Exemption for philanthropic hospitals cannot be denied solely for delayed return filing when substantive conditions are satisfied.

Exemption under section 10(23C)(iiiae) for a hospital or institution existing solely for philanthropic purposes and not for profit cannot be denied merely because the return of income was not filed originally and was later furnished in response to notice under section 148. The text notes that section 139(4C) requires returns from specified exempt entities in certain cases, but does not itself create an independent ground to refuse exemption where the substantive conditions of the exemption are otherwise satisfied. It also records that the income returned and accepted was below the basic taxable limit, and the exemption claim was therefore held to be allowable.

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Issues: Whether exemption under section 10(23C)(iiiae) of the Income-tax Act, 1961 could be denied merely because the return of income was not filed originally and was furnished only in response to notice under section 148.

Analysis: The exemption under section 10(23C)(iiiae) applies to a hospital or institution existing solely for philanthropic purposes and not for profit, subject to the prescribed receipt threshold. The denial in the present case was not on the ground of failure to satisfy the substantive conditions of the exemption clause, but only because the original return had not been filed. Section 139(4C) was examined and found to require filing of a return by specified exempt entities in certain circumstances, but not to create a ground for denying exemption solely for non-filing of the original return. It was also found that the income returned and accepted was below the relevant basic taxable limit.

Conclusion: The denial of exemption under section 10(23C)(iiiae) was not in accordance with law, and the assessee was entitled to the exemption claim.

Ratio Decidendi: A statutory return-filing requirement for exempt entities does not by itself authorise denial of exemption when the substantive eligibility conditions are otherwise satisfied and the income is below the taxable threshold.

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