9911796707
TMI Blog1995 (8) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter in 1953 and 1957, there were amendments in the objects of the Trust. It is registered under the Bombay Public Trust Act, 1980, vide registration No. F. 4491 (Bombay). It is also registered under section 12A of the Income-tax Act, 1961 (hereinafter referred to as " the Act "). The objects of the trust as described in the Rules and Regulations as amended up to 23rd July, 1967 are as under : "To start and maintain for institutions and charitable purposes, viz., relief of the poor, education, medical relief, cultural activities, sports, publication of newspapers and magazines or (sic) a literary nature, propagation of the Kerala system of Ayurveda or any object of general public utility." For giving medical relief and propagation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. Arya Vaidya Sala allow discount at the rate of 11 per cent on the medicines supplied. The assessee did not have any medical shop. Medicines received from the Arya Vaidya Sala are supplied to the patients as per the prescription of the Doctor. These medicines are not available without prescription. The amount of discount which the assessee receives from the Arya Vaidya Sala is being used for running the dispensaries and for carrying the other objects of the trust. Since only the amount of discount is not enough to meet the administrative and other expenditures, the assessee levy 11 per cent 'service charges' from the non-members. The members are not subjected to such levy. This levy is calculated on the price of the medicines. Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee appeared before us. It was vehemently argued that the case of the assessee falls within the ken of section 10(22A) of the Act. According to the learned counsel, providing medical relief through the Kerala Ayurvedic System is the main object of the trust and, therefore, running dispensaries and supplying medicines is incidental to such object. Sale of Ayurvedic medicines at profit is not the main object. It is only incidental to the maintenance of dispensaries and propagation of Ayurvedic medicines. No fee is charged for consultation. Only some nominal charges are there which are listed under the nomenclature 'service charges'. These are mainly to defray the necessary expenses of the dispensaries and also to facilitate the acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1991] 188 ITR 540 (Cal.). 10. Shri Sudhir Chandra, learned Departmental Representative appeared before us. It was stated that the assessee was charging 11 per cent over and above the cost of medicines. Further he was getting discount from the Arya Vaidyasala. This was much more than what was actually required to run the dispensaries. The deficit during the year was only 1.67 per cent. The assessee sold the medicines at profit. Had profit not the motive of the assessee-trust, it would not sell the medicines for more than 2 to 21/2 per cent of the price. The assessee charges 11 per cent against each sale bill as the service charges. This is indeed, very high. It amounts to profit making. Therefore, the claim of the assessee that service ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity for profit. The term 'philanthropy' is used differently under different systems of jurisprudence. But the common attributes which have their abiding place in all the systems of jurisprudence, can be enumerated as under : (i) it must be unselfish ; (ii) it must be of public character ; (iii) it must be voluntary in nature ; (iv) it must be guided by the instincts of piety and benevolence dictated by the desire to do good. 13. What then is an activity of profit ? Undertaking by a business organisation is ordinarily assumed to be for profit, unless expressed otherwise. In an activity for profit, the motive is to earn profit. Service part is incidental. The object is not philanthropic. The difference is very subtle. We will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Pulikkal Medical Foundation (P.) Ltd. It was held that in a case where a hospital exists solely for philanthropic purposes even if incidentally profit is earned, the hospital is entitled to the benefit under section 10(22A). 17. The mere fact that the assessee-trust had objects other than medical relief is not a condition aliunde to which the exemption under section 10(22A) can be denied to the assessee. We have taken this view in accordance with the ratio laid down in the case of Birla Vidhya Vihar Trust. We have noted that the surplus derived from running the dispensaries was utilised for philanthropic purposes. As per Circular No. 194/16-17-IT(A-1), the C.B.D.T. made it clear that if a surplus is used for philanthropic purposes, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
