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TMI Blog2020 (3) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent had not maintained separate books of accounts in respect of the pharmacy store. It is in these circumstances that assessing officer held that the conditions prescribed under Section 11(4A) of the Act were not satisfied by the respondent Trust and accordingly he treated the surplus amount accruing out of the pharmacy store as business income under Section 11(4A) and brought the same within the taxable amount. In appeal, the first appellate authority noted that respondent was granted approval under Section 10(23C)(via) of the Act with effect from the assessment year 2009-10 on the satisfaction that respondent was existing solely for philanthropic purposes and not for purposes of profit. Therefore, the first appellate authority h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Tiwari a/w. Ms Pawar, learned counsel for the respondent - assessee. 2. This appeal has been preferred by the Revenue under Section 260- A of the Income Tax Act, 1961 ( the Act for short) against the order dated 17.08.2016 passed by the Income Tax Appellate 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pharmacy was a property held under the Trust and a business undertaking; therefore, the excess income of such undertaking was rightly held to be for purposes other than charitable. Accordingly, assessing officer had added the said amount as business income of the respondent. 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 thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders passed by the revenue authorities and the case laws, we may also deal with Section 11(4A) of the Act. 12.1. Section 11 mentions the categories of income which are not to be included in the total income of the previous year of the person in receipt of income from property 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In appeal, the first appellate authority noted that respondent was granted approval under Section 10(23C)(via) of the Act with effect from the assessment year 2009-10 on the satisfaction that respondent was existing solely for philanthropic purposes and not for purposes of profit. Therefore, 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy as a separate business activity and thereafter to tax the income accrued therefrom. 18. In Aditanar Educational Institution (supra), Supreme Court was considering exemption granted to an educational institution under Section 10(22) of the Act. As per Section 10(22) of the Act, any income of an university 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 purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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