Charitable trust – Exemption u/s. 11 – A. Y. 2008- 09 – Hospital – Application of income to objects and for purposes of trust – Charity Commissioner giving directions from time to time – Amounts charged or surcharges levied on bills given to indore patients – To be treated as income from activities of trust – Entitled to exemption u/s. 11

The assessee is a charitable trust running a hospital. For the A. Y. 2008-09, the assessee declared total income at Nil claiming exemption u/s. 11. The Assessing Officer found that the assessee levied surcharge of 20% on the bills given to the patients and recovered 25% of the fees paid to honrary doctors. The Assessing Officer treated these amounts as corpus donations and denied exemption u/s. 11. The Tribunal allowed the assessee’s claim and deleted the addition.

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:

“i) T he Tribunal concurred with its earlier order in relation to exemption. Despite the directions of the Charity Commissioner, the Revenue could not insist that the amount charged or surcharges levied should not be treated as income from the activities of the trust. The authorities under the Income-tax Act are supposed to scrutinize the papers and related documents of the trust or the assessee so as to bring the income to tax and in accordance with the Income-tax Act.

ii) In such circumstances, the concurrent finding did not in any manner indicate that the directions issued by the Charity Commissioner are incapable of being complied with or liable to be ignored. The directions issued did not change the character of the receipts. The appeal does not raise any substantial question of law.”