Breach Candy Hospital Trust Vs ACIT (Exemption) (ITAT Mumbai)
In a case concerning exemption claims by a charitable hospital trust, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) set aside the order passed by the first appellate authority and directed that the appeal be reconsidered only after the final outcome of pending writ petitions before the Hon’ble Bombay High Court.
The assessee, a charitable trust registered with the Charity Commissioner, Mumbai and also registered under Section 12A of the Income Tax Act, had applied for approval under Section 10(23C)(via) to claim exemption for its hospital activities. The application was rejected by the Chief Commissioner of Income Tax on 15.04.2010, following which the assessee filed Writ Petition No. 2462 of 2010 before the Bombay High Court. The High Court admitted the petition and granted interim relief directing that assessments be completed on the basis that the applications under Section 10(23C)(via) were approved.
Subsequently, another application for renewal under Section 10(23C)(via) was rejected on 28.09.2012, leading to another writ petition, Writ Petition No. 1051 of 2013, before the Bombay High Court. Similar interim relief was granted in this petition as well.
For Assessment Year 2013-14, the assessee claimed exemption under Section 10(23C)(via) and alternatively under Section 11 based on its Section 12A registration. During assessment proceedings, the Assessing Officer examined the claim under Section 11 and observed that the assessee was carrying on activities like a business venture aimed at profit maximization. However, the officer still held that the assessee was entitled to exemption under Section 11, though certain deductions such as depreciation and provisions for gratuity and leave encashment were disallowed. The total income was determined at Rs. 40.73 crore, out of which exemption under Section 11(1A) amounting to Rs. 6.11 crore and exemption under Section 10(23C)(via) amounting to Rs. 34.62 crore were granted.
