TaxTMI 
TaxTMI 
2025 (4) TMI 788
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....8/PUN/2024 in the case of Poona Obstetrics and Gynaecological Society (in short 'POGS'), assessee has raised following grounds of appeal : "1. Learned PCIT-Central Circle, Pune erred in law and on facts in cancelling registration u/s. 12A of ITA, 1961, by referring and relying upon powers u/s. 12AB(4) of the ITA, 1961. Learned PCIT-Central Circle, Pune erred in treating Appellant Trust as a facilitator/conduit in tax evasion pursuit deployed by "EMCURE group" of companies. 2. Learned PCIT-Central Circle, Pune erred in law and on facts in holding that, activities of the Appellant are not genuine. Learned PCIT-Central Circle ought to have appreciated that, Appellant is a public charitable trust registered under Maharashtra Charitable Trust Act, 1950 and that, Appellant's activities of organising seminars/ symposiums / conferences, etc. is not an activity against any public policy. 3. Learned PCIT-Central Circle, Pune erred in law and on facts in equating Appellant trust to the corporate companies and/ or individual medical practitioners, who may benefit from freebies/gifts, etc. in violation of norms laid down by Indian Medical Council. Appellan....
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....llant society had not carried out any activity conflicting with its objects and which is not genuine. f. By accepting the grants from the pharma company for its educational programs, the appellant had not acted as a conduit of that company for distributing freebies to the medical practitioners /doctors and accordingly, withdrawing registration of the society u/ s 12AB(4) was not justified. 4] The learned Pr. CIT was not justified in holding that the appellant society was a conduit between Emcure Pharma Companies and the medical practitioners for the purposes of providing freebies by those companies to the medical practitioners. 5] The learned Pr. CIT erred in ignoring the fact that the grants received from the pharma companies were utilised properly for the objects of the society like organising the conferences on medical subjects, medical camps, etc. etc. and therefore, the society had not violated any of the rules / regulations of Indian Medical Council and hence, the withdrawal of registration u/s 12AB(4) is not justified. 6] Without prejudice, the learned Pr. CIT was not justified in withdrawing the registration w.e.f. A. Y. 2015 16 u/s 12AB(....
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....efs deemed fit in the facts and circumstances of the case may be granted. 10. The appellant craves leave to add, alter or vary the grounds of appeal before or at the time of hearing." Additional Ground : On facts and circumstances of the case and in law, the learned Principal Commissioner of Income Tax, Central Circle, Pune has erred in passing an order u/ s. 12AB(4) of the ITA, 1961 thereby cancelling the registration of the appellant trust without jurisdiction. As such, cancellation is bad in law. 6. In ITA No.417/PUN/2023 in the case of AIDS Society of India (in short 'AIDS Society'), the assessee has raised following grounds of appeal : "The Principal Commissioner of Income-tax (Central), Pune (hereinafter referred to as the Pr CIT) erred in framing an order under section 12AB(4) of the Act and cancelling the registration granted to the appellants under section 12AA the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the Pr CIT ought not to have framed the order under section 12AB(4) and cancelled the registration under section 12AA inasmuch as he has not appreciated the facts....
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....or the assessee requesting for not pressing the first fold of contention that the order of cancellation of registration u/s. 12A/12AA/12AB can only be ordered by ld.CIT(Exemption). This contention has not been pressed before us. We are dispensing of with mentioning all the arguments made by both the sides during the course of hearing carried out on earlier occasions. Thus, the only one legal issue which remains to be adjudicated is as to whether powers are provided u/s. 12AB of the Act to cancel the registration granted u/s. 12A of the Act under the old regime. 11. Ld. Counsel for the assessee(s) mentioned at Sl.No.1 to 3 of the cause title, Mr. Kishor B. Phadke stated that in the case of the assessees namely Poona Obstetrics and Gynaecological Society and The Mumbai Obstetrics and Gynaecological Society (in short POGS and MOGS'), the registration under the old regime were granted u/s.12A of the Act on 04.12.1982 and 16.12.1976 respectively. So far as the other two assessees are concerned namely AOGS and AIDS society registrations have been granted u/s. 12AA of the Act. 12. As regards the merits of the case are concerned, it has been admitted by both the counsels namely S....
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....s in Medical field which are for the updation of the knowledge of the Doctors. The receipts of the trust are mainly from Annual and Life Membership received from New and Existing Members, sponsorship receipts for various programmes and conferences received from Pharmaceutical Companies are also the source is from Education Grants received from Pharmaceutical Companies for specific Education projects and activities. Ld. PCIT noticed that the list of sponsors include many the company namely Emcure companies including Pharmaceuticals Private Limited and amounts received by assessee trust during F.Y. 2016-17 to 2019-20 are Rs.66.7 lakh, 71.5 lakh, 15.5 lakh, 7.5 lakh respectively. Thereafter, ld. PCIT examined the expenditure made for the doctors which mainly included the booking of hotels for organising conferences, air tickets for the speakers, accommodation provided to the doctors. It was also observed that one of the sponsors namely EPL has given the list of doctors who were to participate in conferences. It was observed that name of delegates and doctors who would attend the conferences are decided by the sponsoring Pharmaceutical Company and the list thereof is sent to the doctor....
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....e also found to be made. From the aforesaid factual background it is clear that the prohibitions contained in Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 were circumvented by the pharmaceutical company with the help of the assessee trust. In doing so the pharmaceutical company has also avoided disallowance of expenditure in violation of the MCI Regulations which come in the ambit of Explanation to section 37(1) of the Act and CBDT Circular No 05/2012. This clearly shows that the averments of the Assessing Officer in his reference are proved. 12. At this stage, it is relevant to refer to the judgment of the Hon'ble Apex Court in the case of Apex Laboratories (P.) Ltd. v. Deputy Commissioner of Income-tax reported in [2022] 442 ITR 1 (SC). In the aforesaid judgment, the Hon'ble Court has held that acceptance of freebies by medical practitioners was punishable as per Circular issued by Medical Council of India under MCI Regulations, 2002, as such gifting of such freebies by pharmaceutical company to medical practitioners would also be prohibited by law. In the aforesaid judgment, the Hon'ble Court has rejected the....
