act. The assessee trust had two trustees viz. Mr. Almiya D. Parkar, Managing Trustee and Mrs. Mumtaz Alimiya Parkar, Secretary and Treasurer. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58,792/-. 6. The CIT(A) did not allow the claim of professional charges of ₹ 6,52,748/-. The assessee had furnished details of total charges collected from the patients by hospital and the professional charges passed from the trust. The assessee had relied on clause 31 of trust deed, which states that any trustee being a doctor, shall be entitled to be paid all the usual professional fees for the time expended, business transacted in connection with the trust. Similarly, the CIT(A) denied the payment of utilization charges of ₹ 1,95,000/- to the trustees being in violation of provisions of section 13(1)(c) of the Act. 7. The assessee is in appeal against the order of CIT(A). 8. The learned Authorized Representative for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le purpose. The case of assessee was taken up for scrutiny pursuant to re-assessment proceedings initiated against the assessee. In the said proceedings, the Assessing Officer noted that the trust deed had only two trustees i.e. Almiya D. Parkar, Managing Trustee and Mrs. Mumtaj Alimiya Parkar, Secretary and Treasurer. The said trust came into existence vide trust deed dated 28.03.2002. The assessee had placed copy of trust deed in the Paper Book. The trust was set up by Dr. Almiya D. Parkar to carry out hospital activities with corpus of ₹ 1000/- only. Since it was not possible for the assessee to start the hospital activity because of lack of funds, Dr. Parkar allowed the carrying on of hospital activity in the hospital building own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. In the present set of facts, admittedly, the managing trustee had established hospital and had even allowed the hospital to use medical facilities and equipment available in the hospital, for which utilization charges were paid, which is also second issue before us, which will be addressed in later paras. However, it is not disputed that both trustees were professionally qualified doctors, who besides looking after the administration and running of hospital, were also providing services to the hospital. The payment to them was also linked to the fees collected from the patients. The total professional charges paid to them were ₹ 6,52,748/-. In such circumstances, where the payment is made for rendering professional services to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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