TMI Blog2014 (2) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... al u/s 10(23C)(via) of the Act, the income of the hospital is taxable as can be inferred from this judgment. In the present case, it is factual position as is admitted by learned A.R. of the assessee that the assessee is not running any other charitable activity and, therefore, as per this judgment cited by learned A.R. of the assessee, it has to be held that the profit from running of hospital is to be held to be taxable because the same has not obtained approval u/s 10 (23C) (via) and since the assessee is not running any other charitable activity, such income of the hospital cannot be claimed to be exempt u/s 11 for utilization of the income from hospital in respect of other charitable activities. Hospital was being run by the appellant for profit - Exemption for a hospital has to be exempt only under the provisions of section 20(23C)(via) of the Act and not u/s 11 and since the assessee has not obtained approval u/s 10(23C)(via) of the Act, there is no merit in these grounds of the assessee and the same are accordingly rejected. Claim for exemption of the surplus - As decided in ADITANAR EDUCATIONAL INSTITUTION VERSUS ADDITIONAL COMMISSIONER OF INCOME-TAX [ 1997 (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicability of section 10(23C) (via) of the Act in the case of the appellant . 3. BECAUSE the CIT (A) has erred in law and on facts in wrongly interpreting the definition of charitable purpose as defined in section 2(15) of the Act, wherein 'medical relief is duly incorporated as being one of the charitable purposes. 4. BECAUSE as a matter of fact, such medical relief includes 'medical service' as there can be no question of medical relief unless certain 'medical service' has been rendered. As such the interpretation of section 2(15) by CIT (A) is wholly erroneous and is against the real intention of law. 5. BECAUSE the CIT (A) has erred in law and on facts in not considering that the appellant is a society duly registered under the 'Societies Registration Act, 1860' having one of its objects as running of an eye hospital and for this charitable purpose it has duly been granted registration under section 12A of the Act by the Ld. Commissioner of Income Tax, Allahabad. 6. BECAUSE, without prejudice to above, the CIT(A) has erred in law and on facts in holding that the appellant is also requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 12A vide order dated 24.02.1994 of the CIT, Allahabad was obtained. The Assessing Officer required the assessee to explain why the surplus of eye hospital amounting to ₹ 4735816/- should not be charged to tax. Before the Assessing Officer it was explained by the assessee that no separate approval under section 10(23C) was required if the society is registered under section 12AA of the Income-tax Act, 1961. It was also stated that approval is not required if the gross receipts do not exceed ₹ 1.0 Crores and it was not applicable to the case of the assessee. The Assessing Officer was of the view that approval for charitable activities is not required where registration under section 12AA was taken but where the institution was running hospital and the receipts exceeded ₹ 1.0 Crores, the approval of the prescribed authority being the Chief Commissioner of Income-tax was required. The Assessing Officer accordingly allowed exemption under Section 11(1) for the income applied for charitable activities done by Mani Mandir only and the net surplus of ₹ 2,296/- was treated as exempt. The net surplus of the eye hospital for the past three years had been declare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputedly the property held under Trust, the surplus derived from running of hospital, has to be necessarily held as income derived from the property held under Trust. It is wholly incorrect to say that a hospital can be run without the exercise of utilization of the skill of the doctors employed in the hospital. The source of income is the hospital as a whole, which undisputedly is the property held under Trust. 5.1 He also placed reliance on a judgment of Hon'ble Kerala High Court rendered in the case of Commissioner of Income-tax Vs Sahrudaya Hospital [2012] 344 ITR 257 (Ker) and also submitted that the copy of this judgment is available from page No. 154 to 156 of the paper book. He also placed reliance on the judgment of Hon'ble Apex Court rendered in the case of Radhasoami Satsang Vs Commissioner of Income-tax [1992] 193 ITR 321 (SC) in support of this contention that when the facts in the present year are identical to the facts in earlier years, the decision of earlier year should be followed. He also placed reliance on the following judicial pronouncements: (i) I.T.A.T. Allahabad Bench order in the case of Sunbeam English School Society in I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the hospital received by the trust which is considered under section 10(23C) subject to the approval or without approval depending upon the quantum of gross receipts and no approval either under section 12A or under section 10 is required for hospital existing for philanthropic purposes if the receipts do not exceed the prescribed limit. In case the limits exceed the prescribed limit, then the approval granted has to be examined every year as to whether the hospital is running solely for philanthropic purposes and not for the purpose of profit. The conditions more or less similar to those stipulated while according approval under section 12A and exemption claimed under section 11 are to be fulfilled even for the purpose of section 10(23C)(vi) if the receipts exceed the prescribed limit. Thus, incorporation of the conditions for application of income and accumulation of income itself is / evident of the fact that the section is a self-containing code and the hospital | cannot avail the benefit of section 11 even if it registered but does not fulfill 1 the conditions of section 10(23C) under which it was approved. Thus, the Assessing Officer was justified in invoking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are - care by a skilled nurse irrigation - (medicine) cleaning a wound or body organ by flushing or washing out with water or a medicated solution bandaging, binding, dressing - the act of applying a bandage holistic medicine - medical care of the whole person considered as subject to personal and social as well as organic factors; holistic medicine treats the mind as well as the body hospice - a program of medical and emotional care for the terminally ill injection, shot - the act of putting a liquid into the body by means of a syringe; the nurse gave him a flu shot bloodletting - formerly used as a treatment to reduce excess blood (one of the four humors of medieval medicine) defibrillation - treatment by stopping fibrillation of heart muscles (usually by electric shock delivered by a defibrillator) detoxification - treatment for poisoning by neutralizing the toxic properties (normally a function of the liver) disinfection - treatment to destroy harmful microorganisms digitalisation, digitalization - the administration of digitalis for the treatment of certain heart di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffering from some illness or injury