TaxTMI 
TaxTMI 
2023 (8) TMI 500
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....me Tax Act 1961 (in short 'the Act'). 2. In this case, on perusing the financials of the Assessee, the AO observed as under: "The Assessee is also running a Pharmacy store in its Hospital and the gross turnover of the Trust is of Rs. 27,99,03,717/-. The Assessee sold medicines and drugs to the patients through the Pharmacy store of Rs. 8,40,06,345/- whereas cost of the medicines as per details furnished by the Assessee was Rs. 6,67,43,965/-. Thus, there is a profit of Rs. 1,72,62,379/- on transactions of Pharmacy store. The profits of Pharmacy store comes at 20.54% of its turnover and total turnover of the Pharmacy store is around 30.01% of total Hospital collections from inpatients and outpatients charges. 2.1 The AO on the ....
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....e the Ld. Commissioner. 4. The Ld. Commissioner, while relying upon the judgments passed by the Hon'ble Bombay High Court in the case of Baun Foundation Trust Vs. CIT-1, Mumbai {Writ Petition No.1206 of 2010 decided on 27th March 2012} and the co-ordinate bench of the Tribunal at Mumbai in the cases of Hiranandani Foundation, Mumbai Vs. ADIT (E) (2)(1) {ITA No. 1772/2017 decided on 05.02.2020} and DCIT (E), Mumbai Vs. National Health and Education Society (ITA No. 1958/Mum/2016), deleted the aforesaid addition of Rs. 1,72,62,379/- by holding as under : "The commercial activities of medical store are to be considered as activities for chartable purpose. Section 11(4) of the Act cannot be applied to the Assessee trust. The Pharmac....
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.... and claimed that the impugned order has been passed in accordance with law and by following the judgments of Hon'ble jurisdictional High Court and therefore does not suffers any perversity, impropriety and or illegality. 7. We have heard the parties and perused the material available on record. The AO in this case, mainly made the addition of Rs. 1,72,62,373/- on account of profit on transaction of Pharmacy store, by taking refuge of the provisions of section 11(4A) of the Act and held that Pharmacy store is not incidental to the attainment of the objects of the Assessee trust. 7.1 The provisions of section 11(4A) have clearly carved out the exception qua non-applicability of the provisions of section 11(4) of the Act, where the busi....
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...., i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities." 7.4 No doubt, the Hon'ble High Court in CIT(E), Mumbai Vs. National Health and Education Society (supra) as relied upon by the Ld. DR, dealt with the situation wherein the Pharmacy was used for in-house/captive consumption of the Hospital and not for over the counter sale in general, however, the Hon'ble High Court in the case of Baun Foundation had taken into consideration the situation, wherein the general public were also using the facility/chemist shop and....
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....ibed objects. Hence on the aforesaid analyazations, we don't have any hesitation to hold that running of the chemist shop is not only essential but also incidental or ancillary to the dominant object and purpose to run a hospital and thus the Assessee has complied with first condition of section 11(4A) of the Act. 7.6 Coming to the second condition of section 11(4A) of the Act, as to whether the Assessee is maintaining separate books of account in respect of such business/chemist shop. We observe that the Ld. Commissioner has given categorical findings that the Assessee is maintaining separate books of accounts and financial statements for pharmacy store, hence the Assessee also complied with 2nd condition of section 11(4A) of the Act. ....