2021 (2) TMI 797 - AT - Income Tax

Exemption u/s 10(23C)(iiiae) denied - assessee has not proved any nexus from his source of income of running of the hospital - assessee submitted that the assessee Trust has been claiming exemption u/s 10(23C)(iiiae) of the Act for the last several years and has also claimed the same for the subsequent years and that the Department has been, in various orders passed u/s 143(3) of the Act accepted the claim of the assessee - HELD THAT - As admittedly the expenditure is incurred by the assessee for the purpose of payment to doctors, nurses and other medical staffs as well as for medicine etc. The mobile medical vans are owned, equipped, maintained, run and controlled totally by the assessee. If any organization has incurred expenditure on behalf of the assessee, they claim reimbursement of such expenses from the assessee. The term reimbursement means that the expenditure is that of the assessee and has been incurred on behalf of the assessee. Even otherwise, even if it to be assumed that the assessee is not running a hospital, any other institution which undertakes reception and treatment of persons suffering from illness etc., is also entitled to claim exemption u/s 10(23C)(iiiae) of the Act. On facts, the assessee is an institution which undertakes reception and treatment of persons suffering from illness. On this fact also the assessee s claim has to be upheld. On these facts and also keeping in view that the Revenue has been granting exemption to the assessee under this Section for earlier assessment years as well as for the subsequent years, we hold that the assessee is eligible for deduction u/s 10(23C)(iiiae) of the Act. - Decided in favour of assessee.

Issues Involved:
1. Eligibility of the assessee for exemption under Section 10(23C)(iiiae) of the Income Tax Act, 1961.
2. Definition and interpretation of the term "hospital" under the statute.
3. Assessment of the assessee's activities and their qualification as a hospital or other institution for medical treatment.
4. Consistency in granting exemption in previous and subsequent years.

Detailed Analysis:

1. Eligibility of the Assessee for Exemption under Section 10(23C)(iiiae):
The assessee, Sushila Birla Memorial Institute (SBMI), a Trust registered under Section 12A of the Act, claimed exemption under Section 10(23C)(iiiae) for running mobile medical vans in collaboration with other charitable organizations. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected this claim, stating that the mobile medical vans were part of the hospitals run by other organizations and the assessee was merely reimbursing expenses. The Tribunal, however, concluded that the assessee's activities fell within the scope of Section 10(23C)(iiiae) as the mobile medical vans provided medical services in remote areas, and the expenditure was incurred by the assessee.

2. Definition and Interpretation of the Term "Hospital":
The AO and CIT(A) interpreted "hospital" to mean a formal institution with permanent facilities and specialized doctors. They argued that the mobile medical vans did not meet this criterion. The Tribunal referred to dictionary definitions, which describe a hospital as a place where ill or injured people are treated by doctors and nurses, without specifying that it must be an immovable property. The Tribunal held that the mobile medical vans, equipped with medical facilities and staffed by qualified personnel, functioned as hospitals under the statute.

3. Assessment of the Assessee's Activities:
The Tribunal examined whether the assessee's mobile medical vans qualified as a hospital or institution for medical treatment. It was established that the vans were equipped with necessary medical instruments and staffed by qualified doctors and nurses, providing medical services in rural areas. The Tribunal found that the assessee incurred the expenditure for these services, and any reimbursement from collaborating organizations did not change the nature of the assessee's activities. Thus, the Tribunal concluded that the assessee's activities met the requirements of Section 10(23C)(iiiae).

4. Consistency in Granting Exemption:
The assessee argued that it had been granted exemption under Section 10(23C)(iiiae) in previous and subsequent years. The Tribunal noted this consistency and held that the Revenue's previous acceptance of the assessee's claim supported the current claim for exemption. The Tribunal emphasized the importance of consistency and upheld the assessee's eligibility for exemption.

Conclusion:
The Tribunal allowed the appeal, granting the assessee exemption under Section 10(23C)(iiiae) of the Income Tax Act, 1961. The Tribunal's decision was based on the interpretation of the term "hospital," the nature of the assessee's activities, and the consistency in granting exemption in other assessment years. The Tribunal concluded that the mobile medical vans operated by the assessee qualified as hospitals or institutions for medical treatment, fulfilling the conditions for exemption under the statute.

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