‘Surplus Alone Doesn’t Make Hospital Profit-Driven’: Bombay HC Grants Breach Candy Hospital Trust Tax Relief
Mumbai, October 13, 2026: In a relief for Breach Candy Hospital Trust, the Bombay High Court has directed the Income Tax Department to grant tax exemption approval to the trust for assessment years spanning 2002-03 to 2021-22. The court held that the hospital’s surplus income alone cannot be treated as proof that it operates for profit. High Court Quashes Tax Orders A bench of Justices BP…
On October 13, 2026, the Bombay High Court granted tax relief to the Breach Candy Hospital Trust, ruling that surplus income alone is not sufficient proof that the hospital operates for profit. The court dismissed orders from the Income Tax Department rejecting the trust's applications under Section 10(23C) of the Income Tax Act for approval dating back to assessment years 2002-03 to 2021-22.
The bench, consisting of Justices BP Colabawalla and Farhan Dubash, emphasized that the focus should be on the use of the hospital's receipts, including asset acquisition for improved medical care. The Revenue had questioned the surplus income, as well as the hospital's concessions for poor patients, doctors' consultation rooms, and the collection of professional fees. However, the court rejected these concerns, stating that surplus income does not inherently demonstrate a profit motive.
The court noted that the hospital's constitutional documents prohibit profit distribution and that the income is dedicated to hospital operations and facilities. No evidence of fictitious or diverted expenditure or private use of funds unrelated to the hospital's objectives was found. The court also examined depreciation and capital expenditure for equipment and facilities, asserting that these expenditures must be considered when evaluating the hospital's activities.
The court granted approvals for the two specified assessment periods: 2002-03 to 2010-11 and 2011-12 to 2021-22.
Written by urgent.news from Free Press Journal's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
