ENDOCRINE AND BREAST SURGERY FOUNDATION,CHANDIGARH V. COMMISSIONER OF INCOME TAX EXEMPTIONS, CHANDIGARH

ITA 244/CHANDI/2025

AI Insights

The case involves two appeals by the Endocrine And Breast Surgery Foundation against the decisions of the CIT (Exemptions), Chandigarh, which had rejected the Foundation's applications for registration under sections 12A(1)(ac)(iii) and 80G(5) of the Income Tax Act. The Tribunal's decision was based on the Foundation's lack of substantial charitable activities and the nature of its expenses, which were primarily directed towards conferences and professional expenses rather than charitable purposes. The Tribunal found that the Foundation's activities were more aligned with networking between medical professionals and pharma companies rather than advancing public charitable purposes.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780218 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 14-02-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANAV BANSAL
• Assessee Lawyers: S.K. BHASIN
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 244 & 245 /Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2025-26 Endocrine And Breast Surgery Foundation Room No. 2, 5th Floor, F Block, Nehru Hospital, PGIMER, Sector-12 Chandigarh बनाम The CIT Exemptions Chandigarh ˕ायी लेखा सं./PAN NO: AABTE4561D अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri S.K. Bhasin and Shri K.B. Sood, CA’s राजˢ की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 04/08/2025 उदघोषणा की तारीख/Date of Pronouncement : 08/10/2025 आदेश/Order PER KRINWANT SAHAY, AM: These are two appeals filed by the Assessee against the order of the Ld. CIT(E), Chandigarh each dt. 06/01/2025 whereby the application seeking registration under section 12A(1)(ac)(iii) of the Act as well as the application seeking Registration under section 80G(5) has been dismissed by the Ld. CIT(E). 2. Since both the above appals were heard together therefore they are being disposed off by this consolidated order for the sake of convenience. 3. We shall firstly deal with the appeal of the Assessee in ITA No. 244/Chd/2025 for the Assessment Year 2025-26 wherein Ld. Counsel for the assessee submitted that the assessee’s application seeking registration under section 12A(1)(ac)(iii) of the Act was rejected by the Ld. CIT (Exemptions) without issuing any show cause notice and without Printed from counselvise.com 2 affording a reasonable opportunity of being heard before such rejection. It was also contended that such action is violative of the principles of natural justice. 4. Thus, against the order of the Ld CIT(E), the assessee is in appeal before us. 5. During the course of hearing, the Ld. AR argued that the assessee has been engaged in carrying out genuine charitable activities in the field of medical relief, which fall squarely within the definition of ‘charitable purpose’ under section 2(15) of the Act. It was submitted that the activities undertaken by the assessee are directed towards providing medical assistance to the needy and underprivileged, thereby advancing an object of general public utility. The Ld. AR contended that rejection of registration without examining these facts and without granting an opportunity to explain or substantiate the charitable nature of activities is arbitrary and unjustified. The Ld. AR therefore pleaded that the order of the Ld. CIT (Exemptions) deserves to be set aside and the matter may be restored to CIT(E) file for fresh adjudication, after affording due and reasonable opportunity of being heard to the assessee. 6. The Ld. CIT-DR relied on the order of Ld. CIT(E) to state that no charitable activities are shown to have been carried out by the assessee. Having heard rival submissions and upon perusal of case record, the appeal is disposed off as under. 7. From case records, it emerges that the assessee filed registration application seeking registration u/s 12AB(1)(ac)(iii) r.w.s. 12AB of the Act. The applicant society is stated to be engaged in providing relief to the poor, education and medical relief. The Ld. CIT(E), upon perusal of Printed from counselvise.com 3 assessee’s submissions and financial statements, observed that the assessee society shared its address with a hospital by the name Trinity Hospital. The perusal of the photographs as submitted by the assessee would show that the assessee’s activities were basically been conducted by Trinity hospital. The assessee reflected expenses which were in the nature of conference expenses, donation expenses, medicine expenses, professional expenses salary / wages and tour and training expenses. For FY 2021-22, the assessee received donations from pharma companies, laboratories and medical instrument companies and registration fees from the doctors. The expenses were primarily to hold conferences from time to time or for sponsoring participation of its members in conferences held across India by paying for their air tickets and stay expenses. 