AI Drafter 
TaxTMI 
TaxTMI 
2022 (2) TMI 760
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....essee's case was selected for scrutiny, and subsequently, the assessment was completed at an income of Rs. 2,95,93,570/- as per the following computation: Computation of Income: Gross receipts as per income & expenditure account: Rs. 5,96,69,866 Application of Income: Expenses as per I & E Statement : Rs. 6,17,20,168/- Less: Depreciation : Rs. 21,41,474/- Rs. 5,95,78,694/- Less: Disallowed 50% expenses as discussed above. : Rs. 2,97,89,347/- Add depreciation on assets purchased during the year: Rs. 3,00,949/- Total Application of Income Rs. 3,00,90,296/- Rs. 2,95,79,570/- Add: Amount as per Section 69 Deemed Income Rs. 14,000/- Deemed income Rs. 2,95,93,570/- 2.1. It has been noted by the Assessing officer in the assessment order that the assessee did not produce the books of account when required to do so and, therefore, 50% of the expenses claimed were to be disallowed. It has also been noted by the Assessing officer that the activity being carried out by the assessee was not charitable in nature but was aimed at earning more profits and, therefore, the benefit of se....
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....e, apparently, the aim of the assessee Society was to earn more and more profits rather than providing medical help/relief at an affordable price to the needy. It was submitted that the Assessing officer had rightly disallowed the benefit of exemptions u/s. 11 and 12 of the Act. 3.1. With respect to deletion of disallowance out of expenses, it was submitted that the Ld. CIT(A) had allowed additional evidences to be filed without enquiring into the reason for the failure of the assessee to have filed the documents during the assessment proceedings. 4.0. Per contra, the Ld. Authorised Representative (AR) submitted that all the preceding and subsequent assessments had been completed u/s. 143(3) of the Act and that the assessee's claim for exemption had been allowed in such assessments. It was emphasized by the Ld. AR that there was no change in facts and circumstances from year to year and, therefore, there was no justifiable reason for the Assessing officer to depart from the precedent of earlier years. It was also submitted that the Ld. CIT(A) had allowed the assessee's appeal after duly considering the factual matrix of the case and after duly noting that the assessee....
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.... 4.1.2 The appellant on the other hand has submitted that the appellant is carrying on the same activities ever since its establishment. It has further been submitted that it is not running the hospital for a profit motive. It has further been submitted that the fact that all 10 assessment years for which the assessments were framed under section 143 (3), the income of the assessee has always been assessed at nil and the nature of receipts and expenditure is the same as was an earlier years and there is no departure from the same. 4.1.3 I have considered the assessment order and also the submissions of the appellant. I have also perused the assessment record which was requisitioned from the assessing officer. From the various details available on the record it is seen that the assessee is engaged in running of a hospital which is also apparent from the assessment orders of the last few years and also for assessment year 2014-15 which have been submitted during the course of the appellate proceedings. It is also seen from the assessment order that the Assessing Officer has himself mentioned that the assessee is deriving receipts from patients (for diagnostic test, medicine....
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....able activities or purposes in the case of the petitioner fall under the residuary head and not under the enumerated heads mentioned in section 2(15). The impugned order in this regard is completely silent. On the said aspect, the petitioner has filed number of orders passed by Commissioner (Appeals) relating to assessment years 1965-66 onwards upto assessment year 1994-95 and orders of the Tribunal from 1966-67 upto 1976-77 in which findings have been recorded that the petitioner was undertaking charitable activities covered under the clauses; relief to poor, education and medical relief. It is, therefore, clear that the impugned order has applied the first proviso to section 2(15) without elucidating the scope and ambit of the said proviso and whether it would be applicable. The revenue has proceeded on assumption that charitable purpose undertaken by the petitioner is covered by the residuary clause, without recording any such specific finding. [Para 12]" 4.1.6 In the case of the appellant also, the only reason why the appellant has been considered to be in the residuary category is that in two appointment letters, the Assessing Officer found that an incentive of Rs. 20....
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....nstitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities." 2.2. 'Relief of the poor' encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizens in need of aid. Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated under section 11(4A) or the seventh proviso to section 10(23C) which are that (i) the business should be incidental to the attainment of the objectives of the entity, and (ii) separate books of account should be maintained in respect of such business. Similarly, entities whose object is 'education' or 'medical relief would also continue to be eligible for exemption as charitable institutions even if they incidentally carry on a commercial activity subject to the conditions mentioned ab....