1996 (1) TMI 118 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of Commissioner of Income-tax under section 263 regarding an order passed by the Inspecting Assistant Commissioner under section 144B.
2. Applicability of section 10(22A) to the facts of the case.

Analysis:
The reference application under section 256(2) of the Income-tax Act, 1961, was made by the Commissioner of Income-tax, Jabalpur, seeking a reference from the Income-tax Appellate Tribunal. The two questions framed by the Revenue pertained to the jurisdiction of the Commissioner under section 263 and the applicability of section 10(22A) to the case. The assessee, an association of persons running a hospital, claimed total income exemption under section 10(22A) for the assessment year 1978-79. The Income-tax Officer assessed the income at Rs. 1,43,327, rejecting certain claims made by the assessee.

The Commissioner of Income-tax initiated proceedings under section 263, challenging the Income-tax Officer's assessment. The Commissioner set aside the order and directed a redetermination of income. The Tribunal, however, overturned the Commissioner's decision, holding that the institution was philanthropic and entitled to exemption under section 10(22A). The Tribunal also ruled that the Commissioner lacked jurisdiction under section 263 as the matter had been decided by the Income-tax Officer under section 144B. The Revenue appealed to the High Court seeking a reference under section 256(2).

Regarding the first issue, the High Court cited previous judgments and the Explanation added to section 263(1), which clarified that orders based on directions under section 144A or 144B are included in the Assessing Officer's purview. The Court upheld the Revenue's position on this issue, stating it had already been settled in previous cases.

On the second issue, the High Court noted that the Tribunal's decision on section 10(22A) was a question of fact. The Commissioner's attempt to challenge the nature of the institution was based on a different interpretation of the articles of association compared to a previous appeal decision. The Tribunal's findings, supported by certificates and letters, established the institution as purely philanthropic. The High Court concluded that the Tribunal's factual determination was sound, and there was no basis for interference in directing a reference to the Court. Consequently, the reference application was rejected.

In conclusion, the High Court dismissed the reference application, affirming the Tribunal's decision on the applicability of section 10(22A) and the jurisdictional aspects under section 263.