CHENNAI PHARMA INDUSTRIAL INFRASTRUCTURE UPGRADATION CO.,,CHENNAI vs. CIT, EXEMPTIONS,, CHENNAI

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ITA 1103/CHNY/2026Status: DisposedITAT Chennai20 July 20265 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal set aside the order of the CIT (Exemption) and directed the issuance of registration certificates under Section 12AB and 80G(5). The Tribunal relied on the principle of consistency, noting that there were no changes in the assessee's objects, revenue stream, or operational model since its inception and that a similar certificate was issued by the same officer previously.

What were the facts?

The assessee, a company registered under Section 8 of the Companies Act, 1956, had its registration under Section 12A and 80G renewed in 2021. The assessee applied for renewal again, but the CIT (Exemption) rejected the application. The assessee appealed this rejection.

What were the issues?

Whether the CIT (Exemption) erred in rejecting the renewal of registration under Section 12A and 80G without appreciating the charitable nature of the assessee's activities and the principle of consistency.

Which sections of the Income-tax Act were involved?

Section 12A,Section 80G,Section 2(15),Section 12AB,Section 80G(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: HONOURABLE SHRI ABY T. VARKEY & SHRI GAGAN GOYAL

Hearing: 15.07.2026Pronounced: 20.07.2026

आयकर अपीलीय अधिकरण ‘ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1102 & 1103/Chny/2026 ननिाारण वर्ा /Assessment Years: - Chennai Pharma Industrial v. The Commissioner of Income Infrastructure Upgradation Company, Tax (Exemption), Third Floor, SIDCO Garment Complex, Chennai. Block-1, SIDCO Industrial Estate, Guindy, Chennai-600 032, [PAN: AACCC4825C] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. R. Vijayaraghavan, Advocate Ld. AR प्रत्यर्थी की ओर से /Revenue by : Ms. R. Anitha, CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 15.07.2026 घोषणाकीतारीख /Date of Pronouncement : 20.07.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (E), (hereinafter referred as the ‘Ld. CIT (E)), Chennai dated 30.12.2025.

GROUDS OF APPEAL ITA No. 1102/Chny/2026 1. The order of the CIT (Exemption) is contrary to the law, facts, and circumstances of the case. 2. The Learned CIT (E) erred in law and on facts in rejecting registration under Section 12A of the Income-tax Act, 1961, without appreciating that the appellant's objects and activities are charitable in nature within the meaning of Section 2(15) of the Act. 3. The Learned CIT (E) failed to appreciate that the appellant is engaged in the establishment and operation of a Common Effluent Treatment Plant (CETP) for pollution control and Page 1 of 5

ITA No.1102 & 1103/Chny/2026 (-) Chennai Pharma Industrial Infrastructure Upgradation Co. environmental protection, which constitutes the "advancement of any other object of general public utility" under Section 2(15) of the Act. 4. The Learned CIT (E) erred in holding that the appellant's activities are not for the benefit of the "public at large" merely because the CETP is used by member industrial units, ignoring the settled legal position that environmental protection and pollution control inherently benefit society as a whole. 5. The Learned CIT (E) erred in law in concluding that restriction of immediate users to "member units" negates the charitable character, contrary to judicial precedents holding that an activity does not cease to be charitable merely because the beneficiaries are identifiable or limited, so long as the object serves a public purpose. 6. The Learned CIT (E) failed to appreciate that the appellant functions under statutory environmental regulations and TNPCB norms, and discharges a public obligation of preventing environmental degradation, thereby serving a public utility function. 7. The Learned CIT (E) erred in treating cost-sharing and recovery of actual expenses from users as evidence of non-charitable activity, without appreciating that the absence of a profit motive and the application of funds solely towards the objects are the decisive tests under Section 2(15). 8. The Learned CIT (E) wrongly invoked the principle of mutuality, ignoring that the issue relates to the sharing of expenses with users and that the benefits of pollution control extend beyond contributors to the general public; therefore, the essential conditions for mutuality are not satisfied. 9. The Learned CIT (E) erred in law in holding that receipt of contributions only from members disentitles the appellant from registration, despite the settled law that the source of income is irrelevant and that the dominant purpose test alone is determinative. 10. The Learned CIT (E) erred in relying on enabling clauses of the Memorandum of Association permitting activities outside India, without considering that the appellant's actual activities are confined to India and that registration under Section 12A cannot be denied on hypothetical or unutilized powers. 11. The Learned CIT (E) failed to apply the dominant purpose test and mechanically rejected registration, which is impermissible at the stage of proceedings under Section 12A.

12.

In view of the above grounds, the appellant prays that the Hon'ble Tribunal may kindly set aside the order of the CIT (E) and direct the grant of registration under Section 12A of the Income-tax Act, 1961. ITA No.1103/Chny/2026

1.

The order of the CIT (Exemption) is contrary to the law, facts, and circumstances of the case.

