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TMI Blog2017 (1) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years in question. Having regard to the specific nature of the income which till 31.03.1999 could not be included as part of the total income, which the Parliament later subsumed through sections 10(23C) and 12A of the Act (subject to conditions) by deleting section 10(22A), in the present case there was no question of confusion the amount received by Dr. Behl as benefits that could debar the assessee to the eligibility it fundamentally had under section 10(22A) of the Act. Question of law framed is answered against the Revenue and in favour of the assessee - ITA 454/2004, ITA 455/2004, & ITA 417/2005 - - - Dated:- 2-1-2017 - MR. S. RAVINDRA BHAT MR. NAJMI WAZIRI JJ Appellant Through: Mr. C.S. Aggarwal, Sr. Adv. with Mr. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 (in short the Act) was granted to the assessee on 28.11.1973. The Memorandum of Association was duly registered subsequently on 21.10.1976. The assessee was also granted exemption certificate from inception i.e. first being on 01.08.1973. The assessee s hospital treats those suffering from illness and also provides convalescence to those requiring medical attention and rehabilitation. It is not in dispute that consistently for the period 1974-75 to 1992-93, the assessee s claims of the income and receipts were being charitable were accepted and not brought to tax. During one of the earlier years i.e. 1975-76 the assessee s income was sought to be taxed; on that occasion its revision under Section 264 of the Act was accepted. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounted to a charity under Section 10(22A) of the Act. He urges that even though Dr. Behl was paid sums of ₹ 3.7 lacs and ₹ 4.7 lacs and a similar amount in the concerned assessment years, these were out of a more substantial billing. He also justified those amounts on account of Dr. Behl s involvement with the society; it was submitted that previously Dr. Behl was not charging any amount and the services were by and large gratis and entirely without a fee. However, having regard to the fact that the institution had expanded its activities and expenditure had also proportionately increased, he felt that it would be in a position to collect some reasonable fees from customers who could be attributed to his services especially i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied. She relied upon the ruling of this Court in Director of Income Tax (Exemption) vs Charanjiv Charitable Trust 267 CTR 305 (Delhi) as well as Director of Income Tax vs Bharat Diamond Bourse (2003) 179 CTR 225 (SC). It is submitted that as long as any benefit passed to a settler or founder of the institution, regardless of whether the larger purpose of the charity was sub-served, its entitlement to receive the benefit under law so as to exclude exempted incomes, ceased. She, therefore, submitted that the Tribunal s finding should not be disturbed. 11. Section 10(22A) of the Act, excluded income received by hospitals or other institutions, for the reception and treatment of persons suffering from illness. It was on the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, Directly or indirectly for the benefit of any person referred to in sub-section (3)..... xxxx xxxx (2) Without prejudice to the generality of the provisions of clause (c) [and clause (d)] of sub-section (1), the income or the property of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation) opens with the exception Nothing contained in section 11 (or section 12) shall operate . What is immediately apparent is that the exclusion of amounts received by virtue of section 10(22A) is not the subject matter of section 13(1) of the Act or any of its further conditions. In other words, the disqualification which attaches in absolute terms by virtue of provisions of section 13(1) especially through section 13(3) to the income out of which some benefit flows to a settler/ founder, does not per se apply to institutions covered by section 10(22A) of the Act. 14. Section 13 was brought into force in its present form on 01.04.1989. Concededly, the provision refers to all manner of charitable income which would otherwise be n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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