TaxTMI 
TaxTMI 
2015 (12) TMI 1589
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....other hand, Ms. Aarti Vissanji, ld. counsel for the assessee, defended the conclusion arrived at in the impugned order by placing reliance upon the decision from Hon'ble jurisdictional High Court in BAUN Foundation Trust vs Chief Commissioner (2012) 251 CTR (Bom.) 237. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a registered society, running a hospital, and is registered u/s 12A of the Act, declared nil income in its return which was attached with final accounts, audit report in form no.10B and claimed exemption u/s 11 of the Act. The main objects of the assessee trust, is education and medical relief to the public at large. The ld. Assessing Officer, while completing u/s 143(3) of the Act brought Rs. 1,45,09,800/- to tax the receipts from the pharmacy store/pharmacy shop situated at the premises of the hospital. On appeal, before the ld. Commissioner of Income Tax (Appeals), the contention of the Assessing Officer as well as of the assessee along with the provision of the Act were considered, by following the decision in DIT(E) vs Shilpam (1998) 230 ITR 126, DIT(E) vs Agri-horticulture....
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.... (1) in computing the fifteen per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the income; (2) if, in the previous year, the income applied to charitable or religious purposes in India falls short of eighty-five per cent of the income derived during that year from property held under trust, or, as the case may be, held under trust in part, by any amount- (i) for the reason that the whole or any part of the income has not been received during that year, or (ii) for any other reason, then- (a) in the case referred to in sub-clause (i), so much of the income applied to such purposes in India during the previous year in which the income is received or during the previous year immediately following as does not exceed the said amount, and (b) in the case referred to in sub-clause (ii), so much of the income applied to such purposes in India during the previous year immediately following the previous year in which the income was derived as does not exceed the said amount, may, at the option of the person in receipt of the income 87[(suc....
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....red asset. Explanation.-In this sub-section,- (i) "appropriate fraction" means the fraction which represents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religious purposes; (ii) "cost of the transferred asset" means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 48 and 49) of the capital asset which is the subject of the transfer and the cost of any improvement thereto within the meaning assigned to that expression in sub-clause (b) of clause (1) of section 55; (iii) "net consideration" means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (1B) Where any income in respect of which an option is exercised under clause (2) of the Explanation to sub-section (1) is not applied to charitable or religious purposes in India during the period referred to in sub-clause (a) or, as the case may be, sub-clause (b), of the said clause, then, such income shall be deemed to be the i....
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....be accumulated or set apart, which shall in no case exceed five years; (b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5); (c) the statement referred to in clause (a) is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year: Provided that in computing the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded. Explanation.-Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall no....
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....in case the trust or institution, which has invested or deposited its income in accordance with the provisions of clause (b) of subsection (2), is dissolved, the Assessing Officer may allow application of such income for the purposes referred to in clause (d) of sub-section (3) in the year in which such trust or institution was dissolved. (4) For the purposes of this section "property held under trust" includes a business undertaking so held, and where a claim is made that the income of any such undertaking shall not be included in the total income of the persons in receipt thereof, the Assessing Officer shall have power to determine the income of such undertaking in accordance with the provisions of this Act relating to assessment; and where any income so determined is in excess of the income as shown in the accounts of the undertaking, such excess shall be deemed to be applied to purposes other than charitable or religious purposes. (4A) Sub-section (1) or sub-section (2) or sub-section (3) or subsection (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental to the attainment of the....
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....y ceases to be a public sector company; (B) such other investment or deposit shall be deemed to be an investment or deposit made under this clause for the period up to the date on which such investment or deposit becomes repayable by such company; (viii) deposits with or investment in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India and which is eligible for deduction under clause (viii) of sub-section (1) of section 36; (ix) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36; (ixa) deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrastructure in India. Explanation.-For the purposes of this clause,- (a) "long-term finance" means any ....
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....ntained by such trust or institution in respect of such business. Section 11(4A) was inserted by the Finance Act, 1983 w.e.f. 01/04/1984, in relation to any income being profit & gains of any business, unless (a) the business is carried on by the trust wholly for public religious purposes/charitable purposes and is carried out. It has been further elaborated in the departmental Circular NO.372 dated 08/12/1983 and further discussed in CIT vs Thanthi Trust (2001) 247 ITR 785, 795 (SC) holding that section 11(4A), as is stood from A.Y. 1984-85 to 1991-92, restricted the benefit so that it was not available for income derived from business unless the conditions contemplated in clauses (a) & (b) are satisfied. It is pertinent to note that by section 11(4A), the benefit due to an assessee in case of an income from a business held interest is extended to an income from a business carried on by it on its satisfying the conditions laid down the under clauses (A) & (b) of the section (CIT vs Dharmodayam COMPANY (1997) 225 ITR 686, 692 (Kerala), wherein, the assessee was held to be entitle to claim exemption u/s 11(1) of the Act. In respect of the income from Kury business, which itself was ....