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Informist, Wednesday, Jun. 10, 2026

 

--Tribunal: RIL hospital, education arms charitable trust for tax exemption 

--CONTEXT: Tax dept rejected trust status for RIL hospital, education arms

 

By Surya Tripathi

 

NEW DELHI – In relief to Reliance Industries Ltd., the Mumbai bench of the Income Tax Appellate Tribunal has said that the company's Reliance Foundation Hospital Trust and Reliance Foundation Institution of Education and Research are charitable trusts under the Income Tax Act, 1961, for claiming income tax exemptions. Reliance Hospital Trust is owned and managed by Reliance Foundation, the philanthropic arm of Reliance Industries, while Reliance Foundation Institution of Education is wholly-owned and funded by RIL. 

 

The appellate tribunal said that the registration of charitable trust for Reliance Foundation Hospital Trust stands granted for a further period of five years with effect from Apr. 1, 2026, and the consequent approval under Section 80G of the 1961 Act, regarding donors claiming tax deductions on donations to charitable trust, is granted for five years from the same date. It asked the commissioner of income tax to renew the registration of Reliance Foundation Institution of Education for the status of trust and the consequent approval under Section 80G. The appellate tribunal quashed orders passed by the income tax department, refusing the status of trust to both RIL's hospital and education arms.

 

The statute recognises that a charitable trust may carry on an activity that may have the attributes of business, provided the business is incidental to the attainment of the objects of the trust and separate books of account are maintained, said the appellate tribunal. This provision is important because it demolishes the simplistic proposition that organised, systematic or revenue-generating activity is per se inconsistent with charity, said the appellate tribunal.

 

In the case of a hospital, carrying on of medical operations, charging of fees from patients, maintenance of accounts, employment of professional staff and acquisition of modern equipment are all integrally connected with the object of medical relief, said the appellate tribunal. They are not extraneous commercial adventures covered by section 11(4A) of the 1961 Act, it said. If the hospital activity itself is the mode through which the charitable object is achieved, then its organised or economically substantial character cannot by itself take it outside the charitable fold, it said. The income tax department has not demonstrated that any activity of the assessee is independent of, or unrelated to, the object of medical relief, it said.

 

The Income Tax Act does not prescribe that medical relief will qualify as charity only if it is provided at a particular price, or only if every service is affordable to the average household, or only if premium facilities are absent, said the appellate tribunal. A cancer hospital, a cardiac hospital, a transplant centre or a multi-speciality tertiary care institution may necessarily involve expensive treatment, said the appellate tribunal. That does not mean that the institution is not rendering medical relief, it added.

 

The appellate tribunal said that a charitable hospital may have paying patients, subsidised patients and free patients. It may use receipts from one segment to sustain services for another, receive donations and deploy them for infrastructure, said the appellate tribunal. It may charge full cost from those who can afford and provide relief to those who cannot, it said. These are matters of institutional design and financial sustainability, it said, adding that the Income Tax Act does not prohibit such a model, it said.

 

Further, Reliance Foundation Institution of Education is an institution engaged in the field of education, which is one of the limbs of charity, said the appellate tribunal. What is required to be seen at the stage of registration is whether the objects are charitable and whether the activities are genuine, it said. The income tax department's order does not record any adverse finding that the assessee's objects were not charitable, it said. The tax department does not record that the assessee is not engaged in educational activities and that its activities are bogus, colourable or not genuine, said the appellate tribunal. Nor is there any finding that the assessee has violated any law which is material for carrying out its educational objects, it said. Thus, the essential statutory conditions for renewal of registration for charitable trust have not been found to be absent, it said.

 

In the absence of any adverse finding on charitable objects, genuineness of activities or violation of law material to the objects, Reliance Foundation Institution of Education could not have been denied renewal of registration, said the appellate tribunal. When an institution has placed before the authority an order of approval already granted by the same office under section 12A(1)(ac)(v), such a document could not have been overlooked, it said. Denial of registration to an educational institution, otherwise pursuing charitable objects, on a factual premise contradicted by the record, would defeat the very purpose of the statutory framework, it said. "The law does not contemplate rejection for rejection's sake. It contemplates an informed satisfaction based on the record, the statute and the real nature of the institution's objects and activities," said the appellate tribunal.

 

The appellate tribunal was hearing appeals by both the petitioners against the income tax department's March order refusing to renew their registration as charitable trusts for claiming income tax deductions. Reliance Foundation Hospital Trust was constituted with the principal object of providing medical relief and allied charitable services. Reliance Foundation Institution of Education has been established with the object of carrying on charitable activities in the field of education and has set up a higher education institution by the name of Jio Institute. 

 

The tax department had cancelled the registration for charitable trust status retrospectively of RIL's hospital's arm, along with refusing to renew the registration. The income tax department said that the scale of receipts, the financial resources available with the institution and the overall financial profile of the hospital indicate that the institution is operating on commercial principles. The department had refused to renew the registration of RIL's education arm saying it had not given an application for registration under the required time after its objectives were changed.

 

At 1329 IST, shares of Reliance Industries Ltd. were down 0.1% at INR 1,267.40 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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