Tribunal Confirms Society's Charitable Status u/s 12AA; Dismisses Revenue's Appeal on Charitable Activities.

The Tribunal upheld the registration of the society under Section 12AA, dismissing the Revenue's appeal. It found the society's activities, including contributions to churches, pharmacy sales, and the Smile Surgery Project, were incidental to its charitable purpose of providing medical relief. The Tribunal also approved the surplus use from the Fun Fair Fund and the manufacture of medicines for charitable activities. The Tribunal concluded that alterations in the Memorandum of Association did not alter the society's primary charitable purpose. The Court affirmed the Tribunal's decision, granting registration under Section 12AA and dismissing the Revenue's appeal.

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Issues involved: Registration u/s 12A denied by Director of Income Tax (Exemption) but later accepted by the Tribunal based on factual findings.

The judgment addresses various issues raised by the Revenue regarding the registration of a society under Section 12A. Firstly, the Tribunal justified the society's contribution to churches/institutions for advertisement, ruling that the amount was meager and did not indicate a benefit to any particular community. Secondly, the Tribunal rejected the contention that selling medicines from the society's pharmacy constituted a business activity, emphasizing that it was only incidental to the hospital's main purpose of providing medical relief. The Tribunal cited the Supreme Court's decision in Addl. CIT vs. Surat Art Silk Cloth Manufacturers Association to support this stance. Thirdly, the Tribunal disagreed with the view that receiving funds for Smile Surgery Project constituted commercial activity, noting that the surgeries were performed on children without charge. Fourthly, the Tribunal found no issue with the surplus generated in the Fun Fair Fund, as it was used for ex-gratia payments to retired employees. Fifthly, the Tribunal approved the manufacture of medicines by the society, highlighting that the profits were utilized for charitable activities. Sixthly, the Tribunal noted that an incident related to the import of medical equipment was pending consideration and did not result in a final finding against the society. Lastly, the Tribunal concluded that alterations in the Memorandum of Association did not change the society's primary purpose of providing medical relief.

In response to the appellant's argument regarding the maintenance of separate books of account for business activities, the Court found that the Director of Income Tax (Exemption) had the necessary details for computation and was aware of the sales made by the pharmacy. The Court dismissed the appeal, upholding the Tribunal's decision to grant registration under Section 12AA to the respondent assessee.

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