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2012 (11) TMI 2 - AT - Income TaxCancellation of Registration u/s. 12AA(3) of the Act – allegation relating to Contribution to Churches – Held that:- Merely a sum of RS. 22,500 was incurred in this regard - It is only information relating to assessee Hospital of the various facilities available along with timings for general OPD, free OPD, emergency services - Since these institutions approached the assessee, the advertisements were given to them - amount involved was very meager and it cannot be said that amount was meant for benefit of any particular community Cancellation of Registration u/s. 12AA(3) of the Act – Sale of medicines in the Pharmacy – Held that:- Activity of pharmacy is an integral part of the Hospital running activity which is not a commercial activity - The income is ploughed back for Hospital activity - It has been further been submitted that 50% margin is without considering salaries of pharmacy department, doctor's salary, contract employees payment, administrative over heads like electricity, maintenance, other utilities, depreciation etc. - this amount is ploughed back for the charitable activities of the Society - sale of medicine in the pharmacy is certainly a charitable activity Cancellation of Registration u/s. 12AA(3) of the Act – Smile Surgery Projects – Held that:- Smile Surgery Project is an International Charitable - Organization providing assistance to the children born cleft lips and platelet - Hospital doesn't charge the patients under this project. The cost incurred may be less than the amount reimbursed by the Smile Project or it may be more which has to be borne by the Hospital - There is no commercial or business element as alleged - Smile Project cannot be said to be commercial activity Cancellation of Registration u/s. 12AA(3) of the Act – Fun Fair Fund - assessee has submitted that the Fair is conducted by the employees of the Society wherein the employees of the Hospital participate and hold lucky draw – Held that:- Amount collected is used to make ex-gratia payment to the exNemployees on retirement, exigencies - income is reflected in the statement of total income of the respective years - activity cannot said to be commercial/business activity - employees are part and parcel of the society - Any activity undertaken to help them cannot be considered as non-charitable Cancellation of Registration u/s. 12AA(3) of the Act – Manufacturing of Medicines – Held that:- Assessee does not manufacture any medicines. The pharmacy undertakes only compounding, mixing and diluting the medicines already available with the assessee. This is done for reducing the strength of the medicine, making it cost effective when smaller doses are required or in case medicines are available in large proportions in the market it is made into smaller portions for patients - Hospital is running for the past 125 years and the Drug Controller conducts regular inspection of the Hospital - income resulting from medicines given to patients is again utilized for the Hospital activity - it cannot be said that assessee is indulging in the manufacturing activity of the medicines. Cancellation of Registration u/s. 12AA(3) of the Act – Withdrawal of exemption from Import Duty – Held that:- Duty exemption was withdrawn citing certain noncompliance, assessee has filed appeal before CESTAT challenging the order of withdrawal and that the assessee has complied with all the terms for exemption - machineries imported are used by the Hospital namely remote control X-ray system and whole body C.T. Scan. The exemption is with respect to duty under Customs Act and does not make the assessee non-charitable Cancellation of Registration u/s. 12AA(3) of the Act – Alteration in MOA - Communication with Revenue authorities – Held that:- Chart depicting the minor amendments carried out by the assessee has been submitted - change does not alter the basic object of medical relief - object of the assessee would remain the same before the amendment as well as after the amendment. Therefore, no adverse inference can be drawn against the assessee There is no reason for cancellation of registration u/s. 12AA(3) of the Act - appeal filed by the assessee is allowed.
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