TaxTMI 
TaxTMI 
2021 (11) TMI 1070
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt viz, independent ledgers, journals, cash book, bank book etc. except for purchase and sale account in respect of its Pharmacy unit. d) The CIT(A) has failed to appreciate the fact that the AO has also made the finding in assessment order that the accounts of pharmacy unit are merged with Chinmaya Mission Hospital Accounts. e) Whether CIT(A) is right in not appreciating the fact that the activities carried out by the assessee with regard to pharmacy unit are "admittedly" in the nature of a business and, therefore, the provisions of Section 11(4A) are attracted, with the result that the assessee should maintain separate books of accounts for such activities in respect of pharmacy unit. f) Whether in the facts and circumstances of the case, CIT(A) while deleting the addition u/s.11(4A) of the Act, is right in relying on the decision of the Supreme Court in the case of M/s. Aditanar Educational Institute Etc. Vs. Addl.CIT,224 ITR 310, wherein the facts relied upon are distinguishable and not applicable to the facts of the assessee's case. g) Any other ground to be raised at the time of hearing the appeal." 3. The assessee has filed Cross-objections in support of the or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated in ITA No.1667/Bang/2019 in the asst. year 2013-14. The brief facts of the case are as under:- 7. The assessee is a Public Charitable Trust registered under the Indian Trust Act 1882. The Trust is also registered u/s 12A(a) of the Income Tax Act, vide certificate of registration No. TRUST/718/1OAIVOL.A1/374 dated 20.12.1985 issued by the CIT, Karnataka -II, Bangalore and the trust is also enjoying recognition u/s 80G of the Income Tax Act, vide order No. DIT(E)BLR/80G(R)/702/AAATKO797Q/ITO(E)-1 VOL2009-10 dt.26.11.2009. 8. The assessee is carrying on activities of the nature of Charitable as defined under section 2(15) of the Income Tax Act ,1961 and, therefore, is eligible for exemption as per the provisions contained in sections 11, 12 and 13 of the Act. 9. For the Assessment year 2013-14, the assessee had filed the return of income, admitting gross receipts of Rs.35,67,77,831/- and total income as NIL after claiming specific deductions. 10. The trust has been established with the object of promoting relief to the poor, education, medical relief, and the advancement of any other object of general public utility as defined u/s 2(15) of the Act. The trust has accordingly ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned by the appellant is not a separate unit and is part of Chinmaya Mission Hospital maintained with the objective of attaining the one of the objects of the trust i.e., providing medical relief. The pharmacy unit procures and supplies the medicines for the purpose of effectuating the charitable objective of providing 'medical relief to the general public at large'. Merely because the activity yielded some surplus, a negative inference cannot be drawn. If the predominant object is to carry out as a charitable purpose and not earn profit, the organization would not lose its charitable character merely because some surplus arises from the charitable activity. 15. The CIT(A) placed reliance on the judgment of Hon'ble Supreme Court in the case of Aditanar Educational Institute Etc. Vs. Addl.CIT, 224 ITR 310 wherein,the addition is deleted by observing as under:- ""while construing the provision 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... being so,the assessee is not required to maintain separate set of books of account as enumerated u/s 11(4A) of the Act. He submitted that the assessee has been established and carriedout the followingactivity. "4.2. The one of the objective of the assessee-trust is "To provide medical relief to the poor, distressed, afflicted and mentally, physically, or psychologically handicapped persons, in India including supply of spectacles and other medical, surgical and remedial appliances and for this purpose to start, establish, conduct, maintain and manage and help dispensaries, hospitals, medical centres, diagnostic centres or other medical or aftercareinstitutions." The affirmations of the AO for brining to tax the surplus income from pharmacy by invoking provisions of section 11(4A) of the Act areas under: 1. No separate books of account are not maintained except purchase and sale account in respect of pharmacy unit. 2. On perusal of purchase and sale of medicine and after determining surplus amount, it is concluded by the AO that assessee is running pharmacy unit as business entity rather than charitable trust." 22. Thus, while carrying on the above activities, the assessee h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pital or other medical institution], being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business;" 26. From the comparison of the language of the two provisions extracted above, we find, the language used in the provisions are comparable and, therefore, the common purpose is easily decipherable by the above provisions appearing in to different sections from the Act. Therefore, we agree with the relevant argument propounded by the Ld Counsel for the assesse. 27. Regarding the argument pertaining to whether the pharmacy shop is an integral part of the hospital business, as mentioned above, we find that the High Court of Bombay in the case of Baun Foundation Trust Vs. CCIT (73 DTR 45), which was delivered in the context of the provisions of section 10(23C) of the Act and find relevant to extract the relevant para which is as follows:- "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 whe....