2015 (10) TMI 241 - AT - Income Tax

Rectification of mistake - whether there had occurred a mistake apparent from record in the tribunal s order in-as-much as the tribunal had assumed that exemption u/s.10(21) was not an issue before the ld. CIT(A)? - denial of exemption u/s.10(21) and 10(23C) - benefit of exemption u/s.11 - Held that - The assessee has brought on record the approval u/s. 35(1)(ii) dated 27.06.2008 w.e.f. 01.04.2002, and which is a prerequisite for the applicability of s. 10(21). The same is subject to certain additions specified therein, and which have not been examined for their satisfaction by the A.O., being not furnished before him. It was thus incumbent on the ld. CIT(A) to have caused so after admitting the said Approval by way of additional evidence under rule 46A. Not only does he not do so, he also does not issue any finding qua the satisfaction or otherwise of those conditions, and proceeds, as afore-stated, on the basis of the matter being covered by the tribunal s order for the earlier years, and which is definitely not the case. The Revenue, on its part, has brought on record the copy of the order u/s.10(23C)(via) dated 31.12.2008 (for A.Ys. 1999-2000 to 2007-08) by the prescribed authority, refusing the approval there-under to the assessee, claiming it to have a bearing in the matter. The same, we observe, contains findings on the aspect of the surcharge @ 20% on the bills issued to the indoor patients, and transferring the same, as also 25% of the fees paid to the doctors, to the corpus fund, even as the same are not in the nature of donations. These factors are duly noted by the A.O. at pg. 2 of his order, and which the assessee explains before the tribunal (for A.Ys. 1995-96 and 2001-02) as being voluntary in-as-much as this was being so done at the instance of the Charity Commissioner and, besides, being earmarked for the upgradation of the hospital, stand diverted by overriding title. These aspects stand duly considered in the Order u/s.10(23C)(via) supra. In view of the foregoing, we, under the circumstances, consider it only fit and proper to restore the matter back to the file of the A.O. to consider and determine the issue of exemption u/s. 10(21) on the income of the assessee s research centre afresh. This is a subsisting issue in the assessee s case. The A.O. shall consider the matter in all its aspects, and decide the same in accordance with the law per a speaking order, taking into account all the material deemed relevant for the purpose, allowing reasonable opportunity to the assessee to state its case. We decide accordingly. - Decided in favour of revenue for statistical purposes.

Summary

Issues:
1. Exemption u/s.10(21) of the Income Tax Act, 1961 for the assessment year 2005-06.

Analysis:
The case involved an appeal by the Revenue against the Order by the Commissioner of Income Tax (Appeals) allowing the Assessee's appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 for the assessment year 2005-06. The Assessee, a public trust registered as a charitable institution, operated through a Hospital and a Research Centre. The Assessing Officer had denied exemption u/s.10(21) and u/s.11, assessing the income of the trust from both wings as business income. The first appellate authority upheld the Assessee's claim, granting exemption u/s.10(21) and u/s.11. In the first round of appeal before the tribunal, the Revenue contended against the exemption u/s.10(21) and u/s.10(23C), which were not allowed by the tribunal. However, the exemption u/s.11 was confirmed.

In a subsequent application u/s.254(2) of the Act, the tribunal recalled its order to decide the issue of the Assessee's entitlement to exemption u/s.10(21). The tribunal found merit in the Assessee's claims, recalling its earlier order for the limited purpose of deciding the exemption u/s.10(21). The Assessee argued for the exemption based on the approval u/s.35(1)(ii) granted beyond 31.03.2002. The Revenue claimed that the conditions of approval u/s.35(1)(ii) had not been examined for satisfaction. The tribunal's mandate was to decide the maintainability of exemption u/s.10(21) in the case.

The tribunal found that the issue of exemption u/s.10(21) had not been examined for the current year specifically in previous tribunal orders. The tribunal directed the matter back to the Assessing Officer to determine the exemption u/s.10(21) on the income of the Assessee's research centre afresh. The A.O. was instructed to consider all aspects and material relevant to the issue, allowing the Assessee a reasonable opportunity to present its case. Consequently, the Revenue's appeal was allowed for statistical purposes.

In conclusion, the judgment focused on the specific issue of the Assessee's entitlement to exemption u/s.10(21) for the assessment year 2005-06. The tribunal directed a fresh assessment by the A.O. to determine the exemption status for the income of the Assessee's research centre, considering all relevant factors and providing the Assessee with a fair opportunity to present its case.