PUNJAB PHARMACY COUNCIL,MOHALI V. COMMISSIONER OF INCOME TAX EXEMPTIONS, CHANDIGARH

ITA 543/CHANDI/2024

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The case involves the Punjab Pharmacy Council, a statutory body established under The Pharmacy Act, 1948, which appealed against the rejection of its application for registration under section 12AB of the Income Tax Act. The Council argued that its activities, which include regulating the pharmacy profession and charging fees for registrations, do not constitute commercial activities. The Commissioner of Income Tax (Exemptions) had rejected the application citing the generation of surplus as a reason. The Tribunal, referencing a Supreme Court decision and similar cases, concluded that the Council's activities are in the public interest and not commercial in nature, thus deserving of the registration.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397933 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2024-2025
• Other Referred Cases: CIT vs. Ahmedabad Urban Development Authority (CA No.21762 of 2017 dated 19-10-2022)
• Laws Referred To: The Pharmacy Act, 1948, Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BANSAL LD
• Assessee Lawyers: AJAY JAIN LD
• Keywords: Charitable institution

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. 543/CHANDI/2024 Punjab Pharmacy Council 2nd Floor, Medical Education Bhawan Sector 69, Chandigarh. 160062. बनाम/ Vs. CIT (Exemptions) Central Revenue Building, Sector 17, Chandigarh-160017. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAALP-1134-A (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Sh. Ajay Jain (CA) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Smt. Kusum Bansal (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 15-04-2025 घोषणाकीतारीख /Date of Pronouncement : 02-06-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of an application seeking registration u/s 12AB vide impugned order dated 24-04-2024 as passed by learned Commissioner of Income Tax (Exemptions), Chandigarh [CIT(E)], the assessee is in further appeal before us. 2. The Ld. AR advanced arguments and relied on various documents as placed on record to assail denial of registration to the assessee. The Ld. CIT-DR also advanced arguments supporting rejection of application. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 2 3. The assessee is holding provisional registration u/s 12A(1)(ac)(i) for AYs 2022-23 to 2026-27. The assessee is a statutory authority established on 04-03-1948 under The Pharmacy Act, 1948. The council issues registration to the pharmacy pass-outs as mandated by the said act. For the same, the assessee charges fees from the pharmacy pass-outs and grants registration to them. The refusal of registration by Ld. CIT(E) prima- facie stem from the fact that the surplus as generated by the assessee for FYs 2019-20, 2020-21 and 2021-22 were to the tune of 43.43%, 29.96% and 37.10% respectively. The assessee quoted ‘medical relief’ as its sole objects. However, the main function of the assessee was to act as a regulatory body and registration of pharmacists. Though the assessee was performing statutory functions and it could be said to be existing for charitable purpose u/s 2(15), it was merely regulating the profession and practice of pharmacy for which it was charging statutory fees. It was providing service to pharmacy business and it was continuously generating surplus in the range of 30% to 45% in each of the year. Accordingly, the aforesaid registration as sought by the assessee u/s 12A(1)(ac)(iv)(item B) was denied against which the assessee is in further appeal before us. 4. From the facts, it clearly emerges that the assessee is performing statutory functions and it is a statutory body constituted by the Government of Punjab to regulate the pharmacy profession. The sole function of the council is to govern the profession of pharmacy as mandated under The Pharmacy Act, 1948. The assessee is performing similar function since the year 1948 and it is collecting fees as per the mandate of legislatures. Simply because it is generating surplus out of its statutory function, it could 3 not be said that it is carrying out commercial activities. It is working well within the framework of statutory legislation only. The Hon’ble Apex Court in its landmark decision titled as CIT vs. Ahmedabad Urban Development Authority (CA No.21762 of 2017 dated 19-10-2022) has made fine distinction in respect of statutory authorities, bodies etc. which have been established by the state / central government for achieving essentially public functions / services. In such a case, it has been held that whatever money has been charged for public services, the same is to be excluded from the mischief of business or commercial receipts as their objects are essential for advancement of public purpose / function. The Ld. AR also brought on record a fact that similar registrations have been granted by the revenue to similarly placed organization viz. Punjab Nurses Registration Council and Punjab Medical Council. Considering all these facts, we direct the appropriate authority to grant the impugned registration to the assessee. We order so. 5. The appeal stand allowed in terms of our above order. Order pronounced on 02-06-2025. Sd/- Sd/- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER लेखासद˟ /ACCOUNTANT MEMBER Dated: 02-06-2025. 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 "