TaxTMI 
TaxTMI 
2014 (2) TMI 1369
X X X X Extracts X X X X
X X X X Extracts X X X X
....tal which is the source of income and not any property as such. The hospital charges fees besides voluntary donations which may be received by the trust. Hence, the claim of exemption has to be examined under section 10(23C) as the income from hospital is specified therein." and thereby upholding the applicability of section 10(23C) (via) of the Act in the case of the "appellant". 3. BECAUSE the "CIT (A)" has erred in law and on facts in wrongly interpreting the definition of "charitable purpose" as defined in section 2(15) of the Act, wherein 'medical relief is duly incorporated as being one of the charitable purposes. 4. BECAUSE as a matter of fact, such medical relief includes 'medical service' as there can be no question of medical relief unless certain 'medical service' has been rendered. As such the interpretation of section 2(15) by "CIT (A)" is wholly erroneous and is against the real intention of law. 5. BECAUSE the "CIT (A)" has erred in law and on facts in not considering that the "appellant" is a society duly registered under the 'Societies Registration Act, 1860' having one of its objects as running of an eye hospital and for this "....
X X X X Extracts X X X X
X X X X Extracts X X X X
....than Rs. 1.0 Crore, the assessee was required to obtain the approval of the Chief Commissioner of Income-tax, Lucknow under section 10(23C)(via) which was not obtained and only the registration under section 12A vide order dated 24.02.1994 of the CIT, Allahabad was obtained. The Assessing Officer required the assessee to explain why the surplus of eye hospital amounting to Rs. 4735816/- should not be charged to tax. Before the Assessing Officer it was explained by the assessee that no separate approval under section 10(23C) was required if the society is registered under section 12AA of the Income-tax Act, 1961. It was also stated that approval is not required if the gross receipts do not exceed Rs. 1.0 Crores and it was not applicable to the case of the assessee. The Assessing Officer was of the view that approval for charitable activities is not required where registration under section 12AA was taken but where the institution was running hospital and the receipts exceeded Rs. 1.0 Crores, the approval of the prescribed authority being the Chief Commissioner of Income-tax was required. The Assessing Officer accordingly allowed exemption under Section 11(1) for the income applied f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om the property held under Trust. It is wholly incorrect to say that a hospital can be run without the exercise of utilization of the skill of the doctors employed in the hospital. The source of income is the hospital as a whole, which undisputedly is the property held under Trust." 5.1 He also placed reliance on a judgment of Hon'ble Kerala High Court rendered in the case of Commissioner of Income-tax Vs Sahrudaya Hospital [2012] 344 ITR 257 (Ker) and also submitted that the copy of this judgment is available from page No. 154 to 156 of the paper book. He also placed reliance on the judgment of Hon'ble Apex Court rendered in the case of Radhasoami Satsang Vs Commissioner of Income-tax [1992] 193 ITR 321 (SC) in support of this contention that when the facts in the present year are identical to the facts in earlier years, the decision of earlier year should be followed. He also placed reliance on the following judicial pronouncements: (i) I.T.A.T. Allahabad Bench order in the case of Sunbeam English School Society in I.T.A. No.93/Allahabad/2009 (ii) Pinegrove International Charitable Trust vs. Union of India and Others [2010] 327 ITR 73 (P&H) (iii) Director of I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....existing for philanthropic purposes if the receipts do not exceed the prescribed limit. In case the limits exceed the prescribed limit, then the approval granted has to be examined every year as to whether the hospital is running solely for philanthropic purposes and not for the purpose of profit. The conditions more or less similar to those stipulated while according approval under section 12A and exemption claimed under section 11 are to be fulfilled even for the purpose of section 10(23C)(vi) if the receipts exceed the prescribed limit. Thus, incorporation of the conditions for application of income and accumulation of income itself is / evident of the fact that the section is a self-containing code and the hospital | cannot avail the benefit of section 11 even if it registered but does not fulfill 1 the conditions of section 10(23C) under which it was approved. Thus, the Assessing Officer was justified in invoking the applicability of section of the Act and deny exemption to the surplus income of the it was not approved under section 10(23C)(vi) by the prescribed authority." 7.1 From the above Para of the order of learned CIT (A), we find that this decision is based on the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the mind as well as the body" hospice - a program of medical and emotional care for the terminally ill injection, shot - the act of putting a liquid into the body by means of a syringe; "the nurse gave him a flu shot" bloodletting - formerly used as a treatment to reduce excess blood (one of the four humors of medieval medicine) defibrillation - treatment by stopping fibrillation of heart muscles (usually by electric shock delivered by a defibrillator) detoxification - treatment for poisoning by neutralizing the toxic properties (normally a function of the liver) disinfection - treatment to destroy harmful microorganisms digitalisation, digitalization - the administration of digitalis for the treatment of certain heart disorders anticoagulation - the administration of an anticoagulant drug to retard coagulation of the blood allopathy - the usual method of treating disease with remedies that produce effects differing from those produced by the disease itself homeopathy, homoeopathy - a method of treating disease with small amounts of remedies that, in large amounts in healthy people, produce symptoms similar to those being treated intensive care - clos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss or injury. Similarly, By carrying out various tests including sonography, the doctor in a hospital can determine the sex of the child in the womb to facilitate the mother to decide whether she wants to continue with her pregnancy or not. This again is also not a service provided to a person suffering from any illness or injury. Abortions are also carried out in hospital if the would be mother does not want to continue with her pregnancy. This again is also not a service provided to a person suffering from any illness or injury. One more example is coming to our mind. Now a days, many hospitals provide health check up to a person, who is not suffering any illness. The same is for the purpose to find out whether there is any disorder in respect of any parameter by undertaking various types of blood test, X ray, Sonography, Echo, Stress test etc. The idea is that if such disorder is known in advance before it results into any type of illness, preventive measures can be taken. This service is a service provided by a hospital towards prevention of illness but it is certainly not a service in the nature of medical relief provided to a person suffering from any illness or injury. These....