2012 (7) TMI 1026 - AT - Income Tax

Tribunal upholds exemption for philanthropic hospital under Income Tax Act section 10(23C)(iiiae)

The Tribunal dismissed the Revenue's appeal and upheld the allowance of exemption to the assessee under section 10(23C)(iiiae) of the Income Tax Act. The ... - Issues involved: Appeal against denial of exemption u/s 10(23C)(iiiae) of the Income Tax Act.Summary:The Appellate Tribunal ITAT Chennai heard an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) XII, Chennai. The only issue raised by the Revenue was the denial of exemption u/s 10(23C)(iiiae) of the Act. The assessee, a registered society, had filed a return of income claiming exemption under the said section. The Assessing Officer denied the exemption stating that the society had an intention to earn profit despite engaging in philanthropic activities. On appeal, the Commissioner of Income Tax (Appeals) allowed the exemption, leading to the Revenue's appeal before the Tribunal.The counsel for the Revenue argued that the society's intention to earn income through property rentals disqualified it from claiming exemption under section 10(23C)(iiiae). They cited legal precedents to support their stance. In contrast, the counsel for the assessee contended that the society operated solely for philanthropic purposes, running a hospital to provide healthcare to the underprivileged. They emphasized that the rental income was accumulated for the society's objectives and not for personal gain. The assessee also highlighted its history of claiming exemptions under charitable provisions.After hearing both parties and examining the facts, the Tribunal observed that the society primarily operated a hospital for several years, focusing on providing medical relief without a profit motive. The Tribunal noted that the rental income accumulation did not indicate a profit motive, especially since the funds were directed towards the society's objectives. They found no evidence of personal benefits being derived from the income. Ultimately, the Tribunal upheld the Commissioner's decision to grant exemption u/s 10(23C)(iiiae) to the assessee, deeming the legal precedents cited by the Revenue as inapplicable to the case.In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the allowance of exemption to the assessee under section 10(23C)(iiiae) of the Income Tax Act.