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I-T - Providing 'medical relief to humans' is not different from providing 'medical relief to animals' for purposes of relief from section 2(15)

By TIOL News Service

AHEMDABAD, MAR 18, 2017: THE ISSUE IS - Whether there is any distinction between 'medical relief to humans' and 'medical relief to animals' for purposes of claiming relief from section 2(15). NO is the verdict.

Facts of the case:

The assessee had filed its return claiming exemption u/s 11[1](a) contending inter alia that the assessee Trust was providing medical facilities, and therefore, its activities were for charitable purposes u/s 2[15]. However, the AO applied proviso to Section 2[15] and held that the assessee was a profit making company, and therefore, activities of the assessee trust were no longer charitable in view of amended provisions of "charitable purposes" and therefore assessee was not entitled to exemption u/s 11[1](a); as claimed. Therefore, the AO did not accept the claim of the assessee for exemption u/s 11[1](a) and consequently, disallowed the amount of Rs. 3,36,06,368/-. On appeal, the ITAT held that the activities of the trust could be said to be providing medical relief, and therefore, proviso to Section 2 [15] shall not be applicable and the assessee shall be entitled to exemption u/s 11 [1](a).

On appeal, the HC held that,

++ the question which is posed before this Court for consideration is as to whether the activities carried out by the assessee can be said to be "charitable purpose" and the assessee is entitled to exemption u/s 11 [1](a), or the case of the assessee can be said to be, "for advancement of any other object of general public utility " and the proviso to Section 2 [15] will be applicable so as to consider the exemption claimed by the assessee u/s 11. While considering the question posed for consideration of this Court, definition of Section 2 [15] is required to be referred to. Section 2 [15] of the I.T Act, as it stood amended by Finance Act, 2009 w.e.f 1st April 2009, which reads that advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of render any service in relation to any trade, commerce of business, for a CESS or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. While considering the aforesaid question, even the objects of the assessee-Trust, as per the Memorandum of Association are also required to be referred to. It is not in dispute that the activities of assessee is also to undertake research, establish and run the veterinary hospitals, laboratory and services, artificial Insemination Centers and services; to provide medicines and Veterinary help to the cattle including organizing programmes which can improve livestock housing veterinary health and to control and eradicate animal diseases. It is the case on behalf of the Revenue that as the assessee is recovering Cess from the agriculturists/farmers towards services provided by the assessee and/or to carry out the activities of the Trust and also on the ground that the activities of the assessee-Trust can be said to be medical relief, however, the same is to the animals, and therefore, activities of the assessee cannot be said to be "charitable purpose" as per first part of Section 2 [15] and the same shall fall under advancement of general public utility, and therefore, when the assessee is recovering Cess, as per proviso to Section 2 [15], the activities of the assessee cannot be said to be "charitable purpose", and therefore, assessee is not entitled to claim exemption u/s 11[1](a);

++ however, considering Section 2 [15], there cannot be any distinction between medical relief to the human and medical relief to the animals. As observed hereinabove, as per Section 2 [15] of the Act, any activity of the relief to the poor, eduction, medical relief, preservation of environment [including watersheds, forests and wildlife] can be said to be for "charitable purpose". It does not say activities of the medical relief to the human being only which can be said to be for "charitable purpose". Therefore, the language of Section 2 [15] is very clear. As per the settled proposition of law, any provision under the Statute; more particularly, the benevolent provision of the Statute, is required to be read as it is. Neither there can be any addition nor there can be any deletion, while interpreting a particular statute; more particularly, the benevolent provision. The expression "medical relief " is required to be given widest meaning so as to achieve the object and purpose of granting exemption to an assessee, whose activities are for "charitable purpose". It is not in dispute that the assessee's activities includes providing maternity, animal nursery, fertility, vaccination to milch animals belonging to the milk producers. Thus, the assessee's activities are to ensure that milching animals are free from diseases, their breed improvement and overall well-being. Thus, we are of the opinion that activities of the medical relief, even to the animals, will fall under former specific category of "medical relief " and not covered under the last limb of Section 2 [15] of the Act ie., "advancement of any other object of general public utility". Now so far as submissions on behalf of the Revenue that as the assessee is recovering/collecting the Cess for the services provided by them, and therefore, considering proviso to Section 2 [15], the activities of the assessee cannot be said to be "for charitable purpose" and therefore, not entitled to exemption claimed u/s 11[1](a) is concerned, at the outset, it is required to be noted that once the activities of the assessee will fall under first three categories of Section 2 [15], proviso to Section 2 [15] shall not be applicable. Therefore, it cannot be said that the Tribunal has committed any error in holding/considering the activities of the assessee within the definition of "charitable purpose" provided in Section 2 [15] of the Act, and therefore, the assessee-Trust shall be entitled to exemption claimed u/s 11 [1](a).

(See 2017-TIOL-511-HC-AHM-IT)