TaxTMI 
TaxTMI 
2018 (8) TMI 1131
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.... Act, 1950, 10% of the operational beds needs to be used for treating the patients from the weaker sections of the society. During the year under consideration, the trust was required to spent 2% of the gross receipts, i.e. Rs. 14,65,854/- and however, the trust spent Rs. 1,34,44,118/-. On examination of the various receipts viz, rents received by the trust, consultation fees paid to the various consultants/surgeons, consultation fees paid to the trustees, investments made by the trust and the repayment of secured loan, list of concessions given to IPD/OPD patients (weaker sections), the AO opined that the assessee trust carried the commercial activities which are in the nature of trade or commerce. He further, opined that giving discounts or making remissions in the patients bill is common practice in the medical field and mere conducting free tests during camps organized do not constitute 'medical relief' within the meaning of section 2(15) of the Act. Further, the huge amount of Rs. 4.62 crores is collected on account of IPD/OPD patients and the same is attributable to the services of Dr. B.E. Kandekar's consultancy alone. The payment made to Dr. B.E. Kandekar towards his profes....
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....llowed. 4. Aggrieved with the order of CIT(A) the Revenue is in appeal before us with the following grounds : "1. Whether on the fact and in the circumstances of the case and in law, the Ld.CIT(A) is justified in not appreciating the fact that the Trust had applied its immovable property and the income for the benefit of the Managing Trustee in violation of provisions of section 13(1)(c) of the Act? 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is justified in not appreciating the fact that the Managing Trustee had diverted the income by using Trust's infrastructure for his private gains in violation of the provision of section 13(1)(c) r.w. sec.13(2)(b) & 13(2)(g) of the I.T. Act, 1961." 5. Ld. DR for the Revenue submitted that the Ld.CIT(A) has not appreciating the facts that the Chief Trustee Dr. B.E.Kandekar, Chief Trustee has diverted the income of the assessee trust by using its infrastructure for his personal gain. The activities of the assessee trust are in the nature of trade or commerce and the predominant object of the assessee trust is profit motive. He, therefore, prayed for reversing the order of the CIT....
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....al propositions that where the predominant object of the trust or institution is to carry out the activities for charitable purposes and not to earn profit, it would not lose its character of being for charitable purpose, merely because some profit arises from the activity. The CBDT in its Circle No.11, dated 19.12.2008 had clarified that where the purpose of trust or institution is relief of the poor, education or medical relief, it would constitute charitable purpose, even if incidentally involves carrying on the commercial activities. In view thereof, where the assessee was engaged in carrying on the activities for attaining the objects of providing medical relief to people at large and surplus was generated from hospital activities for doing charitable work in the hands of the assessee, does not establish the case of the Assessing Officer that it was not engaged in charitable activities. Further, the assessee trust was established for the purpose of granting medical relief and the activities having been carried out as per the terms of settlement and the said activities having been recognized as charitable under the provisions of the Act, even recognition given by the Bombay Pub....
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....r profit, in cases, where the predominant object of the trust is to carry out the activity for charitable purposes and not to earn profit. Further, it was held that the trust would not lose its character of a charitable purpose merely because some profit arises from the activities. Reference was made to the exclusionary clause applicable at that time and it was held that the same does not require that the activity must be carried on in such a manner that it does not result in any profit. 20. Now, coming to the second aspect of exemption under section 11 of the Act to the assessee, in view of violation of provisions of section 13(1)(c) of the Act. In the facts enumerated herein-in-above and also while making reference to the observations of the Assessing Officer, it has been referred to by us that the assessee trust was settled by Dr. Kandekar, managing trustee and four other as trustees. Dr. Kandekar was a cardiologist and he along with his wife made available 45,000 sq. ft. of constructed building to the trust to carry on its activities of running hospital therefrom. The assessee trust was paying monthly rental of Rs. 6 lakhs to Dr. Kandekar and his wife. In addition, cer....
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.... of Assessing Officer that Dr. Kandekar had shifted his private practice to the trust hospital. Looking at the remuneration generated by Dr. Kandekar for the assessee trust, it could not be established that he was doing any private practice at the premises of the trust hospital. Another objection of the Assessing Officer was vis-à-vis the claim of expenditure of associated doctors by Dr. Kandekar in his return of income, against his consultancy charges, it was explained by the assessee before Assessing Officer that the said associate doctors were engaged by Dr. Kandekar for looking after his patients in the trust hospital and he was paying for their services and claiming the expenditure without utilizing the services of doctors of the hospital trust. The said claim of the assessee has not been rebutted by the Assessing Officer and the contrary inference drawn in this regard, cannot be accepted. We find no merit in the objection of the Assessing Officer, where Dr. Kandekar acting as managing trustee of the assessee trust had supervise the activities of the trust and had devoted time for not only the medical consultancy, but also for administrative work. The assessee had also ....