TaxTMI 
TaxTMI 
2009 (8) TMI 315
X X X X Extracts X X X X
X X X X Extracts X X X X
....61 (for short "the Act") for the assessment year 2002 to the assessment year 2008-09 and onwards. 2. The petitioner is a company incorporated and registered under the Companies Act, 1913 whose main object is creating and maintaining a hospital for philanthropic purposes. The petitioner is also registered as a public trust under the Bombay Public Trust Act, 1950. The petitioner was granted exemption under section 10(22A) of the Act for the years 1970-71 to 1995-96. In the year 1996 an issue was raised by the tax authorities whether the petitioner could be considered as carrying on its activities solely for philanthropic purposes and by an order dated March 26, 1991, the petitioner was assessed to income-tax holding that the petitioner did n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment years 2002-03 to 2010-11. That order is impugned in this petition. 3. Learned counsel for the petitioner submitted that the petitioner was previously granted approval by the Central Board of Direct Taxes for the years 1990-2000 to 2001-02 and even earlier, the petitioner was granted exemption holding that it exists solely for the philanthropic purpose. He therefore submitted that respondent No. 1 could not have taken a contrary view and in the absence of any new material could not have taken a different view in the matter in rejecting the applications. We are unable to agree. It is settled principle of law that the principle of res judicata does not apply in matters pertaining to tax for different assessment years as the Cause of act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncessional treatment provided to the staff members could not be regarded as philanthropic purpose. Thirdly, respondent No.1 took exception to the write off the amount of Rs.76,80,723. The petitioner had made certain payments to a stock broker for purchasing trust securities for the employees' provident fund trust. The broker delivered part of the securities but failed to deliver the securities worth Rs.76,80,723 for which the amount was paid. The broker company came under a cloud as it was con trolled by Ketan Parekh who is being prosecuted for alleged malpractices on the stock exchange. The amount paid to the broker became irrecoverable and was written off by the petitioner. This fact was also held against the petitioner. Lastly, the Commi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtain number of years and no explanation was sought from the petitioner on that count though explanation was sought regarding write off of Rs.76,80,723 as also regarding the fees received for medical examination from USA visa applicants. Had notice been given to the petitioner that their applications were sought to be rejected on the ground that there was surplus of income over expenditure for some years, the petitioner could have explained that there was a Cumulative loss for nearly two decades. The petitioner, therefore, had no opportunity of explaining the true position nor does it appear that respondent No. 1 was aware of this position. 6. As regards the second ground of the free or concessional treatment given by the petitioner to its....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riate every receipt for every activity and medical treatment provided by the petitioner. There may be some surplus in some areas and deficit in other areas. Cross subsidization is not unknown. Even in state function, cross subsidies are provided for. The Hospital under the petitioner is one unit run at one place and it is not the case of the respondent there are multiple units and one unit is subsidizing the other. In the same unit, payment is collected for different services rendered which may result in some cross subsidy. Ultimately, the entire receipts are used for treatment of the patients and medical care. In the absence of any material to show that generally there was a profit, it cannot be said that the petitioner does not exist sole....