Activity Of Chemist/Pharmacy Is Incidental To Dominant Object For Running A Hospital: ITAT
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) consisting of Rahul Choudhary (Judicial Member) and M. Balaganesh (Accountant Member) has held that the activity of a chemist or pharmacy is incidental or ancillary to the dominant object of running a hospital. The assessee/respondent is a charitable trust duly registered under section 12A of the Income Tax Act. The...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) consisting of Rahul Choudhary (Judicial Member) and M. Balaganesh (Accountant Member) has held that the activity of a chemist or pharmacy is incidental or ancillary to the dominant object of running a hospital.
The assessee/respondent is a charitable trust duly registered under section 12A of the Income Tax Act. The main objectives of the assessee trust are education and medical relief to the public at large. The AO had sought to treat the conduct of the respondent/assessee in running a pharmacy on a commercial basis. The AO, on perusal of the financials of the pharmacy and the assessee society on an overall basis, observed that the surplus earned in pharmacy contributed substantially to the overall surplus earned by the assessee society. The pharmacy sells medicines to outsiders as well. The AO concluded that the assessee society running a pharmacy is not an activity incidental to the attainment of the objectives of the society and sought to tax the surplus earned by the pharmacy alone on a commercial basis.
The assessee appealed before the CIT (A). In accordance with Section 11(4A) of the Income Tax Act, the CIT (A) treated the operation of a pharmacy as an activity incidental to the achievement of the objectives of the assessee society, which operates a hospital.
The ITAT upheld the order of the CIT(A) granting relief to the assessee.
Case Title: Dy. Commissioner Income Tax (E)-1(1) Versus M/s. Karuna Medical Society
Citation: ITA No.1048/Mum/2022
Dated: 27/07/2022
Counsel For Appellant: Aarti Vissanji & Kashyap Vapari
Counsel For Respondent: Vivek Anand Ojha
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