AIDS SOCIETY OF INDIA,MUMBAI vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), PUNE

Assessee(s) by : Sl.No.1 to 3 - Shri Kishor B. Phadke Sl.No.4 –Shri Rajiv Khandelwal Revenue by : Shri Ajay Kumar Keshari Date of hearing : 08.01.2025 Date of pronouncement : 26.03.2025 आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : These appeals at the instance of different assessees‟ are directed against the separate orders all evenly dated 06.03.2023 framed by PCIT (Central), Pune u/s.12AB(4) of the Income-tax Act, 1961 (in short „the Act‟).

2. As all the parties have admitted that most of the issues involved in these appeals are common, we proceed to dispose of the same by this consolidated order for the sake of convenience and brevity. 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. Appellant , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others contends that, such an analogy is incorrect considering the absence of possibility of any benefits being reaped / enjoyed by Appellant, being a public charitable trust.

4. Learned PCIT-Central Circle, Pune erred in law and on facts in revoking registration u/s.12A of ITA, 1961 from AY 2014-15 without appreciating that, the alleged incriminating evidences seized from "EMCURE Pharma" group relates to AY 2017-18 and onwards.

5. Appellant craves leave to add/modify/ amend /delete all / any of the grounds of appeal.‖ 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. in the case of The Mumbai Obstetrics and Gynaecological Society (in short MOGS), assessee has raised following grounds of appeal :

―The following grounds are taken without prejudice to each other - On facts and in law, 1] The learned Pr. CIT erred in cancelling the registration u/s 12AB(4) w.e.f. A.Y. 2015-16 which was granted to the assessee society u/s 12A by wrongly holding that the activities of the appellant society are neither genuine nor are being carried out in accordance with its objects.

21. The learned Pr. CIT failed to appreciate that -- a. The appellant society accepted the grants from the pharma companies for the educational programs and not for giving any freebies to the delegates for the conferences and thus, it had not violated the Indian Medical Council Regulations. b. The activities of the society like conducting medical camps, medical conferences, etc. were conducted as per the trust deed and there was no illegal activity of the society in any of these years. C. Indian Medical Council had never held that the appellant society had violated any of its rules and regulations in conducting its activities over the years. d. Arranging the travel, lodging, etc. for the faculties for the medical conferences and offering them some mementoes did not amount to , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others offering freebies to them as it is a general norm that the organisers have to bear such expenditure for selected faculty. e. The appellant 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(4) by relying on explanation (e and f) thereof when such explanation was introduced by Finance Act, 2022 only and it was not on the statute in the earlier years. 7] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 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. in the case of Agra Obstetrical and Gynaecological Society (in short AOGS), assessee has raised following grounds of appeal :

―1. The Learned Pr. Commissioner of Income Tax has erred in law and on facts initiating proceedings under section 12AB(4) on the reference made by the Ld. AO even when the alleged issue were not subject matter of the proceedings before him.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 2. The learned Pr. Commissioner of Income Tax has erred in law and on facts in withdrawing our registration u/s 12AB, without there being any specified violation as contemplated in section 12AB(4).

3. The learned Pr. Commissioner of Income Tax has erred in law and on facts to ascertain that the appellant has carried out the charitable activity prescribed u/s 2(15) of the Act and that the activities of the society are genuine.

4. The learned Pr. Commissioner of Income Tax has erred in law and on facts in passing the order without giving proper opportunity of being heard.

5. The learned Pr. Commissioner of Income Tax has erred in law and on facts to pass the order without taking proper cognizance of the reply submitted by the appellant against the notice issued u/s 12AB(4).

7. The learned Pr. Commissioner of Income Tax has erred in law and on facts to reject the application merely based on presumption, conjecture and on surmises basis.

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. in the case of AIDS Society of India (in short „AIDS Society‟), the assessee has raised following grounds of appeal :

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others ―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 of the case in its entirety and hence, the action of the Pr CIT is bad in law and the impugned order needs to be quashed. The appellants further, contend that the Pr CIT has not brought any evidence on record to prove that specified violation as defined in Explanation to section 12AB(4) has occurred and hence, the action of the Pr CIT in framing the impugned order is bad in law and needs to be reversed. The appellants crave leave to add to, alter or amend the aforestated ground of appeal.‖

8. Ld. Counsel for the assessee Shri Rajiv Khandelwal appearing for the assessee trust mentioned at Sl.No.4 –submitted that as the facts and issues raised in these appeals are similar, he would concur with the arguments putforth by Shri Kishor B. Phadke.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 9. After hearing the parties and the fact that additional ground raised by the assessee(s) trusts does not require any fresh investigation of facts and purely legal in nature, we allow the additional ground raised by the assessee(s) trusts in the appeals relating to POGS, MOGS and AOGS are admitted for adjudication by virtue of decision in the case of National Thermal Power Company Ltd. Vs CIT (supra).

12. As regards the merits of the case are concerned, it has been admitted by both the counsels namely Shri Kishor B. Phadke and Shri Rajiv Khandelwal representing these cases that all issues raised in the appeals are common and therefore we would take up in the case of POGS as the lead case and our decision on merits of the case shall apply mutatis mutandis to all the remaining cases.

14. It was also observed that there is violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 and to assess the impact of the above violation to the regulations of Indian Medical Council, show cause notice was issued and proceedings were initiated. Ld. PCIT firstly referred to the sources of receipts of the trust and also from various donors who are also the sponsors to various conferences organised by the trust on various topics 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 companies including the company namely Emcure 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 doctors and the Trust do not interfere in selection of the delegates for the conference.

15. Thereafter, ld. PCIT gave reference to the judgment of Hon‟ble Apex Court in the case of M/s. Apex Laboratories Pvt. Ltd. vs. DCIT 135 Taxmann.com 286 (SC) where the Hon‟ble Court has conclusively held that since acceptance of freebies by Medical Practitioners are punishable as per Circular issued by Medical Council of India under Medical Council Regulations, 2002, Gifting of such freebies by Pharmaceutical Companies to Medical Practitioners is also prohibited by law and thus expenditure incurred in distribution of such freebies would not be allowed as deduction in terms of Explanation 1 to section 37(1) of the Act. Giving reference to the judgment of Hon‟ble Apex Court, ld. PCIT noticed that in the instant case the Pharmaceutical Company EPL has given the freebies to the doctors through the assessee trust in the garb of organising conferences with hidden priorities of providing freebies to the Doctors/Medical Practitioners. By adopting this route, sponsorship companies claims the otherwise inadmissible expenses and avoid rigours of taxation. He further observed that the assessee trust has violated condition (q) of the Certificate dated 24.09.2021 registering the new registration rules provided u/s.12A of the Act. Thereafter, ld. PCIT discussed the , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others provisions of section 12AB(4) and the specified violation referred therein. He also referred to clause 6.8 of the Indian Medical Council Regulations 2002 applicable to Pharmaceutical and allied Health sector industries. Ld. PCIT concluded the proceedings by cancelling the registration granted u/s.12A(a) of the Act on 14.12.1982 from A.Y. 2014-15 onwards and also cancelled the registration granted u/s.12A(1)(ac)(i) issued on 08.02.2022 to be cancelled from A.Y. 2022-23 onwards observing as follows :

―11. In the survey proceedings in the case of the assessee trust certain documents impounded contain correspondence regarding list of doctors nominated by Emcure Pharma. Some of the documents viz. Pages 8-11 in. Bundle No 06 and Pages 36-38 of Bundle No 05 have been reproduced in reference of the Assessing Officer. These documents contain a list of the doctors who were nominated by Emcure Pharma and the nominations were accepted by the assessee trust. Arrangements for accommodation of the nominated doctors are 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.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 12.1 Similar is the situation in the case of the assessee trust, as assessee trust is constituted by the doctors/medical practitioners who are governed by MCI Regulations, 2002. The assessee trust has admitted that pharma companies had nominated their delegates for the conference, and in respect of the nominated doctors/delegates, the assessee trust has incurred expenses towards travel facilities, lodging & boarding, registration fee etc. on such doctors on behalf of the pharma companies, which is clearly in contravention of the MCI Regulations, 2002. In this context the following observations of the Hon'ble ITAT Mumbai in the case of Deputy Commissioner of Income-tax, Central Circle-2(4), Mumbai Macleods Pharmaceuticals Ltd.[2021] 131 taxmann.com 154 (Mumbai Trib.) are found relevant: 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.

