TMI Blog2016 (8) TMI 1490X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in HIRANANDANI FOUNDATION VERSUS ASST. DIRECTOR OF INCOME TAX, EXEMPTION 2 (1) , MUMBAI. [ 2016 (7) TMI 260 - ITAT MUMBAI] as held pharmacy shop is an integral part of the hospital business and the same is not hit adversely by the conditions specified in the provisions of section 11(4A) of the Act. Therefore, so long as the transactions of such pharmacy which ancillary/ incidental for the business of a hospital and objects of the trust, the conditions relating to maintenance of separate books of accounts are met within the meaning of section 11(4A) of the Act. Accordingly, grounds raised by the assessee are allowed - ITA No.87/Mum/2015 - - - Dated:- 17-8-2016 - Shri Shailendra Kumar Yadav, Judicial Member And Shri Rajesh Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness and held that the said running of pharmacy is not for charitable purposes. However, the CIT(A) reversed the addition by the AO holding that the running of pharmacy was not a business activity of the assessee as the same was as per the objectives of the trust and , thus, concluded that the application of section 11(4A) was wrong and directed the AO to allow exemption u/s. 11 of the I.T.Act.In our considered opinion the pharmacy store is an integral part of any hospital and can not be treated as business activity. Had the assessee operated a pharmacy store without running a hospital , then the activity would have been classified differently. 6. We further find that the case of the assessee is fully covered by the order dated 27.05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account by the Chief Commissioner are to be had regard to, it is evident that the activity of a chemist shop is an activity which is incidental or ancillary to the dominant object and purpose which is to run a hospital. The Chief Commisisoner has accepted that the surplus which is earned from the operation of a chemist shop is utilised for the purposes of the hospital. A hospital must of necessity have a section or department where medicines can be dispensed and it is not uncommon for a medical hospital which exists even for philanthropic purposes to have a chemist shop where pharmaceutical products are sold. This is a facility which is intended to be used predominantly by patients and their relatives. Though the members of the general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enance of a pharmacy shop is ancillary to the dominant object of running of a hospital and thus, it is an integral part of the hospital. We noticed, actually the pharmacy shop is being maintained by the hospital itself and not by any private contractor. Drawing the medicine from such pharmacy shop by the Doctors in respect of the patients is also evident from the records, commonly maintained in their medical reports. It is not the case of the revenue that the profits earned on pharmacy was not spent for the objects of trust. Therefore, we find, that the cited judgments (supra) are applicable squarely to the facts of the case so far as the argument relating to if the pharmacy is an integral part of the hospital business or not. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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