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TMI Blog2017 (2) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... trusts registered under Bombay Public Trust 1950 which are running charitable hospitals including nursing home, maternity home, dispensaries or any other centre for medical relief whose annual income exceeds ₹ 5 lakhs. This scheme stipulates to provide compulsory free and concessional medical treatment to the indigent and weaker patients. As per the scheme Trust has to credit 2% of the gross billing to the Indigent Patient Fund every year and this fund should be utilized for providing medical treatment to the poor patients. There is no single evidence which would suggest otherwise. The rationale behind the same being that the doctor’s fees is not a part of the hospital's earnings, but rather a reimbursement to the hospital. The hospital merely acts as a collecting agent between the two for this particular aspect. Neither is there any evidence which would suggest the assessee’s status of that of a "Charitable Trust registered under the Bombay Public Trusts Act, 1950" being revoked by the Charity Commissioner. AO has no role in law by usurping the role of the Charity Commissioner and declaring that the assessee has breached the covenants of the Scheme. - Decided against Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 2% of the gross bill, excluded the doctor s fee of ₹ 7,65,26,156/- The AO noted that there was shortfall of ₹ 15,30,523/- in the transfer of Indigent Patient Fund Account due to exclusion of doctor s fee. Hence, he observed that assessee s character ceased to be of charitable nature and surplus income of ₹ 4,20,30,667/- was assessed as income by denying exemption u/s 11 of the Act. Aggrieved assessee preferred appeal before CIT(A), who allowed the claim of the assessee by following precedents and various case laws by observing as under: - 3.3 I have considered the above submissions of the appellant as well as the facts of the case. The issue in appeal is as to whether the appellant is entitled to exemption u/s 11 of the Act, in view of the violation of the scheme laid out by the Hon'ble Bombay High Court for indigent and weaker section patients. The Bombay High Court has ordered that every charitable hospital shall deduct 2% of the billing of all the patients (other than indigent and weaker section patients) and credited the said amount to the Indigents Patients Fund (IPF). The appellant has although deducted 2% of the billing amount but has excluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the AO is not at all competent to deny the exemption to the appellant u/s 11 of the Act, even when the higher Competent Authority has granted certificate to the appellant u/s 12A of the Act and even when the Charity, Commissioner has not taken an adverse view in the matter. 3.6 I agree with the appellant that the IPF Scheme has been drawn with the objective of providing decent health care specifically to the indigent and weaker section patients and it accordingly provides a mechanism for the same. Section 11 of the IT Act, 1961 on the other hand, stipulates a requirement for a charitable organisation, to avail the exemption in respect of the surplus earned by it from its charitable activities. This requirement is appropriation of rather utilisation of more than 85% of the earnings towards charitable purpose. The appellant has adhered to this condition by utilising almost 88% of its total earnings towards its charitable objectives. Section 11 does not necessarily stipulate adherence by an assessee to the Scheme drawn by Hon'ble Bombay High Court. Further, as discussed above, whether the appellant has complied with and not violated the conditions stipulated by the Scheme i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ognition of the school by the Directorate of Education, the tax authorities can take notice. The gravity of the consequences of holding a certain school as de- recognized is not to be trifled with or taken lightly and it is a powerful tool in the hands of the Directorate of Education and if it is taken away, serious consequences are visited on the school which is not a fact in the present case. 3.8 In the case of Hiralal Bhagwati V. CIT (supra) cited by the appellant Hon'ble Gujarat High Court held that the registration of a charitable trust under s. 12A is not an idle or empty formality and once the registration under section 12A(a) of the Act is granted, the grant of benefit cannot be denied. Hence, the AO was not justified in refusing the benefits which would otherwise accrue under the registration. If there was no registration, as contemplated under section 12A(a) r.w.r. 17A, the Revenue would have been justified in making a submission that the benefit cannot be granted, but where the application for registration is submitted and the registration has been granted, the benefit cannot be denied on the ground that the scheme is not for the benefit of public at large. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt / poor patients. However, as per the data submitted before the Assessing Officer, which is incorporated under para 9 at page 10 of the assessment order, such services to indigent / poor patients was numbering 808 was provided by the assessee trust and the total bill amount of concession given to the patients was ₹ 14,49,969/- as against the billed amount received from other patients of ₹ 3.22 crores. Under the Income-tax Act, there is no provision for providing a percentage of the concession to indigent / poor patients. But certain limits have been laid down otherwise. However, in the absence of any limit being provided in the Income-tax Act, violation, if any, of the said limit does not entitle the Revenue authorities to disallow the claim of exemption under section 11 of the Act to the assessee trust, which otherwise had carried out the activities as per its objects and hence, is entitled to the deduction under section 11 of the Act. Accordingly, the Assessing Officer is directed to allow the claim of assessee in this regard. 5. Further, the learned Counsel for the assessee stated that the Revenue in assessment year 2008-09 has accepted the position vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The Charity Commissioner may also request the Government to withdraw any other concessions/ benefits given to the said hospital. The above clause of this scheme indicates that the power to decide whether a Charitable Hospital has breached the terms of the Scheme rests with the Hon'ble Charity Commissioner who can in turn refer the matter to the State Government recommending even the withdrawal of various benefits provided to such Charitable Hospital, if necessary. These benefits do not include the exemption granted to the trust u/s 11 of the Act. So, effectively, it is the State Government with whom, rests the ultimate power to adjudicate whether a Public Trust is or is not in compliance with the Scheme and to take consequential corrective measures. We find that during the year under consideration, the assessee has transferred 2% of the billing net off doctor s fees to the IPF and not 2% of the total billing without considering doctor ss' fees. Now before us, the learned Sr. DR argued that the assessee has violated the High Court's order and that for this sole reason its character ceases to be charitable in nature. In this regard, we are of the view that has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been usurped the power. Subsection 3 of the said section has also vested the Charity Commissioner and not the Assessing Officer with the power to pass an order cancelling the registration of such trust or institution where subsequent to registration, he is satisfied that its activities are no longer genuine in nature. Till such time, the benefits available pursuant to such grant of the registration cannot be denied. 9. In this regard, we place reliance on the decision of the co-ordinate Bench of Delhi Tribunal in the case of The Civil Services Society Sanskriti School Vs. Director of Income Tax (Exemption) in ITA No.1488/Del/2012, wherein it is held as under: - 6.3 There is sufficient evidence available on record which is uncontested that the objects of the society are charitable in nature and a finding to the said effect has been given in the impugned order itself. Regarding the shortfall in the requisite no. of students belonging to the EWS category students in the facts as they stand no evidence of non-compliance has been brought to our notice either in the arguments or in the impugned order. The reasons consistently advanced for the situation in regard to locational a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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