CARDINAL GRACIAS MEMORIAL HOSPITAL, THANE v. ITO 4(2), THANE

ITA 1675/MUM/2009 | 2004-2005
Pronouncement Date: 29-02-2012 | Result: Dismissed

Appeal Details

RSA Number 167519914 RSA 2009
Assessee PAN AAAAC0484B
Bench Mumbai
Appeal Number ITA 1675/MUM/2009
Duration Of Justice 2 year(s) 11 month(s) 17 day(s)
Appellant CARDINAL GRACIAS MEMORIAL HOSPITAL, THANE
Respondent ITO 4(2), THANE
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 29-02-2012
Date Of Final Hearing 14-02-2012
Next Hearing Date 14-02-2012
Assessment Year 2004-2005
Appeal Filed On 13-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.1673/MUM/2009 (ASSESSMENT YEAR:2002-03) ITA NO.1674/MUM/2009 (ASSESSMENT YEAR:2003-04) ITA NO.1675/MUM/2009 (ASSESSMENT YEAR:2004-05) ITA NO.1676/MUM/2009 (ASSESSMENT YEAR:2005-06) ITA NO.1677/MUM/2009 (ASSESSMENT YEAR:2006-07) CARDINAL GRACIOUS MEMORIAL HOSPITAL BANGLI NAKA SANDOOR POST VASAI DIST: THANE ...... APPELLANT VS INCOME-TAX OFFICER 13(2)(1) AAYAKAR BHAVAN CHURCHGATE MUMBAI ..... RESPONDENT PAN: AAAAC 0484 B APPELLANT BY: SHRI S.N. INAMADAR SHRI ANIL J. SATHE RESPONDENT BY: SHRI D.S. SUNDER SINGH DATE OF HEARING: 22.02.2012 DATE OF PRONOUNCEMENT: 29.02.2012 O R D E R PER R.S. PADVEKAR JM : IN THIS BATCH OF SIX APPEALS THE ASSESSEE HAS CHALL ENGED THE IMPUGNED ORDERS OF THE LD. CIT (A) THANE FOR THE A .YS. 2002-03 2003-04 2004-05 2005-06 AND 2006-07 RESPECTIVELY. THE GROUNDS TAKEN BY THE ASSESSEE IN ALL THE ORDERS ARE WORD TO WORD VERBATIM WHICH ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN IMPLICITLY CONFIRMING THE ACTION OF THE ASSESSIN G OFFICER IN ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 2 REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE I NCOME TAX ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ORDER OF LEARNED ASSESSING OFFICE R BY DENYING THE EXEMPTION UNDER SECTION 11 TO THE APPELLANT TRU ST. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN NOT APPRECIATING THE FACT THAT THE ENTIRE ASSESSMENT OR DER VIRTUALLY RELIES ON THE ALLEGED FINDINGS IN THE SURVEY. WHICH HAVE BEEN REBUTTED BY THE APPELLANT AND IN ANY CASE DID NOT D EAL WITH THE ASSESSMENT YEAR UNDER APPEAL. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ORDER OF LEARNED ASSESSING OFFICE R ASSESSING THE INCOME OF THE TRUST AS BUSINESS INCOME. 5. THE APPELLANT CRAVES TO ADD ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL AT ANY TIME OR THE TIME OF HEARIN G. 2. THE ASSESSE HAS FILED AN APPLICATION SEEKING LEA VE OF THE TRIBUNAL TO RAISE FOLLOWING ADDITIONAL GROUND: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT (A) IS JUSTIFIED IN LAW IN UPHOLDING THE RE-ASS ESSMENT ORDER WHILE CITS RECOGNITION/REGISTRATION U/S.12A WAS VE RY MUCH IN FORCE? 3. WE HAVE HEARD BOTH THE PARTIES ON ADMISSION OF A BOVE ADDITIONAL GROUND. THE LD. COUNSEL SUBMITS THAT THE ADDITIONAL GROUND IS A PURELY LEGAL GROUND AND ALL THE FACTS A RE ON RECORD AND NO PROBE OF THE FACTS ARE REQUIRED. HE FURTHER SUBMIT S THAT IN THE INTEREST OF JUSTICE THE ADDITIONAL GROUNDS MAY BE ADMITTED A S SAID GROUND IS HAVING SERIOUS BEARING ON ASSESSEES CASE. THE LD. COUNSEL PLACED HIS RELIANCE IN THE CASE OF NATIONAL THERMAL POWER CORP ORATION LTD. 229 ITR 383 (S.C.). ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 3 4. WE HAVE ALSO HEARD THE LD. D.R. WE FIND THAT TH E ADDITIONAL GROUND RAISED BY THE ASSESSEE IS PURELY LEGAL GROUN D AND SAME NEEDS TO BE ADMITTED AS ALL FACTS TO DECIDE SAID GROUND A RE ONE RECORD. MOREOVER SAID CONTENTION WAS RAISED BEFORE TRIBUNA L IN THE APPEAL FOR A.Y. 2001-02. WE THEREFORE FOLLOWING THE PRINCIPL ES LAID DOWN IN THE CASE OF THERMAL POWER CORPORATION LTD. ( SUPRA) ADMIT ADDITIONAL GROUND RAISE BY THE ASSESSEE. 5. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSE SSEE IS A REGISTERED TRUST AND ALSO HAS BEEN GRANTED REGISTRA TION U/S.12A OF THE ACT. THE ASSESSEE CLAIMED THAT ITS INCOME IS EXEMP T U/S.11 OF THE ACT. THERE WAS A SURVEY ACTION U/S.133A AGAINST THE ASSE SSEE IN ITS HOSPITAL PREMISES AT BANGLI NAKA SANDOOR POST VAS AI (W) ON 15.11.2006. DURING THE COURSE OF THE SURVEY ACTION A LOOSE PAPER WAS FOUND INDICATING MEDICAL RELIEF FUND CHART FOR THE MONTH OF SEPTEMBER 2006. AS INDICATED IN THE SAID CHART T HERE WERE 9 SUCH FUNDS IN VARIOUS NAMES AGGREGATING TO RS.34.75 LAKH S AND WHILE EXPLAINING THE NATURE THEREOF IT WAS STATED ON BEH ALF OF THE ASSESSEE THAT THE SAME ARE DEPOSITS MADE BY VARIOUS DONORS W ITH A SPECIFIC DIRECTION THAT THE INTEREST EARNED THEREON SHOULD B E UTILIZED FOR THE TREATMENT OF THE PATIENTS AS RECOMMENDED BY THEM. THE ASSESSEE HOWEVER EXPRESSED ITS INABILITY TO PRODUCE THE SAI D DONORS STATING THAT THOSE FUNDS WERE VERY OLD. ANOTHER LIST OF P ATIENTS WAS ALSO FOUND DURING THE COURSE OF SURVEY SHOWING CONCESSIO N GIVEN BY THE ASSESSEE TRUST. IT WAS HOWEVER REVEALED FROM THE RECORD THAT THE AMOUNT OF SUCH CONCESSION HAD BEEN SUBSEQUENTLY REI MBURSED TO THE ASSESSEE TRUST BY NAMELY ST. VINCENT D. PAUL SOCIET Y. IT WAS ADMITTED ON BEHALF OF THE ASSESSEE TRUST THAT THERE WAS A MI STAKE IN INDICATING THE SAID AMOUNT AS CONCESSION WHEN IN FACT SAID AMO UNTS WERE REIMBURSED BY THE OTHER SOCIETY. THE RECORDS MAINT AINED BY THE ASSESSEE TRUST IN RESPECT OF ITS HOSPITAL ALSO REVE ALED THAT NOT EVEN A SINGLE POOR PATIENT WAS GIVEN TREATMENT FREE OF CHA RGE BY THE ASSESSE TRUST. IT WAS REVEALED THAT THE ASSESSEE TRUST HAS CHARGED MEDICAL FEES EVEN FROM A VERY POOR PATIENT. IT WAS THUS FO UND DURING THE COURSE OF SURVEY THAT THE HOSPITAL MANAGED BY THE A SSESSEE TRUST HAS ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 4 NOT BEEN EXTENDING ANY TYPE OF MEDICAL RELIEF TO TH E POOR AND NEEDY PERSONS. IT WAS ALSO FOUND THAT IT HAS BEEN ACCEPT ING DONATIONS FROM THE INTENDING STUDENTS SEEKING ADMISSION TO THE NUR SING SCHOOL. 6. ON THE BASIS OF THE SURVEY ACTION CARRIED OUT A T THE HOSPITAL PREMISES OF THE ASSESSEE TRUST THE ASSESSMENT COMP LETED IN ITS CASE WAS REOPENED BY THE ASSESSING OFFICER INITIATED RE- ASSESSMENT PROCEEDING UNDER SEC. 147 AND ISSUED NOTICE U/S. 14 8 OF THE ACT BY RECORDING FOLLOWING REASONS: 1. THE TRUST HAS RECEIVED DONATIONS FROM THE STUDENTS OF THE NURSING SCHOOL WITHOUT ANY SPECIFIC DIRECTIONS FROM THE DONORS OVER AND ABOVE PRESCRIBED FEES SET FOR T HE STUDENTS SEEKING ADMISSION IN THE NURSING SCHOOL. SINCE PROVIDING OF EDUCATION TO THE NURSING STUDEN TS IS SALEABLE THE CLAIM OF EXEMPTION U/S. 11 OF THE I.T . ACT WAS WITHDRAWN IN VIEW OF THE JUDGMENT IN THE CASE O V VODI THALA EDUCATION SOCIETY HYDERABAD VS. ASSTT. DIRECTOR OF INCOME-TAX (EXEMPTIONS)-II HYDERABAD. 2. THE TRUST HAS ONE OF THE OBJECTS BEING NON CHARITAB LE TO GIVE MEDICAL AID AND PROVIDE FOR THE WELFARE OF THE PERSONS OR EMPLOYEES OF THE HOSPITAL. 3. THE TRUST WAS FOUND TO BE NOT DOING ANY CHARITABLE WORK BUT WAS FOUND TO BE ENGAGED IN THE ACTIVITY ON THE BUSINESS LINE. 7. THE A.O. DENIED THE BENEFIT OF THE EXEMPTION TO THE ASSESSEE TRUST U/S.11 ON THE FOLLOWING REASONS AND COMPLETED THE ASSESSMENT IN ALL THE YEARS BEFORE US AND THE SURPLUS WAS BROUGHT TO TAX 1. THE ASSESSEE TRUST IS NOT ENGAGED IN ANY CHARITY WO RK AS DISCUSSED HEREINABOVE. 2. THE ASSESSEE TRUST CARRIES ON ACTIVITY ON BUSINESS LINE AS DISCUSSED HEREINABOVE. 3. THE ASSESSEE TRUST AS ONE OF THE OBJECTS BEING NON CHARITABLE -- TO GIVE MEDICAL AID AND PROVIDE FOR THE WELFARE OF THE PERSONS OR EMPLOYEES OF THE HOSPITAL. 4. THE ASSESSEE TRUST HAS RECEIVED DONATIONS FROM THE STUDENTS OF NURSING SCHOOL WITHOUT ANY SPECIFIC DIRECTIONS T O TREAT THE SAME FOR THE PURPOSE OF CORPUS FUND. OVER AND ABOV E THE ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 5 PRESCRIBED FEES FIXED BY THE TRUST. THEREFORE IT IS A CLEAR CASE OF SALE OF EDUCATION BY THE TRUST AS DISCUSSED HERE INABOVE IN VIEW OF JUDGMENT IN THE CASE OF VODI THALA EDUCATIO N SOCIETY HYDERABAD VS. ASST. DIRECTOR OF INCOME-TAX (EXEMPT ION)-II HYDERABAD. 5. ONE OF THE TRUSTEES NAMELY SHRI ANTHONY TUSCANO OF THE TRUST HAS EARMARKED DONATION TO BE UTILIZED AS PER LETTE R DATED 06.11.2000 ISSUED BY SHRI ANTHONY TUSCANO TO THE TR UST AS UNDER: A. THE INTEREST ON THE EARMARKED FUND GIVEN TO THE TRU ST WILL BE UTILIZED TOWARDS ONE BED CHARGE IN GENERAL WARD. B. THE TRUST SHOULD ENTERTAIN THE PATIENTS RECOMMENDED BY VINCENT PAUL SOCIETY. C. THE TRUST SHOULD ENTERTAIN CHRISTIAN PATIENTS RESID ING IN NORTH VASAI. D. PREFERENCE SHOULD BE GIVEN TO VINCENT PAUL SOCIETY OR OTHERWISE CHRISTIAN PATIENTS OF NORTH VASAI. E. IF NO PATIENT IS RECOMMENDED THE TRUST SHALL EXERC ISE ITS DISCRETION. F. IN CASE OF EMERGENCY THE RECOMMENDATION OF ANTHONY TUSCANO & FAMILY FUND WILL PREVAIL. 8. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDERS P ASSED BY THE A.O. IN ALL THE YEARS BEFORE LD. CIT(A) BUT WITHOUT SUCC ESS AND NOW THE ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD S. THE LD. COUNSEL SUBMITS THAT ON MERIT THE TRIBUNAL HAS DECI DED THE ISSUE OF THE BENEFIT OF THE EXEMPTION AGAINST THE ASSESSEE I N THE A.Y. 2001-02. HE SUBMITS THAT THE ASSESSEE HAS FILED APPEAL UNDER SEC. 260A AGAINST THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2001 -02 IN THE HONBLE HIGH COURT OF BOMBAY; BEING ITA NO.3558 OF 2009 AND THE HONBLE HIGH COURT HAS ADMITTED THE APPEAL AND HAS ALSO FRA MED THE SUBSTANTIAL QUESTIONS OF LAW. HE SUBMITS THAT WHEN THE MATTER WAS ARGUED BEFORE THE TRIBUNAL FOR THE A.Y. 2001-02 THE CONTENTION RAISED IN THE ADDITIONAL GROUND WAS ALSO ARGUED. IT WAS A RGUED BEFORE HONBLE TRIBUNAL THAT WHEN THE ASSESSEE TRUST HAS B EEN GRANTED REGISTRATION U/S.12A OF THE ACT BY THE LD. CIT WHI CH IS NOT CANCELLED THEN HOW THE A.O. CAN EXAMINE THE OBJECTS OF THE AS SESSEE TRUST AS ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 6 AFTER EXAMINING SAID OBJECTS ONLY HIGHER AUTHORITY LIKE LD. CIT HAS GRANTED REGISTRATION AND THE A.O. HAS EXCEEDED HIS JURISDICTION. THOUGH THE TRIBUNAL TOOK THE NOTE OF IT BUT NO DISC USSION WAS MADE ON SAID CONTENTION. THE LD. COUNSEL TOOK US THROUG H THE ORDER OF THE TRIBUNAL (COPY AT PAGE NO.19 TO 34 OF THE COMPILAT ION) AND SUBMITS THAT AT THE END IT IS HELD THAT WHEN THE REGISTRATI ON GRANTED U/S.12A WAS NOT CANCELLED THEN IT WAS NOT CORRECT ON THE PA RT OF THE A.O. TO GO PROBING THE OBJECTS OF THE ASSESSEE-TRUST. HE THE REFORE PLEADED THAT THE ASSESSEES APPEAL MAY BE ALLOWED ON THIS GROUND S. THE LD. COUNSEL TOOK US THROUGH THE PAPER BOOK MORE PARTIC ULARLY PAGE NO.4 & 5 WHERE COPY OF THE ORDER OF THE CIT -3 THANE PA SSED U/S.12AA(3) OF THE INCOME-TAX ACT DATED 01.12.2008 IS PLACED. BY THE SAID ORDER THE LD. CIT THANE WITHDREW NOTICE ISSUED U/S.12AA( 3) OF THE ACT DATED 16.01.2008 WHICH WAS ISSUED TO THE ASSESSE TR UST ASKING WHY REGISTRATION GRANTED SHOULD NOT BE CANCELLED. WE H AVE ALSO HEARD LD. D.R. WHO RELIED ON THE ORDER OF THE LD. CIT (A). 10. ADMITTEDLY THE IDENTICAL ISSUE HAS BEEN CONSID ERED IN THIS CASE BY THE TRIBUNAL IN THE A.Y. 2001-02 AND THE TRIBUNA L HAS HELD AS UNDER:- 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS MAINLY REITERA TED THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE T HE LEARNED CIT (A) IN AN ATTEMPT TO MEET THE OBJECTION S RAISED BY THE ASSESSING OFFICER WHILE DENYING ITS CLAIM FO R EXEMPTION U/S. 11 OF THE ACT. AS REGARDS THE CHARIT ABLE NATURE OF THE ACTIVITIES OF THE ASSESSEE TRUST HE HAS CONTENDED THAT MEDICAL FACILITIES WERE BEING PROVID ED TO THE PUBLIC AT LARGE IN THE GENERAL WARD AT CONCESSIONAL RATE AND MERELY BECAUSE THE OVERALL RESULT OF THE HOSPITAL A CTIVITIES WAS SURPLUS THE ASSESSING OFFICER AS WELL AS THE L EARNED CIT(A) WERE NOT JUSTIFIED IN IGNORING THE CHARITABL E NATURE OF ACTIVITIES CARRIED ON BY THE ASSESSEE TRUST. HE HA S ALSO CONTENDED THAT ITS CLAIM FOR THE TREATMENT PROVIDED IN THE GENERAL WARD TO PATIENTS AT CONCESSIONAL RATES WAS DULY SUBSTANTIATED BY THE ASSESSEE TRUST BY FURNISHING T HE DETAILED WORKING BUT THE ASSESSING OFFICER REJECTE D THE SAME BY POINTING OUT THE SO CALLED DEFECTS/DEFICIEN CIES ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 7 THEREIN. IN THIS REGARD IT IS OBSERVED THAT THERE WAS NOTHING BROUGHT ON RECORD BY THE ASSESSEE TRUST TO SHOW ANY SCHEME FRAMED BY IT TO PROVIDE MEDICAL TREATMEN T TO THE PATIENTS IN THE GENERAL WARD. WHEN THE LEARNED COUNSEL FOR THE ASSESSEE WAS REQUIRED BY THE BENCH TO FURNISH ANY DETAILS OR PRODUCE ANY EVIDENCE TO SHOW ANY SUCH SCHEME IMPLEMENTED BY THE ASSESSEE TRUST DURIN G THE YEAR UNDER CONSIDERATION HE HAS NOT BEEN ABLE TO D O SO. IN OUR OPINION IF AT ALL THERE WAS ANY SUCH SCHEME FO R PROVIDING THE MEDICAL TREATMENT TO THE PATIENTS IN THE GENERAL WARD AT CONCESSIONAL RATE THERE SHOULD HAV E BEEN AT LEAST SOME RESOLUTION BY THE BOARD OF TRUSTEES L AYING DOWN CERTAIN GUIDELINES ABOUT THE ELIGIBILITY OF PA TIENTS FOR AVAILING THE SAID SCHEME IN ORDER TO FACILITATE IMPLEMENTATION THEREOF. THERE OUGHT TO HAVE BEEN S OME RECORD SHOWING THE WORKING MADE BY THE ASSESSEE TRU ST ABOUT THE EXPENDITURE INCURRED ON THE PATIENTS TREA TED IN GENERAL WARD AT THE RELEVANT TIME WHICH COULD FORM THE BASIS OF DETERMINING THE CONCESSIONAL RATE FOR TREA TMENT. A PERUSAL OF THE RECORDS HOWEVER SHOWS THAT SUCH WO RKING WAS PREPARED AND FURNISHED FOR THE FIRST TIME ONLY AFTER THERE WAS A SURVEY CARRIED OUT AT THE HOSPITAL PREM ISES OF THE ASSESSEE TRUST AND IT WAS CALLED UPON TO EXPLAI N THE CHARITABLE NATURE OF ITS ACTIVITIES. ALTHOUGH THE ASSESSING OFFICER HAS POINTED OUT CERTAIN SPECIFIC DEFECTS/ D EFICIENCIES IN THE SAID WORKING AND THE ASSESSEE HAS MADE AN AT TEMPT TO OFFER ITS CLARIFICATION IN THIS CONTEXT WE DO N OT FIND IT NECESSARY TO GO INTO THIS ASPECT IN DETAIL AS THE A SSESSEE HAS FAILED TO ESTABLISH ON EVIDENCE THAT THERE WAS ANY SUCH SCHEME WHICH WAS FRAMED AND IMPLEMENTED DURING THE YEAR UNDER CONSIDERATION FOR PROVIDING MEDICAL TREA TMENT TO THE PATIENTS OF THE GENERAL WARD. SUCH SCHEME IN FACT HAS BEEN IMPLEMENTED ONLY IN THE SUBSEQUENT YEARS AS PE R THE GUIDELINES LAID DOWN BY THE HONBLE BOMBAY HIGH COU RT ON THE BASIS OF WHICH THE REGISTRATION GRANTED TO IT U /S. 12A HAS BEEN CONTINUED BY CIT-III THANE VIDE HIS ORDER DATED 1.12.2008. 10. AS REGARDS THE DONATION COLLECTED BY THE ASSESS EE TRUST FROM THE STUDENTS ADMITTED FOR THE NURSING COURSE THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE SAID DONATIONS WERE OBTAINED FOR THE PURPOSE OF BUI LDING HOSTEL FOR THE NURSES. HE HOWEVER HAS ADMITTED T HAT THE SAID DONATIONS WERE DIRECTLY CREDITED TO THE CORPUS FUND AND WERE NEITHER OBTAINED AS DONATIONS TOWARDS HOST EL ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 8 FUNDS NOR EARMARKED SPECIFICALLY FOR THE CONSTRUCTI ON OF HOTEL BUILDING. MOREOVER THE FACT THAT THE SAID A MOUNTS WERE COLLECTED WHILE GIVING ADMISSION TO THE STUDEN TS FOR NURSING COURSE CLEARLY SHOWS THAT THE PAYMENT THERE OF WAS NOT MADE VOLUNTARILY AND THERE WAS A PROFIT MOTIVE IN COLLECTING THE SAID AMOUNT. 11. AS REGARDS THE OBJECTION OF THE ASSESSING OFFIC ER RELATING TO THE HOSPITAL ACTIVITIES OF THE ASSESSEE TRUST BEING CARRIED ON AS COMMERCIAL ACTIVITIES THE LEARNED COUNSEL FOR T HE ASSESSEE HAS CONTENDED THAT THE ASSESSING OFFICER H AS IN THIS CONTEXT HIGHLIGHTED THE FACT OF SUBSTANTIAL SU RPLUS EARNED BY THE EARNED TRUST FROM ITS HOSPITAL ACTIVI TIES DURING THE YEAR UNDER CONSIDERATION IGNORING COMPLE TELY THAT THERE WAS ALSO A DEFICIT SUFFERED BY IT IN SOM E OF THE YEARS. IN THIS REGARD HE HAS INVITED OUR ATTENTIO N TO THE RELEVANT DETAILS FURNISHED ON RECORD A PERUSAL OF WHICH HOWEVER SHOWS THAT DEFICIT IN SOME OF THE YEARS WA S A RESULT OF THE DEPRECIATION CLAIMED BY THE ASSESSEE AND IF THE SAME IS IGNORED THERE WAS A SUBSTANTIAL CASH S URPLUS EVEN IN THOSE YEARS. IT IS NO DOUBT TRUE THAT IF THE VERY NATURE OF ANY ACTIVITY IS CHARITABLE IT WILL NOT C HANGE MERELY BECAUSE IT HAS RESULTED IN SURPLUS AS RIGHTL Y CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE R ELYING ON THE VARIOUS JUDICIAL PRONOUNCEMENTS. HOWEVER A S ALREADY DISCUSSED THE ASSESSEE IN THE PRESENT CASE HAS FAILED TO ESTABLISH THAT THE VERY NATURE OF ITS ACT IVITIES OF RUNNING OF A HOSPITAL WAS CHARITABLE AND HAVING COM E TO THE CONCLUSION THAT ITS HOSPITAL ACTIVITY CARRIED O N BY THE ASSESSEE TRUST WAS NOT OF CHARITABLE NATURE BUT THE SAME WAS BEING CARRIED ON AS A COMMERCIAL ACTIVITY WE H OLD THAT IT IS NOT A CASE WHERE THE SURPLUS IS ONLY INCIDENT AL WHEREAS THE MAIN OBJECT OF RUNNING OF A HOSPITAL IS CHARITABLE. THE SUBSTANTIAL SURPLUS CONSISTENTLY E ARNED BY THE ASSESSEE FROM RUNNING OF ITS HOSPITAL THUS FORT IFIES THE CONCLUSION THAT THE SAID ACTIVITY WAS COMMERCIAL AC TIVITY AND IT WAS NOT OF A CHARITABLE NATURE. IT MAY BE R ELEVANT TO MENTION HERE THAT SOME CONCESSION WAS GIVEN BY THE ASSESSEE TRUST FOR THE TREATMENT PROVIDED TO CERTAI N SPECIFIC PATIENTS IN ITS HOSPITAL BUT THE SAID CONCESSION WA S SUBSEQUENTLY REIMBURSED BY OTHER SOCIETY WHICH AS RIGHTLY HELD BY THE AUTHORITIES BELOW WAS A CLEAR INDICATO R THAT THERE WAS NO SCHEME EITHER FRAMED OR IMPLEMENTED BY THE ASSESSEE TRUST TO PROVIDE SUCH CONCESSION ON ITS OW N. ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 9 12. AS REGARDS THE OBJECTION RAISED BY THE ASSESSIN G OFFICER ABOUT ONE OF THE OBJECTS OF THE ASSESSEE TRUST TO G IVE MEDICAL AID AND PROVIDE FOR THE WELFARE OF THE PERS ONS OR EMPLOYEES OF THE HOSPITAL NOT BEING OF A CHARITABLE NATURE WE ARE OF THE VIEW THAT THE ASSESSEE TRUST WAS GRAN TED REGISTRATION U/S. 12A OF THE ACT BY THE LEARNED CIT AFTER HAVING FOUND THAT ITS OBJECTIVES WERE OF CHARITABLE NATURE AND IT WAS THEREFORE NOT INCUMBENT UPON THE ASSES SING OFFICER TO DOUBT THE CHARITABLE NATURE OF THE OBJEC TIVES OF THE ASSESSEE TRUST WHICH WAS CLEARLY BEYOND HIS JURISDI CTION. IN ANY CASE HAVING ALREADY HELD THAT THE ACTUAL AC TIVITY CARRIED ON BY THE ASSESSEE TRUST OF RUNNING A HOSPI TAL WAS NOT OF A CHARITABLE NATURE AND THE SAME WAS CARRIED ON AS A COMMERCIAL ACTIVITY BY IT DURING THE YEAR UNDER CONSIDERATION WE ARE OF THE VIEW THAT IT WAS NOT E NTITLED FOR EXEMPTION AVAILABLE U/S. 11 OF THE ACT. WE THEREF ORE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) CON FIRMING THE ACTION OF THE ASSESSING OFFICER DISALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S. 11 AND DISMISS THIS APPEAL FILED BY THE ASSESSEE. 