NORTH INDIA SOCIETY OF METABOLISM LIPIDS DIABETES AND HYPERTENSION,CHANDIGARH V. THE COMMISSIONER OF INCOME TAX,EXEMPTIONS, CHANDIGARH, CHANDIGARH

ITA 381/CHANDI/2024

AI Insights

The case involves the North India Society of Metabolism Lipids Diabetes and Hypertension, which appealed against the rejection of their registration application under section 12AB of the Income Tax Act by the CIT(Exemptions), Chandigarh. The CIT(Exemptions) had denied the application based on the society's financial activities, which included receiving substantial subscriptions from pharmaceutical companies and using these funds to conduct events that did not appear to serve the general public but rather facilitated networking between doctors and pharma companies. The tribunal agreed with the CIT(Exemptions) that these activities did not meet the legal definition of charitable purposes as they were not directed towards the benefit of the community at large.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633098 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2024-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUSUM BANSAL LD
• Assessee Lawyers: TEJ MOHAN SINGH LD
• Keywords: TDS; Charitable institution
• Section: 194C

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No. 381/CHANDI/2024 North India Society of Metabolism Lipids Diabetes and Hypertension C/o Tej Mohan Singh (Advocate) # 527 Sector 10-D, Chandigarh बनाम/ Vs. CIT (Exemption) Chandigarh ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AACTN-5643-A (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/Appellant by : Shri Tej Mohan Singh (Advocate) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Smt. Kusum Bansal (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 03-06-2025 घोषणाकीतारीख /Date of Pronouncement : 09-06-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of registration application as filed by the assessee seeking registration u/s 12A(1)(ac)(iii) vide impugned order dated 20-03-2024 of Ld. CIT(Exemptions), Chandigarh [CIT(E)], the assessee is in further appeal before us. 2. The Ld. AR advanced arguments and stated that the assessee has carried out charitable activities in medical field. 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 2 rival submissions and upon perusal of case records, the appeal is disposed-off as under. 3. The assessee filed registration application seeking registration u/s 12AB(1)(ac)(iii) r.w.s. 12AB of the Act on 30-09-2023. The Ld. CIT(E), upon perusal of assessee’s financial statements for FYs 2019-20 to 2021-22, held that the activities carried out by the assessee do not inspire confidence that the society existed for the benefit of general public at large. During FY 2019-20, the assessee received subscription from pharma companies and medical instrument companies like Abbot India, MSD Pharmaceuticals and Novartis Healthcare for Rs.23.75 Lacs on which TDS was deducted. Similarly, for FY 2020-21, subscription was received from MSD Pharmaceuticals and Sanofi India. Similarly, in AY 2021-22, subscription was received from Abbot India for Rs.2.94 Lacs. During FY 2022-23, similar subscription was received from Novo Nordisk and Sanofi India. These funds were then used to conduct meetings in five star hotels. The speakers at these conferences were from pharma companies who were paid either honorarium or for the event management. The Ld. CIT(A) 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 clarified its activities as education and medical relief. 3 However, no corresponding expenditure was shown to have been incurred on medical camps. The entire gamut of assessee’s activities would show that it was working solely for the purpose of networking between doctors and pharma companies which was unethical and contrary to public policy rather than to work for general public and in no way the activities performed by it would fall under the definition of charitable purpose as defined u/s 2(15). Finally, the registration was denied against which the assessee is in further appeal before us. 4. Upon perusal of assessee’s financial statements as placed on record, the subscription as received by the assessee during FYs 2019- 20 to 2021-22 could be tabulated as under: - FY Amount of Subscription (Rs.) Name of Subscribers TDS deducted u/s 2019-20 Rs.23.75 Lacs Abbott India Ltd., MSD Pharma. Pvt. Ltd., Novartis Healthcare Pvt. Ltd. 194C 2020-21 Rs.2.75 Lacs MSD Pharma Pvt. Ltd. & Sanofi India Ltd. 194C 2021-22 Rs.3 Lacs Abbott India Ltd. 194C We noted that these are the only substantive receipts for the assessee during FYs 2019-20 to 2021-22. After receiving the subscription from these pharma companies, the assessee has conducted meetings / conferences wherein, as per findings of Ld. CIT(A), speakers would be from these pharma companies who were paid honorarium or paid for the event management. 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. The possibility of assessee-entity being used as a medium to promote the products of pharma companies could not be ruled out altogether. 4 The assessee is not shown to have carried out any other charitable activity. Though Ld. AR has stated that the assessee has carried out many charitable activities during these years, however, the assessee’ financial statements do not support any such averments as made by Ld. AR. On these facts, no interference is required in the impugned order denying registration to the assessee. The case laws being relied upon by Ld. AR have been rendered on particulars sets of facts as existing in those cases and the same do not render any assistance to the case of the assessee. 5. The appeal stand dismissed. Order pronounced on 09-06-2025. Sd/- Sd/- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09-06-2025. आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH "