2015 (3) TMI 1314 - AT - Income Tax

Exemption under section 11 denied - non adherence to provisions of Bombay Public Trust Act - Held that - On perusal of the orders of both the tax authorities, we notice that the CIT(A) has given a specific finding that the assessee has not violated any of the provisions of Bombay Public Trust Act and the AO has not pointed out that the assessee has violated the conditions prescribed in sec. 13 of the Income Tax Act. Under these set of facts, we do not find any reason to interfere with the decision of the ld. CIT(A). - Decided in favour of assessee.

Summary

Issues:
- Appeal against granting exemption under section 11 of the Income Tax Act, 1961.
- Compliance with provisions of Bombay Public Trust Act.
- Assessment year 2009-10.

Analysis:
1. Exemption under Section 11: The appeal was filed by the Revenue against the decision of the ld.CIT(A) granting exemption under section 11 of the Income Tax Act, 1961 to the assessee. The appellant argued that the assessee, a general hospital, did not comply with the requirement to reserve 10% beds for needy and poor people as per the Bombay Public Trust Act (BPT). The AO found that only 4.69% of total beds were allocated to free, indigent, and weaker section patients, below the mandated percentage. However, the ld.CIT(A) reversed this decision, noting that the appellant had reserved 10% of beds for needy and poor individuals, and 2% of gross revenue was allocated to the Indigent Patients Fund. The ld.CIT(A) concluded that the appellant had not violated the BPT Act and was eligible for exemption under section 11, citing precedent decisions in favor of the appellant for previous assessment years.

2. Compliance with Bombay Public Trust Act: The AO contended that since the percentage of weaker section patients treated was below 10%, the assessee was not entitled to the exemption under section 11 of the Act. However, the ld.CIT(A) found that the appellant had complied with the BPT Act by reserving beds for poor and weaker section individuals, ensuring free treatment for the needy, and transferring a portion of revenue to the Indigent Patients Fund. The ld.CIT(A) emphasized that there were no additional requirements for exemption under section 11, and the appellant had met the necessary criteria. The Tribunal concurred with the ld.CIT(A)'s findings, noting that there was no violation of the BPT Act and no non-compliance with the conditions of sec. 13 of the Income Tax Act, thereby upholding the exemption granted under section 11.

3. Assessment Year 2009-10: The dispute pertained to the assessment year 2009-10, with the Revenue challenging the exemption granted to the assessee under section 11 of the Income Tax Act. Despite the absence of representation from the assessee during the appeal process, the Tribunal examined the arguments presented by the ld. DR and reviewed the case records. The Tribunal ultimately dismissed the appeal of the Revenue, affirming the decision of the ld.CIT(A) to allow the exemption under section 11 for the appellant, emphasizing compliance with the provisions of the BPT Act and the absence of any violation of statutory requirements.

In conclusion, the Tribunal upheld the exemption granted under section 11 of the Income Tax Act to the appellant, a general hospital, for the assessment year 2009-10, based on compliance with the provisions of the Bombay Public Trust Act and meeting the criteria for exemption as outlined in the relevant legal framework.