TaxTMI 
TaxTMI 
2022 (2) TMI 868
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....exercising his revision jurisdiction, has set aside the assessment order dated 22.08.2019 with the direction to the Assessing Officer (hereinafter the 'AO') to compute income of the appellant Trust without allowing exemption u/s. 10(23C)(iiiae) of the Act. 2. The brief facts of the case are that the appellant Trust is a society formed on 29.03.1984 and as per Clause 4 of the Memorandum of Association, the society is established for the objects and purposes stated in Clause 3 solely for philanthropic purposes and not for purpose of profit. The appellant Trust is running a medical dispensary wherein it is providing free medical treatment to the patients. For the year under consideration, the appellant Trust derived gross total inco....
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....erved that the action of the A.O. in allowing exemption u/s. 10(23C)(iiiae) of the Act was prima facie found to be erroneous and prejudicial to the interest of the Revenue. He accordingly initiated proceedings u/s. 10(23C)(iiiae) of the Act and show-caused the appellant Trust. The appellant Trust vide its letter dated 21.12.2018 replied as under: "i. The assessee society is running a medical institution being a dispensary located at 102, Muktaram Babu Street, Kolkata. Doctors from both Allopathy and Homoeopathy disciplines visit the Medical Institution at fixed time and number of patients averaging 50 patient approx per day are provided treatment for illness. Such Medical consultancy is absolutely free of charge and medicines are a....
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....ding of a certain percentage of income during the year. The surplus of investment income over the expenditure is being accumulated for spending in future years for the objects and purposes of the society like building of hospital nursing home or any other similar medical institution. If the exemption granted by the provisions of section 10(23C)(iiiae) is not allowed, it will jeopardize our charitable objects and will deprive the general public in getting free medical services." 2.2. After considering the reply of the appellant Trust, the Ld. CIT(E) observed that there was no receipt from the dispensary and therefore, there was no nexus between the income and the expenditure. He observed that the A.O. ought to have examined whether the so....
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....ation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed.]" 4.1. A perusal of the above relevant provision of the Act would show that there is no requirement under the aforesaid provision that the income/receipt of the Trust/Society should come from the charitable/philanthropic activity itself. The only requirement is that the hospital/institution should exist solely for philanthropic purposes and not for purposes of profit and the aggregate annual receipt of such hospital/institution should not exceed the amount of annual receipt as may be prescribed, which is Rs. 1 crore for the rele....
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....terest income from the investment has been made of surplus lying with it. However, there is no allegation that such surplus is applied for any purpose other than the charitable activity. Now, the only allegation is that the appellant Trust has applied only 12% of its receipts and accumulated 88%. We find that under the provision of Section 10(23C)(iiiae) of the Act, there is no limit prescribed for application of receipts and accumulation of receipts. Therefore, the appellant Trust is within its rights to accumulate the receipts as per its requirement. It had been explained by the assessee Trust to the Ld. CIT(E) that the surplus of investment was being accumulated for spending in future years for the objects and purposes of the Trust like ....