Section 2(15) of Income Tax Act, 1961: Medical relief a charitable purpose

As per Section 2(15), of the Income Tax Act 1961 ‘charitable purpose’ include relief of the poor, education, yoga, medical relief, preservation of environment ( including watersheds, forests and wildlife) and preservation of monuments or places or objects’ of artistic or historic interest, and the advancement of any other object of general public utility.

Thus medical relief us one of the charitable purposes which is covered by the definition of

“charitable purpose” contained in section 2(15) of the Income Tax Act 1961.

What constitute medical relief?

(i) Establishing, organizing maintaining and to support,  assist or give aid to, either in cash or in kind or collaborate with hospitals, nursing homes, dispensaries, clinics, health centers including all its auxiliary and supporting units.

(ii) Giving aid to or assist and co operate with all the necessary ancillary units and departments including “X” ray, Pathology, Radiology, Physiotherapy, Blood Bank, Medical Stores etc.

(iii) Providing health care, such as health check-up, treatment and surgical intervention for children covered by the sponsorship programme or supported by community based rehabilitation programme.

(iv) To undertake and arrange family welfare activities for family planning and to educate and motivate the people for family planning.

(v) To give donation to Dispensaries, Hospitals, Nursing Homes, Orphanages, and such other public medical institutions giving medical aid to needy people.

(vi) To provide medical help in all possible manner depending upon circumstances to poor, deserving persons of the weaker section of the society.

(vii) To undertake welfare activities including medical and diagnostic camps and treatment for physically handicapped and mentally retarded persons and also welfare and other rehabilitation activities.

All the activities mentioned above are to be considered as Medical Relief.

Like medical relief, medical research also constitute charitable purpose for the purpose of section 2(15) of the Income Tax Act, 1961. The following objects may therefore be regarded as charitable purpose:

(i) To establish, promote, organize and run, research laboratories to conduct research in all types of diseases including AIDS, Cancer, Cardiac ailments, Urology, Neurology, etc.

(ii) To set up, promote, organize, and manage, the medical research institutions and research programme in any branch of medical science by engaging or employing doctors, scientists, consultants, technicians, experts.

(iii) To conduct experiments and to undertake and carry on research experiments and tests related to various medical branches

(iv) To promote, develop and improve scientific exchange of knowledge as well as technical co operation between research institutions with similar interest and objectives.

(v) To conduct conferences, refresher courses, lectures, seminars, public health education and promotion activities, demonstrations and exhibitions relating to the research done, knowledge generated and results obtained.

(vi) To give advice on, publish research papers and promote utilization of research results in the medical fields.

Nature of Medical relief qualify as charitable purpose.

Treatment of persons suffering from physical or mental illness and providing medical and allied facilities to person during convalescence and taking care of persons requiring medical attention and rehabilitation, can be regarded as medical relief.

When the activities are carried out to provide medical relief by way of treatment to patients either with or without charges, the same would be considered as a charitable purpose. For being a charitable purpose it is not necessary that activities should be absolutely philanthropic in the sense that one has to provide free medical services or subsidized medical services. Thus to provide cheap medical services is charitable purpose.

Object of assessee–trust included merely establishment of hospital. Establishment of hospital was one of the modes to provide such medical help. Taking a liberal view providing medical help was also covered in the objects of the trust, particularly when genuineness of such payments incurred by assessee in respect of medical help was not doubted, assessing officer was directed to delete the disallowance. Vide Shrimad Vallabh Vishwa Dharma Sanstha Vs. Addl. CIT(2006) 102 TTJ 653(Ahd.Trib)

Further medical relief is not confined to relief to poor only. The act of providing medical aid to needy patients whether poor or rich is charitable purpose. (Devki Devi Foundation V. DIT(2015) 40 ITR (trib)1(Delhi “B” Trib.)2015(170) TTJ 69 it was observed that the conduct of affairs of the assessee-society was not on charitable lines and was clearly on commercial lines.

Incidental commercial activities vis-à-vis charitable purpose.

Just because an institution like hospital charges fees for services rendered, that, by itself, would not preclude it from claiming to be doing charitable work as defined in section 2(15). It is not necessary that medical relief and hospital service should be given only to poor nor it can be presumed that unless any particular percentage of service is rendered free, a hospital would become not a charitable one ITO v.Kaushalya Medical Foundation (2009) 31 SOT 119 (mum-Trib)

It was held that since activities like running of blood bank, x-ray centre, homeopathic dispensaries, etc. carried out by assessee trust were in respect of medical relief, it would continue to be eligible for exemption as charitable institution, even if in the nature commercial activities. Further, it was held that even otherwise, in view of the fact that there was no basis for satisfying CIT that activities of assessee were not genuine and they were not carried out in accordance with objects of society, the order cancelling registration was to be set aside. Samparpan Samiti v. CIT(2012) 24 205(Agra-Trib)

CIT v. Rajasthan Jain Charitable Trust(2013)351 ITR 354(karn): (2013)214 Taxman 198

Mere charging of fees does not ipso facto mean that the assessee was not doing any charitable activity because  profit of the assessee trust was applied only for charitable activity and there was prohibition in the trust deed to direct the funds for any other object. Thus exemption under section 11 was rightly claimed. Lions Club of Anna Nagar Charitable Trust v. Dy.DIT(2015) 40 ITR (trib) 746 (Chenn “C” Trib)