CIT vs. Gulab Devi Memorial Hospital Trust (P&H High Court)

S. 10(23C)(vi)/ (via)/ 80G: The law laid down in Visvesvaraya Technological University vs. ACIT 384 ITR 37 (SC) is that the generation of surplus is not fatal to the grant of exemption u/s 10(23C)(vi)(via)/ 80G if such surplus is utilized for charitable purposes. The fact that the hospital charges of the assessee, as compared to other commercial establishments, are very nominal, throws further light on its charitable character

In view of the findings of the Apex Court in paragraphs 8 and 9 of its judgment in Visvesvaraya’s case (supra), as reproduced earlier, we unhesitantly conclude that even if substantial surplus is generated, but the same is found to have been ploughed back for building infrastructure/assets, which in turn are used for educational/charitable purposes, the institution would not lose its charitable character. In the case before us, it has not been disputed that the assessee is registered under Section 12A and that it has been held entitled to the grant of exemption under Section 10 (23C)(vi) of the Act as per orders of this Court passed in C.W.P. No. 6031 of 2009, upheld by the Apex Court in Civil Appeal No. 9606 of 2013. It has further come on record that the assessee was granted exemption under Section 80G of the Act from the year 1997 till the passing of the impugned order. Further, the finding of the Tribunal, that the assessee has never mis-utilized its funds, has not been assailed before us. The generated surplus having been ploughed back for expansion purposes also remains undisputed by the Revenue as no challenge to the same has been made. In fact, the utilization of surplus for large scale expansion at the behest of the assessee was also acknowledged by the Commissioner. The Tribunal had further detailed in its order the receipts, expenditure, capital expenditure, income/surplus of receipts over expenditure, income applied for the charitable purposes and percentage of the income applied in a tabulated form, which clearly depicted utilization of surplus by the assessee for only charitable purposes

CIT vs. Gulab Devi Memorial Hospital Trust (P&H High Court)

 

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