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....ohibited by law" is thus wholly irrelevant in the present context. What is material is that the expenditure in question is incurred for the purposes which are prohibited in law, and that is what disqualifies the expenditure in question from deduction under section 37(1) by virtue of Explanation thereto. The freebies from pharmaceutical companies cannot, under section 20A of the Indian Medical Council Act 1956 read with rule 6.8 of Indian Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002, as amended from time to time, be lawfully accepted by medical professionals and, therefore, an extension of such freebies is for a purpose, prohibited by law". The stand of the Assessing Officer cannot, therefore, be faulted. 21. In any case, the ill effects of this not so holy nexus between some unscrupulous medical professionals and some greedy pharmaceutical companies have played havoc with the reputation of one of the noblest professions in the world, and this pampering of the medical professionals is perceived as at the cost of the helpless end consumer, ie. the patients seeking medical help- overwhelmingly from the most underprivileged sections of the fel....
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....e of unlawful consideration cannot equally be recognized. It cannot be held that businessmen are entitled to conduct their business even contrary to law and claim deductions of payments as business expenditure, notwithstanding that such payments are illegal or opposed to public policy or have pernicious consequences to the society as a whole." "If demanding of such commission was bad, paying it was equally bad. Both were privies to a wrong. Therefore, such commission paid to private doctors was opposed to public policy and should be discouraged. The payment of commission by the assessee for referring patients to it cannot by any stretch of imagination be accepted to be legal or as per public policy. Undoubtedly, it is not a fair practice and has to be termed as against the public policy." 12.3 It is seen from the guiding principles of the aforesaid judgments that acceptance and payment of freebies are both recognized to be against public policy and violative of the Indian Medical Council Regulations. The argument that the prohibitions apply to doctors only, has expressly been rejected. Any activity opposed to public policy will render the activities of the assesse....
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....f Commissioner of Income-tax (Exemptions), Kolkata v. Batanagar Education And Research Trust [2021] 129 taxmann.com 30 (SC) wherein the Hon'ble Apex Court has upheld the cancellation of registration u/s 12AA of the Act with the following observations: "An entity which is misusing the status conferred upon it by section 12AA of the Act is not entitled to retain and enjoy said status. The authorities were therefore, right and justified in cancelling the registration under sections 12AA and 80G of the Act." Similarly, the Hon'ble Allahabad High Court in the case of Dr. Bhim Rao Ambedkar Educational Society vs. Commissioner of Income-tax, (Exemptions) [2017] 88 taxmann.com 524 (Allahabad) has held that withdrawal of registration granted to assessee-Society under section 12AA was justified where its activities were neither genuine nor was it run as per objective set out in memorandum. 14. It is further relevant to refer that prior to the insertion of section 12AB of the Act by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 01/04/2021, provisions of section 12AA of the Act was applicable for cancellation o....
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....e assessee trust is liable to be cancelled. 15. With regard to the cancellation of registration of trust, the Hon'ble Supreme Court in the case of CIT vs. Jagannath Gupta Family Trust reported in [2019] 411 ITR 235 (SC) has held that even one instance of violation is sufficient to cancel the registration. Further, the Delhi Bench of the Hon'ble Tribunal in the case of Young Indian vs. Commissioner of Income Tax (Exemption) reported in [2019] 111 taxmann.com 235 (Delhi - Trib.) has held that Registration granted under section 12A can be cancelled from date when registration had been granted if assessee has not carried out any activity in line with its objects or activities carried out are not genuine. The relevant finding of the Tribunal is reproduced hereunder: "121. One of the key contentions raised by the Id. counsel before us is that the Id. CIT(E) does not have the power to cancel the registration from retrospective date and any such cancellation can only be prospective, i.e., from the date of passing of the order and in support of which certain decisions have also been relied upon. From a bare reading of Section 12AA (3) it is seen that, section provi....
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.... the Assessing Officer has discussed facts elaborately leading to the finding of "specified violations" by the trust. In these proceedings, the assessee trust has failed to disprove the averments made against it due to its abstinence from making any submission in response to the notices by this office. 17. I am, therefore, of the considered opinion that the aforesaid activities of the assessee trust are not in accordance with the objects of the assessee trust. Therefore, activities of the assessee trust cannot be held genuine. In fact, clause (a) of Explanation below section 12AB(4) provides that if any income of the trust, has been applied, other than for the objects of the trust or institution, same will come under the ambit of specified violation. Further, if any activity of the trust or institution is not genuine or is not being carried out in accordance with all or any of the conditions subject to which it was registered, then same would also be covered under the specified violation as provided under clause (e) of Explanation below section 12AB(4) of the Act. And lastly clause (1) of Explanation below section 12AB(4) of the Act provides that if the trust or institutio....
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....rate that the assessee trust(s) has carried out its activities as per the objects and the funds received from various companies as sponsorship fees along with the Membership fee received from its members have been applied only for the purpose of charitable objects for which they are registered. The synopsis filed by the ld. Counsel for the assessee read as under : "1. Facts of the present case: 1.1 Appellant's status and main objects-Appellant, i.e. POGS, is a charitable trust registered under the Maharashtra Public Trust Act, 1950; and has been engaged in regulatory / educational / research activity relating to Obstetrics &Gynecology since last over 40 years. POGS's main objects, as per the Memorandum of Association (i.e. MoA)are - - to promote professional fellowship amongst the members, - to encourage research in obstetrics & gynecology, - to extend educational interests, etc. A copy of the MoA is enclosed herewith and marked as Annexure-1. 1.2 Seminars / Conferences - For conducting various research and educational programs, Appellant is required to host conferences at various places in each year. Costs of h....
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.... [Key points / issues related to powers available u/s 12AB(4) are summarized as below] Sr. No. Particulars Reference in 12AB(4) order Paper-Book reference 2.1 Summary chart of original position of sections related to charitable trust, and changes in these sections from time to time, is enclosed herewith and marked as Annexure-3. - - 2.2 Earlier to the new regime, Registration was granted u/s 12A (old regime). W.e.f. 1/4/2021, Registrations is granted only u/s 12AB. In the new section 12AB(4), no any direct / indirect power is available for cancelling registration u/s 12A. As such, disturbing registration u/s 12A, by using powers u/s 12AB, is non-permissible. Learned PCIT has used such powers which are not bestowed upon him by the law. (Similar situation arose in section 12AA, where, prior to year 2010, there was no power to cancel registration u/s 12A. Arguments were raised by I-T department that, cancellation of registration u/s 12A is an inherent power, and there is no need of any separate power to be granted. These arguments were rejected by the apex court in case of by Industrial Infrastructure Development Corporation (Gwalior) M.P. Lt....
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....(Flag-25) cases given in Case-Law compilation 2.7 Search was initiated in Emcure Pharma's case on 16/12/2020. Simultaneous survey conducted in Appellant's case on 16/12/20202 only. Alleged incriminating material (i.e. emails of Emcure Pharma officials, etc.) relate to AY 2017-18 or AY 2020-21. Now, for these years (i.e. all Assessment Years till AY 2020-21), Appellant's registration was u/s 12A (old ergime). As stated earlier, no power to disturb 12A registration exists u/s 12AB. However, Power to disturb registration u/s 12AB (new regime) does exist u/s 12AB. But, for this purpose, there ought to exist, incriminating material showing ‗specified violation‖. In present case, there is no incriminating material at all, since, search survey took place on 16/12/2020 (i.e. earlier to new regime of section 12AB). Conclusion - As per various paras of the order of learned PCIT (Central) and in particular, as mentioned in Para-18 of the last page of the said order, learned PCIT (Central Circle) has revoked registration granted to the Appellant on 4/12/1982 u/s 12A by exercising power u/s 12AB(4) of ITA. A close reading of the said section....
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....GISTER can do medical practice anywhere in India 247 Clause 1.2.3 Each medical professional must participate in continuing medical education programs for at least 30 hours in every five years 308 Guidelines for CPD Clause-1 For renewal of the name of medical professional in the REGISTER, earning of 6 hours per year is mandatory 3.3 Continuing Professional Development (i.e. CPD) hours On Page-308 of the Paper-Book-III, norms of grant of CPD hours are stated. As per these norms, the CPD hours are granted when a medical professional participates in a seminar / conference relating to study and research of the related field. These CPD hours granting mechanism is dependent on the quality of each program, contents of the same, stature of the faculties therein, etc. In short, for a medical professional, to remain in active practice, earning of 6 CPD hours per year is a sine- qua-none. From perusal of CPD Guidelines reproduced at Page-306 of Paper-Book-III, it also reveals that, if any sponsorship of any pharma company leads to marketing / advertising / promotion of drugs / equipment of such pharma companies, no any CPD hours are eligible for being grante....
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....s for Appellant's Seminars A brief summary of major conferences organized by appellant along with CPD points are as follows: Date Conference Name CPD Pts. Attendance 12/8/18 Lactacon 2018 2 351 19/8/18 USG Workshop 2 169 8/12/18 to 9/12/18 Summit 2018 - Annual Conference of POGS 4 296 27/7/19 to 28/7/19 FOGSI Clinicolegal 2019 4 300+ 11/8/19 Lactacon 2019 2 100 19/5/19 USG Workshop 2 129 11/12/20 to 13/12/20 Just Tumors Conference (Virtual) 3 6,500+ 4/12/21 to 5/12/21 Fetopanishad 4 211 16/7/21 to 18/7/21 AMOGS 2021 2 174 3.7 Overall scenario of the regulatory aspects Appellant has prepared a chart which demonstrates as to how, the regulatory authorities govern the lower authorities and in turn, how the medical professionals are regulated as regards the CPD hours mechanism. The said chart is enclosed herewith and marked as Annexure-4. 3.8 Sponsorships The issue involved in the present appeal is, nature of sponsorships received by the Appellant. It is submitted that the entire amount of sponsorships received from Pharma compa....
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....grams. Here is a sample list of such programs. - National conference on Clinicolegal - Page - 199 of Paper-Book-II (2 CPD hours) - Lactacon conference - Page - 204 - Paper-Book-II (2 CPD hours) The CPD hours granted by MMC are updated in each medical professional's REGISTER through the e-portal of MMC. 3.11 Difference between offence v. prohibition - Learned PCIT has alleged that, Appellant's activities are prohibited by other laws and, as such, Appellant violates clause (f) of section 12AB(4). It is already explained as to how, the said clause does not apply in the present case. Be that as it may. It needs to be noted that, difference exists between an activity leading to "offence" per se, and activity which could be considered as "prohibited by law". These two categories arise from Explanation-1 to section 37 of ITA, 1961. As per wording therein, offences are considered as Limb-1 and "prohibitions under other laws" is considered as Limb-2. In the case of Apex Laboratories[2022] 442 ITR 1 (SC), Hon'ble Supreme court has observed that, activities of Apex (of extending freebies to DOCTORS) is covered by Limb-2 i.e. "prohibited by law".....
