2014 (1) TMI 1500

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....rd. Departmental Appeal : 3. The Revenue challenged the order of the ld. CIT(A) in holding that investment of surplus fund in FDRs to earn interest income on idle funds is directly incidental activity. Hence, such interest income of Rs.11,32,800/- is eligible for exemption u/s. 11 of the IT Act. It is also stated that earning of interest on surplus funds cannot be treated as either educational or charitable activities. 4. The assessee filed return of income at nil income accompanied by auditors report. The assessee society is running a maternity hospital at Aligarh. All services pertaining to maternity, i.e., consultation, delivery and related operations etc. are provided to the patients at nominal charges. The assessee society is ....

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....;   "Assessee trust would not lose exemption under s. 11 merely because of investing surplus money in mutual fund units and entering frequent transactions related to purchase/switchover from one such mutual fund scheme to another as the same is not a business activity; even otherwise, there was due compliance of the provisions of s. 11(4A) by the assessee." The ld. CIT(A) found the claim of the assessee to be correct because the interest earned on surplus/corpus fund was directly incidental to the main activities of the trust and the assessee's claim is allowable by the above decision. The AO was therefore, directed to allow deduction u/s. 11 of the IT Act. 5. On consideration of the rival submissions, we are of the view tha....

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....t of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed." 7. The AO noted in the assessment order that the assessee society is running maternity hospital and all services pertaining to maternity only. Maternity is a natural process and could not be termed as illness or disease. Giving birth and at that time hospital providing services for delivery could not be said to be providing any treatment for illness or mental defectiveness. Further in absence of any details or evidences available on record, ....