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

Facts

The Revenue filed appeals against the order of the CIT(A) who allowed exemption for the income from a pharmacy shop run by a charitable hospital. The Assessing Officer (AO) denied this exemption, treating the pharmacy income as business income unrelated to the hospital's charitable objects. The Revenue argued that the pharmacy operations were a separate profit-making venture, not incidental to the hospital's main purpose.

Held

The Tribunal held that the running of the medical store was incidental and ancillary to the main objective of the hospital providing medical relief. The Tribunal emphasized the principle of consistency, noting that similar claims had been accepted in previous assessment years. The Tribunal also pointed out that if the activity were to be considered business, only net profits, not gross receipts, should be taxed, and the AO failed to consider the expenses incurred.

Key Issues

Whether the income from a pharmacy run by a charitable hospital is incidental to its main objects and thus eligible for exemption under Section 11 of the Income Tax Act, or if it constitutes a separate business activity to be taxed.