A hospital can qualify for tax exemption under Section 10(22A) if its dominant purpose is philanthropic, regardless of incidental profits aimed at sustaining operations.

1The Judgment of the court was delivered by John Mathew, J.-
Whether the assessee's hospital is existing solely for philanthropic purposes and not for purposes of profit is the important question of law involved in this reference. The assessee (Pulikkal Medical Foundation) is a private company as defined under the Companies Act. 1956. The liability of its members is limited. It was incorporated on 23rd June 1976. It is running a hospital at Cochin known as 'Medical Trust Hospital'. The company became a deemed public company under S.43A(1A) with effect from 1st January 1986. The word 'private' in. the name of the company was cancelled from that date. Fresh certificate of incorporation consequent on change of name was given on 12th May 1988. Medical Trust Hospital was originally run by a firm of partners. That firm was dissolved on 15th October 1976 and its business was taken over by the assessee company, giving the partners of the firm due credit.

2 For the assessment year 1981-82 the assessee had a net profit of Rs. 6,02,123. After making adjustments the net income for income tax .purposes was shown by the assessee as Rs. 3,81,811. For the assessment year 1982-83 the profit of the assessee was Rs. 18,61,241. However its total income for income tax purposes was determined at Rs. 18,97,400. The assessee claimed exemption under S.10(22A) of the Income Tax Act for both these assessment years on the ground that the hospital is existing solely for philanthropic purposes and not for purposes of profit. The Income Tax officer rejected the claim for exemption and that order was confirmed by the Commissioner of Income Tax (Appeals). However, the Income Tax Appellate Tribunal allowed the appeals filed by the assessee holding that the hospital is existing solely for philanthropic purposes and not for purposes of profit, In obedience to the directions dated 16th September 1991 of this court in O. P. Nos. 6120/88 and 6121/88, the Income Tax Appellate Tribunal has referred the case Co this court.

3 S.10(22A) of the Act is as follows:
''10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included
(1 to 22 omitted)
(22A) any income of a hospital or other institution for the reception and treatment of persons suffering from illness or mental defective ness 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;" .
(Clauses 23 onwards omitted)
It is not disputed that the hospital is an institution for the reception and treatment of persons suffering from illness or of persons requiring medical attention. .Therefore, it is only necessary to examine whether the hospital is 'existing solely for philanthropic purposes and not for purposes of profit'.

4 The word 'philanthropy' is not defined in the Income Tax Act. However, S.2(15) defines 'charitable purpose', which is as follows:
"2(15) 'Charitable purpose' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity for profit."
Subject to the provisions of S.60 to 63, S.11 of the Act provides for limited exclusion of the income from property held for charitable or religious purposes, to the extent to which such income is applied to such purposes in India.

5 The words 'Charitable purpose' and not involving any activity for profit have come up for interpretation by different High Courts and the Supreme Court. It is not necessary to consider ail the authorities referred to by learned senior counsel Sri. P. K. Ravindranatha Menon, appearing for the revenue and learned senior counsel Sri. K. Parasaran, appearing for the assessee. Since most of those decisions were considered in Addl. C. I. T. v. Surat Art Silk Cloth Mfrs. Asson. (1980) 121 ITR 1, we may refer to that judgment alo