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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the Revenue against the order of the learned Commissioner of Income Tax (Appeals)-NFAC, Delhi [‘CIT(A)’ in short] dated 09.05.2025 arising from the assessment order dated 30.12.2019 passed by the DCIT, Circle Exemption 1(1), New Delhi under Section 143(3) of the Income-tax Act, 1961 (Hereinafter referred to as “Act”) concerning Assessment Year (A.Y.) 2017-18.
The grounds raised by the assessee are as under :
(i)Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying on the decision of Hon’ble Delhi High Court dated 28.02.2024 in assessee’s own case, ignoring that department has filed SLP against the same.
(ii)Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the benefit of exemption u/s 11 & 12 of the Act ignoring that the assessee foundation has not been operating as charitable institution, as the trustee allowed the property / hospital of the society to be taken over by the Man-Group by creating various financial & legal obligations and activities of the society were commercial in nature and covered by the proviso to section 2(15) of the 1.T. Act, 1961.
(iii)Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring that, the assessee trust did not fulfil the minimum notified criteria of providing 25% of OPD & 10% of beds in IPD as free treatment to the EWS (Economically Weaker Section).
(iv)The assessee craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing.”
Brief facts of the case are that the assessee is a society registered under the Societies Registration Act XXI of 1860. The assessee society is running a super specialty hospital in Saket, New Delhi for the purposes of providing medical relief. Return of income for the assessment year 2017-18 was filed by the assessee on 26.10.2017 declaring NIL income. The case was selected for scrutiny assessment and order u/s 143(3) was passed denying the benefit of section 11 and 12 of the Act wherein the income of the assessee society was assessed at Rs.14,01,25,670/- as taxable income.
The AO held that the assessee was engaged in undertaking research projects sponsored by pharmaceutical companies as part of their CSR obligations on contract basis. The AO also held that the assessee was not providing concessional treatment to economically backward sections. It was also held that the assessee was being operated as a group concern of Max Hospitals, a corporate medical group. The AO held that the assessee did not function as charitable institution and hence its activities did not fall within the ambit of charitable purpose as defined under section 2(15) of the Act. On appeal, the CIT(A) deleted the additions. Aggrieved the Revenue is before us.
The ld DR has relied on the orders of the AO while the Ld AR relied on the order of the CIT(A).
We have heard the rival submission and have perused the materials on record. We find that the CIT(A) has granted relief as follows:
6.5In this case vide order dated 28.12.2011 DIT (Exemptions), Delhi withdrew the registration granted to the assessee earlier u/s 12A of the IT Act. However this cancellation was deleted by the ITAT, Delhi vide its order ITA No.1027/Del/2012 dated 22.10.2019. Therefore when the AO passed present order on 30.12.2019 denying the exemption u/s 11, the assessee had a valid registration u/s 12AA. Hence the denial of exemption u/s 11 was not in order. Further the Delhi Court, has vide its order in the case of the assessee dated 28.02.2024 upheld the ITAT’s order mentioned above. In these cases, the ITAT and Jurisdictional High Court considered the eligibility of the assessee for exemption u/s 11 in the light of the issues raised by the AO such as association with Max Healthcare and treatment of economically weak patients. The ITAT and Delhi Court found that the assessee was eligible for registration under section 12AA. Therefore the disallowance made by the AO is not in order. Grounds 1 to 3 are allowed.
We further note that the CIT(A) has followed the decision of the hon’ble Delhi Court in assessee’s own case in ITA No.115/2021 dated 28.02.2024, to decide the issue in favour of the assessee. We find that the only ground of Revenue is that since the department has filed SLP before the Hon’ble Supreme Court which has been admitted, the CIT(A) was wrong in law to allow the appeal.
We find that the Hon’ble Delhi High Court has ruled in favour of the assessee on issues raised and the same has not been stayed by the Hon’ble Supreme Court. The Hon’ble Delhi High Court decision in assessee’s own case is fully applicable to the facts of the instant A.Y. 2017-18 and accordingly, we hold that the CIT(A) rightly held the assessee, being eligible for registration u/s 12AA, is consequently eligible for benefit u/s 11 of the Act. The grounds of the Revenue are dismissed.
In the result, appeal filed by Revenue is dismissed.