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 fellow citizenry. Hon'ble Prime Minister echoed these feelings when, on 19th April 2018, he explained how the use of generic medicines, through Jan Aushadhalya, has brought down medicine cost by almost 85%, and subtly hinted towards this not so holy nexus between medical professionals and pharmaceutical companies by , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others observing that "In the same way.....the person who writes the medicine also gets something. You must know that the doctors' conference is sometimes in Singapore, sometimes it is in Dubai. It is not because someone is sick there; it is so because it is necessary for the pharmaceutical companies" (https://www.narendramodi.in/ preliminary- text-of-pm-s-interaction-in-bharat-ki-baat-sabke-saath- programme-at-london--539744). If Government can bring down the effective cost of medicine by 85% by selling the same medicine by its generic name, one can imagine how end users have been taken for a ride all along-and these freebies have played a critical role in those maneuverings. Not only it is wholly illegal that medical professionals are extended freebies by the pharmaceutical companies, but such gratifications are also clearly opposed to public policy as well as is recognized by Hon'ble Punjab & Haryana High Court in the case of Kap Scan's case(supra). 12.2 The assessee trust failed to show that it was not facilitating the process of providing freebies by the pharmaceutical companies to the medical practitioners/ doctors. Furthermore, the activities of the assessee Trust have resulted in violations of Indian Medical Council Regulations and are not conducive to public policy. While assisting the pharmaceutical company in marketing of its products may be an unintended fallout, the same cannot be said about being instrumental in providing freebies to the doctors in support of the marketing strategy of a pharmaceutical company In Commissioner of Income-Tax v. Kap Scan and Diagnostic Centre P. Ltd., a Division Bench of the Punjab and Haryana High Court disallowed the benefit of the exemption for commission provided to doctors engaged in private practice for referring their patients to the assessee's diagnostic centre, holding that: "It, thus, emerges that an assessee would not be entitled to deduction of payments made in contravention of law. Similarly, payments which are opposed to public policy being in the nature 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others render the activities of the assessee trust as non-genuine. Hence, the assessee is found to have done a 'specified violation" in so far as the assessee is found to be carrying out activity of organizing conferences which involves providing facility to pharmaceutical company to give freebies to doctors. This act of facilitating the act of providing freebies is not being carried out in accordance with any of the conditions subject to which it was registered nor such activity is in accordance with the objects of the assessee trust. Thus, specified violation under clause (e) of Explanation below section 12AB(4) of the Act is found to have taken place in the case of the assessee trust. 12.4 Undisputedly, a party cannot be permitted to carry out an activity on behalf of some other person who himself is not permitted to carry out such activity. The arrangement between the assessee and pharma companies is such that by providing free of cost travel, accommodation and waiver of registration fee to the doctors nominated by pharma companies, the assessee trust has provided freebies to the doctors on behalf of and at the instruction of the pharma companies, which are not permitted to undertake such activities by themselves. It is settled law that what cannot be done directly cannot be permitted to be done indirectly. That the Hon'ble Supreme Court in the aforesaid judgment in the case of Apex Laboratories (P.) Ltd (supra) has further held that 'It is also a settled principle of law that no court will lend its aid to a party that roots its cause of action in an immoral or illegal act (ex dolomalo non oritur action) meaning that none should be allowed to profit from any wrongdoing coupled with the fact that statutory regimes should be coherent and not self-defeating."

13. It is also seen that activities of the assessee trust as stated hereinabove are not an activity recognized under the registration granted under Section 12A of the Act. The aforesaid finding coupled with the inference that in guise of making expenditure on its objects, the trust is facilitating the receipt of freebies by the doctors which is in contravention of Medical Council of India Regulations. This is clearly against public policy and amounts to misuse of the registration granted to the trust u/s 12A of the Act. In this regard reference is made to the judgment of the Hon'ble Supreme Court in the case of 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 of registration. Sub section (3) of section 12AA provides that where a trust or an institution has been granted registration under clause (b) of section 12AA(1) and subsequently the Principal Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, he shall pass an order in writing cancelling the registration of such trust or institution. Further section 12AA(4) of the Act (as applicable from 01/10/2014), provides that where a trust or an institution has been granted registration under clause (b) of section 12AA(1) 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 sections 11and 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 Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust. Sub clause (ii) of Clause (c) of section 13(1) provides that in the case of a trust for charitable purposes, if any income thereof during the previous year is used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3) then the provisions of sections 1land 12 do not apply to exclude either whole or any part of the income of such trust or institution. Further subsection (3) of section 13 provides the category of persons for whose benefit the income of the trust cannot be used or applied, directly or indirectly. The clause (b) of subsection (3) of section 13 refers to any person who has made a substantial contribution to the trust or institution, that is to say, any person whose total contribution up to the end of the relevant previous year exceeds fifty thousand rupees. Since in the case of the assessee trust, Emcure Pharma has made a contribution exceeding Rs. 50,000/- and undisputedly the assessee trust has incurred expenses on travel and accommodation of the doctors as per the list provided by Emcure Pharma, as such, it can be concluded that it has provided benefit to Emcure Pharma, and hence its income is not liable to be excluded under the provisions of section 11 and 12 of the Act and hence even as per subsection (4) of section 12AA of the Act, registration granted to the 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 provides that where a trust or an institution has been granted registration and if subsequently, Pr. CIT or CIT is satisfied that the activities of the trust are not genuine or 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 the Commissioner has power to cancel the registration from the time when such breach has occurred. Suppose, if the assessee after grant of registration carries out its activities in accordance with its objects and the activities are also genuine then the assessee is entitled for benefits of section 12AA; and if from a particular period or year, the activities are found to be either non-genuine or not carried out in accordance with its stated objects, then the Commissioner can cancel the registration from the date or period when such non genuineness is found. Hon'ble Madras High Court in the case of Prathyusha Educational Trust (supra) have clearly reiterated this proposition, relevant text of which has been already incorporated above, wherein their Lordships have held it a misnomer to state that the order is retrospective or retroactive and the order of the cancellation of registration even passed on subsequent date would take effect from the year when cause of action arose

16. The reference made by 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.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 institution has not complied with the requirement of any other law, then same would also be a specified violation under the said clause. Since in this case, the assessee trust by acting as a conduit of the pharmaceutical companies has provided freebies to the doctors/medical practitioners nominated by such pharmaceutical companies, as such, it has violated the MCI Regulations, 2002 and the decision 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) which has become law of land. This act of violation of 'other law' by the assessee trust falls under the specified violation in clause (f) of Explanation below section 12AB(4) of the Act.

“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 holding these mass conferences are quite exorbitant. For such conferences, POGS receives sponsorship grants from various pharma companies as a cost mitigation exercise. Summary of Income & Expenditure and Balance Sheet for FY 2017-18 to 2021-22 is enclosed herewith and marked as Annexure-2. 1.3 Old registration u/s 12A–Appellant has availed 12A registration on 4/12/1982. Copy of the 12A registration certificate is given at Page 2 of Paper-Book-I. Since then, Appellant‘s 12A registration (old regime) has never been disturbed by I-T officials. 1.4 New registration u/s 12AB – Appellant has also availed registration u/s 12AB (new regime) from 1/4/2021 onwards. Appellant was granted registration u/s 12A(1)(ac)(i) on 8/2/22. Copy of the new regime registration certificate is given at Page 19 of Paper-Book-I. 1.5 Allegation against Appellant - Key issue alleged by learned PCIT-CC is that, Appellant has committed violation of norms / standards of Indian Medical Council on account of extending freebies to doctors / professional received from various Pharma Companies through their sponsorships. Appellant refutes the said allegation on various accounts, for which, separate grounds of appeal are raised.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 1.6 Cancellation of registrations – For various reasons stated in the rejection order dated 6/3/23, learned PCIT-CC has cancelled the registration u/s 12A as well as u/s 12AB. It is the contention of Appellant that all charges levied by learned PCIT-CC are, mere conjectures and suspicions, and unfortunately so formed, without considering facts of the case and relevant applicable legal provisions. 1.7 Challenge to cancellation - The key issue involved in the appeal is objection to the cancellation of registration u/s 12A and u/s 12AB of the ITA, 1961. The registrations have been cancelled by the learned PCIT (Central Circle) considering some emails / documents seized during search u/s 132 in case of M/s EMCURE PHARMA LIMITED and survey u/s 133A in case of Appellant herein. Objections are raised through various grounds of appeal. These grounds could be segregated into three main parts as under – a) Grounds relating to jurisdiction assumed by learned PCIT (not pressed) b) Grounds relating to powers available in section 12AB c) Grounds relating to merits of the Appeal

2. Powers u/s 12AB(4) [Key points / issues related to powers available u/s 12AB(4) are summarized as below] Sr. Particulars Reference Paper-Book No. in 12AB(4) reference order 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 Full copy of were rejected by the apex court in case of by the apex , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Sr. Particulars Reference Paper-Book No. in 12AB(4) reference order Industrial Infrastructure Development Corporation court (Gwalior) M.P. Ltd.[2018] 90 taxmann.com 281 (SC) decision is observing that, order of grant / cancellation of given at registration of EXEMPTION, is a quasi-judicial order; Flag-6 of and that; power for passing such order ought to be Case-law expressly granted by Legislature. In absence of compilation. express power, 12A registration can‘t be cancelled u/s 12AA. Exactly similar factual matrix prevails now. Under section 12AB(4), only, registrations granted u/s 12AA and 12AB cases are covered for cancellation. In other words, u/s 12AB, no power is bestowed for cancellation of registration u/s 12A).

2.3 ―Specified violation‖ are applicable from AY 2022-23 - Islamic (and not for earlier years). For earlier years, criteria Academy‘s of ―Specified Violations‖ can‘t be applied. This issue case (Flag- remained to be considered by learned PCIT. 21) given in Case Law Compilation 2.4 Cancellation of registration should be only for such - Wholesale years, for which, ―specified violation‖ exists. In Cloth‘s present POGS case, alleged irregularity relates to caseFlag-9) AY 17-18 and 20-21. As such, no reason exists for given in disturbance of other years. This factum is glossed Case Law over by learned PCIT. Compilation 2.5 Registration cancellation for ―specified violations‘ is - - plausible only when, the PCIT is satisfied about the same. Now, reaching a ―satisfaction‖ stands at a higher pedestal, compared to earlier pedestal (say) .. AO has reason to suspect … - - .. AO has reasons suggesting escapement … .. AO is of the opinion .. - .. AO has reason to believe, etc. - In present case, point of ―satisfaction‖ is not reached. Instead, conclusions have been reached on mere suspicion. Facts of the case and legal provisions are not considered in proper perspective.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Sr. Particulars Reference Paper-Book No. in 12AB(4) reference order 2.6 Issue of cancellation of registration u/s 12AB ought Chandigarh to be tested at the end of Assessment proceedings Education (especially when, the Assessment proceedings are Society(Flag- ongoing). Reason being that, issues of alleged 10) + irregularity gets elaborated / explained in detail Shridevi during the scrutiny proceedings. Cancellation of Charitable registration, prior to completion of Assessment Trust(Flag- proceedings is premature step. 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 12AB(4) reveals that, the power of cancellation of registration granted u/s 12AB(4) is restricted only for the following two types of registrations – a) Registrations granted u/s 12AB(1) b) Registrations granted u/s 12AA(1) As such, the cancellation of registration granted to the Appellant on 04/12/1982 was beyond the powers bestowed u/s 12AB(4). Disturbance of 12A registration is incorrect as per law. Further, cancellation of registration granted u/s 12AB is permissible only on basis of some material showing ―specified violation‖. No such material exists with learned PCIT. Hence, disturbance of 12AB registration is inappropriate on facts. For various above contentions, cancellation of registrations granted u/s 12A on 04/12/1982 and granted on 8/2/2022 u/s 12A is wrong and incorrect.

As per the regulatory framework, the IMC has divested powers w.r.t registration, - renewal and - - cancellation of licenses of medical professionals to the MMC 3.2 Essential condition for a medical professional In India, only those medical professionals whose names are in the Indian Medical Register are eligible to practice as a medical professional.

Following are the relevant provisions:

Paper-Book-III Indian Medical Provision in brief Council Act, 1956 or Indian Medical Regulations, 2002 / 2016 (Relevant section / (Page Number) clause 224 Section 21 The Council shall cause maintenance of REGISTER which shall contain names of all medical professionals 225 Section 23 The Registrar shall enter name of a medical professional into the REGISTER 226 Section 27 Every medical professional, whose name is entered into the REGISTER 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Paper-Book-III Indian Medical Provision in brief Council Act, 1956 or Indian Medical Regulations, 2002 / 2016 (Relevant section / (Page Number) clause 308 Guidelines for CPD For renewal of the name of medical Clause-1 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 granted. As such, an internal check and balance exists in the regulatory framework that, all such programs, for which CPD hours get allotted, there is absence of any pharma company‘s promotion of drugs / medicines / equipment. 3.4 Events organized / regulated by the MMC Now, for granting the CPD hours, holding of worthy conferences is a key task. This task is performed by various charitable organizations. The field of medicines is huge. In each discipline, some apex charitable institutions are recognized by the IMC such as: AIDS Society of India - Heart Foundation - - Federation of Obstetrics and Gynecological Society of India (i.e. FOGSI) - etc. Now, despite these apex bodies working in respective fields, the task of holding conferences for thousands of medical professionals scattered at various places in India, can‘t be performed single-handedly. As such, these apex bodies grant accreditations to various eligible charitable institutions. POGS (i.e. Appellant herein) is an accredited institution of FOGSI above.

3.5 Appellant‘s programs / seminars , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others As per the Maharashtra Medical Council‘s guidelines, CPD credit points can be earned by attending Symposium/Conferences/ Workshops/Research paper/Books publications etc (Page 308 of the Paper Book No. III). Appellant trust has got itself accredited with the Maharashtra Medical Council for conducting workshops, seminars, conferences, short courses etc(Page 180 of the Paper Book No. II). As stated earlier, Appellant is an accredited institution of FOGSI in this regard. The brief events involved thereafter w.r.t conference and sponsorships are as follows:

- Deciding the venue, topic of the conference and the speakers - Inviting expressions of interest from various pharma companies for educational grant/sponsorship Application to Maharashtra Medical Council for approval of topics, venue - and CPD hours Approval from Maharashtra Medical Council w.r.t topics, venue and CPD - hours - Receipt of educational grant/sponsorship from the pharma companies - Conference takes place - Submission of list of speakers/delegates to the Maharashtra Medical Council for awarding CPD Credit points to the eligible medical practitioners. 3.6 Attendance examples for Appellant‘s Seminars A brief summary of major conferences organized by appellant along with CPD points are as follows:

CPD Date Conference Name Attendance Pts. 12/8/18 Lactacon 2018 2 351 19/8/18 USG Workshop 2 169 8/12/18 Summit 2018 - Annual to 4 296 Conference of POGS 9/12/18 27/7/19 to FOGSI Clinicolegal 2019 4 300+ 28/7/19 11/8/19 Lactacon 2019 2 100 19/5/19 USG Workshop 2 129 11/12/20 Just Tumors Conference to 3 6,500+ (Virtual) 13/12/20 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others CPD Date Conference Name Attendance Pts. 4/12/21 to Fetopanishad 4 211 5/12/21 16/7/21 to AMOGS 2021 2 174 18/7/21 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 companies are meant and utilized for promoting educational and research in the field of Obstetrics and Gynecology as per the term of contract with the pharma companies. As such, the appellant is carrying its activities as per the object clause of the trust deed. Further, the sponsor pharma companies add specific riders in their sponsorship letters that, their sponsorships are meant only for educational and research pursuit and not for promotion of the drugs / medicines produced by such companies. Kindly refer to the f o l l o wi n g s a m p l e s p o n s o r s h i p l e t t e r s i n t h i s r e g a r d : - Emcure Pharma – Page 211 of Paper-Book-II - SANOFI – Page 207 of Paper-Book-II - ERIS – Page 205 of Paper-Book-II - Abbot – Page 212 of Paper-Book-II From these sponsorship letters, it will reveal that, pursuit of the sponsorships is not to grant any freebies to medical professionals. On the other hand, pursuit is to mitigate costs of education and research programs. 3.9 Regulations issued by IMC (regarding professional conduct, etc.) IMC issues regulations from time to time, as to how, the medical professionals should conduct their practices. The Regulations issued in year 2002 (updated in year 2009) are given at Page-246 of Paper-Book- III. A further updated Regulation issued on 18/10/2016 is enclosed herewith and marked as Annexure-5. As per clause 6.8 on Page-9 of the said 2016 Regulations (in comparison to the year 2009 regulations), it reveals, the said Regulation do not apply to Associations, and on the contrary, it applies only to medical professionals. Even on this count, the allegations / objections of the learned PCIT (Central) appear to be incorrect. Learned PCIT (Central) has relied upon the year 2002 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Regulations which do not hold the field considering the revised Regulations of year 2016. 3.10 Regulations permit sponsorship for approved research programs Kindly refer to sub-clause (e) of clause 6.8.1 of the 2016 Regulations given at Annexure-5 [and similar clause (e) of clause 6.8.1 of the 2002 / 2009 Regulations given at Page-252 of Paper-Book-III]. As per this clause, any sponsorship for a research program conducted through approved institutions is permitted expressly. As per facts, all programs conducted by Appellant (POGS) were expressly approved by the MMC and, MMC has granted CPD hours for such programs. 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‖. U/s 12AB(4)(f), it is stipulated that, Appellant has to comply with other laws. Now, per se, none of the regulations applicable to DOCTORS (Guidelines issued u/s 20A of Indian Medical Council Act) apply to the Appellant. As such, ―offence‖ aspect ought to be ruled out / left at that. Further, if ―prohibition of law‖ aspect is to be applied to the present situation, then, express power, as was so available in Explanation-1 to section 37 ought to exist. As per facts, no such Limb-2 exists in section 12AB(4)(f). Hence, reliance on Apex decision is misplaced. Copy of decision of Apex Court was submitted during course of hearing. 3.12 Summary of all the issues on merits of the case:

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Sr. No. Particulars Reference Paper- in Book / 12AB(4) Other order reference 3.12.1 It is compulsory for doctors to earn 6 - 225 (six) CPD hours per year. Attending 246 Programs / Seminars helps in earning 247 CPD hours. Arranging seminars for 272 facilitating Doctors to earn CPD hours is logical and correct. 3.12.2 Approved institutions can conduct - 301 Seminars for CPD hours, provided, 311 same are in compliance with laws and rules and regulations For CPD hours, detailed guidelines are issued There is a peculiarity of ―Observers‖ for the CPD related Seminars. 3.12.3 It is incumbent that, Seminars / - 365 Symposiums / Programs ought to be held, wherefrom, CPD hours could be earned by Members. For this, various apex bodies are formed Annexure- (such as Cancer Society of India, Aids 4 Society of India, FOGSI etc.). Many accredited societies work under these apex bodies. This position is captured in a FLOWCHART. Under FOGSI, Appellant is approved and accredited 3.12.4 Appellant‘s objectives (per MOA) - Annexure- include, study / research & 1 development / holding seminars, etc. 3.12.5 From time to time, Appellant, structures, - 183 some useful scientific programs for 201 benefit of members. In these programs, many papers are presented which are of scientific nature. 3.12.6 Appellant applies to MMC for CPD hours - 198 sanction for such Seminars 203 3.12.7 MMC grants approval for apt number of 199 CPD hours 204 3.12.8 Attendance in Research & Development - - Seminars is aimed at knowledge development / benefit of Doctors, 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.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Sr. No. Particulars Reference Paper- in Book / 12AB(4) Other order reference 3.12.9 Seminars are Research oriented. Now, - Annexure- Research activity is expressly permitted 5 by the Guidelines. 3.12.10 Seminars are pre-approved by MMC - 199 (Maharashtra Medical Council). Based 204 on credentials of speakers and contents of Seminar, CPD hours are allotted to attending Members. 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 - 205 funds. Pharma companies help in cost 207 mitigating by sponsoring such 211 programs. Pharma Companies stipulate 212 purpose of sponsorship (typically, scientific knowledge, new trends in profession, etc.) 3.12.13 Pharma companies expressly state in - 207 sponsorship letters that, no any 208 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 ―satisfaction‖ without considering these vital facts. As such, his conclusions are totally incorrect. 3.12.14 Detailed Guidelines are provided by GOVT authorities for activities which are permitted, and activities which are not permitted. Learned PCIT did not consider the Guidelines in proper perspective. 3.12.15 Learned PCIT, erroneously, applied old Para 17 Annexure- regulation (2002 / 2009). New 5 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. 3.12.16 As per guidelines, if any sponsorship by - 306 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Sr. No. Particulars Reference Paper- in Book / 12AB(4) Other order reference 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. 3.12.17 As per New Guidelines of 2016, for - Annexure- violation of Guidelines, following actions 5 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 PCIT. Conclusions drawn from old Guidelines deserve to be left at that. 3.12.18 Sponsorships received from Pharma - 205 Companies are meant and utilized for 207 promoting educational and research in 211 the field of Obstetrics and gynecology 212 as per the term of contract.

3.12.19 PCIT (CC) kept reliance on clause (b) Para 7.4 - and (c) of Point 6.8.1 of Guidelines reproduced at Para-7.4. Learned PCIT(CC) glossed over the permissible activities given in second sentence of clause (d) and clause (e) of the same Guidelines reproduced at Para 7.4.

Conclusion – As such, it transpires that, Appellant has involved itself into the permissible activities. Appellant has not acted as any conduit at all. No any impermissible freebies 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, , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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.

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) (Appellant has submitted copies of the above decisions during the course of the hearing).

In these cases, Hon‘ble Bombay High Court, after considering views of various other High Courts, has laid down that, exemption u/s 11 ought to be denied only to the extent of violative portion. Similarly, Appellant has referred to section 13(1) and 115BBI, wherein, withdrawal of exemption only for violative part is provided for. This changing principle of the I-T law has been glossed over by learned PCIT-CC.

In the present case, no any violation exists per se. Secondly, assuming there is some violation, exemption ought to be denied for such violative part. 12A / 12AA / 12AB cancellation is not the apt remedy.

