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2022 (2) TMI 760 - AT - Income TaxExemption u/s 11 - Charitable activity u/s 2(15) - assessee was running a hospital - appointment letters for appointing doctors which states that an incentive of ₹ 200/- only will be given in case of conversion of each OPD case into an IPD case - HELD THAT - CIT(A) has relied on the judgement of the Hon'ble Bombay High Court in the case of Breach Candy Hospital Trust Vs. CCIT 2009 (8) TMI 315 - BOMBAY HIGH COURT to underline the fact that the fact of profit making was itself was not a conclusive proof of the trust having non-charitable activities. CIT(A) has relied upon the order in the case of Hamdard Laboratories India Vs. DGIT (Exemptions) 2013 (4) TMI 397 - DELHI HIGH COURT for holding that without recording any specific findings, the Assessing officer cannot invoke the proviso to section 2(15) of the Act for holding that the assessee fell under the category of advancement of general public utility. CIT(A) has also referred to CBDT Circular No. 11/2008 dated 18.12.2008, wherein, it has been clarified that proviso to section 2(15) will not be applicable in case of education, relief of the poor and medical relief etc. - in the course of arguments before us, the Ld. Sr. DR could not point out any perversity in the said observations of the Ld. CIT(A). Accordingly, on the facts of the case, being guided by the earlier assessment years as well as succeeding assessment years as well as the settled judicial precedent, we find no reason to interfere with the findings of the Ld. CIT(A) on the issue of allowing the benefit of exemption to the assessee Trust u/s. 11 and 12 - Decided in favour of assessee.
Issues Involved:
1. Eligibility for exemption under Section 11 of the Income Tax Act, 1961. 2. Nature of the assessee's activities and their alignment with charitable purposes. 3. Admission of additional evidence by the CIT(A) under Rule 46A of the Income Tax Rules. Detailed Analysis: Issue 1: Eligibility for Exemption under Section 11 of the Income Tax Act, 1961 The primary contention from the Revenue was that the assessee, a society registered under Section 12(A)(a) of the Income Tax Act, was not eligible for exemption under Section 11. The Assessing Officer (AO) argued that the assessee's activities were not charitable but profit-oriented, thus disqualifying it from the benefits of Sections 11 and 12. The AO highlighted that the assessee incentivized doctors to convert outpatient department (OPD) cases into inpatient department (IPD) cases, suggesting a profit motive. The CIT(A) disagreed with the AO's assessment, noting that the assessee had been consistently granted exemptions in prior and subsequent years under similar circumstances. The CIT(A) emphasized that the assessee was engaged in running a hospital, which falls under the category of providing medical relief, a recognized charitable purpose. The CIT(A) cited the case of Breach Candy Hospital Trust vs. CCITT and Hamdard Laboratories India vs. Director General of Income Tax (Exemption) to support the position that incidental profit-making does not negate the charitable nature of an entity. The Tribunal upheld the CIT(A)'s decision, affirming that the assessee is eligible for exemption under Sections 11 and 12. Issue 2: Nature of the Assessee's Activities The AO contended that the assessee's activities were commercial rather than charitable, as evidenced by the incentives provided to doctors for converting OPD cases to IPD cases. The CIT(A) found this argument unconvincing, noting that the AO did not provide evidence on the extent of such conversions. The CIT(A) referenced CBDT Circular No. 11/2008, which clarifies that the proviso to Section 2(15) does not apply to entities engaged in education, relief of the poor, or medical relief, even if they incidentally carry on commercial activities. The Tribunal agreed with the CIT(A), concluding that the assessee's activities were aligned with providing medical relief and thus qualified as charitable. Issue 3: Admission of Additional Evidence by the CIT(A) The Revenue argued that the CIT(A) erred in admitting additional evidence (bills/vouchers) under Rule 46A without proper justification. The CIT(A) had allowed the additional evidence after obtaining a remand report from the AO, ensuring that the AO had an opportunity to review and comment on the new evidence. The Tribunal found that the CIT(A) acted within the scope of their powers and safeguarded the Department's interests by obtaining the remand report. Consequently, the Tribunal dismissed this ground of appeal as well. Conclusion The Tribunal dismissed the Department's appeal, affirming the CIT(A)'s decision to grant the assessee exemption under Sections 11 and 12 of the Income Tax Act. The Tribunal found no merit in the Department's arguments regarding the nature of the assessee's activities or the admission of additional evidence by the CIT(A). The order was pronounced on 07.02.2022.
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