Shiv ita575.14 IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.575 OF 2014 Director of Income Tax (Exemption), Mumbai .. Appellant. Vs. Jaslok Hospital and Research Centre Respondent. Mr. A.R. Malhotra along with Mr.N.A. Kazi and Ms.Padma Divakar for Appellant. Mr. Nitesh Joshi along with Mr.Rajesh Poojary i/b M/s.Mint and Conferors for Respondent. CORAM : S.C. DHARMADHIKARI AND A.K. MENON, JJ. DATED : 20TH APRIL, 2015. P.C. : 1. This appeal by revenue challenges order passed by Income Tax Appellate Tribunal, Bench at Mumbai dated 14th August, 2013. 2. following two questions proposed by revenue are termed as substantial questions of law : A. Whether, on facts and circumstance of 1/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: ita575.14 case and in law, Hon'ble Tribunal is justified in granting exemption u/s.11 of Income Tax Act, 1961 ignoring fact that income earned by assessee trust has been considered as profit from business concerned by A.O. ? B. Whether, on facts and circumstance of case and in law, Hon'ble Tribunal is justified in allowing claim of assessee for exemption u/s.11 ignoring fact that Assessing Officer in his order has pointed out specific defects in treating income earned by levying surcharge at specific rate for bills raised on patients and doctors on fees paid to them and treating them as corpus donation instead of income earned from activities of trust ? 3. As far as first questions is concerned, according to Mr.Malhotra tribunal failed to note that assessee is registered public trust. assessee also has been granted registration under section 12A(a) of Income Tax Act, 1961 (for short I.T. Act ). assessee is notified Scientific Research Association under section 35(1)(ii) of I.T. Act. assessee applied for exemption under section 10(23C)(vi-A) of I.T. Act. However, that exemption was denied. 4. In present case, when assesee filed return of income for assessment year 2007-08 and it declared total 2/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: ita575.14 income at Nil. assessing officer found that assesee levies surcharge on bills given to indoor patients and also recovers surcharge on fees paid to Honorary doctors. assessing officer treated these amounts as corpus donation by assessee. He, therefore, denied exemption under section 11 of I.T. Act. 5. Aggrieved by such order, assessee carried matter in appeal to Commissioner of Income Tax (Appeals) and said Commissioner allowed appeal by his order dated 31st March, 2010. While allowing appeal, Commissioner followed Income Tax Appellate Tribunal's order in assessee own case for assessment year 2006-07. 6. Mr.Malhotra while fairly conceded that there is no material indicating that tribunal's order for prior assessment year have been questioned by revenue and any appeals are pending in this Court, still, it is clear that observations of Commissioner while denying exemption under section 10(23C) of I.T. Act cannot be confined to that case. Mr.Malhotra has taken us through assessment order and particularly paragraphs wherein it has been held that surcharges have been levied and collected. Commissioner also does not indicate that this is permissible course but makes distinction 3/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: ita575.14 with regard to income exempted under section 11 of I.T. Act. Mr.Malhotra would submit that such distinction was impermissible and particularly when assessee undertakes medical relief. If that is principal object with which it is registered, then, such surcharges as are levied and collected did not meet that object and purpose. Therefore, independent of observations and conclusions recorded earlier, this is fit case where Tribunal's order should be examined and minutely by this Court. 7. We are unable to agree with Mr.Malhotra for more than one reason. definition of term charitable purpose is appearing in section 2(15) of Income Tax Act, 1961 and which includes medical relief. 8. Insofar as section 10(23C) is concerned, that pertains to any income received by any person on behalf of hospital or other institution for reception and treatment of persons suffering from illness or mental defectiveness or for reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit. In relation to that, we find that Commissioner passed order denying exemption and that order of Commissioner has been challenged by 4/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: ita575.14 assessee by filing Writ Petition in this Court being Writ Petition No.323 of 2010 and that is pending. 9. In present case, neither Commissioner nor Tribunal has decided anything by which it can be gathered that above exemption or order in relation thereto forms basis for conclusion reached by Commissioner and Tribunal concurrently. question No.A, therefore, does not arise from Tribunal's order at all. 10. Insofar as exemption under section 11 is concerned, in paragraph 4 of its order, Tribunal has found that for assessment year 2007-08, only reason for not applying Tribunal's order for earlier assessment years and as recorded by assessing officer is that revenue or department has not accepted said order. However, in light of fair concession of Mr.Malhotra that tribunal's orders on same facts, as rendered for earlier assessment years, have not been challenged by revenue, then, we cannot fault Tribunal or Commissioner for applying them. It is clear from Tribunal's order that there was no issue before Commissioner in respect of any exemption under section 10(21) and 10(23C). assessing officer had disallowed claim of exemption under section 11 of I.T. Act. Tribunal's earlier orders are in 5/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: ita575.14 relation to this exemption. Tribunal concurred with its earlier order. Tribunal, therefore, found that when facts are identical to Assessment order under consideration, then, there is no difficulty in applying and following its views for earlier assessment years. It is in these circumstances that we are of view that Tribunal's order does not raise any substantial question of law. In these circumstances conclusion reached in paragraph 5 and 5.1 cannot be termed as perverse or vitiated by any error of law apparent on face of record. 11. argument of Mr.Malhotra that levy of surcharge on patients and doctors ought not to have been treated as income earned from activities of trust but corpus donation, need not detain us. Mr.Malhotra himself had pointed to us that certain directions were issued to Assessee by Charity Commissioner of State in exercise of his powers under section 34 of Bombay Public Trust Act, 1950. They have been referred to in order of assessing officer as well. argument that revenue can examine this aspect despite such directions of Charity Commissioner is also without merit. order of Charity Commissioner and particularly in relation to these matters is aspect directly covered by Bombay Public Trust Act. In that regard perusal of said Act and particularly provisions of Chapter V, V-A and section 40 and 6/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: ita575.14 41-A would indicate that Charity Commissioner can from time to time issue directions to any trustees of Public Trust or any person connected therewith to ensure that trust is properly administered and income thereof is properly accounted for or duly appropriated and applied to objects and for purposes of trust. Charity Commissioner has been conferred with powers to give directions to trustees, in event, he finds that trust property is in danger of being wasted, damaged, alienated or wrongfully sold, removed or disposed of. It is duty of every trustee or persons connected with trust to comply with these directions. In circumstances and when section 41-AA was inserted in Bombay Public Trust Act by Maharashtra Act of 1985 with avowed and specific purpose, that we do not think that despite directions of Charity Commissioner, revenue can insist that amounts charged or sur-charges levied should not be treated as income from activities of trust. authorities under Income Tax Act are suppose to scrutinise papers and related documents of trust or assessee so as to bring income to tax and in accordance with I.T. Act. In such circumstances, concurrent findings did not in any manner indicate that directions issued by Charity Commissioner are incapable of being complied or liable to be ignored as is held. directions issued did not change character of receipts. In 7/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: ita575.14 circumstances even this argument would not enable us to entertain this appeal. appeal, therefore, does not raise any substantial question of law and is accordingly dismissed. No costs. (A.K. MENON,J.) (S.C. DHARMADHIKARI,J.) 8/8 ::: Uploaded on - 24/04/2015 ::: Downloaded on - 31/12/2018 15:40:14 ::: Director of Income-tax (Exemption), Mumbai v. Jaslok Hospital and Research Centre