2021 (12) TMI 412 - HC - Income Tax

Exemption u/s 11 - grant of registration u/s 12AA - Assessee engaged providing activities like sale/purchase of medicine, running of pathological clinic, x-ray clinic, polyclinic etc. - assessee contended that Trust has been established for general charitable objective as specified in Section 2(15) of the Act, which provides medical services to the public at large without discrimination of caste, creed and religion - As submitted polyclinic which the assessee Trust has established and being administered undertakes pathological tests, x-ray and render other medical services comes within the purview of medical relief within the meaning of charitable purpose as defined in Sub-section 15 of Section 2 of the Income Tax Act, 1961 - ITAT held that assessee would qualify for grant of registration under Section 12AA of the Act and their activity is undoubtedly a charitable activity - HELD THAT - As decided in OXFORD ACADEMY FOR CAREER DEVELOPMENT 2008 (12) TMI 192 - ALLAHABAD HIGH COURT as relying on AMERICAN HOTEL LODGING ASSOCIATION EDUCATIONAL INSTITUTE 2008 (5) TMI 17 - SUPREME COURT wherein it was held that the prescribed authority while examining an application for grant of registration is only required to examine the nature, activities and genuineness of the institution and mere existence of profit/surplus did not disqualify the institution. Also held in ST. LAWRENCE EDUCATIONAL SOCIEITY (REGD.) ANOTHER 2011 (2) TMI 72 - DELHI HIGH COURT institution seeking exemption under the provisions of the Act should not generate a quantitative surplus was a condition which was legally untenable. In the light of the above discussion, we hold that the order passed by the Tribunal does not call for any interference. In the result, the appeal is dismissed and the substantial questions are answered against the Revenue.

Summary

Issues:
1. Interpretation of law regarding charitable purpose under the Income Tax Act, 1961.
2. Justification of the Tribunal's decision on the nature of activities conducted by a Trust for medical relief.

Analysis:
1. The appeal before the Calcutta High Court under Section 260A of the Income Tax Act, 1961 challenged the Tribunal's order regarding the charitable status of a Trust's activities. The Revenue questioned whether the Tribunal was correct in considering activities like sale/purchase of medicine, running medical clinics, as falling under the purview of medical relief for charitable purposes as defined in the Act.

2. The Trust in question, established for general charitable objectives, applied for registration under Section 12AA of the Act. The Commissioner of Income Tax rejected the application, deeming the Trust's activities as commercial due to involvement in medical services. The Trust argued that it provides medical services without discrimination and generates marginal profit to sustain its charitable activities. The Tribunal found the Trust eligible for registration, considering its activities as charitable under Section 2(15) of the Act.

3. The respondent Trust's counsel cited legal precedents to support their case, including the High Court of Allahabad and the Supreme Court's decisions emphasizing the examination of an institution's nature and activities for registration, irrespective of profit generation. The counsel also referred to the High Court of Delhi's ruling that generating a quantitative surplus should not disqualify an institution seeking exemption under the Act.

4. The High Court upheld the Tribunal's decision, concluding that the Trust's activities indeed qualified as charitable under the Act. The Court dismissed the Revenue's appeal, answering the substantial questions against the Revenue. Additionally, the stay application related to the case was also dismissed by the Court.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, relevant legal precedents cited, and the final decision rendered by the Calcutta High Court in this matter.