DCIT Vs Birla Nagar Jan Sewa Trust (ITAT Agra)
Conclusion: AO was not justified in denying the exemption under section 11 on the ground of excessive payment of salary and professional fees to Doctors as the services rendered by doctors who had passed out with the same degree in Cardiology (DM) could not be compared with experience doctor working in the field for the last ten years.
Held: Assessee-charitable trust was running medical institution (hospital) and also in the imparting of education. Assesses trust besides having registered u/s 12AA was also approved u/s 10(23C)(via). Assessee had filed return of income declaring the NIL income for the AY 2012-13. However, the assessment was completed by the AO by assessing the income of the assessee to the tune of 7,34,12,020/- by not allowing the exemption u/s 10(23C) (viia) viz-a-viz Section 11. AO contended that assessee had been making the payment to Doctors by way of salary and professional fees which was in excess of what may be reasonably paid for such services by the comparable doctors in the Gwalior and for that purposes AO had brought on record the comparable instances of Doctors working in Gajraja Chikitsa Mahavidyalaya and Chirayu Medical College. In the present case, AO had brought on record the comparable instances of the Gajraja Chikitsa Mahavidyalaya and Chirayu Medical College on record but failed to bring on record expertise, qualification any other factors like seniority competence ,experience, qualification etc. AO had further failed to bring on record the revenue collected by these hospital or a period of three years and what was a salary paid to these doctors. Further AO failed to bring on record whether salary paid to these doctors as mentioned in order were in which proportion to revenue collected by the hospital or not. The Government medical college or salary paid to the government hospital could not be compared with the salary paid by the private hospital to the private doctors. In the absence of necessary information with respect to that establishment of the hospital, the revenue collected by the hospital, the competence, experience and their ability to give result, it would not be safe use these as comparable instances with that of the assessee. Thus, doctors who had passed out with the same degree in cardiology DM could not be compared with experience doctor working in the field for the last ten years. Also, in the earlier financial year 2010-11, the services rendered by the same set of doctors and payment made to them had not been disputed by AO and same had been accepted by AO. Thus, the consistency was required to be maintained not only by assessee but also by Revenue. Hence, exemption was allowable.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is filed by the Revenue against the order dated 22.02.20 17 passed by the ld. CIT(A), Gwalior for the assessment year 2012-13. The sole ground raised in this appeal is as under:
“1. Whether the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 7,34,12,020/- made by the Assessing Officer and allowing the benefits of exemption u/s 11 of the l. T. Act to the assessee, as the payments in excess of reasonable limits as supported by comparative instances quoted by Assessing officer, were made and treated by h benefits to the persons referred to in section 13(3) of the Act and especially when the trust was being run on the commercial lines by sharing of receipts with prohibited persons on lump sum or percentage basis?”
2. The assessee is a charitable trust registered since 2 1.11.1977 and is running medical institution (hospital) and also in the imparting of education. The assesses trust besides have registered u/s 12AA of the Act was also approved u/s 10(23C)(via) of the Act. The assessee trust is running the hospital in the name of BIMR Hospital and BIMR Heart Centre. The assessee had filed return of income declaring the NIL income for the AY 2012-13. However, the assessment was completed by the AO by assessing the income of the assessee to the tune of 7,34,12,020/- by not allowing the exemption u/s 10(23C) (viia) viz-a-viz Section 11 of the Income Tax Act, 1961.
3. The AO records in the assessment order that the payments were made to the prohibit person u/s 13(3) of the Act at unreasonable rate.At Page 5 of the AO mentioned as under:
