The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) stated the taxpayer hospital is levying on the grounds of commercial rates from the patients and is not qualified for registration as a charitable organization under Section 12A of the Income Tax Act.
The two-member bench of Laliet Kumar (Judicial Member) and R.K. Panda (Accountant Member) saw that the taxpayer imposing as per the commercial rates from the patients either outdoor or indoor and the taxpayer is unable to show that the fees levied via the same was on the ground of the reasonable cost.
The ITAT as per the Supreme Court’s order for the case of New Noble Educational Society Versus The Chief Commissioner of Income Tax in which the same stated that the CIT(E) was correct to find out the audited records through the fact of interpreting the kind of the activities.
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Supreme court, in which the goal of the institution seems to be for the profit that institutions are not qualified for approval under section 10(23C) of the income tax act.
The taxpayer was a private limited company, the taxpayer transformed the company into a Section 8 company and altered the name to “Fernandez Hospital.” on August 3, 2018.
Under Section 12AA of the Income Tax Act, the taxpayer for the hospital has applied for registration. But the CIT(E) has refused the application that has been furnished via the taxpayer on the basis of the taxpayer engaged in the activities that have the type of trade and furnishes the services within the market rates.
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The CIT(E) mentioned that the taxpayer breaches Section 13 of the Income Tax Act of 1961 by filing the bigger sums to directors along with the other interested parties.
The CIT(E) recorded, the amount that the taxpayer levied was exceeding the amount levied via the other diagnostic centres or hospitals for identical tests, diagnoses, or treatments.
The taxpayer, activities that the taxpayer performs would be charitable and CIT(E) would have denied the taxpayer applicant wrongly for the allotment of the registration under section 12AA. The order issued via the CIT(E) was not as per the law.
The activities of the taxpayer match with the Bill & Melinda Gates Foundation (BMGF), Tata Foundations, etc activities. The business houses belong to philanthropic work.
The department argued that through the perusal of the taxpayer’s profit and loss account, the taxpayer has made a gain of Rs 23.54 cr on the total revenue from the functioning of Rs 141.90 cr. The same specified that the taxpayer company would be a profit-making firm.
The tribunal, there is no proof that was specified by the taxpayer that he levied a lower fee or nil fee at all post its conversion or that the same was prolonging the free medical utilities to the poor and oppressed.
Under Sections 10(23C) or 12A of the Income Tax Act, the tribunal sees that the taxpayer does not entitle to registration or approval
| Case Title | Fernandez Foundation Vs Commissioner of Income Tax (Exemption) |
| Citation | ITA No.1884 & 1885/Hyd/2019 and ITA No.299/Hyd/2020 |
| Date | 08.12.2022 |
| Assessee by | Shri S. Ravi, Advocate |
| Revenue by | Shri Rajendra Kumar, CIT-DR |
| ITAT Hyderabad | Read Order |
