CIT (Exemptions) Vs Sir Kikabhai Premchand Settlement Trust No. XI (Bombay High Court)
The Bombay High Court delivered its judgment on the Income Tax Appeal filed under Section 260-A of the Income Tax Act, 1961, by the Revenue against the order dated 27th December 2017 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 779/MUM/2017 for AY 2012-13. The appeal challenged the ITAT’s dismissal of the Revenue’s appeal and its confirmation of the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which had set aside the Assessment Order (AO) dated 10th March 2015 passed under Section 143(3) of the Act. The central issue concerned the computation of the 2% contribution to the Indigent Patient Fund (IPF Account) under the Indigent Patient and Weaker Section Scheme framed by the Bombay High Court.
The assessee, a charitable trust, excluded doctors’ fees of ₹11,90,04,614 from gross billing while computing the 2% contribution to the IPF Account, contending that the statutory requirement applied only to gross billing net of doctors’ fees. Consequently, approximately 86% of total billing was utilized toward charitable objectives, and the requisite 2% was deposited into the IPF Account. The AO, however, disagreed with this approach and held that the exclusion of doctors’ fees resulted in a shortfall in the contribution. On this basis, the AO denied exemption under Section 11 of the Act and taxed a surplus amount of ₹6,81,70,680, initiating separate proceedings for penalty computation.
