ITAT Grants Relief to Sushila Birla Memorial Institute By Allowing exemption u/s 10(23C)(iiiae) of Income Tax Act

ITAT Grants Relief to Sushila Birla Memorial Institute By Allowing exemption u/s 10(23C)(iiiae) of Income Tax Act

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, on 19 February 2021, granted relief to Sushila Birla Memorial Institute (Assessee) by allowing exemption under section 10(23C)(iiiae) of the Income Tax Act (IT Act).

The ITAT coram comprising of Aby T. Varkey and J. Sudhakar Reddy noted that "The Revenue has been granting exemption to the assessee for earlier assessment years and the subsequent years. The assessee is eligible for deduction under Section 10(23C)(iiiae) of the IT Act."

The factual background of the case is that the assessee is a Trust that has been running a specialty school for retarded children and also provides medical aid and treatment for persons who are suffering from illness or mental defectiveness.

The assessee also owns several mobile medical vans that are in collaboration with M/s. Bharat Sevashram Sangha, M/s. Vivekananda Swasthya Seva Sangha etc. which are charitable organizations.

These vans are well-staffed with doctors, nurses, attendants etc., and also are equipped with surgical equipment, x- rays, diagnostic equipment, and medicines. The entire expenditure incurred on these mobile medical vans is paid by the assessee.

It also provides medical services in remote and rural areas, where no medical facilities are available. The total annual receipt of the assessee is less than Rs.1 crore. The assessee claimed exemption under Section 10(23C)(iiiae) of the IT Act.

The Assessing Officer (AO) in the assessment order passed under Section 143(3) of the IT Act held that M/s. Bharat Sevashram Sangha and M/s. Vivekananda Swasthya Seva Sangha were running a mobile medical unit and submitting the bills monthly to the assessee for reimbursement.

He opined that this mobile medical van is a part and parcel of the hospital of M/s. Bharat Sevashram Sangha or M/s. Vivekananda Swasthya Seva Sangha and was only funded by the assessee and that the assessee was merely reimbursing the bills raised by them.

The Commissioner of Income Tax (Appeals) [CIT(A)] stated that the assessee is reimbursing expenditure incurred by these institutions for running medical services, which means that the expenditure belongs to the assessee and it was incurring this expenditure through his institution.

Under Section 10(23C)(iiiae) of the IT Act exemption is available to the assessee only if it has a hospital and doing medical services by itself. It was further observed that the doctors are not regular employees of the assessee and they were employees of Bharat Sevashram Sangha, Kolkata, and Vivekananda Swasthya Seva Sangha, Kolkata, on part-time basis and that they have been paid very meagerly.

An appeal was filed before the ITAT that observed that there is no dispute of the fact that the assessee exists solely for philanthropic purposes and not for profit. The annual receipts of the assessee do not exceed the amount prescribed.

The ITAT referred to the definition of 'hospital' in the Collins Dictionary that is "A hospital is a place where people who are ill are looked after by nurses and doctors".

It added that there is no requirement for a hospital to be located in an immovable property. Payment to doctors and nurses is not done by the assessee cannot be a reason to conclude that the assessee is not running any institution or hospital to cure the sick.

It concluded that "The expenditure is incurred by the assessee for payment to doctors, nurses and other medical staffs and for medicine, etc. The mobile medical vans are owned, equipped, maintained, run, and controlled totally by the assessee."

It added, "If any organization has incurred expenditure on behalf of the assessee, they claim reimbursement of such expenses from the assessee. The term "reimbursement" means that the expenditure is that of the assessee and has been incurred on behalf of the assessee."