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TMI Blog2022 (2) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - I.T.A. No. 5716/Del/2017 - - - Dated:- 7-2-2022 - SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA , JUDICIAL MEMBER Appellant by : Sh. Anil Kumar Sharma , Sr. DR Respondent by : Sh. Rajiv Tandon , CA ORDER PER SUDHANSHU SRIVASTAVA , JM : This appeal is preferred by the Revenue against order dated 01.06.2017 passed by the Learned Commissioner of Income Tax (Appeals)-40, Delhi {CIT(A)} for Assessment Year 2012-13. 2. The brief facts of the case are that the assessee is a society registered u/s. 12(A)(a) of the Income Tax Act, 1961 (in short 'the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng grounds of appeal:- 1. On the basis of facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the assessee is not eligible for exemption u/s. 11 of the I.T. Act, 1961. 2. On the basis of facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the intent of the assessee is not of providing charitable service but was to earn more profit by making patient as IPD instead of OPD. This activity goes on to book better profitability which is contrary to the principle of an organization which is not meant for profit. 3. On the basis of facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the assessee is not entitled to produce evidences/documents in form of bills/vouchers of the aforesaid expenses as per clause (b) of rule 46A(1) as assessee was accorded sufficient opportunities to file documentary evidences during assessment proceedings. 4. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearings. 3.0. At the outset, the Ld. Sr. DR submitted that the assessee was not providing any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 of some sample 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. Two such letters have been relied upon by the Assessing Officer. As per the Assessing Officer, these documents clearly, manifestly and unambiguously prove that the intent of the assessee is not of providing charitable services but to earn more profit by making the patient an indoor patient instead of an outdoor patient. It has also been held that the doctors are incentivised for an act to convince the patient to get admitted in the hospital to earn more and more profits instead of providing medical help/relief at an affordable price. It has also been held that the main objective of providing the benefit of exemption under section 11 is to extend medical help to needy and poor people who are not capable to take medical assistance is at least possible price and should not be deprived from medical help relying on the particular clause 13 of the appointment letter which has been held to show clear motive to incentivise only those doctors who convert outpatients to inpatients. After discussing the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patient when inpatient is a commercial activity, nothing has been brought on record to show how many such cases were found. It the case of Breach Candy Hospital Trust vs. CCITT [ (2010) 228 CTR 381 (Bom)], it has been held that the fact of making profit in 7 out of 9 assessment years was in itself not a conclusive contention for treating the trust is non-charitable and a commercial entity. 4.1.5 Since it is clear that the assessee falls in the category of providing medical relief, the next issue is whether the proviso to section 2 (15) can be invoked by holding that the assessee falls in the category of advancement of any of the general public utility. In the case of Hamdard Laboratories India vs. Director General of Income Tax (Exemption) [ (2013) 35 taxmann.com 314 (Delhi)], the Hon'ble Delhi High Court have held as under: The first proviso to sub-section 2(15) was amended by Finance (No. 2) Act, 2009 with retrospective effect from 1-4-2009. The said proviso is applicable in cases -where an assessee claims that it is carrying on charitable purpose covered by the residuary clause i.e., 'advancement of any other object of public utility'. The proviso is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oor (ii) Education (iii) Medical relief and (iv) the advancement of any other object of general public utility. An entity with a charitable object of the above nature was eligible for exemption from tax under section 11 or alternatively under section 10(23C) of the Act. However, it was seen that a number of entities who were engaged in commercial activities were also claiming exemption on the ground that such activities were for the advancement of objects of general public utility in terms of the fourth limb of the definition of 'charitable purpose'. Therefore, section 2(15) was amended vide Finance Act, 2008 by adding a proviso which states that the 'advancement of any other object of general public utility' shall not be a charitable purpose if it involves the carrying on of- (a) any activity in the nature of trade, commerce or business; or (b) any activity of rendering any service in relation to any trade, commerce or business; for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity. 2. The following implications arise from this amendment- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged and activities carried on providing medical relief and accordingly the proviso to section 2 (15) will not apply to the assessee. The Assessing Officer is directed to allow exemption under sections 11 and 12 with all consequential benefits. Grounds of appeal nos. 1, 2 and 3 are allowed. 5.1. A perusal of the above extract from the order of the Ld. CIT(A) would show that the Ld. CIT(A) has given a thoughtful consideration to the issue in dispute before him. He has mentioned that it was not in dispute that the assessee was running a hospital. Thereafter, the Ld. CIT(A) has stated that even if some kind of incentive was being provided to doctors for converting an outdoor patient into an indoor patient, nothing has been brought on record to demonstrate as to how many such cases were found. The Ld. CIT(A) has relied on the judgement of the Hon'ble Bombay High Court in the case of Breach Candy Hospital Trust Vs. CCIT reported in [2010] 228 ITR 381 (Bom) to underline the fact that the fact of profit making was itself was not a conclusive proof of the trust having non-charitable activities. Thereafter, the Ld. CIT(A) has relied upon the order of the Hon'ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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