No denial of sec. 11 relief to hospital

No denial of sec. 11 relief to hospital just because it didn't provide concessional treatment to poor patients

[2015] 57 taxmann.com 333 (Pune - Trib.)

IN THE ITAT PUNE BENCH 'B'

Income-tax Officer, Ward -3, Ahmednagar

v.

Noble Medical Foundation & Research Centre

Section 2(15), read with section 11, of the Income-tax Act, 1961 - Charitable or religious purpose (Medical relief) - Assessment year 2008-09 - Assessee-trust, running a multi-speciality hospital, claimed exemption of income under section 11 - Assessing Officer denied exemption on grounds that earning of profit was pre-dominant activity of trust and charitable activity was only incidental; and that assessee had failed to provide concessional treatment to indigent/poor patients - Whether since assessee was engaged in carrying on activities for attaining objects of providing medical relief to people at large which has been recognised as charitable activity under Act, merely because surplus was generated from hospital activities could not be ground to deny exemption under section 11 - Held, yes - Whether under Act, there is no provision for providing a percentage of concession to indigent/poor patients and, therefore, this could not be a ground to disallow claim of exemption under section 11 to assessee-trust, which otherwise was entitled to deduction under section 11 - Held, yes [Paras 17 to 23] [In favour of assessee]

Section 13 of the Income-tax Act, 1961 - Charitable or religious trust - Denial of exemption (Sub-section (1)(c)) - Assessment year 2008-09 - Assessee-trust, running a multi-speciality hospital, claimed exemption of income under section 11 - Assessing Officer denied exemption on that Dr. K, managing trustee, himself alone had diverted income by using trust infrastructure for his profit/gains, in clear violation of provisions of sections 13(1)(c), read with section 13(2)(b) and 13(2)(g) - Whether in view of fact that 72 per cent of total receipt of trust were attributable to service of Dr. K, against which he was paid only consultancy fee that for looking after his patients in trust hospital, Dr. K had engaged associate doctors and he was paying for that services; that Dr. K had made available services of his laboratory to patients of trust hospital at concessional rate; and that Dr. K had made available large land to trust to carry on its activities of running hospital, amount paid to Dr. K, could not be said to be unreasonable and, therefore, provisions of section 13(1)(c) were not attracted - Held, yes [Paras 21 & 22] [In favour of assessee]

Circulars and Notifications : CBDT Circular No. 11, dated 19-12-2008