Assessee engaged in running a blood bank cannot be said to be engaged in providing medical facilities so as to be entitled to exemption under section 11

[2013] 38 taxmann.com 360 (Ahmedabad - Trib.)

IN THE ITAT AHMEDABAD BENCH 'A'

Advance Transfusion Medicine Research Foundation

v.

ADIT (Exemption), Ahmedabad*

G.C. Gupta, VICE-PRESIDENT
AND ANIL CHATURVEDI, ACCOUNTANT MEMBER

IT Appeal No. 399 (Ahd.) of 2013
[ASSESSMENT YEAR 2009-10]

SEPTEMBER  20, 2013 

Section 2(15), read with sections 11 and 13, of the Income-tax Act, 1961 - Charitable purpose [Medical relief - Blood bank] - Assessment year 2009-10 - Assessee, registered under section 12AA, was engaged in running a blood bank - During year, it had entered into transaction of sale of fresh frozen plasma (FFP) with its associated concern - Assessing Officer noticed that assessee had supplied FFP to patients at higher price and held that assessee was not eligible for deduction under section 11 as it had granted concessional benefit to its associated concern - Whether since assessee was not an educational institution and it also could not be said to be a hospital or medical institution as it was not engaged in dispensing medical facility, assessee was not entitled to exemption under section 11 and, thus, no interference with order of Assessing Officer was called for - Held, yes [Para 15] [In favour of revenue]

FACTS

■		The assessee, a company registered under section 12AA, had entered into transaction of sale of fresh frozen plasma (FFP) with its associated concern and during the year it had supplied FFP to said concern.
■		The Assessing Officer found that the assessee had supplied FFP to patients at higher price and had also charged service charges from patients which were not charged to the said concern. The Assessing Officer was, thus, of the view that since the assessee had provided concessional benefit to its associated concern it was not eligible for deduction under section 11.
■		The Commissioner (Appeals) upheld the order passed by the Assessing Officer.
■		On second appeal:

HELD

■		As per sub-section (6) of section 13 a trust running an educational institution or a medical institution or a hospital shall not lose the benefit of exemption of any income other than the value of benefits of educational or medical facilities provided to the specified persons, solely on the ground that such benefits have been provided to specified persons. It should be noted that the sub-section covers, (i) only those trusts running an educational institution or a medical institution or a hospital; (ii) the benefit extends only in respect of educational or medical facilities and not any other facility. In the present case, it is an undisputed fact that assessee has entered into transactions with the related concerns. It is also a fact that it cannot be said that the assessee is an educational institution and cannot be said to be a hospital or medical institution as it is not engaged in dispensing medical facility though it is engaged in running a blood bank. [Para 15]
■		Considering the totality of facts, the assessee cannot be considered to be engaged in providing medical facilities so as to be entitled to exemption of income. In view of the aforesaid facts, there was no reason to interfere with the order of the Assessing Officer. [Para 15]

Moisturex cream meant for curing skin is medicament; SC lays down principles to identity medicament products

'Moisturex' cream having medicinal ingredients and meant for curing of skin ailments/diseases is a medicament (duty @15%) and not cosmetic (duty @70%)

Facts:

The assessee was engaged in manufacture of product 'Moisturex', which it sought to classify as 'medicament', liable to duty at 15% under Heading 30.03. However, the Department classified product as cosmetics liable to duty @ 70% under Tariff Heading 33.04.

The Supreme Court held in favour of assessee as under:

1) For deciding whether a product is 'medicament' following principles are relevant :

1. Presence of pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, is relevant and proportion of such ingredients is not decisive;
2. Even if a product is sold without a prescription of a medical practitioner or over/across counter, it may be 'medicament';
3. People who actually use such products must understand it to be 'medicament';
4. Its primary function has to be "cure" and not "care", i.e., it must be used mainly in curing or treating ailments or diseases.

2) Accordingly, 'Moisturex' cream having medicinal ingredients, though in small quantities, is not primarily intended for protection of skin but for curing of skin ailments/diseases, is a medicament (duty @15% : Tariff Heading 30.03) and not cosmetic (duty @70% : Tariff Heading 33.04) - COMMISSIONER OF CENTRAL EXCISE, MUMBAI-IV V. CIENS LABORATORIES (2013) 38 taxmann.com 337 (SC)