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....rs, which is different than plausible personal benefits of doctors. Prohibited freebies / gifts (like distribution of Gold Coins, Fridge, etc.) are much different than knowledge development. - - 3.12.9 Seminars are Research oriented. Now, Research activity is expressly permitted by the Guidelines. - Annexure- 5 3.12.10 Seminars are pre-approved by MMC (Maharashtra Medical Council). Based on credentials of speakers and contents of Seminar, CPD hours are allotted to attending Members. - 199 204 3.12.11 Due to sponsorships, cost of attending a larger seminar gets reduced, which benefits the common Members attending Seminars - - 3.12.12 Holdingof worthy conferences requires funds. Pharma companies help in cost mitigating by sponsoring such programs. Pharma Companies stipulate purpose 0 sponsorship (typically, scientific knowledge, new trends in profession, etc.) - 205 207 211 212 3.12.13 Pharma companies expressly state in sponsorship letters that, no any promotion of their drugs should be done in the Seminars and that, all applicable laws need to be complied with. Unfortunately, learned PCIT reached adverse "satisfac....
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....ies have been extended by Appellant. Typically, large scale seminars require approvals from regulatory authorities. All such requisite approvals have been availed by Appellant. It transpires, one arm of the Government (i.e. MMC / IMC) grants CPD hours for conferences / seminars held by Appellant with sponsorships, and as such, puts it's stamp of legality on entire such conference / seminar. On the other hand, another arm of the Government (i.e. Income-tax Department) treats the very same seminars as violations of IMC Regulations due to sponsorships. Approach of the learned PCIT (Central Circle) is contrary to the approach of the Regulatory Authorities. As stated, learned PCIT (Central Circle) views are mere surmises of suspicions and without considering facts and laws. 4. Emerging trend of denial of exemption only to the extent of violations (without prejudice to the main contentions) Appellant has relied upon decisions of jurisdictional High Court in following cases - -Audyogik Shikshan Mandal [2019] 101 taxmann.com 247 (Bombay) -Maharashtra Academy of Engineering and Educational Research [2024] 161 taxmann.com 290 (Bombay) (Appella....
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....ther extended, it will make large hotels (where Seminars are held) or, sound system service providers (for reaching voice to thousands of attendants), etc. also as conduits. This is strange. 17. On the other hand ld. Departmental Supported the order of the ld. PCIT and also referred to the judgement of Hon'ble Apex Court in the case of M/ s. Apex Laboratories Put. Ltd. (supra) and again asserted the fact that the assessee trust(s) are working as conduit for grant of freebies to the doctors through Pharmaceutical Companies and has thus violated the specified violation under clause (e) to (f) of Explanation below section 12AB(4) of the Act. Reference is also made to the written submissions and case laws which are as follows : "Identical issues involved in the case of Mumbai Obstetrics & Gynaecological Society (ITA 522/PN/2023) and Agra Obstetrics & Gynaecological Society (ITA 549/PN/2023). 1. Brief facts of the case: 1.1 The assessee is a trust engaged in the activities related to obstetrics and gynecology. 1.2 A search and seizure action u/s 132 of the Act was conducted in Emcure Group on 16/ 12/2020. During the search action, the assessee ....
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....come from other sources. The said income from other sources includes conference receipts, membership fees, academic grants or sponsorship, etc. As per the answer to the Q.11 recorded in the statement of Dr. Harshad Parasnis, President of the trust, the sponsors include the name various companies including Emcure Pharmaceuticals Put. Ltd [Page no. 11 of PCIT(Central) order]. 2.4 While answering to Q.12, Dr. Parasnis, the President of the trust admitted that certain number of free nominations are allowed to sponsoring company [Page no. 11 and 12]. It is clear that in lieu of sponsorship provided, certain number of free nominations are allowed to sponsoring company. 2.5 It is also observed that, the names of the delegates / doctors who would attend the conference are decided by the sponsoring pharmaceutical company only and then the list is sent to the assessee trust. This indicates that the trust has no interference in selection of the delegates/ doctors. 2.6 In the answer given to the Q.13[Page no. 12], it is observed that from F.Y. 2014-15 to F.Y. 2019-20, the assessee trust has received funds from M/s Emcure Pharmaceuticals amounting to Rs. 1.61 Cr. as s....
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....(c) page no. 17. It was confirmed by the assessee that the list of delegates/ doctors were received on mail from Emcure Pharmaceuticals Ltd. who attended the conference. Further in response to a question it was confirmed that lodging, travelling and other expenses of the delegates were borne by Emcure Pharmaceuticals Ltd. 2.9 As per the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 further amended on 10/12/2009, "6.8 Code of conduct for doctors and professional association of doctors in their relationship with pharmaceutical and allied health sector industry. 6.8.1 In dealing with Pharmaceutical and allied health sector industry, a medical practitioner shall follow and adhere to the stipulations given below :- a) Gifts: A medical practitioner shall not receive any gift from any pharmaceutical or allied health care industry and their sales people or representatives. b) Travel facilities: A medical practitioner shall not accept any travel facility inside the country or outside, including rail, air, ship, cruise tickets, paid vacations etc.from any pharmaceutical or allied healthcare industry or their....
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....ieved indirectly. As was said in Fox v. Bishop of Chester [1824] 2 BFC 635 Jagir Singh v. Raubir Singh [1999] 2 SCR 282 that it is a : "Well-known principle of law that the provisions of an Act of Parliament shall not be evaded by shift or contrivance" And that "To carry out effectually the object of a Statute, it must be construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined." 2.12. Thus it was held that even the donor or provider of such freebies is also prohibited and if any act is prohibited directly then it cannot be done indirectly. In the present case, even though the Emcure Group has provided funds to the assessee trust and the assessee is providing freebies such as accommodation, travel, etc. the Emcure Group is the indirect provider of the freebies and such act is a violation of the law. The said act of violation of "other law" by the assessee falls under specified violation defined in clause (f) in Explanation below section 12AB(4) of the Act. 2.13 Hence, it can be concluded that such act as violation of law is covered by "specified violation" u/s 12AB(4)(....
