M/S MADRAS CITY OPHTHALMOLOGICAL ASSOCIATION,CHENNAI vs. CIT(E), CHENNAI

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ITA 2110/CHNY/2026Status: DisposedITAT Chennai13 October 2026AY 2025-263 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the matter back to the file of the Ld. CIT(E), Chennai for reconsideration. The reasoning was that while the Ld. CIT(E) relied on the financials to conclude that the assessee was primarily a mutual organization and not involved in charitable activities, the Tribunal, after reviewing the audited financials and the evidence submitted by the assessee, including photographs of charitable activities, found it necessary to re-examine the case. The Tribunal directed the Ld. CIT(E) to reconsider the matter in light of the evidence furnished before the Tribunal and to give the assessee an opportunity of being heard as per Section 282 of the Act. The assessee was also directed to participate in the proceedings before the Ld. CIT(E) by furnishing relevant explanations and evidence. The grounds raised by the assessee were allowed for statistical purposes only.

What were the facts?

The assessee, M/s. Madras City Ophthalmological Association, filed an appeal against the order of the Commissioner of Income Tax (Exemption) (CIT(E)), Chennai, dated 17.03.2026, for Assessment Year 2025-26. The assessee had applied for registration under Section 12AB of the Income Tax Act, 1961, on 30.09.2025, after having been provisionally approved earlier. The CIT(E) rejected the application. The assessee contended that the CIT(E) erred in treating its activities as falling under the principle of mutuality and failing to consider submitted documents and evidence, and not providing an opportunity to be heard. The Tribunal noted that the assessee trust has been in existence since December 2019 and observed that its audited financials were not in sync with its claimed objects.

What were the issues?

1. Whether the Ld. CIT (Exemption) erred in treating the charitable activities carried on by the appellant as falling under the principle of mutuality, which is incorrect and unsustainable (Section 12AB of the Income Tax Act, 1961)? Assessee's contentions: - The Ld. CIT (Exemption) erred in treating the charitable activities as falling under the principle of mutuality. - The Ld. CIT (Exemption) ought to have considered the documents and information provided during the proceedings for granting approval u/s 12A. - The Ld. CIT (Exemption) failed to duly consider the submissions and evidences submitted by the appellant and did not provide an opportunity of being heard before passing the rejection order. Revenue's contentions: - The Ld. CIT (E) relied on the financials of the assessee and held that the assessee is primarily a mutual organisation and nowhere involved in any charitable activity as such.

Which sections of the Income-tax Act were involved?

Section 12A,Section 12AB,Section 282

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

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

Hearing: 17.08.2026Pronounced: 13.10.2026

आयकर अपीलीय अधिकरण ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ 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. 2110/Chny/2026 ननिाारण वर्ा /Assessment Years: 2025-26 M/s. Madras City Ophthalmological v. The Commissioner of Income Association, Tax (Exemption), No.1957, 10th Main Road, Anna Nagar, Chennai. Chennai- 600 040. [PAN: AAKAM7872M]

(अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. Jharna B. Harilal, C.A, Ld. AR, प्रत्यर्थी की ओर से /Revenue by : Ms. Nayani Swapna, CIT Ld. DR सुनवाईकीतारीख/Date of Hearing : 17.08.2026 घोषणाकीतारीख /Date of Pronouncement : 13.10.2026 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 17.03.2026 for the Assessment Year (hereinafter referred as the ‘AY’) 2025- 26.

GROUDS OF APPEAL 1) The Order of the Ld. CIT (Exemption) is against the law and facts of the case. 2) The Ld. CIT (Exemption) erred both in law and on facts in treating the charitable activities carried on by the appellant as falling under the principle of mutuality, which is incorrect and unsustainable. 3) The Ld. CIT (Exemption) ought to have considered the documents and information provided during the course of proceedings initiated for granting approval u/s 12A. Page 1 of 3

ITA No.2110/Chny/2026 (2025-26) M/s. Madras City Ophthalmological Association

4) The Ld. CIT (Exemption) failed to duly consider the submissions and evidences submitted by the appellant in support of the application, and did not provide any further opportunity of being heard before passing the rejection order. 5) The appellant craves the leave of the Appellate to raise any further ground that may be adduced during the course of appeal.

2.

The brief facts of the case are that the assessee filed an online application on 30.09.2025 in Form No. 10AB u/s. 12A (1) (ac)(ii) of the Act, seeking registration u/s. 12AB of the Act. The assessee was provisionally approved vide registration letter dated: 21.03.2022, valid for A.Y.s 2022-23 to 2026-27. Ultimately, the application filed by the assessee on 30.09.2025 was rejected by the Ld. CIT(E), Chennai vide order dated: 17.03.2026 in terms of para 4 of his order. The assessee being aggrieved with the same preferred an appeal before us.

3.

We have gone through the order of the Ld. CIT (E), Chennai and submissions of the assessee alongwith grounds taken before us. It is observed that the assessee trust is in existence since December 2019. We have gone through the audited financials of the assessee and observed that the financials are not in sync with the objects as claimed by the assessee. But as the assessee has submitted the details alongwith photographs w.r.t. the charitable activities carried out by the assessee vide “Annexure-A”.

4.

It’s a consistent observation of the tribunal that a mutual organisation may be indulged in charitable activities but not vice-versa. Hence, as the Ld. CIT(E), Chennai is relying on the financials of the assessee and held that the assessee is primarily a mutual organisation and nowhere involved in any charitable activity as such, based on the submissions of the assessee, we restore the matter back to the file of the Ld. CIT(E), Chennai for reconsideration of the matter in the light of evidences furnished before us after giving the assessee an opportunity of being heard as per the provisions of section 282 of the Act and the assessee is also directed to participate in the proceedings before the Ld. CIT(E), Chennai by

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ITA No.2110/Chny/2026 (2025-26) M/s. Madras City Ophthalmological Association

furnishing relevant explanations alongwith evidences for the same. Resultantly, the grounds raised by the assessee are allowed for statistical purposes only. 5. In the result, the grounds raised by the assessee are allowed for statistical purposes only. Order pronounced on the 13th day of October, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 13th October, 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 5. गार्ड फाईल/GF Digitally signed K BABU by K BABU Date: 2026.10.16 09:06:46 +05'30'

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