Masina Hospital Trust Vs CIT (Exemptions) (ITAT Mumbai)
ITAT Mumbai Set Aside Rejection of Section 12AB Renewal and Retrospective Cancellation of Registration for Charitable Hospital Trust
The Income Tax Appellate Tribunal, Mumbai Bench, allowed the appeal filed by Masina Hospital Trust against the order dated 30.03.2026 passed by the Commissioner of Income-tax (Exemptions), Mumbai, rejecting its application in Form No. 10AB under Section 12A(1)(ac)(ii) for renewal of registration under Section 12AB of the Income-tax Act, 1961 and cancelling its existing registration retrospectively with effect from 23.09.2021 under Section 12AB(1)(b)(ii)(B). The Tribunal noted that the issues concerning the meaning of “medical relief” under Section 2(15), Sections 11 and 12AB, the relevance of hospital scale and financial structure, alleged non-compliance with Section 41AA of the Maharashtra Public Trusts Act, 1950 and the Indigent Patients’ Fund (IPF) Scheme, and retrospective cancellation of registration were substantially identical to those decided in the connected appeals of Breach Candy Hospital Trust v. CIT(E), and adopted those findings mutatis mutandis.
The CIT(E) had examined the assessee’s application by referring to Rule 17A, Section 41AA of the Maharashtra Public Trusts Act, the Bombay High Court judgment in Sanjiv Gajanan Punalekar v. State of Maharashtra & Others, and the IPF Scheme requiring reservation of beds for indigent and weaker section patients and maintenance of an Indigent Patients’ Fund. After calling for extensive operational and financial information, the CIT(E) analysed patient statistics, treatment costs, average revenue per bed, salary expenditure, IPF balances and utilisation, and concluded that the hospital had treated only a small percentage of indigent and weaker section patients, had allegedly failed to comply with the IPF Scheme, operated on commercial principles, violated Section 2(15), and failed to comply with another law material for achieving its charitable objects. On that basis, the CIT(E) rejected renewal and cancelled the existing registration retrospectively.
