2009 (6) TMI 123 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessee trust's activity of running a homeopathic dispensary falls within the definition of "charitable purpose" u/s 2(15) of the IT Act.
2. Whether the assessee trust complied with the conditions for renewal of approval u/s 80G(5)(vi) of the IT Act.
3. Whether the assessee trust was required to maintain separate books of account for its homeopathic dispensary and issue certificates to donors.
4. Whether the principle of consistency applies to the renewal of approval u/s 80G(5)(vi) of the IT Act.

Summary:

1. Charitable Purpose u/s 2(15):
The primary issue was whether the activity of the homeopathic dispensary carried on by the assessee trust falls within the definition of "charitable purpose" as defined u/s 2(15) of the IT Act. The Tribunal noted that the assessee trust was dispensing homeopathic medicines and receiving token receipts and patient charges, which amounts to 'medical relief' under the definition of "charitable purpose." The Tribunal held that the activity of dispensing homeopathic medicines is not a business but a charitable activity.

2. Compliance with Conditions u/s 80G(5)(vi):
The Tribunal found that the CIT had exceeded his jurisdiction in rejecting the renewal application. The CIT's decision was based on irrelevant considerations, and the assessee trust had not violated any provisions of sections 11, 12, or 80G(5) of the IT Act. The Tribunal emphasized that the assessee trust was not required to maintain separate books of account for the homeopathic dispensary or issue certificates to donors, as the activity was not a business.

3. Separate Books of Account and Donor Certificates:
The Tribunal held that the assessee trust was not carrying on any business in dispensing homeopathic medicines and, therefore, was not required to maintain separate books of account or issue certificates to donors. The Tribunal noted that the Department failed to prove that the assessee's activity amounted to a business. The onus of proving that the activity was a business lay with the Department, which was not discharged.

4. Principle of Consistency:
The Tribunal observed that the assessee trust had been granted renewal of approval from time to time up to 31st March 2008 and was duly registered u/s 12AA of the Act. There was no change in the facts, and the principle of consistency was wrongly ignored by the CIT. The Tribunal directed the CIT to grant renewal of approval u/s 80G(5)(vi) of the IT Act to the assessee trust.

Conclusion:
The Tribunal allowed the appeal filed by the assessee trust and directed the CIT to grant renewal of approval u/s 80G(5)(vi) of the IT Act, emphasizing that the activity of dispensing homeopathic medicines is a charitable activity and not a business.