Reliance Foundation Hospital Trust Vs CIT (Exemptions) (ITAT Mumbai)
CIT(E) Cannot Judge Hospital Tariffs to Decide Charity: ITAT Restores Reliance Hospital Trust’s U/s 12AB Registration
Premium Rooms Don’t Kill Charity: ITAT Restores Reliance Hospital Trust’s 12AB Registration
In a landmark ruling, the Mumbai ITAT set aside the order of the CIT(Exemptions) which had rejected renewal of registration under Section 12AB, denied approval under Section 80G and even cancelled the existing registration retrospectively in the case of Reliance Foundation Hospital Trust. The Tribunal held that while examining registration under Section 12AB, the CIT(E) cannot step into the shoes of a healthcare regulator and decide charitable status on the basis of hospital tariffs, premium rooms, treatment costs or perceived affordability of medical services.
The CIT(E) had concluded that the hospital was operating more like a premium healthcare enterprise than a charitable institution, relying upon factors such as high room tariffs, substantial treatment costs, premium suites, revenue per bed and the percentage of indigent patients treated. He also alleged non-compliance with the provisions of Section 41AA of the Maharashtra Public Trusts Act and the Indigent Patient Fund Scheme and, on that basis, cancelled the trust’s registration with retrospective effect.
The Tribunal, however, noted that there was no dispute regarding the charitable objects of the trust, the genuineness of its activities or the fact that it was actually running a large multi-speciality hospital providing medical relief. It emphasized that “medical relief” is an independent charitable purpose under Section 2(15) and that charging fees, maintaining advanced infrastructure or operating premium facilities does not by itself destroy the charitable character of a hospital. The ITAT further observed that compliance with the Maharashtra Public Trusts Act is primarily within the domain of the Charity Commissioner and that the CIT(E) cannot assume the role of a parallel regulator under another statute.
Holding that the CIT(E) had travelled far beyond the limited scope of enquiry permissible under Section 12AB and had adopted considerations alien to the statutory framework, the Tribunal quashed the denial of renewal as well as the retrospective cancellation of registration and restored the trust’s charitable status and consequential benefits.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
