Commissioner of Income Tax, Cochin vs Luke Memorial Eye Hospital

C.N. Ramachandram Nair, J.—In the appeal filed by the Revenue, the question raised is whether the exemption granted to the respondent-assessee u/s 10(22A) of the Income Tax Act is correct or not. The respondent which is running a hospital is assessed as association of persons by the Assessing Officer after rejecting the claim of exemption. Even though assessee has obtained registration u/s 12A of the income tax Act, exemption was declined by the Assessing Officer for the reason that assessee spent substantial amount during the previous year in construction of a building which will ultimately go to the Towner of the land as the lease is only for a period of thirty years. We find from the orders of the authorities including that of the Assessing Officer that relevant details are not considered while considering the claim of exemption. The Tribunal has just followed the decision of the Supreme Court which is not squarely applicable to the facts of this case. We feel a detailed enquiry is called for by the Assessing Officer with reference to the operations of the assessee in the previous years and subsequent years and verify whether claim of free or concessional medical relief provided to patients, genuine or not. If the net income is invested in building and if the building ultimately go to the land owner, then we do not think such expenditure calls for deduction u/s 10(22A) of the income tax Act. As facts, are not considered in detail, we set aside the order of Tribunal confirming Commissioner''s order and matter to the Assessing Officer. Fresh order are to be passed by the Assessing Officer only after hearing the assessee. The appeal is disposed of as above.