TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 282
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....ing the benefit to the trustees in violation of section 13 as under - a. By providing the residential accommodation to Dr. G. S. Kulkarni, Dr. Milind Kulkarni and Dr. Sunil Kulkarni at Rs.8,16,000/-. b. Allowing Dr. Kulkarni and other doctors from Kulkarni family the user of the Trust's hospital equipments free of cost at Rs. 1,95,899/-. 3] The learned CIT(A) failed to appreciate that considering the following facts the trust obtained a larger benefit from Dr. G. S. Kulkarni and his family members and thus, they did not obtain any benefit from the trust which could violate the provisions of section 13 - a. Dr. G. S. Kulkarni, Trustee had not charged any rent to the trust over the years for the portion of his hospital building and assets therein. b. Doctors of Kulkarni family had never charged the trust the professional charges in treating and operating its patients. 4] The learned CIT(A) erred in rejecting the stand taken by the assessee that the trust had provided accommodation at a concessional rate to Kulkarni Family Doctors as their services as doctors were available to the trust even at odd hours for any emergency and thus, providing quarters to these doctors near ....
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.... show-cause notice, the appellant trust had filed a detailed explanation stating that Dr. G. S. Kulkarni is an Orthopaedic Surgeon for last 52 to 60 years. The appellant trust was found by Dr. G. S. Kulkarni with philanthropic objective. The building owned by Dr. G. S. Kulkarni was allowed to be used by the appellant trust to pursue its charitable objects without charging any rent. Even in the initial years of operation of the appellant trust, the equipment belonging to Dr. G. S. Kulkarni was allowed to be used by the appellant trust for charitable activities. The patients come to the appellant trust‟s hospital only on account of goodwill and reputation of Dr. G. S. Kulkarni. Thus, the appellant trust had denied that the patients of the trust were diverted to the individual practice of Dr. G. S. Kulkarni and his two sons. 5. As regards to the provisions of residential accommodation to Dr. G. S. Kulkarni and his two sons, it is submitted that Dr. G. S. Kulkarni and his two sons were rendering voluntary services to the appellant trust without charging any fees and the appellant trust are required to be available throughout the day, as the services are required around the clock....
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....gued that the operation rooms and bungalows occupied by the trustees of Dr. G. S. Kulkarni and his two sons cannot be said to be without any consideration. 9. On the other hand, ld. CIT-DR submits that the appellant trust had clearly violated the provisions of section 13(1)(c) by allowing use of operation rooms by Dr. G. S. Kulkarni and his two sons and paying nominal rent for occupation of the bungalows owned by the appellant trust and, therefore, the order of the ld. CIT(A) should be sustained. 10. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the determination whether or not the appellant trust had violated the provisions of section 13(1)(c) of the Act?. Admittedly, Dr. G. S. Kulkarni and his two sons (hereinafter referred as "specified persons) used the operation rooms owned by the appellant trust for his private practice without paying any rent or fees for such use. Dr. G. S. Kulkarni and his two sons had occupied the accommodation that owned by the appellant trust for the residential purposes on payment of Rs.5,000/- per month for each bungalow. It is also admitted fact that Dr. G. S. Kulkarni had allowed 50% o....
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....me or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),- (a) if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub-section (3) for any period during the previous year without either adequate security or adequate interest or both; (b) if any land, building or other property of the trust or institution is, or continues to be, made available for the use of any person referred to in sub-section (3), for any period during the previous year without charging adequate rent or other compensation; (c) if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services; (d) if the services of the trust or institution are made available to any person referred to in sub-section (3) during the previous year without adequate remuneration or other compensation;....
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....d persons is inadequate. In case, it is found that these specified persons had availed the benefit from the appellant trust for compensation in any other form or rent paid is adequate, the question of applicability of section 13(1)(c) does not arise. Therefore, the question that arises before us is whether compensation had been paid to the appellant trust in lieu of the benefit availed by the specified persons and rent paid by the specified person is adequate. The submissions made on behalf of the appellant trust that the buildings owned by the specified persons is used by the appellant without payment of any rent remains uncontroverted by the Department. Therefore, it cannot be said that the specified persons had availed the benefit from the appellant trust without paying any compensations to the appellant trust. Furthermore, it is the submission of the appellant trust that the specified persons had been rendering the voluntarily professional services to the appellant trust also remains uncontroverted. In the backdrop of this factual scenario, the question that arises for consideration before us is, can it be said, that the appellant availed the operation rooms owned by the appell....