2018 (1) TMI 1570 - AT - Income Tax

Tribunal affirms relief to assessee against pharmacy shop income under Section 11(4A) for AY 2012-13

The Tribunal upheld the decision of the Ld. CIT(A) and dismissed the revenue's appeal, affirming the relief granted to the assessee against the pharmacy ... Exemption u/s 11 - assessee runs a pharmacy store in the hospital for profit and earned profit from pharmacy store and not covered in the charitable activity - HELD THAT:- As decided in assessee’s favor by first appellate authority for AY 2010-11 & 2011-12. This Tribunal for AY 2010-11 [2016 (8) TMI 1490 - ITAT MUMBAI ] after considering the judgment of Baun Foundation Trust Vs CCIT [2012 (4) TMI 172 - BOMBAY HIGH COURT] & Hiranandani Foundation Vs. ADIT [2016 (7) TMI 260 - ITAT MUMBAI] upheld the stand of Ld. CIT(A). The revenue is unable to bring any contrary facts on record and distinguish the facts of earlier years with that of impugned AY. Therefore, in view of the binding judicial precedent in the shape of the order of co-ordinate bench of the Tribunal, taking same stand, we dismiss revenue’s appeal. Issues:Appeal against relief provided to the assessee under Section 11(4A) for Assessment Year 2012-13.Analysis:1. The appeal by the revenue contested the relief granted to the assessee against the pharmacy shop's income under Section 11(4A) for the relevant Assessment Year. The Ld. Commissioner of Income-Tax (Appeals) had provided this relief to the assessee, which was challenged in this appeal.2. The assessee, an association of persons (Trust), was assessed under Section 143(3) with certain adjustments resulting in a net surplus. The trust claimed exemption under Section 11 of the Income Tax Act, 1961, as it was registered under Section 12A and with the Charity Commissioner Bombay.3. During the assessment proceedings, it was found that the trust was running a pharmacy shop in the hospital, generating significant turnover and net surplus. The Assessing Officer (AO) considered the income from the shop as business income under Section 11(4A) due to various reasons, including the lack of separate books of accounts for the shop and the systematic nature of the business activity.4. The Ld. CIT(A) allowed the appeal of the assessee, stating that the operation of the pharmacy shop was intrinsic to the activities of the assessee and not incidental. The Ld. CIT(A) also referred to the observation of the Hon'ble Bombay High Court in a subsequent order supporting the assessee's position.5. The Departmental Representative (DR) contested the findings of the Ld. CIT(A) based on the lack of separate books of accounts for the pharmacy shop. The counsel for the assessee argued that the provisions of Section 11(4A) were not applicable as the shop activity was an intrinsic part of the charitable activity.6. The Tribunal upheld the decision of the Ld. CIT(A) based on the precedent set in earlier years and dismissed the revenue's appeal. The Tribunal found no contrary facts presented by the revenue and relied on the binding judicial precedent in favor of the assessee.7. Consequently, the revenue's appeal was dismissed, affirming the relief provided to the assessee against the pharmacy shop's income under Section 11(4A) for the relevant Assessment Year.