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....e it was held that "19. In view of the above discussions, it is clear that the regulations prohibiting the acceptance of freebies by the medical professionals provide, under section 20A of the Indian Medical Council Act 1956 read with rule 6.8 of Indian Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002, as amended from time to time, that such freebies cannot be lawfully accepted by medical professionals, and, therefore, any expenditure incurred for extending these freebies to the medical professionals is for a "purpose which is prohibited by law". On these facts, therefore, Explanation to section 37(1) is clearly attracted. 20. It is an open secret, secret if it is, that all these freebies extended by the pharmaceutical companies to the medical professionals, more often than not, come with strings attached, and that is what makes the expenditure in question for a purpose which is, as discussed earlier, 'prohibited by law'. The plea of the learned counsel that these regulations do not bind pharmaceutical companies, and, therefore, extending these freebies to medical professionals cannot be treated as 'prohibited by ....
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.... passed by Ld. PCIT(Central) u/s 12AB(4) of the Act for cancelling the registration of the assessee trust is justifiable. 2.18 Reliance in this regard is placed on the decision of Hon'ble Supreme Court in the case of CIT(Exemptions) vs Batanagar Education and Research Trust where it was held that, "11. The answers given to the questionnaire by the Managing Trustee of the Trust show the extent of misuse of the status enjoyed by the Trust by virtue of registration under section 12AA of the Act. These answers also show that donations were received by way of cheques out of which substantial money was ploughed back or returned to the donors in cash. The facts thus clearly show that those were bogus donations and that the registration conferred upon it under sections 12AA and 80G of the Act was completely being misused by the Trust. An entity which is misusing the status conferred upon it by section 12AA of the Act is not entitled to retain and enjoy said status. The authorities were therefore, right and justified in cancelling the registration under sections 12AA and 80G of the Act." 2.19 Similar view was taken by Hon'ble Allahbad High Court i....
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....r are not carried out in accordance with the objects of the trust, he may cancel the registration by way of an order in writing. Consequently, if there is violation of any such conditions, then the registration so granted can be cancelled by the CIT. Nowhere, the Statute envisages that the cancellation cannot be retrospective or it has to be necessarily prospective. What it provides that the Commissioner has statutory powers to cancel the registration u/s. 12A/12AA if he finds reason to believe that the activities of the assessee are not in line with its objects or the activities carried out by the assessee are not genuine in nature. If from the date when registration has been granted, the assessee has not carried out any activity in line with its objects or the activities carried out are not genuine, then from that date itself, the registration can be cancelled because it is only when the knowledge of such breach come to the notice of the Commissioner, then he has the power to cancel the registration from the date he notices the infringement. The cancellation of registration, whether with retrospective effect or prospective, depends upon the facts and circumstances of the case and....
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....nd that recently the very issue has been dealt by us in the case of M.M. Patel Charitable Trust in ITA No. 1130/PUN/2024 order dated 21.02.2025 wherein we have decided this issue observing as follows : "11. We have heard the rival contentions at length and perused the record placed before us. The assessee which is a Public Charitable Trust and running a Medical College, Hospital and Research Centre was subjected to search u/s.132 of the Act carried out on 25.08.2022 and certain documents alleged to be incriminating in nature were found and seized. Assessee trust enjoys registration u/ s. 12A of the Act granted on 16.02.2001 which was subsequently renewed u/s. 12AB(1) of the Act w.e.f 01.04.2021. During the pendency of the assessment proceedings subsequent to carrying out of the search, ld. PCIT on the basis of a reference received from ld. AO under second proviso to section 143(3) of the Act carried out the proceedings so as to examine whether the assessee has made any 'specified violation' as defined in clause (f) of Explanation to section 12AB(4) of the Act and also issued show cause notice in this regard to the assesssee as to why registration u/s. 12A/ 12AA be ....
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.... in cancelling the registration given u/s.12AB(1) of the Act alleging 'specified violation' without considering that the 'specified violation' word has been inserted from 01.04.2022 and the allegation against the assessee are for F.Yrs. 2019-20 to 2021-22. 14. Now we take the first limb as to whether there are express powers provided u/s. 12AB of the Act for cancelling the registration granted to the assessee u/ s. 12A of the Act for the year 2001. We notice that ld. PCIT (Central) issued notice on 21.07.2023 u/s. 12AB(4) of the Act, copy of which is placed from pages 8 to 24 of the paper book show- causing the assessee as to why the registration u/s. 12A of the Act granted on 16.02.2001 should not be cancelled. For examining this aspect, we first need to go through section 12AB of the Act. Section 12AB of the Act provides for the procedure for fresh registration and the same has been brought into Statute by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions Act) (TOLA) 2021 w.f. 01.04.2021. Earlier section 12 was inserted by the Finance Act, 2020 w.e.f. 01.06.2020 but omitted by TOLA with retrospective effect from 01.06.2020. Secti....
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....ntal to the attainment of its objectives; or (c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or (d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) any activity being carried out by the trust or institution,- (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub- section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality z[; or] (g) the application referred to in clause (ac) of sub-section (1) of section 12A is not complete or it contains false or incorrect informat....