5.2 It is claimed that, clause (f) of Appellant submits that the ‗Other explanation section 12AB(4) is Laws‘ (MMC guidelines) specifically violated. It is claimed that the trust permit organizing Seminars for has not complied with provisions of benefits of thousands of Doctors ‗Other Laws‘. considering grant of CPD hours and various contentions above, it transpires no provision of ‗Other Laws‖ are violated.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Sr. Charge levied Explanation No 5.3 It is claimed that, clause (q) of Appellant submits that said clause approval u/s 12AB is violated. (q) relates to approval effective from Clause (q) stipulates that, provisions AY 2022-23. Present subject matter of ITA, 1961 should be complied relates to period prior to with. 13/11/2020. Secondly, as stated earlier, no any provisions of I-T law is violated. 5.4 It is claimed that, ‗A‖ is a conduit for In the first place, knowledge reaching freebies to Doctors development and research pursuit attending Seminars. can‘t be equated to freebies. Secondly, Appellant‘s aim is to ensure happening of research and development programs. For such pursuit, it can‘t be called as a conduit of Pharma Companies. Thirdly, if I-T dept analogy is to be further 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 Pvt. 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.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 trust was identified as beneficiary of sponsorship of its activities by Emcure Pharmaceuticals Ltd. and its associate concerns. 1.3 Simultaneously a survey action was conducted u/s 133 of the Act on the assessee trust, in which various incriminating documents/digital evidences of providing freebies in various forms to doctors/medical practitioners in flagrant violation of the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 further amended on 10/12/2009 were found and impounded.For assessing the impact, the case was centralized with the ACIT, Central Circle – 2(1), Pune. 1.4 After considering the materials found during the search, AO‘s comments with regards to specified violation u/s 12AB(4) of the Act, the Ld. PCIT(Central) Pune, passed the order u/s 12AB(4) vide dated 06/03/2023 stating that the activities of the trust are not in accordance with the objects of the trust. Hence, the activities are not genuine. There is specified violation by the trust under clause (a), clause (e) u/s 12AB(4) of the Act. There is violation as per clause (f) also because the assessee by acting as a conduit of the pharmaceutical companies has provided freebies to the doctors/medical practitioners, as such, it has violated the MCI Regulations, 2002. 1.5 Therefore, the Ld. PCIT withdrew and cancelled the registration of the assessee w.e.f F.Y. 2013-14 and subsequent registration granted u/s 12A(1)(ac)(i) of the Act.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 sponsorship grant. The receipts of such sponsorship grant from pharmaceutical companies including Emcure Group form the major part of funds received by the trust. 2.7 As per para (b) page no. 12& 13 of PCIT (Central) order, it is observed that as per the submission of the assesseepayments were made for the following:  Hotel Le Meredian, Pune for accommodation availed by the doctors in connection with CME Conference on 11/08/2013 and 12/08/2013.  Air Travel expenses to Dove Travels Worldwide for travel of Dr. Aziz Nuzhat and Dr. Surampundi Kameswar on 04/04/2013.  In FY 2018-19 expenses were incurred for accommodation of the doctors in Hotel Westin.  In FY 2018-19 payments were made for accommodation of Dr. Rohini Deshpande, Dr. Jagannath Dixit, Milind Dugad, Meeta Singh, Pankaj Talwar, Deepak Jumani and Devang Kamu to Sheraton, Nagar Road, Viman Nagar, Pune. Dr. Rohini Deshpande was nominated by Emcure.  Also, accommodation was provided to Dr. Daule Jyotsna in Hotel Westin, who was also nominated by Emcure. The above expenses indicate that the doctors nominated by Emcure Pharmaceuticals Ltd. are also provided accommodation by the assessee. This means that Emcure Pharmaceuticals Ltd. is indirectly providing funds to provide the accommodation for the doctors who are nominated by them. Also it was observed on the basis of submissions by the assessee during post survey proceedings, that no registration fees which are ordinarily charged have been collected from the nominated participants. These are some special benefits which are provided by the Emcure Pharmaceuticals to the doctors nominated by it by using the assesse trust. Also, it is observed that the independent doctors are not getting such special benefits. It is a well settled principle of law that what cannot be done directly, cannot be achieved indirectly, which was considered by the Hon‘ble Supreme Court in the case of Apex Laboratories (P) Ltd vs Deputy Commissioner of Income Tax. 2.8 Page 14 to 16 of thePCIT (Central) order provides the mail communications between the assessee trust and the sponsorer i.e. Emcure , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Pharmaceuticals Ltd. The said mail communication on page no.15includes the list of doctors sponsored by Emcure Pharmaceuticals Ltd. during the clinicolegal conference. Also as mentioned in Para (c) page no.

2.11 Reliance in this regard is placed on the decision of Hon‘ble Supreme Court in the case of Apex Laboratories (P) Ltd vs Deputy Commissioner of Income Tax where it was held that, ―36. In the present case too, the incentives (or "freebies") given by Apex, to the doctors, had a direct result of exposing the recipients to the odium of sanctions, leading to a ban on their practice of medicine. Those sanctions are mandated by law, as they are embodied in the code of conduct and ethics, which are normative, and have legally binding effect. The conceded participation of the assessee- i.e., the provider or donor- was plainly prohibited, as far as their receipt by the medical practitioners was concerned. That medical practitioners were forbidden from accepting such gifts, or "freebies" was no less a prohibition on the part of their giver, or donor, i.e., Apex‖ It is also a known principle that what cannot be done directly, cannot be achieved 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)(a) and clause (f) of the Explanation of the Act which states that, ―[(4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,— (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Explanation.—For the purposes of this sub-section, the following shall mean "specified violation",— (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution (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 2a[; or]‖ 2.14 Further it should be also considered that, the Circular no. 05/2012 issued by the CBDT, New Delhi explains that : ―3. Section 37(1) of Income Tax Act provides for deduction of any revenue expenditure (other than those failing under sections 30 to 36) from the business Income if such expense is laid out/expended wholly or exclusively for the purpose of business or profession. However, theexplanation appended to this sub-section denies claim of any such expense, if the same has been incurred for a purpose which is either an offence or prohibited by law. Thus, the claim of any expense incurred in providing above mentioned or similar freebees in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 shall be inadmissible under section 37(1) of the Income Tax Act being an expense prohibited by the law. This disallowance shall be made in the hands of such pharmaceutical or allied health sector Industries or other assessee which has provided aforesaid freebees and claimed it as a deductable expense in its accounts against income.‖ 2.15 Reliance is also placed on the decision of Hon‘ble Mumbai ITAT in the case of DCIT, Mumbai v. Macleods Pharmaceuticals Ltd. where 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 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.‖ 2.16 Further the Hon‘ble Pune ITAT in the case of DCIT v. Emcure Pharmaceuticals Ltd, has taken a view by referring to the decision of Hon‘ble Supreme Court in the case of Apex Laboratories, confirmed the disallowance u/s 37(1) on account of providing freebies by the Emcure Pharmaceuticals to medical practitioners. 2.17 From the above explanation, it can be understood that to avoid such disallowance u/s 37(1) of the Act, the pharmaceutical company i.e Emcure Pharmaceuticals Ltd. has routed the expense of providing of freebies through the assessee trust as it enables the Emcure Pharmaceuticals Ltd. to claim an otherwise inadmissible expense as deduction. Such act of the assessee trust of carrying the activity of providing freebies at the behest of the pharmaceutical company is in contravention of Medical Council of India Regulations. The said activity of providing freebies and assisting Emcure Pharmaceuticals Ltd. in claiming expenditure which is otherwise inadmissible under law is nothing but facilitating tax evasion, and that amounts to misuse of the registration granted to the assessee trust u/s 12A of the Act. Also we would like to draw your kind attention, where it is observed that the sponsorship and grants given by M/s Emcure Pharmaceuticals Ltd. are claimed as ―Sales Promotion Expenditure‖. This expense indicates that the nature of expenditure is business related expenditure and the assessee trust is providing platform for such expenses and hence the activities of the assesee do not come into the ambit of charitable activities. This act comes under violation u/s 12AB(4). Therefore, the order 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 in case of Dr. Bhim Rao Ambedkar Educational Society vs CIT(Exemptions) that, ―Withdrawal of registration granted to assessee-society under section 12AA was justified where its activities were not genuine nor was it run as per objective set out in memorandum‖ 2.20 Further in the case of CIT v. Jagannath Gupta Family Trust, the Hon‘ble Supreme Court has held that even one bogus donation can make the activities of the trust non genuine. Hence, only one instance of violation is also sufficient for cancelling the registration. 2.21 In the present case, in guise of organizing Continuous Medical Education (CME) programmes, the activities of the assessee trust are for providing platform to pharmaceutical company for giving freebies to medical practitioners/doctors. This is a misuse of the status conferred upon it by Section 12A as the activities by which the assessee is providing platform for the pharmaceutical company to provide freebies is strictly prohibited. Such activities are in violation of the law and hence the assessee is not entitled to enjoy such status. The facts of the above referredcase law are squarely applicable to the present case.It should be considered that a party cannot be permitted to carry out an activity on behalf of some other person who himself is prohibited to carry out such activity. It is a settled law that what cannot be done directly cannot be permitted to be done indirectly. Hence, the activities of the assessee trust lack genuineness. Therefore, cancellation of the registration of the assessee trust from A.Y. 2013-14 is justifiable. 2.22 Reliance with regards to retrospective cancellation of registration is placed on the decision of Hon‘ble Delhi ITAT in the case of Young Indian v. CIT(Exemption) where it was held that, ―121. One of the key contentions raised by the ld. counsel before us is that the ld. 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 provides that where a trust or an institution has been granted registration and if subsequently, Pr. CIT or CIT is satisfied that the , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others activities of the trust are not genuine or 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 the Commissioner has power to cancel the registration from the time when such breach has occurred. Suppose, if the assessee after grant of registration carries out its activities in accordance with its objects and the activities are also genuine then the assessee is entitled for benefits of section 12AA; and if from a particular period or year, the activities are found to be either non-genuine or not carried out in accordance with its stated objects, then the Commissioner can cancel the registration from the date or period when such non genuineness is found. Hon'ble Madras High Court in the case of Prathyusha Educational Trust (supra) have clearly reiterated this proposition, relevant text of which has been already incorporated above, wherein their Lordships have held that it a misnomer to state that the order is retrospective or retroactive and the order of the cancellation of registration even passed on subsequent date would take effect from the year when cause of action arose.‖ 2.23 Hence, the cancellation of registration from A.Y. 2013-14 in the present case is justifiable. The above submission may kindly be considered.‖

