Commissioner Of Income Tax (Exemptions), Pune v. Lata Mangeshkar Medical Foundation

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL (IT) NO. 671 OF 2018 WITH INCOME TAX APPEAL (IT) NO. 1144 OF 2018 Commissioner of Income Tax (Exemptions), Pune VersusLata Mangeshkar Medical Foundation … Appellant … Respondent Mr. Suresh Kumar for Appellant.Mr. Rahul Hakani for Respondent. P.C. : CORAMK. R. SHRIRAM &DR. N. K. GOKHALE, JJ.DATED:30[th] August 2023 INCOME TAX APPEAL (IT) NO. 671 OF 2018 : 1.Respondent-Assessee is a trust running a hospital by thename “Deenanath Mangeshkar Hospital” at Pune. During theassessment proceeding for Assessment Year 2010-2011, theAssessing Officer (“AO”) denied the exemption under Section 11 ofthe Income Tax Act, 1961 (“the Act”) and then vide assessmentorder under Section 143(3) of the Act, computed the total incomeat Rs. 18,16,02,520/-. 2.One of the aspects considered by AO while denyingexemption under Section 11 of the Act was that the Assessee-Trusthad not furnished proper information to the Charity Commissionerand there was shortfall in making provision of Indigent PatientsFund (“IPF”). According to AO, Assessee should have credited anamount of Rs. 2.14 crores to the IPF as against Rs. 75.96 lakhsonly. 3.The second aspect for denial of exemption by AO was thatthe Assessee-Trust had generated huge surplus and therefore, theintention of the trust was profit making. AO was of the opinionthat the hospital of Assessee did not provide services to the poorand under-privileged class of the society. 4.The third ground for denying exemption was that theAssessee-Trust was running a canteen in the hospital with profitmotive and was not providing free meals. 5.AO also felt there was violation of provisions of Section13(1)(c) of the Act by Assessee-Trust as remuneration was paid totwo individuals, viz., Mrs. Bharati Mangeshkar, who is a trustee with no significant qualification and Mrs. Meena Kelkar, mother ofthe trustee Dr. Dhananjay Kelkar, who also did not possess anyqualification and was beyond 65 years of age. 6.Being aggrieved by this assessment order dated 22[nd] March2013, Assessee-Trust preferred an Appeal before Commissioner ofIncome Tax (Appeal) (“CIT(A)”). The CIT(A) granted relief toAssessee-Trust by restoring the exemption under Section 11 of theAct. Revenue challenged the said order before the Income TaxAppellate Tribunal (“ITAT”). The ITAT was pleased to dismiss theAppeal by an order dated 23[rd] June 2017. It is this order of theITAT that Revenue is challenging and proposed the followingsubstantial questions of law : a.Whether on the facts and circumstances of the caseand in law the Hon’ble ITAT was correct in overlooking theobservation of the Charity Commissioner who had observedthat the Assessee had not reserved 10% of the operationalbeds, thought it was so required in Bombay Public Trust Actunder Section 41(AA) of the said Act; for indigent patientsand patients of the weaker section of the society ? b.Whether on the facts and circumstances of the caseand in law the Hon’ble ITAT was correct in overlooking theinspection report of the Joint Charity Commissioner wherethe Assessee had understated the number of beds to be givento poor patients ? c.Whether on the facts and circumstances of the caseand in law the Hon’ble ITAT was correct in ignoring the factthat the Assessee was running hospital purely on commerciallines and no justification or comparable care was providedby the Assessee to negate this observation of the AssessingOfficer more so when high surplus was being generated ? 7.The CIT(A) while deciding the issue in favour of theAssessee noted that the facts in the year under Appeal, i.e., forAssessment Year 2010-2011 was identical to that of AssessmentYears 2008-2009 and 2009-2010. The CIT(A) followed the ordersof his predecessor for Assessment Years 2008-2009 and 2009-2010and decided the issue in favour of Assessee. c.Whether on the facts and circumstances of the caseand in law the Hon’ble ITAT was correct in ignoring the factthat the Assessee was running hospital purely on commerciallines and no justification or comparable care was providedby the Assessee to negate this observation of the AssessingOfficer more so when high surplus was being generated ? 7.The CIT(A) while deciding the issue in favour of theAssessee noted that the facts in the year under Appeal, i.e., forAssessment Year 2010-2011 was identical to that of AssessmentYears 2008-2009 and 2009-2010. The CIT(A) followed the ordersof his predecessor for Assessment Years 2008-2009 and 2009-2010and decided the issue in favour of Assessee. 8.Revenue had challenged those orders of CIT(A) and filed anAppeal before the ITAT for Assessment Years 2008-2009 and 2009-2010. The co-ordinate Bench of the ITAT by an order dated 15[th]April 2016 upheld the order of CIT(A). The ITAT in the impugnedorder has also followed what its co-ordinate Bench held in its orderdated 15[th] April 2016 for Assessment Years 2008-2009 and 2009-2010. Since there was nothing on record before the ITAT (or evenbefore us) that the order of ITAT dated 15[th] April 2016 has been setaside or overruled in any manner by the High Court, the ITAT Digitally signedGITALAXMIKRISHNAby GITALAXMIKRISHNAKOTAWADEKARKOTAWADEKARDate:2023.09.0111:40:10 +0545 found no reason to interfere with the order of CIT(A). Therefore,we also find no reason to interfere with the order of ITAT. 9.Mr. Suresh Kumar states that the Appeals those were filedbefore for the earlier years have also been dismissed on the groundof delay. 10.Having considered the findings, we find no infirmity in theorder of ITAT. Appeal dismissed. INCOME TAX APPEAL (IT) NO. 1144 OF 2018 : 1.Here also the same identical/similar substantial questions oflaw have been proposed. Here also the findings of CIT(A) as wellas of the ITAT are in the same lines as taken for Assessment Year2010-2011, which was the subject matter in Income Tax Appeal(IT) No. 671 OF 2018. Therefore, this Appeal also standsdismissed. (DR. N. K. GOKHALE, J.) (K. R. SHRIRAM, J.)