2021 (9) TMI 1056 - SCH - Income Tax

Benefit u/s 10 (23C) (via) - benefits in terms of the section are available to any hospital existing solely for philanthropic purposes and not for purposes of profit - Denial of benefit as remuneration has been paid from the earnings of the IPD to the doctors who may not be working in that department and, secondly, that the rates being charged by the appellant are at par with other hospitals which run on commercial basis - HELD THAT - While referring to the remuneration payable to member doctors with regard to IPD patients receipts, the same is not confined to the doctors performing the task. Learned counsel for the appellant did seek to canvas, despite this, as if only doctors performing the task in the IPD are paid. However, that would run contrary to the own pleading of the appellant specially towards the end of paragraph (xi) extracted aforesaid which makes it clear that the receipts from IPD are distributed across the board for doctors. We are, thus, of the view that the decision on facts made by the competent authority and as affirmed by the High Court cannot be said to be perverse or having complete absence of rationality for us to interfere in the same. We make it clear that if the appellant wants to rectify the position, as emerging from aforesaid, that would not preclude the appellant from claiming exemptions for relevant subsequent years.

Summary

Issues:
Claim for benefit under Section 10(23C) of the Income Tax Act, 1961 for assessment years 1999-2000 to 2002-2003.

Analysis:
The judgment dealt with the appellant's claim for benefit under Section 10(23C) of the Income Tax Act, 1961 for specific assessment years. The section provides benefits to hospitals existing solely for philanthropic purposes and not for profit. The legislative intent behind the provision was to prevent entities not entitled to the benefit from availing it. The denial of exemption was based on two main reasons: remuneration paid to doctors from earnings and charging rates similar to commercial hospitals.

The court noted that the denial of exemption was justified based on the remuneration structure for doctors. The appellant's admission in the pleadings revealed that remuneration from IPD patient receipts was distributed among doctors, not just those directly involved in IPD services. This structure contradicted the appellant's argument that only IPD doctors received payment. The judgment upheld the decision of the competent authority and the High Court, finding no irrationality in their conclusions.

The court clarified that rectifying the remuneration structure would allow the appellant to claim exemptions in subsequent years. Ultimately, the civil appeal was dismissed, affirming the denial of benefits under Section 10(23C) for the specified assessment years.