18. The ld. Departmental relied on the following case laws/MCI Notification/CBDT Circular :

1 Apex Laboratories (P.) Ltd vs DCIT (SC) 135 taxmann.com 286 2 CIT (Exemptions) vs Batanagar Education and Research Trust (SC) 129 taxmann.com 30 3 Dr. Bhim Rao Ambedkar Educational Society vs CIT(Exemptions) (Allahbad HC)88 Taxmann.com 524 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 4 DCIT, Mumbai v. Macleods Pharmaceuticals Ltd (ITAT Mumbai) 131 taxmann.com 154 5 CIT v. Jagannath Gupta Family Trust (SC) 411 ITR 235 6 DCIT v. Emcure Pharmaceuticals Ltd. (Pune ITAT) 7 Young Indian v. CIT(Exemption) (Delhi ITAT) 8 MCI Notification dated 10/12/2009 9 CBDT Circular 05/2012 dated 01/08/2012

―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 not cancelled. In reply, the assessee made multifold contentions challenging the jurisdiction of the ld. PCIT of passing the order of cancellation u/s.12A, 12AA and 12AB(4) of the Act, the powers of the authority u/s.12AB(4) of the Act to cancel the registration granted u/s.12A of the Act, merits of the case contending that the allegations made against the assessee trust of receiving refund of cash in lieu of expenses incurred towards staff salary, doctors salary, PG stipend as , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others well as receiving capitation fees are merely based on the statement of employees which have been subsequently retracted and the Pendrive and loose document found at the residential premises of employee has also been retracted at the subsequent stage and that the Managing Trustee of the assessee trust has denied to be indulged into any of such alleged transaction in the statement given during the course of search. However, the assessee failed to succeed before ld.PCIT and now the assessee is in appeal before this Tribunal raising multifold contentions, mainly the following three issues : a) Challenge to jurisdiction assumed by learned PCIT b) Challenge to powers available in section 12AB c) Challenge to cancellation of registration on merits of the Appeal 12. Before us, ld. Counsel for the assessee has not pressed the issue challenging the jurisdiction assumed by ld.PCIT. Thus, Grounds of appeal

No.1 and 2 raised by the assessee are dismissed as ‗not pressed‘.

13. Now we take up the second issue challenging the powers available in section 12AB of the Act. Ld. Counsel for the assessee while raising the issue of challenging the powers available in section 12AB of the Act made threefold contentions and the same are : (a) that in absence of express powers provided u/s.12AB of the Act for cancelling the registration u/s.12A of the Act, notice issued on 21.03.2023 u/s.12AB(4) of the Act is invalid and void ab-initio. (b) that second notice issued on 20.03.2024 u/s.12AA(3)/12AA(4) is also void ab-initio as nothing contained in section 12AA(5) of the Act shall apply on or after 01st day of April, 2021. (c) that since no specific conditions were mentioned in the registration given u/s.12A and the renewed registration u/s.12AB(1) of the Act except for carrying out the genuine activities, ld. PCIT erred 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.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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. Section 12AB of the Act which is inserted w.e.f. 01.04.2021, the powers of cancelling the registration of the trust are provided u/s.12AB(4) of the Act which reads as under :

―[(4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,— (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub- section (3) of section 143 for any previous year; or (c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall,— (i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.—For the purposes of this sub-section, the following shall mean "specified violation",— (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental 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,— , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others (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 7[; 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 information.]‖

―The main questions, that arise for consideration in this appeal, are four : 17. First, whether the CIT has express power to cancel/withdraw/recall the registration certificate once granted by him under Section 12A of the Act and, if so, under which provision of the Act? 18. Second, when the CIT grants registration certificate under Section 12A of the Act to the assessee, whether grant of certificate is his quasi judicial function and, if so, its effect on exercise of his power of cancellation of such grant of registration certificate? 19. Third, whether Section 21 of the General Clauses Act can be applied to support the order of cancellation of the registration certificate granted by the CIT under Section 12A of the Act, in case, if it is held that there is no express power of cancellation of registration certificate available to the CIT under Section 12A of the Act? And 20. Fourth, what is the effect of the amendment made in Section 12AA introducing sub-clause(3) therein by Finance (No-2) Act 2004 w.e.f. 01.10.2004 conferring express power on the CIT to cancel the registration certificate granted to the assessee under Section 12A of the Act.

21. In our considered opinion, the CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Section 12A till 01.10.2004. It is for the reasons that, , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others first, there was no express provision in the Act vesting the CIT with the power to cancel the registration certificate granted under Section 12A of the Act. Second, the order 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.

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 application in this case.

25. The general power, under Section 21 of the General Clauses Act, to rescind a notification or order has to be understood in the light of the subject matter, context and the effect of the relevant provisions of the statute under which the notification or order is issued and the power is not available after an enforceable right has accrued under the notification or order. Moreover, Section 21 has no application to vary or amend or review a quasi judicial order. A quasi judicial order can be generally varied or reviewed when obtained by fraud or when such power is conferred by the Act or Rules under which it is made. (See Interpretation of Statutes, Ninth Edition by G.P. Singh page 893).

