2012 (4) TMI 172

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....been granted the benefit of exemption under Section 10(22A) or Section 10(23C) (via) or under Section 11, as the case may be, upto Assessment Years 200708. By an application dated 31 March 2009 the Petitioner sought continuation of its exemption for the period from 1 April 2008. Particulars and information as sought by the First Respondent were submitted. On 29 April 2010 the First Respondent rejected the application filed by the Petitioner seeking approval under Section 10(23C)(via) for the period from 200910 onwards. 2. The sole ground on which the Chief Commissioner of Income Tax has denied his approval is that the Petitioner conducts a chemist shop in the premises of the hospital. The Chief Commissioner has computed the net surplus fr....

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....ant purpose would not detract from the true nature or character of the trust. Consequently, it was urged that the Chief Commissioner has misapplied himself in law. On the other hand counsel appearing on behalf of the Revenue has supported the order passed by the Chief Commissioner. 4. In Aditanar Education Institute Etc. v. Additional Commissioner of Income Tax (1997) 224 ITR 310(SC), the Supreme Court has observed, while construing the provisions of Section 10(22) that the decisive or acid test is whether on an overall view of the matter the object is to make a profit. If after meeting the expenditure any surplus results incidentally from the activity lawfully carried on by the institution, it will not cease to be one existing solely for ....

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.... over a stipulated period. In our view, the Chief Commissioner of Income Tax has clearly misapplied himself in law by having regard to a clearly ancillary or incidental activity and elevating it to the status of the dominant purpose for which the hospital has been established. Running the chemist shop in the present case is not the dominant object or purpose of the trust. Nor would the figures as disclosed indicate that the nature of the activity has assumed such a dominating or overwhelming importance so as to cast doubt on the true nature and character of the hospital which is conducted by the Petitioner. The Chief Commissioner has acted contrary to the judgments of the Supreme Court which hold the field consequent upon which the impugned....