INCOME TAX ACT, 1961

Exemption under section 10(22A)- Hospitals or other similar institution-Profit motive

Assessee-society was entered into two agreements with EHIRC. It carried out laboratory tests and investigations as per the requirement of EHIRC for which it received payment, as per terms of these agreements. AO was of view that the assessee was carrying on its activities for its own profit and not for charitable purposes and so was not entitled to the benefits of sections 10(22A) and 11. Held:For the first and last relevant assessment years the assessee was granted exemption. There was no change in the facts and circumstances in the case of the assessee from the initiation year to till the relevant assessment years. The agreements were subsisting and the activities of the assessee had remained the same. The only change that had occurred was that AO had earlier granted the exemption to the assessee but for the some reason he had now decided to deny the exemption to the assessee. Tribunal held that the assessee was entitled to the exemption. It was found that when there was absolutely no change in facts, a mere change of opinion would not entitle the revenue to pick and choose the assessment year in which an appeal should be filed. As there was no change in the facts and circumstances from the initiation, the revenue must follow a consistent pattern and when it had granted the benefit of exemption under sections 10(22A) and 11, it could not be permitted to change its opinion merely on the whims and fancies of AO without any noticeable change in circumstances. Hence, the appeal of the revenue was disallowed.

Income Tax Act, 1961 Section 10(22A)

Decision: In favour of Assessee.
A.Y. 1995-96 to1998-99

Director of Income Tax (Exemptions) v. Escorts Cardiac Diseases Hospital Society