8. The Ld. CIT(E) then referred to Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002 prohibiting medical practitioner from taking monetary benefits from pharma companies. The law recognizes no purpose as charitable unless it was of public character. A purpose to be charitable must be directed for the benefit of the community and not for the benefit of private individuals. The same was not the case here. The assessee classified its activities as education and medical relief. However, the genuineness of the activities and expenses thereof was doubtful considering the nature of expenses and considering the fact that the assessee shared its address with Trinity Hospital to which the members of the society belong. The term ‘education’ was to be interpreted in a narrow sense to imply only formal schooling. In the present case, the assessee work solely for the purpose of networking between the doctors and the pharma companies, labs and medical instrument companies which was unethical and contrary to public policy rather than to work for general Printed from counselvise.com 4 public and in no way the activities of the assessee could be termed as for ‘Charitable purposes’ as defined u/s 2(15). Accordingly, the application was rejected against which the assessee is in further appeal before us. Our findings and Adjudication 9. Upon perusal of the records it could be seen that the assessee has received donations and registration fees and other receipts. As against this, the major expenditure is on account of professional expenses. The other major expenses are in the nature of conference expenses, medicine expenses, advertisement and donations to other funds. No major expenditure is shown to have been incurred towards charitable activities. The perusal of donors would show that the major donors are medical centers, healthcare centers, pharma companies and labs etc. These donations have been used to conduct meetings / conferences. The perusal of photographs would show that the assessee is carrying out its activities under the banner of Trinity Hospital which, apparently, run as a commercial enterprises. On these facts, it could very well be concluded that there was direct nexus between the subscription as received by the assessee and meetings / seminars conducted by the assessee. Therefore, the possibility of assessee-entity being used as a medium to promote the products of pharma companies as well as Trinity Hospital could not altogether be ruled out. The assessee is not shown to have carried out any substantial charitable activity. The Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002, as referred to by Ld. CIT(E), prohibits such a nexus. We concur with the observation of Ld. CIT(E) that the assessee work solely for the purpose of networking between the doctors and the pharma companies, labs and medical instrument companies which is unethical and contrary to public policy. In no way the activities of the Printed from counselvise.com 5 assessee could be termed as for ‘Charitable purposes’ as defined u/s 2(15). No substantial material could be shown to us to rebut these findings of Ld. CIT(E). Therefore, we see no reason to interfere in the impugned order. 10. In the result present appeal is dismissed. 11. We shall now take up the appeal of the assessee in ITA No. 245/Chd/2025 for the Assessment Year 2025-26, wherein The Ld. Counsel for the assessee contended that the Ld. CIT(E), Chandigarh erred in rejecting the assessee’s application under section 80G(5) of the Income Tax Act, 1961 on the ground that exemption under section 80G(5) could not be granted unless and until the assessee’s application under section 12A(1)(ac) of the Act was first approved. 12. We have heard the rival submissions of both the parties and have carefully perused the material available on record. In the present case, it is observed that the Ld. CIT(E) has rejected the assessee’s application under section 12AB of the Act, which had been filed on 31.07.2024. In so far as the application seeking approval under section 80G(5) is concerned, the Ld. CIT(E) has held that, in the absence of registration under section 12AB, the conditions prescribed under section 80G(5) are not satisfied. Consequently, the request for approval under section 80G(5) was declined without being examined on merits. 12.1 On due consideration of the facts and circumstances of the case, we find no infirmity in the order passed by the Ld. CIT(E). It is a mandatory requirement under the law that, for obtaining approval under section 80G(5) of the Act, the assessee must first secure registration under section 12AB of the Act. Since this primary condition was not fulfilled, the Ld. CIT(E) was justified in rejecting the assessee’s Printed from counselvise.com 6 application. The findings recorded by the Ld. CIT(E) are accordingly upheld, and the appeal of the assessee is dismissed. 13. In the result, both the above appeals of the Assessee are dismissed. Order pronounced in the open Court on 08/10/2025 Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "