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TMI Blog2018 (12) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the trust or the institution should be created or established for the benefit of a particular religion or group. Display and distribution of religious books free of cost in a small book shop without charging any rent or electricity charges would not change the core and primary nature of charitable activity carried out by the respondent-assessee as to attract disqualification under Section 13(1)(b) of the Act. Recovery of expenses from the employees was found to be much less than the actual expenditure incurred by the assessee - Held that:- This Court is of the opinion however, that part payment of electricity or water charges or incurring maintenance expenses for the residential accommodation for employees would not result in violation of Section 13(2)(b) of the Act. This provision is attracted when land, building or other property of the trust or charitable institution is made available to a person referred to in subsection (3) to Section 13 without charging adequate rent or other compensation. Assessing Officer has not pointed out any abnormal or high expenditure on the aforesaid account made to benefit a particular employee covered under Section 13(3) of the Act. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y order dated 26.9.2013 ITA No. 37/2013 filed by the Revenue challenging the order dated 11.05.2012 of the Tribunal was dismissed by the Delhi High Court for the following reasons:- (i) The respondent society had made contribution of ₹ 22,500/- in all, to eight churches/institutions for advertisement. Director of Income Tax (Exemption) held that this shows that the respondent was working for benefit of a particular religious community. In our opinion, the Tribunal s finding, keeping in view the quantum, is justified and is not perverse. The amount involved is too meagre and does not show or establish that the respondent society was meant for benefit of any particular community. (ii) The respondent society had sold medicines from their pharmacy to the public. Director of Income Tax (Exemption) held that this amounts to business. Director of Income Tax (Exemption) has also stated that the respondent society had earned and operated the pharmacy at 50% profit margin. Tribunal has rejected the said contention observing that the respondent society was/is a hospital and has to dispense medicines to patients. Selling of medicines was not the predominant object of the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (supra) is equally applicable. (iv) Director of Income Tax (Exemption) has objected to surplus generated in the Fun Fair Fund. The Tribunal in the impugned order has held that the Fun Fair Fund activities were conducted by the employees of the society wherein the employees participated and held a lucky draw. The amount collected was used for ex-gratia payment to the exemployees on retirement and exigencies. The said fund was reflected in the total income declared in respect of earlier years. It has been observed that this did not amount to non-charitable activity as the said fund was for the benefit of retired or ex-employees. (v) Director of Income Tax (Exemption) has objected to the manufacture of medicines. Tribunal in this regard has observed that the respondent society had a pharmacy where compounding, mixing and diluting the medicines was done. This was required to reduce the strength of medicine and make it cost effective when smaller dosages were required. Drug Control Department had granted permission to sell, stock and run the pharmacy. The respondent s hospital had been in existence for past 125 years and the Drug Controller had conducted regular ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Display and distribution of religious books free of cost in a small book shop without charging any rent or electricity charges would not change the core and primary nature of charitable activity carried out by the respondent-assessee as to attract disqualification under Section 13(1)(b) of the Act. 6. The second objection raised by the Revenue relates to electricity, water and maintenance expenses incurred by the respondent-assessee on residential accommodation allotted to their employees at Rajpur Road and GT Road Flats and residential accommodation provided to doctors, nurses and other staff in the hostel and other areas within the hospital compound. The contention is that recovery of expenses from the employees was found to be much less than the actual expenditure incurred by the respondent-assessee and therefore Section 13(2)(b) of the Act was violated. This Court is of the opinion however, that part payment of electricity or water charges or incurring maintenance expenses for the residential accommodation for employees would not result in violation of Section 13(2)(b) of the Act. This provision is attracted when land, building or other property of the trust or charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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