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ITA No.1102 & 1103/Chny/2026 (-) Chennai Pharma Industrial Infrastructure Upgradation Co. 2. The Learned CIT(E) erred in law and on facts in rejecting registration under Section 80G of the Income-tax Act, 1961, without appreciating that the appellant's objects and activities are charitable in nature within the meaning of Section 2(15) of the Act. 3. The Learned CIT (E) failed to appreciate that the appellant is engaged in the establishment and operation of a Common Effluent Treatment Plant (CETP) for pollution control and environmental protection, which constitutes the "advancement of any other object of general public utility" under Section 2(15) of the Act. 4. The Learned CIT(E) erred in holding that the appellant's activities are not for the benefit of the "public at large" merely because the CETP is used by member industrial units, ignoring the settled legal position that environmental protection and pollution control inherently benefit society as a whole. 5. The Learned CIT(E) erred in law in concluding that restriction of immediate users to "member units" negates the charitable character, contrary to judicial precedents holding that an activity does not cease to be charitable merely because the beneficiaries are identifiable or limited, so long as the object serves a public purpose. 6. The Learned CIT (E) failed to appreciate that the appellant functions under statutory environmental regulations and TNPCB norms, and discharges a public obligation of preventing environmental degradation, thereby serving a public utility function. 7. The Learned CIT (E) erred in treating cost-sharing and recovery of actual expenses from users as evidence of non-charitable activity, without appreciating that the absence of a profit motive and the application of funds solely towards the objects are the decisive tests under Section 2(15). 8. The Learned CIT (E) wrongly invoked the principle of mutuality, ignoring that the issue relates to the sharing of expenses with users and that the benefits of pollution control extend beyond contributors to the general public; therefore, the essential conditions for mutuality are not satisfied. 9. The Learned CIT (E) erred in law in holding that receipt of contributions only from members disentitles the appellant from registration, despite the settled law that the source of income is irrelevant and that the dominant purpose test alone is determinative. 10. The Learned CIT(E) erred in relying on enabling clauses of the Memorandum of Association permitting activities outside India, without considering that the appellant's actual activities are confined to India and that registration under Section 12A cannot be denied on hypothetical or unutilized powers. 11. The Learned CIT (E) failed to apply the dominant purpose test and mechanically rejected registration, which is impermissible at the stage of proceedings under Section 80G. 12. In view of the above grounds, the appellant prays that the Hon'ble Tribunal may kindly set aside the order of the CIT(E) and direct the grant of registration under Section 80G of the Income-tax Act, 1961.

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ITA No.1102 & 1103/Chny/2026 (-) Chennai Pharma Industrial Infrastructure Upgradation Co. 2. The brief facts of the case are that the assessee is a company registered u/s. 8 of the Company’s Act 1956 and was found in the year 2004. Since inception the assessee was registered u/s. 12A and 80G of the Act. The last registration granted to the assessee u/s. 12A and 80G of the Act was 24.09.2021 applicable for A.Y. 2022-23 to A.Y. 2026-27. As a matter of procedure the assessee again applied for renewal of registration u/s. 12A in Form No.10AB under Rule 17A of the I.T. Rules, 1962 under item (ii) of clause (ac) of sub-section (1) of section 12A of the Act but the same was rejected by the Ld. CIT (Exemption), Chennai vide order dated 30.12.2025. The assessee being aggrieved with this order preferred the present appeal before us.

3.

We have gone through the order of the Ld. CIT (E), Chennai and submissions of the assessee along with grounds taken before us. In addition to this, a factual argument was also there during the course of hearing before the bench that since 2004 and till date there is no change / amendment in the object clauses of the assessee, Revenue stream and operational model. This fact was confronted to the Ld. CIT (DR) during the course of hearing itself and she also agreed to this fact that there is no change in the facts of the assessee in terms of object clauses of the assessee, Revenue stream and operational model.

4.

Moreover, the earlier certificate vide dated: 24.09.2021 applicable for A.Y. 2022-23 to A.Y. 2026-27 was also issued by the same officer, still he ignored the facts of the case and even his own certificate issued for the earlier years. Hence, based on the above facts, without examining the merits in the order of the Ld. CIT (E), Chennai and submissions of the assessee, we relied upon the principle of consistency along with the case laws relied upon by the assessee, we set aside the orders of the Ld. CIT (E), Chennai and directed for issuance of Registration Certificate u/s. 12AB and 80G (5) of the Act. In view of this, the grounds taken by the assessee are allowed for both the appeals.

5.

In the results, both the appeals of the assessee are allowed in above terms.

Order pronounced on the 20th day of July, 2026, in Chennai.

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ITA No.1102 & 1103/Chny/2026 (-) Chennai Pharma Industrial Infrastructure Upgradation Co.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 20th July, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR Digitally signed 5. गार्ड फाईल/GF K BABU by K BABU Date: 2026.07.27 11:00:43 +05'30'

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