M/S.SREE AVITTOM THIRUNAL HOSPITAL HEALT vs. THE COMMR.OF INCOME TAX, KAUDIAR, TVM.

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ITA/73/2011HC KeralaKLHC01026421201124 February 2012Author: HONOURABLE MR. JUSTICE BABU MATHEW P.JOSEPH,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the order of the Tribunal. The Court noted that the assessee's claim for exemption as a charitable institution was allowed. The assessment details show that after allowing deductions and a portion of income to be carried forward under Section 11(2), a net surplus income of Rs. 19,44,135/- was assessed as not used for charitable purposes or permissible to be carried forward. The Court found that the assessee is engaged in business activity, and the income generated is used for charitable purposes. Therefore, the excess unutilized income was rightly found to be assessable by the Tribunal. The appeal was dismissed as devoid of any merit.

What were the facts?

The appeal was filed by M/s. Sree Avittom Thirunal Hospital Health Education Society against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, for the assessment year 2005-2006. The assessee is a charitable institution. The Assessing Officer completed the assessment, and the Commissioner of Income Tax (Appeals) confirmed it. The ITAT also sustained the assessment. The total net income was estimated at Rs. 1,26,86,204/-. Deductions of Rs. 1,04,89,936/- were allowed. The Assessing Officer accepted the application of 50% expenditure under Section 11(1)(a) at Rs. 16,57,210/-. Additionally, 75% of the income, amounting to Rs. 68,88,591/-, was allowed to be carried over to subsequent years under Section 11(2). The net surplus income assessed as not used for charitable purposes or permissible to be carried forward was Rs. 19,44,135/-.

What were the issues?

1. Whether there is a substantial question of law arising from the assessment sustained by the Tribunal, concerning the utilization of income for charitable purposes. The assessee contended that its claim for exemption as a charitable institution was allowed. The revenue argued that the assessee is engaged only in business activity, and the excess unutilized income was rightly assessed by the Tribunal. The core issue revolves around the assessment of Rs. 19,44,135/- as surplus income not used for charitable purposes or permissible to be carried forward, despite the assessee being recognized as a charitable institution.

Which sections of the Income-tax Act were involved?

Section 11(1)(a),Section 11(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH FRIDAY, THE 24TH DAY OF FEBRUARY 2012/5TH PHALGUNA 1933 ITA.No. 73 of 2011 ( ) ---------------------- (ITA.249/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH) APPELLANT/: ------------ M/S.SREE AVITTOM THIRUNAL HOSPITAL HEALTH EDUCATION SOCIETY, MEDICAL COLLEGE P.O. TRIVANDRUM. BY ADVS.SRI.P.BALAKRISHNAN (E) SRI.V.SREEKUMAR SRI.K.S.MENON (K) RESPONDENT: -------------- THE COMMISSIONER OF INCOME TAX, TRIVANDRUM-695 003. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 24-02-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURE A: TRUE COPY OF ASSESSMENT ORDER DT.17.12.2007 OF THE ASSESSING OFFICER. ANNEXURE B: TRUE COPY OF MEMORANDUM OF ASSOCIATION AND ITS RULES AND REGULATIONS. ANNEXURE C: TRUE COPY OF APPEAL ORDER DT.16.12.2008 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, KOCHI. ANNEXURE D: TRUE COPY OF APPELLATE ORDER DT.16.11.2010 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH. TRUE COPY P.S. TO JUDGE C.N.RAMACHANDRAN NAIR, & BABU MATHEW P. JOSEPH, JJ. .................................................................... I.T. Appeal No.73 of 2011 .................................................................... Dated this the 24th day of February, 2012.

JUDGMENT Ramachandran Nair, J. Appeal is filed against order of the Tribunal confirming the assessment completed for the year 2005-2006. We have heard counsel for the appellant and also Standing Counsel for the respondent.

2.

After hearing both sides and after going through the orders impugned, we do not find any substantial question of law arising from the assessment sustained by the Tribunal. It is seen that assessee's claim for exemption as a charitable institution is allowed. In fact on a total net income estimated at Rs.1,26,86,204/-, after giving deductions at Rs.1,04,89,936/-, the Assessing Officer has accepted application of 50% expenditure under Section 11(1)(a) at Rs.16,57,210/-. Besides this, 75% of the income was allowed to be carried over to subsequent years i.e. Rs.68,88,591/- under Section 11(2) of the Act. In the result, the net surplus income assessed as not used for charitable purpose or permissible to be carried forward for subsequent years is ITA 73/2011 2 Rs.19,44,135/-. It is seen that assessee is engaged only in business activity, though income generated is used for charitable purpose. So much so, excess unutilised income was rightly found to be assessable by the Tribunal. We, therefore, do not find any substantial question of law arising from the order of the Tribunal. Accordingly appeal is dismissed as devoid of any merit.

C.N.RAMACHANDRAN NAIR Judge BABU MATHEW P. JOSEPH Judge pms

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