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on under which it wants to claim the exemption. In our considered opinion, the answer to this question is also a big "NO" because neither any expenditure can be claimed as allowable under two different sections nor an income can be taxed under two different sections and therefore, on a similar logic, exemption of income also cannot be claimed under two different sections i.e. section 11 and section 10(23C) as in the present case. When we examine the provisions of these two sections i.e. section 11 and 10(23C) clause (via) of the Act, we find that the provisions of section 11 are general which exempts income derived from property held under the trust only for charitable purposes. Charitable purpose, as per the provisions of section 2(15) includes 'medical relief'. In our considered opinion, the term 'medical relief' is a general term whereas the term used in section 10(23C)(via) is specific term i.e. 'any hospital or any institution for the reception and treatment of persons suffering from illness or mental defectiveness' etc. and hence, it is seen that the provisions of clause (via) of section 10 (23C) are specific and are applicable for hospital or a similar institution. Under thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mption, if the funds were applied for other charitable purposes. In our considered opinion, it means that the income from the hospital was held to be taxable but it was held to be exempt because such income was utilized for other charitable activities such as running of old age home for the poor, training institute for mentally challenged etc. In the present case, it is admitted position that the assessee is not running any charitable activity apart from the hospital and therefore, the income of the hospital has to be held as taxable in the light of this judgment of Hon'ble Kerala High Court because in the present case also, the assessee has not obtained approval u/s 10(23C)(via) of the Act and since the income was not utilized for any other charitable activity, the assessee is not eligible for exemption in respect of such income on the basis of its utilization for charitable activities. In any case, this judgment at least does not help the case of the assessee. 8.4 The next decision cited by learned A.R. of the assessee is the Tribunal decision rendered in the case of Sunbeam English School Society (supra). In our considered opinion, this Tribunal decision is also not rende....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... present case, the dispute is different. The dispute is whether the exemption is available to the assessee u/s 10(23C)(via) of the Act or section 11 and it is not in dispute that the exemption is allowed u/s 11 to one part of the activity of the hospital and for the remaining part, it is denied and, therefore, this judgment is not rendering any help to the assessee in the present case. We would also like to observe that Hon'ble Apex Court has also observed in that case that the decision is confined to the facts of that case and not for general application. 8.8 The next judgment cited by learned A.R. of the assessee is the judgment of Hon'ble Delhi High Court rendered in the case of St. Lawerance Educational Society (Registration.) & Another vs. CIT & Another (supra). This judgment is also not applicable in the present case because the issue in dispute was whether the rejection of the application for approval u/s 10(23C)(vi) on the sole ground that the assessee has made profit is valid or not. 8.9 The next judgment cited by learned A.R. of the assessee is the judgment of Hon'ble Bombay High Court rendered in the case of Vanita Vishram Trust vs. CCIT & Another (supr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of Agarwal Shiksha Samiti Trust Vs Commissioner of Income-tax (supra). In this case also, this was not the dispute as to whether the exemption is to be allowed u/s 10(22) or section 11 of the Act and hence, this judgment is also not rendering any help to the assessee. 8.15 The next judgment cited by learned A.R. of the assessee is the judgment of Hon'ble Kerala High Court rendered in the case of CIT vs. Geeta Bhavan Trust (supra). This judgment is also not rendering any help to the assessee because in this case also, this was not the dispute as to whether the assessee is eligible for exemption u/s 10(23C) or section 11. In fact, it was held that the assessee is eligible for exemption u/s 10(22) of the Act. 8.16 The next judgment cited by learned A.R. of the assessee is the decision of the Tribunal delivered in the case of City Montessory School vs. ACIT (supra). In this case, the issue in dispute was as to whether the school was existing solely for educational purposes or for purpose of profit. This was not the dispute as to whether the exemption is to be allowed u/s 10(22)/10(23C) or section 11 of the Act. Therefore, this decision is not rendering any help to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly and exclusively for attainment of its objects as set out in its memorandum of association and view to the contrary as has been taken by the authorities below is wholly erroneous and not sustainable. 7.2 BECAUSE looking to the nature of activities carried out wholly and exclusively for attainment of its objects as set out in its memorandum of association (such objects having been held as objects for charitable purpose), the "appellant" cannot be said to be existing for the purposes of profit and the authorities below have erred in holding that the activities of running the hospital are for the purposes of profit." 11. In view of our decision that exemption for a hospital has to be exempt only under the provisions of section 20(23C)(via) of the Act and not u/s 11 and since the assessee has not obtained approval u/s 10(23C)(via) of the Act, there is no merit in these grounds of the assessee and the same are accordingly rejected. 12. Ground No. 8 of the appeal is as under: "8. BECAUSE the "CIT(A)" has erred in law and on facts in misinterpreting the decision of Hon'ble Apex Court in CIT vs. Aditanar Educational Institution reported in 224 ITR 310 wherein their lordship....