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.... passed under Section 12A by the CIT is a quasi judicial order and being quasi judicial in nature, it could be withdrawn/recalled by the CIT only when there was express power vested in him under the Act to do so. In this case there was no such express power. 22. Indeed, the functions exercisable by the CIT under Section 12A are neither legislative and nor executive but as mentioned above they are essentially quasi judicial in nature. 23. Third, an order of the CIT passed under Section 12A does not fall in the category of "orders" mentioned in Section 21 of the General Clauses Act. The expression "order" employed in Section 21 would show that such "order" must be in the nature of a "notification", "rules" and "bye laws" etc. (see Indian National Congress(1) v. Institute of Social Welfare [2002] 5 SCC 685. 24. In other words, the order, which can be modified or rescinded by applying Section 21, has to be either executive or legislative in nature whereas the order, which the CIT is required to pass under Section 12A of the Act, is neither legislative nor an executive order but it is a "quasi judicial order". It is for this reason, Section 21 has no applicati....
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....ration for the first time by enacting sub-Section (3) in Section 12AA only with effect from 01.10.2004 by the Finance (No.2) Act 2004 (23 of 2004) and hence such power could be exercised by the CIT only on and after 01.10.2004, i.e., (assessment year 2004-2005) because the amendment in question was not retrospective but was prospective in nature. 28. The issue involved in this appeal had also come up for consideration before three High Courts, namely, Delhi High Court in the case of DIT (Exemptions) v. Mool Chand Khairati Ram Trust [2011] 11 taxmann.com 42/199 Taxman 1/339 ITR 622, Uttaranchal High Court in the case of Welhom Boys' School Society v. CBDT [2006] 285 ITR 74//2007) 158 Taxman 199 and Allahabad High Court in the case of Oxford Academy for Career Development v. Chief CIT [20091.315 ITR 382 29. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in the Act vesting the CIT with power of cancellation of registration till 01.10.2004; an....
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....not given any reason for rejecting various explanation given by the assessee to various show cause notices issued. All that the ld CIT(E) says that the replies are in relation to observations made by the Assessing officer and has nothing to do with the reasons given for giving show cause notice for cancellation of registration. A perusal of the order of ld CIT(E) clearly shows that the reasons given for the show cause notice are the reasons which are considered by the Assessing Officer in the assessment order for the assessment years 2013-14 & 2014-15. The assessee has also given reply to various issues in the show cause notice. In any case, the show cause notice for cancellation of registration having been issued on 6.10.2022, ld CIT (E) could not have cancelled registration retrospectively w.e.f 1.4.2014 insofar as the provisions of section 12AA/12AB does not provide for the cancellation of registration with retrospective effect. This view of our finds supports from the decision of ITAT Bangalore Bench in the case of Amala Jyothi Vidya Kendra Trust (supra), wherein, from paras 6 to 6.10, the Co-ordinate Bench has held as follows: "6. We have heard the rival submissions a....
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.... if there is a violation in previous year 2017-18 relevant to assessment year 2018- 19, these provisions cannot be applied to the assessee's case. For clarity, we will go through the relevant provisions applicable to previous year 2017-18 relevant to assessment year 2018-19 as follows: "12AA(4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A [as it stood before its amendment by the finance (No.2) Act, 1996 (33 of 1996)] and subsequently it is noticed that, the activities of the trust or the institution are being carried out in a manner that the provisions of section 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13, then the Pr. Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institutions. Provided, that the registration shall not be cancelled under this subsection if the trust or institution proves that, there was reasonable cause for the activity to be ....
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.... c) The trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public; or d) The trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or e) Any activity being carried out by the trust or institution- - (i) is not genuine, or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or f) The trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality. 6.3 As per section 12AB(4) of the Act as applicable to assessment year 2017-18, the ld. PCIT if he is satisfied that activities of the Trust or institution are not genuine or not being carried out....
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....lve months commencing on the 1st day of April every year". 17.5 In the case of CIT v. Isthmian Steamship Lines (1951) 20 ITR 572 (SC), a 3-judge Bench of this court exposited on the fundamental principle that "in income-tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied." This decision and various other decisions were considered by the Constitution Bench of this court in the case of Karimtharuvi Tea Estate Ltd. v. State of Kerala (1966) 60 ITR 262 (SC) and the principle were laid down in the following terms (at pages 264-266 of 60 ITR): "Now, it is well-settled that the Income-tax, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force ...... The High Court has, however, relied upon a decision of this court in CIT v. Isthmian Steamship Lines, where it was held as follows: 'It will be observed that we are h....
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....r 2022-23. 6.8 Thus, we are of the view that no retrospective cancellation could be made u/s 12AB(4)(ii) of the Act as it has been provided or is seen to have explicitly provided to have a retrospective character or intended. Therefore, without a specific mention of the amended provisions to operate retrospectively, no cancellation for the earlier years could be made. In this regard, it is appropriate to place reliance on the judgement of Hon'ble Madras High Court on the question as to whether the cancellation will operate from a retrospective date in the case of Auro Lab Ltd. Vs. ITO (2019)411 ITR 308 (Mad) wherein held as under : 20. On the second question as to whether the cancellation will operate from a retrospective date, it was held that the amendment to section 12AA(3) is prospective and not retrospective in character. The courts reasoned that even when Parliament had plenary powers to enact retrospective legislation in matters of taxation, the amended section is not seen to have explicitly provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively, the cancellation c....
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....nance Act, 2022 w.e.f. 1.4.2022. Before 1.4.2022, the registration could have been cancelled u/s. 12AB(5). However, the provisions of section 12AA and Section 12AB came into effect from 1.4.2015. Before that registration was done under section 12A of the Act. One needs to understand that the provisions of section 12A of the Act was amended to 12AA and then 12AB because registration scheme for Trust was to corollary to claim file and smile i.e. to file the registration as admittedly charitable institution. Subsequently, the provisions of exemption was brought in and opportunity was given to ld CIT(E) to deny the exemption, still the power for cancellation the registration was granted. However, the power to cancel the registration with retrospective effect is not provided in the Statute. This being so, as the registration in the present case, has been cancelled retrospectively, same is not permissible as the same is not provided in the Statute, the order passed by ld CIT(E) cancelling the registration retrospectively stands cancelled." 17. Now from going through the above decisions of Coordinate Bench in the case of Maa Jagat Janani Seva Trust (supra) wherein catena of judgm....
