INCOME TAX OFFICER Vs. NEDUMCHALIL TRUST HOSPITAL

JUDGEMENT

(1.) These appeals arise out of a common order passed by the Income Tax Appellate Tribunal, Cochin Bench in ITA No. 278/Coch./95 and connected matters. Respondent-assessee is a hospital run by a charitable trust. In response to notice under Section 148, dated 19-7-1991, the assessee filed its return for the assessment year 1989-90 on 20-9-1991 declaring nil income. Return was posted for evidence. Assessee claimed that it is a charitable hospital solely existing for philanthropic purposes and not for the purpose of profit and as such is fully exempt from tax under Section 10(22A) of the Income Tax Act. Reliance was also placed on the decision of this Court in CIT v. Pulikkal Medical Foundation (P.) Ltd., 1994 210 ITR 299. Assessing authority noticed that the facts in Pillikkal Medical Foundation (P.) Ltd.s case (supra) and, the assessee's case are entirely different and took the view that the assessee is conducting the hospital on commercial lines and consequently not entitled to get exemption under Section 10(22A) of the Act. It was also noticed that the assessee hospital is fully managed by a family trust which was not registered under Section 12A of the Income Tax Act. It was also noticed that the total expenses including free treatment is nominal when compared to total hospital collections. It was also noticed that the assessee had made substantial profit during the years in question. Assessment was accordingly completed rejecting the assessee's claim for exemption under Section 10(22A) of the Act.

(2.) Assessee took up the matter in appeal before the Commissioner (Appeals). Appeal was allowed following the decision of this Court in Pulikkal Medical Foundation (P.) Ltd.s case (supra). Commissioner took the view that the assessee had satisfied all the conditions for claiming exemption under Section 10(22A) of the Income Tax Act. Revenue took up the matter in appeal before Tribunal. Tribunal rejected the appeal, against which these appeals have been preferred.

(3.) Sri P.K. Raveendranatha Menon, senior counsel appearing for the revenue supported the orderof the Income Tax Officer and submitted that since the hospital is functioning on commercial lines, the assessee is not entitled to get exemption under Section 10(22A) of the Act. Counsel submitted that the decision of this Court in Pulikkal Medical Foundation (P.) Ltd.s case (supra) would not apply to the facts of this case.