DY. COMMISSIONER OF INCOME TAX(EXEMPTIONS)-2(1), MUMBAI, MUMBAI vs. SWAMI VIVEKANAND MEDICAL MISSION, MUMBAI

Facts

The Revenue appealed against the CIT(A)'s order allowing exemption to the assessee trust for income from its medical store. The Assessing Officer (AO) denied the exemption, considering the medical store's operation as a separate business activity for profit, not incidental to the trust's main charitable objective of providing medical relief. The Revenue's appeal is based on grounds that the CIT(A) erred in allowing the exemption for pharmacy income under Section 11(4A) and for not appreciating the profit motive and substantial gross receipts from the pharmacy.

Held

The Tribunal held that the running of the medical store by the assessee trust was incidental and ancillary to its primary charitable objective of running a hospital and providing medical relief. The Tribunal relied on the principle of consistency, noting that similar claims were accepted in previous assessment years without additions. It also referred to High Court decisions which held that running a chemist shop in hospital premises for patients' convenience is ancillary to the main object of running a hospital and not a separate business venture.

Key Issues

Whether the income generated from running a medical store by a charitable hospital is to be treated as a separate business activity or as incidental to the main charitable purpose, affecting its eligibility for exemption under Section 11 of the Income Tax Act.