26. Relying upon the aforementioned rule of interpretation, this Court has held that the Government has no power to cancel or supersede a reference once made under Section 10(1) of the Industrial Disputes Act, 1947. [See- State of Bihor v. D.N. Ganguly AIR 1958 SC 1018). Similarly, on the same principle it is held that the application of Section 21 of the General Clauses Act has no application to amend or rescind or vary a notification issued under Section 3 of the Commissions of Enquiry Act for reconstituting the commission by replacement or substitution of its sole member except applicable for a limited purpose for extending the time for completing the enquiry. (State of Madhya Pradesh v. Ajay Singh AIR 1993 SC 825). It is also held while construing the provisions of Citizenship Act that the certificate of registration of citizenship issued under Section 5(1) C of the Citizenship Act cannot be cancelled by the authority granting the registration by recourse to Section 21 of the General Clauses Act. (Ghaurul Hasan v. State of Rajasthan AIR 1967 SC 107 and Hori Shanker Jain v. Sonia Gandhi AIR 2001 SC 3689).

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others And lastly, while construing the provisions of the Representation of People Act, it is held that the Election Commission cannot, by recourse to Section 21 of the General Clauses Act, deregister or cancel the registration of a political party under Section 29A of the Act for the decision of the Commission to register a political party under Section 29A(7) of the Act is a quasi judicial in nature. [See Indian National Congress(1) (supra)] 27. It is not in dispute that an express power was conferred on the CIT to cancel the registration 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; and lastly, Section 21of the General Clauses Act has no application to the order passed by the CIT under Section 12A because the order is quasi judicial in nature and it is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him under Section 12A till the power was expressly conferred on the CIT by Section 12AA(3) of the Act w.e.f. 01.10.2004.

31. In the light of the foregoing discussion, the appeal succeeds and is allowed. Impugned order is set aside and the order of ITAT is restored.

―6. We have heard the rival submissions and perused the materials available on record. The main contention of the ld. A.R. is that the ld. PCIT cancelled the registration granted to the assessee w.e.f. the previous year i.e. 2017-18 relevant to assessment year 2018-19 by applying the provisions as stood on 29.12.2023, which cannot be applied for the violations of the provisions of section 12AA or 12AB of the Act. According to the ld. A.R., the ld. PCIT has cancelled the registration granted to the assessee since the ld. PCIT was satisfied that one or more specified violations have taken place. The specified violations are mentioned in explanation to section 12AB(4) of the Act as follows: Explanation: For the purposes of this sub-section, the following shall mean ―specified violation‖,-- , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others a) Where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or b) The trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental 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 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. 6.1 The contention of the ld. A.R. is that, these provisions have been inserted by Finance Act, 2022 w.e.f. 1.4.2022 and 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 carried out in the said manner.‖ 6.2 This section has been amended by Finance Act, 2022 w.e.f. 1.4.2022 as follows: 12AB(4): Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of subsection (1) or clause (b) of sub- section (1) of section 12AA, as the case may be, and subsequently,-- a) The Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; b) The Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or c) Such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year; The Principal Commissioner or Commissioner shall— i. call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; ii. pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; iii. pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; iv. forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation: For the purposes of this sub-section, the following shall mean ―specified violation‖, , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others - a) Where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or b) The trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental 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 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 in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution after affording reasonable opportunity of being heard. As per section 12AB(5) of the Act, when trust or institution complied wholly or in part of the income of such trust or institution in violation of section 13(1) of the Act or if they complied with any other law, for the time being in force by the trust or institution as are material for the purpose of achieving its objectives as mentioned in section 12AB(1)(b)(ii)(B) of the Act. However, in the present case, the ld. PCIT invoked the provisions of section 12AB(4)(a)(ii) of the Act as stood in the assessment year 2022-23. The objection of the ld. A.R. is that for the cancellation of registration for the assessment year 2021-22, he could not invoke the provisions of section 12AB(4)(ii) of the Act which is introduced , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others by Finance Act, 2022 w.e.f. 1.4.2022 and applicable for the assessment year 2022-23 onwards. 6.4 In the case of Isthmian Steamship Lines reported in 20 ITR 572 (SC) wherein the Hon‘ble Supreme Court held that ―it is a cardinal principle of the tax law that law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication‖. 6.5 In the case of Karimtharuvi Tea Estate Ltd. Vs. State of Kerala reported in 51 ITR 129 (SC) the same view was taken by the Hon‘ble Supreme Court. 6.6 Further, the Hon‘ble Supreme Court in the case of Shree Chowdhary Transport Company Vs. ITO reported in 426 ITR 289 (SC) wherein held as under: 17.4 It needs hardly any detailed discussion that in income- tax matters, the law to be applied is that in force in the assessment year in question, unless stated otherwise by express intendment or by necessary of implication. As per section 4 of the Act of 1961, the charge of incometax is with reference to any assessment year, at such rate or rates as provided in any central enactment for the purpose, in respect of the total income of the previous year of any person. The expression ―previous year‖ is defined in section 3 of the Act to mean ―the financial year immediately preceding the assessment year‖; and the expression ―assessment year‖ is defined in clause (9) of section 2 of the Act to mean ―the period of twelve 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…… , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 here concerned with two datum lines: (1) the 1st of April, 1940, when the Act came into force, and (2) the 1st of April, 1939, which is the date mentioned in the amended proviso. The first question to be answered is whether these dates are to apply to the accounting year or the year of assessment. They must be held to apply to the assessment year, because in income-tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied. The first datum line therefore, affected only the assessment year of 1940-41, because the amendment did not come into force till the 1st of April, 1940. That means that the old law applied to every assessment year up to and including the assessment year 1939-40.‘ This decision is authority for the proposition that though the subject of the charge is the income of the previous year, the law to be applied is that in force in the assessment year, unless otherwise stated or implied. The facts of the said decision are different and distinguishable and the High Court was clearly in error in applying that decision to the facts of the present case.‖ (emphasis supplied) 17.6 We need not multiply on the case law on the subject as the principles aforesaid remain settled and unquestionable. Applying these principles to the case at hand, we are clearly of the view that the provision in question, having come into effect from April 1, 2005, would apply from and for the assessment year 2005-06 and would be applicable for the assessment in question. Putting it differently, the Legislature consciously made the said sub-clause (ia) of section 40(a) of the Act effective from April 1, 20056, meaning thereby that the same was to be applicable from and for the assessment year 2005-06; and neither there had been express intendment nor any implication that it would apply only from the financial year 2005- 06.‖ 6.7 Being so, we find force in the argument of ld. A.R. that in income-tax matters, law to be applied is the law in force in the assessment year unless otherwise stated or implied. In the present case, ld. PCIT is cancelling the registration granted u/s 12AA/12AB of the Act w.e.f. previous year 2020-21 relevant to assessment year 2021-22. In our opinion, the law as stated in the assessment year 2021-22 is to be applied and not the law as stood in the assessment year 2022-23.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 cannot operate from a past date. 21 On the third question of the effective date of operation of the cancellation order, it was held that the cancellation will take effect only from the date of the order/notice of cancellation of registration. Since the act of cancellation of registration has serious civil consequences and the amended provision is held to have only a prospective effect the effect of cancellation, in' the event the pending tax appeal is decided in favour of the Revenue, will operate only from the date of the cancellation order, that is December 30, 2010. In other words, the exemption cannot be denied to the petitioner for and up to the assessment year 2010-11 on the sole ground of cancellation of the certificate of registration.‖ 6.9 In this case, the ld. PCIT has cancelled the registration under the new provisions of the Act i.e. 12AB(4)(ii) of the Act, which specifically provides that cancellation can be done for such previous year and all subsequent previous years, which makes it clear that the cancellation cannot be retrospective, therefore, in view of the above discussion, we are of the opinion that cancellation of registration with retrospective effect is invalid in these cases. Since the ld. PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1.4.2022 so as to cancel the registration with retrospective effect from assessment year 2018-19, which is bad in law. 6.10 It is noted that coordinate bench of this Tribunal in both assessee‘s case for AY 2021-22 has taken similar view and as quashed the retrospective applicability of the new amended provision u/s 12AB(4)(ii) of the Act. We also note that same view has been taken by Coordinate bench of Mumbai in the case of 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Heart Foundation of India in vide order dated 17 27.7.2023, wherein held that registration granted u/s 12A of the Act dated 21.7.1989 cannot be cancelled by ld. PCIT (Central) vide order dated 6.3.2023 w.e.f. assessment year 2016- 17, by invoking the provisions of section 12AB(4)(ii) of the Act. Accordingly, we allow the primary ground nos.2, 3, 5 & 12 and order of ld. PCIT passed u/s 12AB(4)(ii) of the Act is quashed. ― 6. Further, on perusal of provisions of section 12AB(4) of the Act shows that the said provision has been substituted by the Finance 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 judgments have been referred and also the ratio laid down by the Hon‘ble Apex Court in the case of Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd. (supra) has been followed, we find that the same is squarely applicable on the facts of the instant case and therefore we are inclined to hold that since there is no express power provided u/s.12AB(4) of the Act for cancelling the registration granted u/s.12A of the Act, ld. PCIT (Central) grossly erred in issuing show cause notice u/s.12AB(1) of the Act on 21.07.2023. The said show cause notice is held to be invalid and void ab-initio and therefore finding of ld. PCIT (Central) is reversed and we hold that registration granted u/s.12A of the Act cannot be cancelled during the proceedings carried out u/s.12AB(4) of the Act.‖ 20(a). Respectfully following the above decision and examining the facts of the instant case, we find that firstly in section 12AB of the Act powers are only there to cancel the registration u/s.12AA and 12AB of the Act but there is no express power to cancel the registration granted u/s.12A under the old regime. The situation is similar to the one which came before the Hon‟ble Apex Court in , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others the case of Industrial Infrastructure Development Corporation (supra) where the issue was regarding cancellation of registration u/s.12A under the provisions of section 12AA of the Act and since there was no express power granted u/s.12AA of the Act to cancel the registration u/s.12A of the Act, such cancellation order was quashed. Subsequently, there was an amendment brought in by the Finance Act, 2010 thereof giving power u/s.12AA of the Act to cancel the registration u/s.12A of the Act. However, under the current provisions of section 12AB of the Act there is no express powers provided under the Act to cancel the registration u/s.12A of the Act granted under the old regime. We also find that in the impugned orders in the case of all the assessees in appeal before us, ld. PCIT has referred to the ‗specified violation‘ mentioned in section 12AB(4) of the Act which the assessee(s) trusts have been alleged to have been committed based on which the registrations granted u/s.12A/12AA/12AB have been cancelled. However, the word ‗specified violation‘ has been brought into the Act in section 12AB of the Act from 01.04.2022 onwards and is therefore applicable 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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 appeal in case of POGS and MOGS are allowed and the impugned orders dated 06.03.2023 passed u/s.12AB(4) of the Act in case of POGS and MOGS are hereby quashed to the extent of cancelling the registration granted to the POGS and MOGS u/s.12A of the Act.