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....e for A.Y. 2022-23 and onwards and therefore in absence of word 'specified violation' prior to 01.04.2022, ld.PCIT erred in invoking section 12AB(4) of the Act in the cases of assessee(s) appeals before us. Cancellation of registration should be only for such years for which 'specified violation' exists. In the case of POGs alleged irregularity relates to A.Y. 2017-18 to 2020-21. As such, no reason exists for disturbance of other years. Similar is the situation for other assessees also wherein also no 'specified violation' committed by the assessee(s) as referred in section 12AB(4) of the Act post 01.04.2022. Admittedly, in case of POGS and MOGS registrations were granted under the old regime u/s. 12A of the Act whereas in case of AOGS registration was granted u/s.12AA of the Act. Thus in light of the discussions made hereinabove, we find that in the case of POGS and MOGS as the registration u/s. 12A was granted under the old regime on 04.12.1982 and 16.12.1976 therefore ld. PCIT grossly erred in cancelling the registration u/s. 12A of the Act from A.Y. 2014-15 onwards till A.Y. 2021-22. Accordingly, the legal issues raised in the additional grounds of appea....
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....) trusts which are constituted by the doctors/medical practitioners were governed by Medical Council of India Regulations, 2002. They have admitted that Pharma Companies had nominated their delegates for the conference and the assessee(s) trusts have incurred expenses towards travel facilities, lodging and boarding, registration fee etc. on such doctors on behalf of the pharmaceutical companies which is clearly in contravention of the Medical Council of India Regulations, 2002. Ld. PCIT found such activity of the assessee(s) trusts are 'specified violation' in so far as the assessee(s) trusts were found to be carrying out the activity of organising conferences which involves providing facilities to pharma companies to give freebies to doctors and such act of providing freebies is not being carried out in accordance with any of the conditions subject to which they were registered nor such activity is in accordance with the objects of the assessee(s) trusts). Ld. PCIT accordingly held that 'specified violation' under clause (e) of Explanation below section 12AB(4) of the Act is found to have taken place. 23. Before us, ld. Counsel for the assessee(s) trusts has sta....
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....they are found to be violating the guidelines but not a single doctor attending any programme has been fined/punished. 24. We observe that all the assessee(s) trusts in appeal before us are having common objects which mainly include promotion of professional fellowship among the members, encouraging research in the respective medical field relevant to such associations and to extend educational interest and to achieve these objectives one of the major source is of organising conferences/seminars of National and International level for which the attending doctors/delegates are also awarded Continuous Professional Development hours. Ld. Counsel for the assessee has referred to the flow of events which normally takes place for carrying out such activity and though we have mentioned in the preceding para, for the sake of convenience we briefly reproduce the same below : Particulars It is compulsory for doctors to earn 6 (six) CPD hours per year. Attending Programs / Seminars helps in earning CPD hours. Arranging seminars for facilitating Doctors to earn CPD hours is logical and correct. Approved institutions can conduct Seminars for CPD hours, provided, same are in complian....
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....erspective. Learned PCIT, erroneously, applied old regulation (2002 / 2009). New regulation of 2016 does not apply to Associations like Appellant herein. As such, allegation of violation of law can't be attributed to Appellant at all. Learned PCIT glossed over this position. As per guidelines, if any sponsorship by any pharma company leads to marketing / advertising / promotion of drugs / equipment of such pharma companies, no CPD hours are eligible for being granted. Herein, Seminars have earned CPD hours to Doctors expressly. By analogy, it can be logically inferred that, there is no violation of Guidelines. Learned PCIT reached his incorrect conclusions without considering these facts. As such, his conclusions deserve to be overruled. As per New Guidelines of 2016, for violation of Guidelines, following actions are provided for. Censure of erring Doctor Fine on Doctors Removal of name of such Doctor from Register of Doctors for varying periods Not a single Doctor, attending any program with Appellant, has been fined / punished. Hence, by analogy, it can be concluded that, no violation has taken place. These new / amended Guidelines are not referred by learned P....
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...., 2019: 09:00-09:20 Welcome Remarks and Scientific Program Outline Scientific Chairs: Dr. Dilip Mathai, Hyderabad; Dr. R Sajithkumar, Kottayam; Dr. Jyoti Dhar, UK 09:20-10:00 Oral Abstract Session-I (1-4) Chairs: Dr. R Sajithkumar, Kottayam Dr. Satish Rao, Mangalore 1. Awareness, Willingness, Facilitators and Barriers of PrEP among Key Population: Results from a cross- sectional study in high-prevalent geographies Dr. Ashwin Beludi, Medcha 2. Effect of "Mobile phone reminders and electronic tracking tool" (M-TRACK) on pre-treatment Loss to Follow up among PLHIV under programme settings: An interventional study from Gujarat Dr. Kedar Mehta, Vadodara 3. Barriers to adherence among PLHIV on ART in a tribal state of India, Chhattisgarh Mr. Mayank Khede, CSACS 4. A study of pyrexia of unknown origin in patients infected with HIV at a tertiary care referral centre Dr. Marikanty Adarsh, Hyderabad Session I 10:00-11:10 HIV Epidemic - Where are We? Chairs: Dr. Franco, Buonaguro, Italy Dr. Glory Alexander, Bangalore 10:00-10:30 Global Epidemiology : Success and Challenges Dr. Adeeba Kamarulzaman, IAS 10:30-10:55 N....
