TMI Blog2023 (8) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... f the poor, education or medical relief, it will constitute charitable purpose even if it incidentally involves the carrying on of commercial activities. Medicines are one of the most common healthcare interventions and play a significant role in patients' health management. Pharmaceuticals are an integral part of patient care. Admittedly the Assessee is running a Hospital and also having in-house patient s facilities, therefore, the medicines are essentials for the treatment of in-house patients especially. Assessee may be on commercial basis but in fact, directly-indirectly providing medical relief by selling medicines to the in-house patients and outpatients and outsiders as well and therefore protected by CBDT Circular (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Choudhry, JM For the Appellant/Department : Sh. S.N. Kabra, Ld. Sr.DR For the Assessee/Respondent : Sh. Prakash Jotwani, Ld. Adv. ORDER PER N. K. CHOUDHRY, JM: The Revenue Department/Appellant herein has preferred this appeal against the order dated 25.01.2023 impugned herein passed by Ld. Commissioner of Income Tax (Appeals)-1/ National Faceless Appeal Centre (NFAC), Delhi {in short Ld. Commissioner) } u/s 250 of the Income Tax Act 1961 (in short the Act ). 2. In this case, on perusing the financials of the Assessee, the AO observed as under: The Assessee is also running a Pharmacy store in its Hospital and the gross turnover of the Trust is of Rs. 27,99,03,717/-. The Assessee sold medicines and drugs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this pharmacy surplus has to maintain separate books of accounts in respect of the same. However, Assessee trust has not maintained separate books of accounts in respect of Pharmacy store. Here merely maintaining some ledgers of medicines purchases and sales does not amount to maintaining separate books of accounts. 3. The Assessee being aggrieved against the addition of Rs. 1,72,62,379/- made by the AO, preferred first appeal before the Ld. Commissioner. 4. The Ld. Commissioner, while relying upon the judgments passed by the Hon ble Bombay High Court in the case of Baun Foundation Trust Vs. CIT-1, Mumbai {Writ Petition No.1206 of 2010 decided on 27th March 2012} and the co-ordinate bench of the Tribunal at Mumbai in the cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case the pharmacy was for in-house/captive consumption of the Hospital and not for over the counter sale in general but here in this case the Assessee is also selling the drugs and medicines to outsiders, therefore, the Assessee is not entitled for the benefit as claimed for on the basis of the judgments, on which the Ld. Commissioner granted the relief to the Assessee. 6. On the contrary the Ld. AR supported the impugned order and claimed that the impugned order has been passed in accordance with law and by following the judgments of Hon ble jurisdictional High Court and therefore does not suffers any perversity, impropriety and or illegality. 7. We have heard the parties and perused the material available on record. The AO in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act will not apply to medical relief etc. and where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute charitable purpose even if it incidentally involves the carrying on of commercial activities. For clarity relevant clarification reads as under: The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15), i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute charitable purpose even if it incidentally involves the carrying on of commercial activities. 7.4 No doubt, the Hon ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial basis but in fact, directly-indirectly providing medical relief by selling medicines to the in-house patients and outpatients and outsiders as well and therefore protected by CBDT Circular (supra) as well. It is also not the case here that the Assessee has established Chemist/Pharmacy store exclusively for outpatients/outsiders and has utilized surplus from the operation of a chemist shop, for other objects than the prescribed objects. Hence on the aforesaid analyazations, we don t have any hesitation to hold that running of the chemist shop is not only essential but also incidental or ancillary to the dominant object and purpose to run a hospital and thus the Assessee has complied with first condition of section 11(4A) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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