and not to any other person who is not so suffering from any illness or injury. When we examine the scope of the services which can be provided by a hospital, we find that the facilities or services being provided by a hospital can be used by those persons also, who are not so suffering from any illness or injury. For example, the doctor in a hospital can perform an operation for ligation i.e. Nasbandi . This is not a service provided to a person suffering from any illness or injury. Similarly, By carrying out various tests including sonography, the doctor in a hospital can determine the sex of the child in the womb to facilitate the mother to decide whether she wants to continue with her pregnancy or not. This again is also not a service provided to a person suffering from any illness or injury. Abortions are also carried out in hospital if the would be mother does not want to continue with her pregnancy. This again is also not a service provided to a person suffering from any illness or injury. One more example is coming to our mind. Now a days, many hospitals provide health check up to a person, who is not suffering any illness. The same is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of services which a hospital can provide is different and beyond the scope and ambit of the term medical relief . Therefore, it cannot be said that a hospital is eligible for exemption u/s 11 read with section 2 (15). 8.1 Now in our considered opinion, we should also examine and decide this aspect as to whether a particular income of a particular institution can be said to be eligible for exemption under the provisions of two sections i.e. section 11 and section 10(23C) (via) and the assessee can choose the section under which it wants to claim the exemption. In our considered opinion, the answer to this question is also a big NO because neither any expenditure can be claimed as allowable under two different sections nor an income can be taxed under two different sections and therefore, on a similar logic, exemption of income also cannot be claimed under two different sections i.e. section 11 and section 10(23C) as in the present case. When we examine the provisions of these two sections i.e. section 11 and 10(23C) clause (via) of the Act, we find that the provisions of section 11 are general which exempts income derived from property held under the trust only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, this judgment of Hon'ble Kerala High Court is not applicable in the facts of the present case. Rather, in our considered opinion, in the facts of the present case, this judgment helps the case of the Revenue because in that case, the approval was not granted to the hospital of the assessee u/s 10(23C)(via) of the Act and because of this reason, it is stated by Hon'ble Kerala High Court in Para 3 of the judgment that even if one of the branches of operations leads to gain or profit, still the society is entitled to exemption, if the funds were applied for other charitable purposes. In our considered opinion, it means that the income from the hospital was held to be taxable but it was held to be exempt because such income was utilized for other charitable activities such as running of old age home for the poor, training institute for mentally challenged etc. In the present case, it is admitted position that the assessee is not running any charitable activity apart from the hospital and therefore, the income of the hospital has to be held as taxable in the light of this judgment of Hon'ble Kerala High Court because in the present case also, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue as to whether the assessee is eligible for exemption u/s 10(23C)(via) or section 11 of the Act. 8.7 The next judgment on which reliance has been placed is the judgment of Hon'ble Apex Court rendered in the case of Radhasoami Satsang vs. CIT (supra). In that case, the trust was enjoying exemption and thereafter, the same was bifurcated into two groups. One group was held to be entitled for exemption and the other group also claimed to be exempt. It was held that the second group is also eligible since the first group was accepted as eligible. In the present case, the dispute is different. The dispute is whether the exemption is available to the assessee u/s 10(23C)(via) of the Act or section 11 and it is not in dispute that the exemption is allowed u/s 11 to one part of the activity of the hospital and for the remaining part, it is denied and, therefore, this judgment is not rendering any help to the assessee in the present case. We would also like to observe that Hon'ble Apex Court has also observed in that case that the decision is confined to the facts of that case and not for general application. 8.8 The next judgment cited by learned A.R. of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute as to whether the exemption is to be allowed u/s 10(23C) or section 11 of the Act. 8.13 The next judgment cited by learned A.R. of the assessee is the judgment of Hon'ble Kerala High Court rendered in the case of Brahmin Educational Society vs. ACIT (supra). This decision is not applicable in the present case because this issue was not before the Hon'ble Kerala High Court as to whether the exemption is to be allowed u/s 10(23C) or section 11 of the Act. 8.14 The next judgment cited by learned A.R. of the assessee is the judgment of Hon'ble Rajasthan High Court rendered in the case of Agarwal Shiksha Samiti Trust Vs Commissioner of Income-tax (supra). In this case also, this was not the dispute as to whether the exemption is to be allowed u/s 10(22) or section 11 of the Act and hence, this judgment is also not rendering any help to the assessee. 8.15 The next judgment cited by learned A.R. of the assessee is the judgment of Hon'ble Kerala High Court rendered in the case of CIT vs. Geeta Bhavan Trust (supra). This judgment is also not rendering any help to the assessee because in this case also, this was not the dispute as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spital in respect of other charitable activities. 9.1 In view of the above discussion, we hold that no interference is called for in the action of learned CIT (A) on this aspect and therefore, these grounds being ground No. 1 to 6 are rejected. 10. Ground No. 7 is as under: 7.1 BECAUSE Ld. CIT(A) has erred in law and on facts in confirming the view taken by the Assessing Officer that the hospital was being run by the appellant for profit and thereby in upholding the assessment of income at ₹ 47,35,816/- being the surplus revealed by the Income Expenditure account without appreciating that the eye hospital was being run wholly and exclusively for attainment of its objects as set out in its memorandum of association and view to the contrary as has been taken by the authorities below is wholly erroneous and not sustainable. 7.2 BECAUSE looking to the nature of activities carried out wholly and exclusively for attainment of its objects as set out in its memorandum of association (such objects having been held as objects for charitable purpose), the appellant cannot be said to be existing for the purposes of profit and the author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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