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....R 17:45-18:05 Cure of HIV Dr. Herve Fleury, France Discussion 18:30- 19:30: ASI Annual General Body Meeting 19:30 -21:30: Cultural Programme and Dinner Day 2: Nov 23, 2019: 09:00-09:40 Oral Abstract Presentations -III (9-11) (ART) Chairs: Dr. GD Ravindran, Bangalore Dr. Ketan Ranpariya, Surat 8. First line ARV drug resistance mutations among the HIV-1 subtype C infected patients of Agra, North India Mr. Sushanta Kumar Barik, Agra 9. Clinical and immunological profile of antiretroviral therapy failure patients Dr. Digvijay Chavan, Aurangabad 10. Dolutegravir regimens may need optimization for youth failing ART. Will K65R and M184V mutations lead to virologic failure and dolutegravir resistance? Ms. Vinie Kouamou, Zimbabwe Session VII 09:40-11:15 Think Beyond What You See Chairs: Dr. S. Murugan, Tirunelveli Dr. V Chandrasekhar, Warangal 09:40-10:00 CNS Complications of HIV Dr. Scott Letendre, USA 10:00-10:20 HIV and non-AIDS Malignancies Dr. Franco Buonaguro, Italy 10:20-10:40 Ageing and HIV Dr. Thomas Campbell, USA 10:40-11:00 Neurocognitive disorders i....
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....nnai Discussion Session XIV 10:25-10.50 Plenary 4 Chairs: Dr. Manoharan, Coimbatore, Dr. George Oommen, Mumbai Future of TB- Newer Drugs and diagnostics Dr. Constance Benson, USA 10:50-11:10 Tea Break Session XV 11:10-11:55 Special people - Special ways Chairs: Dr. A. R. Pażare, Mumbai Dr. Ruby Bansal, Ghaziabad 11:10 -11:30 Care of Adolescent and Children Dr. Jyoti Dhar, UK 11:30-11:45 What is new in ART for Women? Dr. S. Poongulali, Chennai Discussion Session XVI 11.55-12.20 Plenary 5 Chairs: Dr. Franco Buonaguro, Italy Dr. G. D. Ravindran, Bengaluru Long Acting ARVs Dr. Susan Swindells, USA Session XVIII 12:20-13:30 Towards Elimination of the Disease and the Stigma Chairs: Dr. Jyoti Dhar, UK Dr. Prakash Bora, Mumbai 12:20-12:35 Strategies to Eliminate TB Dr. Sanjay Kumar Mattoo, RNTCP 12:35-12:50 Elimination of Mother to Child HIV Transmission Dr. Glory Alexander, Bengaluru 12:50-13:05 Stigma and AIDS Bill Mr. Manoj Pardeshi, NCPI+, Pune 13:05-13:20 HIV/AIDS Act : An interactive session Justic....
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....ty is that for the purpose of imparting education programmes are devised and conferences are organised. Eminent speakers from across the globe/country are invited to give the deliberations and various research activities are also undertaken. Such platform of research activities provided by the conferences/seminars give rise to fostering critical thinking, enhancing learning, promoting innovation, and contributing to societal advancement by providing solutions to problems and improving lives and for carrying out this expenditure has to be incurred for booking the hotels, food, travel expenses and also the expenses relating to staff who are engaged in organizing such activity. Even in the judgment referred by the Ld. PCIT in the case of M/ s. Apex Laboratories Put. Ltd. vs. DCIT (supra) the same is focussed only of giving freebies by the Pharma companies claiming it as expenditure u/s 37 of the Act and the doctors who receive the freebies. Before us, the case is not of the Pharmaceutical Company or the doctors who have got the alleged benefit and the Revenue authorities assessing such pharmaceutical companies/doctors can decide the cases as per the provisions of the Act and the settl....
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.... / guidelines adopted by such approved institutions, in a transparent manner. It shall always be fully disclosed. e) Medical Research: A medical practitioner may carry out, participate in, work in research projects funded by pharmaceutical and allied healthcare industries. A medical practitioner is obliged to know that the fulfillment of the following items (1) to (vii) will be an imperative for undertaking any research assignment / project funded by industry for being proper and ethical. Thus, in accepting such a position a medical practitioner shall :- (i) Ensure that the particular research proposal(s) has the due permission from the competent concerned authorities. (ii) Ensure that such a research project(s) has the clearance of national/ state / institutional ethics committees/bodies. (iii) Ensure that it fulfils all the legal requirements prescribed for medical research. (iv) Ensure that the source and amount of funding is publicly disclosed at the beginning itself. (v) Ensure that proper care and facilities are provided to human volunteers, if they are necessary for the research project(s). (vi) Ensure that undue....
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....n dated 01.12.2016 the words "Professional Association of doctors" has been removed which means that assessee(s) trusts which are basically "Professional Association of doctors" are no more covered in the code of conduct regulations issued by Indian Medical Council. Further, the alleged allegation of providing freebies to the doctors and the funds received from Pharmaceutical Companies are for the period subsequent to the Notification dated 01.12.2016. 31. From the discussion made hereinabove, we find that the assessee(s) trusts are genuinely and consistently carrying on the work for the charitable objects for which they have been granted registration u/s.12A(old regime)/12AA/12AB of the Act and the funds they have received from the pharmaceutical companies have been applied for the objects of the trusts. Further, it has been consistently held that denial of exemptions can only be to the extent of violation made by the assessee(s) trusts. Hon'ble Bombay High Court in the case of Audyogik Shikshan Mandal (supra) has held that exemption u/s.11 ought to be denied only to the extent of violative portion. Further, since the assessee(s) trusts are genuinely carrying out the charit....