Failure of CIT(E) to examine aspects as directed by High Court unjustified

Shushrusha Citizens Vs CIT (ITAT Mumbai)

ITAT Mumbai held that CIT(E) failed to examine the aspects as directed by the High Court in the matter of application for registration under section 10(23C)(via). Accordingly, matter restored back to CIT(E).

Facts- The assessee is a co-operative society formed under the Maharashtra Co-operative Societies Act, 1960, and was granted registration on 01/09/1964. The assessee was formed to give members of the society and citizens better medical facilities at reasonable charges and provide decent hospital facilities, dispensaries, and other up-to-date scientific medical and surgical amenities. The assessee has also been registered under section 12A of the Act since 28/12/1988, as well as section 80G of the Act, which registration is continuing to be in force. As per the assessee, it is running a hospital providing medical facilities at subsidised rates. The assessee enjoyed the benefit u/s. 10(22A) of the Act and in the past, applications made by the assessee u/s. 10(23C) of the Act were also accepted.

The assessee filed an application for registration u/s. 10(23C)(via) of the Act, which was rejected vide order dated 30/03/2011, holding that the assessee does not satisfy the conditions laid down u/s. 10(23C)(via) of the Act of existing solely for philanthropic purposes and not for the purposes of profit, as surplus year after year are generated out of the systematic activity of profit-making and therefore the assessee is running the hospital for the purpose of profit.

Conclusion- Held that the learned CIT(E) did not analyse all the submissions made by the assessee in light of the various aspects highlighted by the Hon’ble High Court. It is pertinent to note that the matter was restored for the consideration of assessee’s application for registration under section 10(23C)(via) of the Act and the Hon’ble High Court directed the assessee to furnish the information/details regarding the aspects as highlighted in para 17-22 of its judgment. However, the learned CIT(E) without examining all these aspects, as directed by the Hon’ble High Court, has reiterated its findings regarding the non-earmarking of any beds for indigent and weaker sections, which as noted above was held to be not a correct test by the Hon’ble High Court. We find that the learned CIT(E) did not examine all the information as noted on pages 6-9 of the impugned order while rejecting the assessee’s application for registration under section 10(23C)(via) of the Act. Therefore, since the directions of the Hon’ble High Court have not been complied with by the learned CIT(E), we deem it appropriate to restore this issue to the file of the learned CIT(E) for de novo adjudication as per the directions of the Hon’ble High Court vide judgment dated 6^th and 7^th December 2017 passed in Writ Petition No. 949 of 2011. Accordingly, the impugned order passed by the learned CIT(E) is set aside and the sole ground raised by the assessee is allowed for statistical purposes.

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