BREACH CANDY HOSPITAL TRUST vs. THE CHIEF COMMISSIONER OF INCOME TAX AND ANR.

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WP/2462/2010HC Bombay12 October 2026Author: HON'BLE SHRI JUSTICE B.P. COLABAWALLA HON'BLE SHRI JUSTICE FARHAN P. DUBASH55 pages
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What did the High Court hold?

The High Court held that the Petitioner hospital satisfies the requirement of existing solely for philanthropic purposes and not for purposes of profit under Section 10(23C)(via) of the Income-tax Act, 1961. The Court found that the Petitioner's objects, actual activities, and the use of its funds clearly established its philanthropic nature. The Court reasoned that the mere generation of surplus, by itself, does not establish that the Hospital existed for profit. The Court noted that the Petitioner's Memorandum and Articles of Association, its registration as a public trust, and the application of its income and property towards its stated objects were indicative of its philanthropic purpose. The Court quashed and set aside the impugned orders of the Chief Commissioner of Income-tax. The Court directed the Respondent or the competent authority to issue the requisite approval orders for Assessment Years 2002-03 to 2010-11 and for Assessment Years 2011-12 to 2021-22, consistent with the judgment's findings, within eight weeks of the judgment's upload.

What were the facts?

The Breach Candy Hospital Trust (Petitioner) challenged orders dated April 15, 2010, and September 28, 2012, passed by the Chief Commissioner of Income-tax (Respondent No. 1). These orders rejected the Petitioner's applications for approval under Section 10(23C)(via) of the Income-tax Act, 1961, for Assessment Years (AY) 2002-03 to 2010-11 and AY 2011-12 onwards, respectively. The Petitioner, incorporated in 1946, claimed its income should be excluded from total income as it exists solely for philanthropic purposes and not for profit. The Respondent rejected the applications, citing concerns about the Hospital's substantial surpluses, the proportion of expenditure on poor patients, and profits from certain activities. The High Court considered these challenges through two writ petitions.

What were the issues?

1. Whether the Petitioner hospital satisfies the requirement of "existing solely for philanthropic purposes and not for purposes of profit" under Section 10(23C)(via) of the Income-tax Act, 1961, for the relevant assessment years? Assessee's Contentions: The Petitioner argued that its Memorandum and Articles of Association clearly state its objects are philanthropic and not for profit. It contended that its income and property are applied solely towards its objects, with no distribution of profits to members. Upon dissolution, remaining assets are to be distributed for charitable purposes. The Petitioner also highlighted its registration as a public trust. It further argued that the surpluses generated, even if substantial, do not inherently mean the institution exists for profit, especially when considering its core activities and the use of funds. The Petitioner also submitted that for determining surplus, only amounts arising from its core hospital operations should be considered. Revenue's Contentions: The Revenue, through Respondent No. 1, rejected the applications primarily on the grounds that the Hospital did not exist solely for philanthropic purposes. This conclusion was based on the substantial surpluses generated by the Hospital, the relatively small proportion of expenditure devoted to poor and needy patients, and profits derived from certain activities like the sale of medical supplies. The Respondent also considered profits from treasury income and investments in determining the existence of a profit motive.

Which sections of the Income-tax Act were involved?

Section 10(23C)(via),Section 10(22A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, disposed of

Heard together (2 matters)

WP/2462/2010
WP/1051/2013

Read from the judgment's own cause title. This page is filed under one of them.

89.

For all the above reasons, Rule is made absolute in both petitions, which are accordingly allowed in terms of the following order: (a) The order dated 15ᵗʰ April 2010 passed by Respondent No. 1, impugned in Writ Petition No. 2462 of 2010, rejecting the Petitioner’s application for approval under section 10(23C)(via) of the Act for Assessment Years 2002-03 to 2010-11 is hereby quashed and set aside. (b) Respondent No. 1, or the authority presently competent to grant such approval, shall issue the requisite order granting approval under Section 10(23C)(via) of the Income-tax Act, 1961 for Assessment Years 2002-03 to 2010-11 to the Petitioner pursuant to the applications forming the subject matter of the first petition, consistent with the findings recorded in this judgment. This order shall be issued within eight weeks from the Uploaded on - 12/10/2026 Downloaded on - 27/10/2026 22:25:40

WP/2462/2010 & WP/1051/2013 Breach Candy Hospital Trust. v. CCIT & Ors. ---------------------------------------- Judgment dated 12th October 2026 date on which a copy of this judgment is uploaded on the website of the High Court. (c) The order dated 28ᵗʰ September 2012 passed by Respondent No. 1, impugned in Writ Petition No. 1051 of 2013, rejecting the Petitioner’s application for approval under section 10(23C)(via) of the Act for Assessment Year 2011-12 and subsequent years, is also hereby quashed and set aside. (d) Respondent No. 1, or the authority presently competent to grant such approval, shall issue the requisite order granting approval under Section 10(23C)(via) of the Income-tax Act, 1961 pursuant to the Petitioner’s application dated 22nd September 2011 forming the subject matter of the second petition, consistent with the findings recorded in this judgment. It is clarified that though the Petitioner’s said application had sought approval for Assessment Year 2011-12 and subsequent years, the requisite order granting such approval shall restrict itself to Assessment Years 2011-12 to 2021-22 only. This order shall also be issued within eight weeks from the date on which a copy of this judgment is uploaded on the website of the High Court. (e) There shall be no order as to costs. Uploaded on - 12/10/2026 Downloaded on - 27/10/2026 22:25:40

WP/2462/2010 & WP/1051/2013 Breach Candy Hospital Trust. v. CCIT & Ors. ---------------------------------------- Judgment dated 12th October 2026 (f) Though we have disposed of the two petitions, we place them on board for reporting compliance on 14th December 2026. 90. This order shall be of this Court. All concerned parties shall act upon such digitally signed copy of this order downloaded from the official website of the Bombay High Court.

(FARHAN P. DUBASH, J.)

(B. P. COLABAWALLA, J.)

Shubham Gadhavepatil SHUBHAM SHESHRAO GADHAVEPATIL SHESHRAO GADHAVEPATIL Date: 2026.10.12 15:40:14 +0530 Uploaded on - 12/10/2026 Downloaded on - 27/10/2026 22:25:40 Powered by TCPDF (www.tcpdf.org)

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