TMI Blog2022 (2) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... should be earned from such philanthropic activity, rather it is otherwise that the institution/Trust has done such an activity purely for charitable/philanthropic purposes and under such circumstances expectation of income from such activity will be against the spirit of the aforesaid statutory provision. There is no allegation that the institution is doing any activity other than the aforesaid medical dispensary. The annual income of the appellant Trust is out of the interest income from the investment has been made of surplus lying with it. However, there is no allegation that such surplus is applied for any purpose other than the charitable activity. Now, the only allegation is that the appellant Trust has applied only 12% of its receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Commissioner of Income Tax (Exemption) [hereinafter referred to as Ld. 'CIT(E)'] passed u/s. 263 of the Income Tax Act, 1961 (hereinafter the 'Act') and whereby he, exercising his revision jurisdiction, has set aside the assessment order dated 22.08.2019 with the direction to the Assessing Officer (hereinafter the 'AO') to compute income of the appellant Trust without allowing exemption u/s. 10(23C)(iiiae) of the Act. 2. The brief facts of the case are that the appellant Trust is a society formed on 29.03.1984 and as per Clause 4 of the Memorandum of Association, the society is established for the objects and purposes stated in Clause 3 solely for philanthropic purposes and not for purpose of profit. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a facie existing for profit as per the decision of the Hon'ble Supreme Court in the case of Visvesvaraya Technology University [(2016) 68 taxmann.com 287]. 2.1. He, therefore observed that the action of the A.O. in allowing exemption u/s. 10(23C)(iiiae) of the Act was prima facie found to be erroneous and prejudicial to the interest of the Revenue. He accordingly initiated proceedings u/s. 10(23C)(iiiae) of the Act and show-caused the appellant Trust. The appellant Trust vide its letter dated 21.12.2018 replied as under: i. The assessee society is running a medical institution being a dispensary located at 102, Muktaram Babu Street, Kolkata. Doctors from both Allopathy and Homoeopathy disciplines visit the Medical Institution a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the society is not distributed among the members and is ploughed back in the institution. vi. The provisions of section 10(23C)(iiiae) do not provide for spending of a certain percentage of income during the year. The surplus of investment income over the expenditure is being accumulated for spending in future years for the objects and purposes of the society like building of hospital nursing home or any other similar medical institution. If the exemption granted by the provisions of section 10(23C)(iiiae) is not allowed, it will jeopardize our charitable objects and will deprive the general public in getting free medical services. 2.2. After considering the reply of the appellant Trust, the Ld. CIT(E) observed that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed.] 4.1. A perusal of the above relevant provision of the Act would show that there is no requirement under the aforesaid provision that the income/receipt of the Trust/Society should come from the charitable/philanthropic activity itself. The only requirement is that the hospital/institution should exist solely for philanthropic purposes and not for purposes of profit and the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no allegation that the institution is doing any activity other than the aforesaid medical dispensary. The annual income of the appellant Trust is out of the interest income from the investment has been made of surplus lying with it. However, there is no allegation that such surplus is applied for any purpose other than the charitable activity. Now, the only allegation is that the appellant Trust has applied only 12% of its receipts and accumulated 88%. We find that under the provision of Section 10(23C)(iiiae) of the Act, there is no limit prescribed for application of receipts and accumulation of receipts. Therefore, the appellant Trust is within its rights to accumulate the receipts as per its requirement. It had been explained by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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