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Informist, Thursday, Sept. 11, 2025

 

NEW DELHI – The Delhi High Court has rejected the Commissioner of Income Tax (Exemptions) Delhi's plea for adding INR 1.94 billion in Hamdard Laboratories (India)'s income for taxation purposes. The high court upheld the Income Tax Appellate Tribunal's 2023 order that said Hamdard Laboratories was a charitable institution, eligible for exemption under Section 11 and 12 of the Income Tax Act, 1961 and deleted the tax department's addition of total income of INR 1.94 billion. 

 

There is no dispute that Hamdard Laboratories has been enjoying exemption granted under Section 10(23C)(iv) of the 1961 Act since assessment year 2004-05 and the court in earlier cases has assessed fully the objects of the company and affirmed its claim for exemption, said a bench of Justice Anish Dayal and Justice Nitin Wasudeo Sambre. The income tax department did not plead any particular circumstance or facts to displace the exemption granted under the 1961 Act and no unique feature or distinctive material had been argued, the bench added.

 

The high court noted that Hamdard's own residential property had been given to the senior trustee on rent as per terms of their employment with the company and a licence fee was being charged. The court said that Hamdard's case was not covered under Section 13(2) read with Section 13(3) of the 1961 Act as no undue benefits were passed on to the specified persons. 

 

The case has its genesis from Hamdard Laboratories claiming exemption under Section 11 and 12 of the 1961 Act and disclosing its income as nil for assessment year 2016-17. Thereafter, the tax department issued notices to Hamdard questioning about the residential accommodation made available to its trustees and their family members. The two properties in question were at 25, Kautilya Marg, New Delhi, and 13, Rajdoot Marg, New Delhi, which were provided for use to Hamdard's trustees and their families at a consolidated lease rent of INR 90,000 per month. 

 

The tax department held that the provisions of Section 13(2)(b) of the 1961 Act would disentitle Hamdard from availing exemption under Section 11 and 12 of the income tax law. Consequently, Hamdard was taxed and taxable income was computed at INR 1.94 billion, including addition of INR 3.1 million as income from house property and disallowing claim of INR 523,190 for depreciation in respect of leased out properties.  End

 

Reported by Surya Tripathi

Edited by Deepshikha Bhardwaj

 

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