11. THE LD. COUNSEL IS FAIR ENOUGH TO SUBMIT THAT O N MERIT HE IS NOT DESIRING TO ARGUE THE MATTER AS MERIT HAS BEEN CONS IDERED BY THE TRIBUNAL IN THE A.Y. 2001-02 BUT BY WAY OF ADDITION AL GROUND HE PLEADED FOR DIRECTING THE A.O. TO ALLOW THE EXEMPTI ON UNDER SEC. 11 TO THE ASSESSEE. ON PERUSAL OF THE TRIBUNALS ORDER MORE PARTICULARLY PARA NO.12 WE FIND THAT LD. CIT HAS GRANTED THE RE GISTRATION TO THE ASSESSEE TRUST U/S.12A OF THE ACT WAS ARGUED BEFORE THE TRIBUNAL IN A.Y. 2001-02 AND THE TRIBUNAL ALSO AGREED ACCEPTING THE PLEA OF THE ASSESSEE THAT IT WAS NOT CORRECT ON THE PART OF THE A.O. TO DOUBT ABOUT THE CHARITABLE OBJECT OF THE ASSESSEE TRUST WHICH W AS BEYOND HIS JURISDICTION. IN FACT IN OUR OPINION THE TRIBUNA L HAS ALREADY CONSIDERED THE ISSUE WHICH IS ARISING FROM THE ADDI TIONAL GROUND TAKEN BY THE ASSESSEE IN THE APPEAL THE THE A.Y. 20 01-02 BUT DECLINED TO ACCEPT THE PLEA OF THE ASSESSEE FOR GRANTING THE EXEMPTION U/S.11 OF THE ACT AS IN CONSEQUENCE OF SURVEY ACTION IT WAS P ROVED THAT ASSESSE WAS NOT IN FACT CARRYING OUT ANY CHARITABLE ACTIV ITIES BUT INDULGED INTO COMMERCIAL EXPLOITATION. ON THE PRINCIPLES OF JUDICIAL DISCIPLINE WE ARE BOUND BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2001-02. WE THEREFORE FOLLOWIN G THE REASONS GIVEN ITAS 1673 TO 1677/M/2009 CARDINAL GRACIOUS MEMORIAL HOSPITAL 10 BY THE TRIBUNAL IN ASSESSEES OWN CASE IN THE A.Y. 2001-02 (BEING ITA NO.498/MUM/2009) ORDER DATED 15.05.2009 HOLD THAT T HE ASSESSEE IS NOT ENTITLED FOR EXEMPTION AVAILABLE U/S.11 OF THE ACT. ACCORDINGLY ORDERS OF THE LD. CIT (A) IN ALL THE APPEALS BEFORE US ARE UPHELD AND ALL THE GROUNDS ORIGINAL AS WELL AS ADDITIONAL ARE DISM ISSED. WE MAY PLACE ON RECORD THAT THE LD. COUNSEL RELIED ON FOLL OWING PRECEDENTS IN SUPPORT OF THE PROPOSITION THAT WHEN THE REGISTRATI ON IS GRANTED U/S.12A/12AA OF THE ACT AND WHICH HAS NOT BEEN CANC ELLED IN THAT CASE THE BENEFIT OF EXEMPTION CANNOT BE DENIED TO T HE ASSESSEE. (I) AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS. DY. DIRECTOR OF INCOME-TAX (EXEMPTION) -335 ITR 575(GU J); (II) CIT-I VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. GUJARAT HIGH COURTS APPEAL NO.376 OF 2010 ORDER DATED 8.8. 2011 THE HONBLE HIGH COURT OF GUJARAT (UNREPORTED). 12. IN OUR HUMBLE OPINION AS THE ISSUE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE WE CANNOT TAKE DIFFERENT VIEW. MOREOVER ASSESSE HAS ALREADY CHALL ENGED ORDER OF THE TRIBUNAL FOR A.Y. 2001-02 BEFORE HONBLE HIGH OF BO MBAY AND NOW MATTER HAS BEEN ADMITTED ALSO. 13. IN THE RESULT ALL THE FIVE APPEALS OF THE ASSE SSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9TH FEBRUARY 2012. SD/- ( J. SUDHAKAR REDDY ) ACCOUTANT MEMBER SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 29TH FEBRUARY 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-II THANE. 4) THE CIT-II THANE. 5) THE D.R. C BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN