TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 781
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....rounds: "1. The Ld. CIT (A) has erred in law and on facts of the case in allowing exemption U/s 10(34) and 10(38) on dividend income and on redemption of Mutual fund units respectively without appreciating the fact of the case that the assessee has never claimed exemption under these sections, in the return of income. 2. The Ld. CIT (A) has erred in law and on facts of the case in allowing exemption U/s 10(23C)(iiiae) on interest income without appreciating the fact that the assessee has earned interest income on FDRs, which was on account of receipts of liaison office at Mumbai and not out of the income of the hospital run by the Trust." 3. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 4. We have considered the rival submissions. We find that in Para 4 of the assessment order, it is noted by the Assessing Officer that although the assessee trust is registered u/s 12AA with effect from 03/02/82 but in the year under consideration, the assessee claimed exemption u/s 10(23C)(iiiae) and not u/s 11 as it was clarified in writing by the assessee. On this basis, the Assessing Officer held that ....
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.... that any income received by any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution does not exceed the amount of annual receipts as may be prescribed is eligible for exemption. In our considered opinion, the income earned by Mumbai office on account of bank interest and dividend etc. is not eligible for exemption under clause (iiiae) of section 10(23C) of the Act. 5. Now we examine the basis adopted by learned CIT(A) to decide this issue in favour of the assessee. It is noted by CIT(A) in Para 4(5)(ii) that the Assessing Officer while completing the assessment has treated the income of Rs. 7.50 lac of the hospital as exempt u/s 10(23C)(iiiae) of the Act and the income of the liaison office was determined at Rs. 71,93,691/-. We do not find any merit in this stand taken by CIT(A) because this expenditure of donation cannot be considered as an expense ....
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....come exempt u/s 10(34) of the Income Tax Act 1961 as upheld in number of cases. 3. That the Learned CIT(A) erred in law as well as on facts in completely ignoring the departmental appeal for the just preceding Assessment Year 2005-06 viz. "...the Learned CIT(A) has erred on facts and in law by allowing exemption u/s 11 to the assessee whereas the exemption was claimed u/s 10(23C) of the Act...." duly allowed for statistical purposes by the Hon'ble ITAT Bench 'A' Lucknow in ITA No.27/Luc/10 dated 23-11-2010 which is basically the assessee's case that the entire receipts are covered by the provisions of Section 10(23C)(iiiae). 4. That the Learned CIT(A) ought to have followed the Hon'ble ITAT's order in ITA No.05/Luc/10 dated 23-11- 2010 filed during the appellate proceedings and remanded the case to the A.O. for fresh adjudication by considering the claim for exemption u/s 10(34) and Section 10(23C) afresh. 5. That the Learned CIT(A) erred in law as well as on facts in observing that there was contravention of the provision of Section 11(5) and that the dividend income constituted income within the scope of Section 11(1) of the Act. 6. That the observatio....
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....t income without appreciating the fact that the assessee has earned interest income on FDRs, which was on account of receipt of liaison office at Mumbai and not out of the income of the hospital run by the Trust. 3. The Ld. CIT(A) has erred in law and on facts of the case in deleting the addition of Rs. 3 Lacs considering the additional evidences in violation of Rule 46A of I.T. Rules, 1962." 12. It was agreed by both the sides that the issue involved in ground No. 1 & 2 is identical to issue of Revenue's appeal for assessment year 2005-06 and the same can be decided on similar lines. Regarding ground No. 3, Learned D.R. of the Revenue submitted that there is violation of Rule 46A whereas Learned A.R. of the assessee supported the order of CIT(A). 13. We have considered the rival submissions. We find that while deciding the appeal of the Revenue for assessment year 2005-06, we have held that the exemption u/s 10(34) is allowable in respect of dividend income and therefore, we approve the order of CIT(A) on this issue. Regarding the direction of CIT(A) that the assessee is eligible for exemption u/s 10(23C)(iiiae) on interest income also, we have held in that year that interest i....