REV FR FERDINAND KAYAVIL Vs. MAHAVIR GUPTA

JUDGEMENT

(1.) THE complainant is running Ozanam Eye Centre, Benziger Hospital at Quilon. According to the complainant this is being run by a registered charitable mission hospital administered by the Bishop of Quilon. It is engaged in providing treatment for eye patients for which purpose free eye camps are Regularly conducted and poor patients are given medical and surgical care totally free. This institution is recognised by the Government of India from which it received a grant of Rs. 2 lakhs for purchasing new equipment so as to improve the medical services.

(2.) THE complainant purchased an Argon Laser unit (Photocoagulator) with accessories for a total CIF value of US$ 30,000 from M/s. Universal Medical Products, USA with one year's warranty. The purchase was negotiated in December, 1989 through M/s. Apu Impex, of which the Opposite Party is the M.D. Bombay and was installed in June, 1990, after providing the facilities required for the installation of the Argon Laser unit. The installation was also done by the service engineer of the opposite party M/s. Apu Impex Bombay. The laser unit, however, first stopped functioning on 19th April, 1991. The service engineer of the opposite party stated that Argon Laser unit had stopped working due to a short circuit which was rectified. Again it did not function in June, 1991 and this was found to be due to some fault in the transistors and indicators. The Argon Laser unit did not function satisfactorily and in July, 1991 the opposite party requested the supplier of the equipment viz. HGM Inc., USA for a new power supply under the warranty but this did not materialise. In the result, the laser unit remained in disuse. According to the complainant the prolonged disuse of the unit would have meant deterioration of the laser tube which is the heart of the unit. According to the complainant, it was not sufficient to otherwise repair the unit without replacing the tube "because the laser tube having deteriorated, the longevity of the laser unit will become severly reduced". So the complainant asked for the replacement of the Laser tube along with the other parts to make the unit functioning. As the opposite party did not do so, it asked for a sum of Rs. 16.61 lakhs from the opposite party including refund of the cost of the unit, interest, loss of clientele, goodwill and reputation and costs for prosecuting the complaint.

(3.) DURING the course of hearing, a question arose whether the Eye Centre was being run as a commercial concern and if so whether the purchase of the Argon Laser unit was for a commercial purpose. The complainant was called upon to produce the audited balance sheets and the profit and loss accounts of the hospital for a period of three consecutive years. Originally he submitted on 18th February, 1993 the Income and Expenditure Account and the Balance Sheets for the period from 1-1-1989 to 31-3-1990, 1990-91 and 1991-92 with a certificate from the Chartered Accountant that it had been "Verified and found correct." He had also submitted a certificate from the Chartered Accountant that the centre was exempted under Section 10 (22A) of the Income Tax Act and hence they were not assessed to tax under Section 10 (22 A)"the income of a hospital for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or rehabilitation existing solely. for philanthropic purposes need not be included in the computation of taxable income. However, from the copy of the assessment order for 1986-87 of the Assistant Commissioner of Income Tax, it is seen that the Complainant assessee had returned his "Net taxable income as per the return filed by the assessee" as "Nil".