High court picks holes in hospital’s charity claim, says pay income tax
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The Bombay high court refused any relief to a hospital run by Yash Society, a charitable trust of the Birla group, that was seeking income tax exemption on the grounds that it was running a philanthropic institution.
A division bench of Justice M S Sanklecha and Justice G S Kulkarni questioned the "philanthropy" of the institution and upheld the income tax department decision to deny it tax relief.
"The figures of concessional treatment clearly indicate that Yash Society has spent meagre amount on the weaker section of the society, which negates the contention that it is existing solely for philanthropic purpose and not for profit," the court said. It said records showed that in 2007- 2010 the concessional treatment ranged from 3.5% to 4.45% while the trust assets grew vastly.
There was an increase in fixed assets of the trust from Rs 63.75 lakh in 2006-07 to Rs 8.02 crore in 2009-10; cash and bank balances grew from Rs 1.42 lakh to Rs 1.74 crore during the same period. The trust also bought 8,350 sq m of land in Thane for Rs 363.63 lakh. The trust claimed the land was for a new hospital.
"If the trust was to solely exist for philanthropic purposes and was to conduct the hospital to achieve that object by providing treatment to the weaker sections of the society, it could not have been possible for it to achieve such a huge surplus and the consequent enabling to utilize such surplus funds to generate assets," the court said.
Yash Society runs the Sujata Birla Hospital in Nashik and used to enjoy income tax exemption. From 2009-2010, when the annual receipts of the hospital exceeded Rs 1 crore, the income tax department denied it exemption, which it said was given only to hospitals set up solely for philanthropy and not profit.
The trust argued that generating a surplus did not mean it did not exist for philanthropic purposes.
Advocate Suresh Kumar was the counsel for the income tax department.
A division bench of Justice M S Sanklecha and Justice G S Kulkarni questioned the "philanthropy" of the institution and upheld the income tax department decision to deny it tax relief.
"The figures of concessional treatment clearly indicate that Yash Society has spent meagre amount on the weaker section of the society, which negates the contention that it is existing solely for philanthropic purpose and not for profit," the court said. It said records showed that in 2007- 2010 the concessional treatment ranged from 3.5% to 4.45% while the trust assets grew vastly.
There was an increase in fixed assets of the trust from Rs 63.75 lakh in 2006-07 to Rs 8.02 crore in 2009-10; cash and bank balances grew from Rs 1.42 lakh to Rs 1.74 crore during the same period. The trust also bought 8,350 sq m of land in Thane for Rs 363.63 lakh. The trust claimed the land was for a new hospital.
"If the trust was to solely exist for philanthropic purposes and was to conduct the hospital to achieve that object by providing treatment to the weaker sections of the society, it could not have been possible for it to achieve such a huge surplus and the consequent enabling to utilize such surplus funds to generate assets," the court said.
Yash Society runs the Sujata Birla Hospital in Nashik and used to enjoy income tax exemption. From 2009-2010, when the annual receipts of the hospital exceeded Rs 1 crore, the income tax department denied it exemption, which it said was given only to hospitals set up solely for philanthropy and not profit.
The trust argued that generating a surplus did not mean it did not exist for philanthropic purposes.
Advocate Suresh Kumar was the counsel for the income tax department.
Category : Income Tax | Comments : 0 | Hits : 566
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