SAIFEE MEDICARE CENTRE,SURAT vs. CIT(E), AHMEDABAD

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ITA 202/SRT/2026Status: DisposedITAT Surat28 October 20265 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the CIT(E) had not taken cognizance of the details filed by the assessee regarding its objects and charitable medical assistance activities provided at free or nominal charges. The Tribunal found that these aspects required proper verification. Consequently, the matter was remanded back to the file of the CIT(E) for proper verification of the details and adjudication in accordance with the Income Tax Act. The assessee was to be given an opportunity of hearing, adhering to the principles of natural justice. For ITA No. 202/SRT/2026, relating to the renewal of Section 12A registration, the appeal was partly allowed for statistical purposes. Similarly, for ITA No. 203/SRT/2026, concerning the rejection of the application under Section 80G(5)(ii), the matter was also remanded back to the CIT(E) with similar directions, and this appeal was also partly allowed for statistical purposes. The Tribunal did not decide the substantive issues raised by the assessee.

What were the facts?

The assessee, Saifee Medicare Centre, is a public charitable trust established in 1980, working in the field of medical relief. It previously held exemption under Section 10(23C)(iiiae) and later obtained registration under Section 12A(1)(ac)(i) of the Income Tax Act, 1961, effective from April 1, 2021, for five years, along with approval under Section 80G. The assessee filed an application for renewal of its registration on Form 10AB on June 3, 2025. The Commissioner of Income Tax (Exemption) [CIT(E)] issued a questionnaire and sought clarifications regarding the trust's activities. Despite the assessee providing details and audited accounts, the CIT(E) rejected the renewal application on December 30, 2025, under Section 12AB(4), concluding that the assessee engaged in business/trading activities by operating a medical clinic and dispensing medicines. The assessee appealed this order.

What were the issues?

1. Whether the Ld. CIT(E) erred in not issuing a show cause notice specifying the exact nature of alleged violations before passing the impugned order, thereby not providing an adequate opportunity of being heard to the assessee? 2. Whether the Ld. CIT(E) erred in mechanically applying the proviso to Section 2(15) without appreciating that medical relief is a specified charitable purpose, distinct from 'any other object of general public utility', and that the 20% restriction applies only to the latter, not to medical relief? 3. Whether the Ld. CIT(E) erred in overlooking documentary evidence, including audited accounts and reports reflecting free medical relief activities and concessions to weaker sections, and erroneously concluding that the assessee's activities were solely "sale of medicines" and "running medical clinics"? 4. Whether the Ld. CIT(E) erred in concluding that the activities were undertaken with a profit motive by ignoring that licensing is regulatory, cost recovery is not profit, and any surplus is ploughed back into charitable activities? Assessee's Contentions: The assessee argued that the CIT(E) ignored details of its charitable healthcare activities for the underserved population and free medical camps. It contended that medical relief is a distinct charitable purpose under Section 2(15), not subject to the 20% restriction applicable to 'any other object of general public utility'. Charging fees for medical services does not automatically make it a commercial activity, and mere licensing is regulatory. Any surplus is reinvested in charitable activities. Revenue's Contentions: The Ld. DR relied upon the order of the CIT(E).

Which sections of the Income-tax Act were involved?

Section 2(15),Section 12A(1)(ac)(i),Section 12AB(4),Section 80G(5)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

Pronounced: 28.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA Nos.202 & 203/SRT/2026 (िनधा�रण वष�/Assessment Year: NA) SAIFEE MEDICARE CENTRE CIT(EXEMPTION) GROUND FLOOR, MEDICARE ROOM NO.609, FLOOR-6, CENTRE, JAMEA SAIFIYA MARG, AAYKAR BHAWAN ZAMPA BAZAR, SURAT-395003, (VEJALPUR), NR. SACHIN GUJARAT TOWER, 100 FOOT ROAD, Vs. ANANDNAGAR- PRAHLADNAGAR ROAD, AHMEDABAD-380015, GUJARAT अपीलाथ� (APPELLANT) ��थ� (RESPONDENT)

Permanent Account Number of Assessee: AABTS2595R

अपीलाथ� �ारा/Appellant represented by: Shri Esmayeel Saherwala, CA ��थ� �ारा/Respondent represented by: Ms. Ila Mahendrasinh Parmar, CIT. DR सुनवाई की तारीख / Date of conclusion of hearing: 18.08.2026 घोषणा की तारीख / Date of pronouncement: 28.10.2026

O R D E R PER : SUCHITRA KAMBLE, J M: These two appeals filed by the assessee are against the order passed by the Commissioner of Income Tax (Exemption), Ahmedabad [in short “CIT(E)”] dated 30.12.2025.

2.

The assessee has raised the following grounds of appeal: “1. (1) On the facts and in the circumstances of the case and in law, the Ld. CIT(E). AHMEDABAD has erred in not issuing a show cause notice specifying the exact nature of alleged violations before passing the impugned order

ITA Nos.202 & 203/SRT/2026 (A.Y. NA) SAIFEE MEDICARE CENTRE vs. CIT(E) after submission of all the required documents and thereby not ensuring that adequate opportunity of being heard is provided to assessee. (2) The Ld. CIT(E) erred in law and on facts in mechanically applying the proviso to Section 2(15) without appreciating that: (a) Medical relief is a specified charitable purpose under Section 2(15) and separate from 'any other object of general public utility'; (b) The 20% restriction applies only to 'advancement of any other object of general public utility' and not to the four specified categories including 'medical relief'; (c) The charging of fees for medical services does not ipso facto convert charitable medical relief into commercial activity. (3) On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Ahmedabad has erred in: (a) Grossly overlooking and/or ignoring the documentary evidences filed along with the application, including but not limited to: (i) Audited accounts & Activity Reports clearly reflecting expenditure on free medical relief activities including numerous free medical check- up camps organized by the appellant; (ii) Sample bills/receipts evidencing concessions and subsidized rates granted to patients of economically weaker sections; (b) Erroneously and arbitrarily concluding that the activities of the appellant are restricted solely to "sale of medicines" and "running medical clinics," thereby completely ignoring the substantive medical relief & health check up/awareness activities as evidenced by documentary proof submitted, demonstrating genuine medical relief work and that the appellant's activities fall squarely within "medical relief" under Section 2(15) of the Act; (4) The Ld. CIT(E) erred in concluding that the activities are undertaken with profit motive by: (a) Ignoring that mere licensing under Drugs & Cosmetic Act 1940 is a regulatory requirement and does not establish commercial intent; (b) Failing to appreciate that recovering costs of medical services does not amount to profit motive (c) Disregarding that surplus, if any, is ploughed back into charitable activities and not distributed;

ITA Nos.202 & 203/SRT/2026 (A.Y. NA) SAIFEE MEDICARE CENTRE vs. CIT(E)

(5) The Appellant reserves the right to add, amend, replace or delete any grounds of Appeal before conclusion of the appeal. (6) The Appellant prays to quash the order of Ld CIT(E), Ahmedabad and allow the eligibility for registration U/s.12A of the Act.” 3. The assessee is a public charitable trust established under a Trust Deed dated 20.03.1980 and working in the field of Medical Relief. The Trust was duly registered with the Assistant Charity Commissioner, Surat, under the Bombay Public Trust Act, 1950. The assessee availed exemption u/s 10(23C)(iiiae) of the Income Tax Act, 1961 (in short “the Act”) available to medical institution since inception and assessed accordingly. Upon the introduction of the new registration regime, the assessee migrated its status and was granted regular registration u/s 12A(1)(ac)(i) of the Act via Form 10AC. This registration was effective from 01.04.2021 and was valid for a period of 5 years alongwtih approval u/s 8G of the Act. As per the requirement, the assessee trust filed application for renewal as Form 10AB on 03.06.2025 alongwith the details and the existing 12A & 80G certificates for renewal of trust. The CIT(E) issued a questionnaire notice dated 27.08.2025, which was replied on 08.09.2025 alongwith the details. The CIT(E) on 12.12.2025 requested the assessee trust to clarify the trust activities. The same was complied by the assessee. The CIT(E) rejected the renewal application on 30.12.2025 u/s12AB(4) of the Act and concluded that the assessee operates medical clinic and dispenses medicines to OPDs individuals, it engaged in the business / trading activities.

4.

Being aggrieved by the order of the CIT(E), the assessee filed appeal before us.

5.

The Ld. Authorized Representative (in short “the Ld. AR”) for the assessee submitted that the assessee trust has categorically given the details of the objects as well as the financials clearly set out that the assessee trust operates charitable healthcare center for undeserved

ITA Nos.202 & 203/SRT/2026 (A.Y. NA) SAIFEE MEDICARE CENTRE vs. CIT(E) population and give free medical camps to the general public. The details were totally ignored by the CIT(E).

6.

The Ld. Departmental Representative (in short “Ld. DR”) relied upon the order of the CIT(E) passed on 30.12.2025.

7.

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the CIT(E) has not taken cognizance of the details filed by the assessee in respect of objects of the assessee as well as the work carry out by the assessee trust for a general public in respect of medical assistance at free cost or nominal charges which amounts of charitable in nature on prima facie. These aspects need verification, therefore, we remand back this matter to the file of the CIT(E) for proper verification of the details and adjudicate the same as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Thus, ITA No.202/SRT/2026 is partly allowed for statistical purposes.

8.

As relates to ITA No.203/SRT/2026, the same is related to the rejection of application u/s 80G(5)(ii) of the Act. The same also needs verification. The similar direction passed in ITA No.202/SRT/2026 be taken into account and the matter is remanded back to the file of the CIT(E). Thus, ITA No.203/SRT/2026 is partly allowed for statistical purposes.

9.

In result, both the appeals filed by the assessee trust are partly allowed for statistical purposes.

Order pronounced in the open court on 28.10.2026

Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat; Dated: 28.10.2026 //True Copy// * SKS, Sr. P.S. 4

ITA Nos.202 & 203/SRT/2026 (A.Y. NA) SAIFEE MEDICARE CENTRE vs. CIT(E) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order, HEMA KISHORE Digitally signed by HEMA KISHORE JAKKA JAKKA Date: 2026.10.29 18:24:38 +05'30' Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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