2019 (8) TMI 1794 - AT - Income Tax

Exemption u/s 11 - AO treated the assessee s contract with Fortis Hospital for running hospital as commercial activity - objects of the assessee seems to be charitable in nature but the activities carried out by the assessee which resulted in income are commercial in nature - HELD THAT - It is an admitted fact that for the Asstt. year 2007-08 the AO has allowed such an exemption. In these circumstances we are of the considered opinion that the learned CIT(A) rightly followed the rule of consistency and allowed the claim of the assessee. We find no reason to interfere with the same. We accordingly uphold it. Appeal of the revenue being devoid of merit is liable to be dismissed. The appeal of the revenue is accordingly dismissed.

Summary

Issues:
Challenging the order of the Commissioner of Income-tax (Appeals) allowing the appeal of the assessee by ignoring the commercial nature of the activities carried out by the charitable society.

Analysis:
The case involved a charitable society running a hospital, challenged by the Revenue for treating commercial activities as charitable. The Revenue contended that the trust's activities were commercial, disentitling it from tax exemptions under sections 11 and 12 of the Income-tax Act. The Revenue argued that various agreements showed the trust's commercial nature, emphasizing the income earned from commercial activities like rental income and business centers. The Revenue relied on a previous tribunal decision to support its stance.

The assessee, on the other hand, argued that the activities highlighted by the Revenue were consistent over the years and did not change the charitable nature of the trust. The assessee emphasized the consistent allowance of exemptions under sections 11 and 12 by the authorities in previous years, indicating the charitable intent. The assessee also pointed out that a previous tribunal decision cited by the Revenue had been set aside by the High Court, making it non-binding.

The Tribunal analyzed the facts, noting that the activities in question had been ongoing for years and had received exemptions in previous assessments. The Tribunal highlighted the importance of consistency in tax assessments and noted that the previous tribunal decision cited by the Revenue had been set aside by the High Court. Therefore, the Tribunal upheld the Commissioner's decision to allow the claim of the assessee, dismissing the Revenue's appeal as lacking merit. The Tribunal emphasized the rule of consistency and the lack of compelling reasons to deviate from past decisions, ultimately affirming the tax exemption for the charitable society.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the decision to grant tax exemptions to the charitable society based on the consistent application of tax laws and previous assessments.