AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 178
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....pellate Tribunal, Mumbai Bench 'B', Mumbai (briefly 'the Tribunal' hereinafter) in I.T.A.No.87/ Mum/2015 for the assessment year 2010-11. 3. Assessee is a Trust running a hospital. 4. For the assessment year under consideration, respondent had filed return of income declaring total income at nil. Following scrutiny assessment, assessing officer noted that respondent runs a pharmacy store in the hospital and was selling drugs and medicines to the patients through this pharmacy store. In the process, it had turnover of Rs. 37,29,09,641.00 and surplus of Rs. 12,77,07,089.00. Taking the view that Section 11(4A) of the Act would not be applicable, the assessing officer vide the assessment order dated 30.03.2013 treated the surplus amount on ac....
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..... 9. On the other hand, learned counsel for the respondent at the outset submits that Chief Commissioner of Income Tax, Mumbai had passed an order dated 07.04.2011 granting approval under Section 10(23C)(via) of the Act for the assessment year 2009-10 and onwards in respect of the respondent. When the Chief Commissioner had granted approval under Section 10(23C)(via), it is beyond comprehension as to how the assessing officer could have treated the income earned through the pharmacy store as business income. 9.1. Learned counsel has also referred to the stand of the respondent before the first appellate authority and contends that respondent is not carrying on any business activity. It does not sell drugs to outsiders but only charges for....
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....held for charitable or religious purposes. As per sub-section (4), for the purposes of Section 11, "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 the power to determine the income of such undertaking in accordance with the provisions of the 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. 12.2. Sub-section (4A) provides that provisions of sub-section (1) or sub-sect....
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....fore, the first appellate authority held that there was no basis to treat the running of pharmacy as a business venture. Running of pharmacy was part of philanthropic activity of running the hospital. No materials were brought on record by the assessing officer to justify the adverse view taken. Application of Section 11(4A) was not called for. Consequently, the first appellate authority held the addition and taxability of the surplus out of the pharmacy store to be erroneous and accordingly the same was directed to be deleted. 15. When the Revenue preferred appeal before the Tribunal, Tribunal relied upon its decision in the case of Hiranandani Foundation which in turn had relied upon the decision of the Supreme Court in Aditanar Educatio....
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....rsity or other educational institution existing solely for educational purposes and not for purposes of profit is not to be included in the total income of the previous year of any person. In the facts of that case, Supreme Court held that after meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes since the object is not one to make profit. 19. In Baun Foundation Trust (supra) where exemption under Section 10(23C)(via) of the Act was in question, this Court referred to the decision of the Supreme Court in Aditanar Educational Institution (supra) and held that a hospital must of necessity have a ....