DDA issues a warning to escorts

The Delhi Development Authority (DDA) threatened to revoke the land allocation to the prestigious Escorts Hospital on Tuesday by serving a last showcause notice. The DDA discovered that giving the hospital land may have cost it millions of dollars after the free medical care for the poor controversy arose. The development agency had given the hospital institutional land at a discounted rate because it was a charitable trust. Escorts Heart Institute and Research Centre (EHIRC) is no longer a charity trust and has merged with a Chandigarh-based organization of the same name, which is corporate in character, according to the income tax (I-T) department, which has informed DDA of this. The I-T department claims that this is a violation of the Societies Registration Act, 1860 because the DDA should have been notified. Sources claim that the hospital could be fined for breaking the lease agreement. DDA has lost a premium amount that it could have recovered had it given prime land to a corporate house, according to a senior DDA official, who added: “We can easily recover what is called a “unearned increase,” which refers to the fact that the organization initially acquired land as a charitable trust before converting into a corporate firm. The notice was issued after additional commissioner (income tax, range 11) Seema Raj pointed out in a series of letters from March to July that EHIRC had been claiming tax exemption under Section 11 of the Income Tax Act, 1961. The fine can amount to billions of rupees, ranging from Rs 10 crore to Rs 100 crore, depending on the market value of the allotted land. Raj wrote in a letter dated July 2 that the merger of EHIRC Delhi and EHIRC Chandigarh “was a ploy to transfer assets of the tax exempt society at Delhi to the society at Chandigarh which was not enjoying any such exemption… Since DDA had provided land for charitable purposes to EHIRC Delhi at a discounted rate, it was the society’s responsibility to have informed DDA as well as the Delh government.” An Escorts spokesperson said: “No final showcause notice has been received today. In any case, extension has been sought on the earlier notices, and a response will be sent in the next few days.” EHIRC executive director Dr. Naresh Trehan responded: “I am not aware of any notice. I am not involved with this issue.”