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TMI Blog2009 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... me for any other purpose than the charitable purpose. As rightly observed by the ld. CIT(A) that profitability is not the sole criteria to judge the charitable nature of a society. In a charitable activity incident of profit can be there but that would not goad any quasi-judicial authority to say that society ceases to be a charitable society. AO fails to point out any defects in the objects of society or in the means of achieving those objects. His only area of grievance is that income is resulting to the society by carrying out such activity. But again he fails to take into consideration that such income was only applied for the purpose of charity. AO also pointed out that assessee has entered into contracts with the doctors in such a way that the hospital should not suffer any loss. In our opinion from those contracts nothing adverse can be drawn against the assessee because in order to provide best facilities assessee is supposed to keep best doctors on its panels. Similarly it has to see that hospital should able to run its activity. If it starts loosing the resources then its existence would be in dark. Therefore, taking into consideration all the material on record and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been incurred for giving free/subsidized treatment which is 2.3 per cent of total turnover. According to the Assessing Officer on examination of the details of patients who were given subsidized/free treatment reveals that many of them are doctor s relatives/friends or doctors which are employees of the Dharam Shila Cancer Hospital. On the basis of this analysis, he draw an adverse inference against the assessee mainly on two grounds, one is that the hospital charges were on the higher side and were comparable to hospitals run on commercial basis. According to the Assessing Officer, the terms of the contract appointments to the doctors were such which were also like the terms in any other commercial hospitals. The other inference drawn by him is that the alleged subsidized treatment was only given to the relatives/friends of doctors/employees of the hospital. With these observations, he held that assessee is not entitled to claim exemption under section 11 of the Income-tax Act. 3. Dissatisfied with the assessment order, assessee carried the matter in appeal before the CIT(A). It was contended before the ld. First Appellate Authority that while drawing adverse inference against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the benefit of sections 11 and 12. It was contended that Assessing Officer could not point out any circumstance indicating the fact that assessee has applied its income for any other purpose than charitable purpose. According to the assessee the benefit of section 11 cannot be legally denied to the assessee until and unless any violation of section 13 is done by the assessee s society. The comparative details of room rent and charges of other services submitted by the assessee were duly considered by the ld. CIT(A). Ld. First Appellate Authority on a detailed analysis of all these facts arrived at a conclusion that Assessing Officer has wrongly denied the benefit of sections 11 and 12 of the Act to the assessee. The relevant observation made by the ld. CIT(A) read as under : Regarding the Assessing Officer s allegation that the hospital is being run on commercial considerations it is noticed from the details filed that the appellant is a registered society registered under section 12A of the Act and has also been granted exemption under section 80G of the Act. The main object of the society is to carry out research in the field of cancer as well as to establish and run the ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its main object of running the hospital where a surplus has arisen to it. The hospital is being run for the welfare of general public and not for the purpose of profit and it is noticed that the surplus arising to it has been applied towards various activities which are in the nature of general public welfare like publication of cancer information, booklets and news letters which are distributed free of cost among general public for primary and secondary prevention of cancer. The appellant society has also organized various national/international conferences and seminars in the field of cancer. They have also carried on various research activities. They regularly furnish details of free/subsidized treatment provided by them to the Director of Health Services Govt. of Delhi. They have also organized various cancer detection camps and cancer awareness programmes for the welfare of general public. Thus all these activities which are funded from the surplus arising to the society from the hospital are applied towards meeting the aims and objects for which the appellant society was established. It is also noticed that on the basis of same facts and circumstances the appellant society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accination services given at the hospital. Certain vaccines are given by the Govt. to the public free of cost whereas assessee has been charging for all these facilities from the public. All these circumstances indicate that assessee was not working for charitable purpose. The ld. counsel for the assessee on the other hand relied upon the order of CIT(A). He pointed out that Assessing Officer failed to bring out any material on record which can indicate that income of the assessee has been applied for any other purpose than of a charitable. The Assessing Officer has drawn adverse inference by quoting various room rents charged by the assessee. But assessee has demonstrated before the ld. First Appellate Authority that room rents charged by it are quite on lower side than the other similarly situated hospitals in Delhi. He took us through the comparative chart reproduced by the CIT(A) on page 14 of the impugned order as well as page 14 of the paper book. Ld. counsel further pointed out that assessee has produced evidence before the Assessing Officer exhibiting the facts that the society has carried out various other activities which are in nature of general public welfare, like publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given only to the doctors, relatives/friends of the doctors and the employees. In order to conceive these facts Assessing Officer has taken into consideration the charges for providing various services by the assessee namely room rent and vaccination charges. With the assistance of ld. Representative we have gone through the record carefully. Assessee has demonstrated on the record that its recharges were in the line of other hospitals who are enjoying the benefit of sections 11 and 12. As far as the allegation of the Assessing Officer that free and subsidized services were provided to the relatives of the doctors/employees and to the doctors and employees themselves is concerned we have perused that list available on pages 83-96. In this list name of 443 indoor patients are available. The patients have came from far flung areas also from Uttar Pradesh, Punjab, Haryana and Himachal Pradesh. From the list it is not discernible as to how ld. Assessing Officer has considered them as employees or relatives of employees. We could understood the stand of Assessing Officer if he would have make out a case that assessee is applying its income for any other purpose than the charitable pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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