2016 (3) TMI 689 - HC - Income Tax

Claim for exemption u/s. 10(22A) - whether the Association was eligible for exemption under section 10(22A) as a medical institution existing solely for philanthropic purposes? - Held that - The matter is remanded back to the assessing officer for examining the tax effect, in the light of the Circular no.21 of 2015 dated 10th December, 2015 issued by CBDT. After hearing the submission of the assessee on this limited aspect of the matter the assessing officer shall examine whether the tax effect is less than ₹ 20 lakhs. In case he holds in the affirmative the appeal shall stand dismissed.

Summary

Issues:
1. Disallowance of expenses related to running a hospital in tea gardens.
2. Appeal against order of CIT(A) allowing exemption under section 10(22A).
3. Tax effect and appeal dismissal under Circular No.21 of 2015.

Issue 1: Disallowance of Hospital Expenses:
The assessing officer disallowed expenses related to running a hospital in tea gardens as no agreements existed for reimbursement. The CIT(A) upheld the disallowance, citing the lack of fresh material or arguments against the claim for the assessment year 1992-93. The Tribunal dismissed the revenue's appeal, following its earlier orders for assessment years 1986-87 and 1987-88, confirming exemption under section 10(22A) for philanthropic purposes.

Issue 2: Appeal against Exemption Order:
The revenue appealed against the CIT(A)'s order granting exemption under section 10(22A) for the assessment year 1992-93. The Tribunal upheld the exemption, aligning with its previous decisions for assessment years 1986-87 and 1987-88, stating that the funds were raised for philanthropic purposes. The judges answered related questions in the negative, as no new facts were presented, and the income source was similar to the assessment year 1988-89.

Issue 3: Tax Effect and Appeal Dismissal:
A question arose regarding the tax effect being less than ?20,00,000, in line with Circular No.21 of 2015. The judges referred to a previous judgment emphasizing the importance of adhering to CBDT instructions on tax effect limits. The matter was remanded to the assessing officer to determine if the tax effect was below ?20 lakhs. If affirmed, the appeal would be dismissed, following the Circular's guidelines.

The judgment dealt with the disallowance of hospital expenses, the appeal against exemption under section 10(22A), and the tax effect for appeal dismissal under Circular No.21 of 2015, providing detailed analysis and reasoning for each issue involved.