TaxTMI 
TaxTMI 
2026 (9) TMI 688
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....r regular registration under section 12A(1)(ac)(iii) of the Income-tax Act, 1961 has been rejected and the provisional registration granted earlier on 06.08.2022 under section 12A(1)(ac)(vi) has also been cancelled. 2. The assessee is a Section 8 company whose objects, as contained in its Memorandum of Association, are exclusively in the field of medical relief and healthcare. The principal object, inter alia, is to establish, maintain and run hospitals, nursing homes, medical centres, clinics, health mobile units, dispensaries, diagnostic and pathological laboratories, rehabilitation centres and other healthcare facilities; to provide primary, secondary and tertiary medical services; and to provide medical facilities to underprivileged ....
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....tion was rejected and the existing provisional registration was also cancelled. 4. Before us, the assessee has filed detailed written submissions and supporting material. It has been submitted that the very foundation of the impugned order proceeds on an erroneous understanding of section 2(15). The assessee is engaged exclusively in providing medical relief and MMU/MMV services are nothing but a mode devised by the State Government for taking medical and diagnostic facilities to rural, remote and underprivileged areas. The fact that such services are rendered pursuant to a Government tender or that consideration is received from the Government does not change the intrinsic character of the activity. Our attention was also drawn to the c....
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....re, purpose and destination and not merely the contractual mechanism through which it is implemented or funded. Here, the assessee has been engaged by the Medical and Health Department, Government of Rajasthan for operating mobile medical units/vans. The very purpose of these units is to carry healthcare, diagnostic and medical facilities to populations situated in rural and remotely accessible areas. The contract awarded by the State Government is therefore not an activity divorced from the charitable objects of the assessee; it is the very instrumentality through which those objects of providing medical relief are being effectuated. 7. Section 2(15) consciously recognises "medical relief" as a distinct and independent limb of charitabl....
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....ted pursuant to a tender. Equally, deduction of tax at source under section 194C is only a statutory mechanism governing deduction from payments and cannot, by itself, determine the character of the recipient's activity under section 2(15). 9. We may also observe that generation of surplus, by itself, is equally inconclusive. As held in Reliance Foundation Hospital Trust Vs. CIT (Exemptions), Mumbai ITA Nos. 3798 & 3799/MUM/2026, order dated 09.06.2026, following the settled jurisprudence on charitable institutions, the Act does not contemplate that an institution pursuing medical relief must remain financially insignificant or economically fragile. What is material is the purpose for which the institution exists and the manner in which ....
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....ipt of payments for services rendered and the contemporaneous records placed before the authority, the conclusion that the activities themselves are not genuine lacks adequate evidentiary foundation. 11. Coming to the payments made to persons specified under section 13(3), the assessee's explanation was that these represented professional fees/remuneration for actual medical, managerial and administrative services rendered by qualified and experienced persons in operating the medical activities and MMU/MMV programme. Details regarding their functions, remuneration, ledger accounts and bank accounts were furnished and tax was also deducted at source. Most importantly, the Ld. CIT(E) has not recorded any definite finding, based upon compar....
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....tive opportunity to meet the same. On the facts brought before us, this requirement has not been demonstrated to have been fulfilled. Thus, even on this count, the cancellation of provisional registration cannot be sustained. 13. Thus, on an overall consideration of the objects of the assessee, the nature of the MMU/MMV programme, the Government contract under which these services are rendered and the material placed on record, we are unable to concur with the conclusion of the Ld. CIT(E) that the assessee is carrying on business activities in the garb of charity. The fundamental character of the activity remains medical relief. The fact that the State Government has chosen a contractual/tender mechanism for delivering healthcare service....