INCOME TAX ACT, 1961

--Exemption under section 10(23C)(via)--Income from hospital, etc.Existence solely for the purposes of philanthropy--Assessee was registered as a public trust under the Bombay Public Trust Act, 1950. It was running a hospital and had been granted benefit of exemption under section 10(22A) or 10(23C)(via) or section 11, as the case may be, till assessment year 2007-08. It filed an application seeking approval under section 10(23C)(via) for continuation of its exemption. Chief Commissioner found that assessee was running a chemist shop in the premises of hospial and the nature of chemist shop was not exclusive to the patients coming to the hospital and was commercial or akin to trading activity. He, therefore, concluded that trust did not exist solely for the purpose of philanthropy and rejected the application of assessee. Held: The Chief Commissioner had accepted the fact that the surplus earned from operation of chemist shop was utilized for the purpose of hospital. This facility was intended to be used by patients and their relatives though members of general public were not prohibited from using the facility. Even, considering the figures, which were taken into account by Chief Commissioner, it was evident that activity of a chemist shop was an activity, incidental or ancillary to the dominant object and purpose which was to run a hospital. In view of above, it was concluded that Chief Commissioner had clearly misapplied himself in law by having regard to clearly ancillary or incidental activity and elevating it to the status of dominant purpose for which hospital had been established. Therefore, Chief Commissioner was directed to consider the application of assessee.

Income Tax Act, 1961 Section 10(23C)(via)