20(b) So far as the assessee namely AOGS is concerned since registration has been granted u/s.12AA of the Act, there are powers u/s.12AB(4) of the Act to cancel the registration u/s.12AA of the Act also and therefore our finding that registration u/s.12A of the Act in the old regime cannot be cancelled u/s.12AB(4) of the Act in absence of express powers, will not be of any help in the case of assessee AOGS. Therefore, the legal issue raised by way of additional ground in the case of AOGS is hereby dismissed.

22. Ld. PCIT referred to the documents placed at pages 8-11 in Bundle No.6 and Pages 36-38 of Bundle No.5 observing that the same contains list of doctors who were nominated by Emcure Pharmaceuticals Private Limited and the nominations were accepted by the assessee(s) trusts, arrangements for accommodation of the nominated doctors are also found. By making of such arrangements between the Pharma Company and the doctors, ld. PCIT observed that the assessee(s) trusts are working as conduit and helping the Pharma companies to avoid disallowance of expenditure in violation of Medical Council of India Regulations which comes in the ambit of Explanation 1 to section 37(1) of the Act. Ld. PCIT also observed that the assessee(s) 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 , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 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.

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 compliance with laws and rules and regulations For CPD hours, detailed guidelines are issued There is a peculiarity of ―Observers‖ for the CPD related Seminars. It is incumbent that, Seminars / Symposiums / Programs ought to be held, wherefrom, CPD hours could be earned by Members. For this, various apex bodies are formed (such as Cancer Society of India, Aids Society of India, FOGSI etc.). Many accredited societies work under these apex bodies. This position is captured in a FLOWCHART. Under FOGSI, Appellant is approved and accredited. Appellant‘s objectives (per MOA) include, study / research & development / holding seminars, etc. From time to time, Appellant, structures, some useful scientific programs for benefit of members. In these programs, many papers are presented which are of scientific nature. Appellant applies to MMC for CPD hours sanction for such Seminars MMC grants approval for apt number of CPD hours Attendance in Research & Development Seminars is aimed at knowledge development / benefit of Doctors, 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. Seminars are Research oriented. Now, Research activity is expressly permitted by the Guidelines. 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. Due to sponsorships, cost of attending a larger seminar gets reduced, which benefits the common Members attending Seminars Holding of worthy conferences requires funds. Pharma companies help in cost mitigating by sponsoring such programs. Pharma Companies stipulate purpose of sponsorship (typically, scientific knowledge, new trends in profession, etc.) 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 ―satisfaction‖ without considering , 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others Particulars these vital facts. As such, his conclusions are totally incorrect. Detailed Guidelines are provided by GOVT authorities for activities which are permitted, and activities which are not permitted. Learned PCIT did not consider the Guidelines in proper perspective. 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 PCIT. Conclusions drawn from old Guidelines deserve to be left at that. Sponsorships received from Pharma Companies are meant and utilized for promoting educational and research in the field of Obstetrics and gynecology as per the term of contract.

PCIT (CC) kept reliance on clause (b) and (c) of Point 6.8.1 of Guidelines reproduced at Para-7.4. Learned PCIT(CC) glossed over the permissible activities given in second sentence of clause (d) and clause (e) of the same Guidelines reproduced at Para 7.4.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 27. Further, it is also brought to our notice that various dignitaries including the President of India, Home Minister, Minister of Health and Family Welfare have been giving the messages to the assessee trust Aids Society of India for various conferences and seminars organised by it.

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others 29. One of the allegation made by the ld. PCIT is that there is violation of Professional Conduct, Etiquette and Ethics Regulations, 2002 issued by the Indian Medical Council. We take note of para 6.8 of the regulations which were amended upto 0.01.2016 and the same reads as under :

―The Clause No. 6.8, as under, is included in terms of Notification published on 14.12.2009 in Gazette of India. "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 representatives for self and family members for vacation or for attending conferences, seminars, workshops, CME programme etc as a delegate. c) Hospitality: A medical practitioner shall not accept individually any hospitality like hotel accommodation for self and family members under any pretext. d) Cash or monetary grants: A medical practitioner shall not receive any cash or monetary grants from any pharmaceutical and allied healthcare industry for individual purpose in individual capacity under any pretext. Funding for medical research, study etc. can only be received through approved institutions by modalities laid down by law / rules / 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:-

, 522, 549 and 417/PUN/2023 Poona Obstetrics and Gynaecological Society and 3 others (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 animal experimentations are not done and when these are necessary they are done in a scientific and a humane way. (vii) Ensure that while accepting such an assignment a medical practitioner shall have the freedom to publish the results of the research in the greater interest of the society by inserting such a clause in the MoU or any other document/agreement for any such assignment. f) Maintaining Professional Autonomy: In dealing with pharmaceutical and allied healthcare industry a medical practitioner shall always ensure that there shall never be any compromise either with his/her own professional autonomy and/or with the autonomy and freedom of the medical institution. g) Affiliation: A medical practitioner may work for pharmaceutical and allied healthcare industries in advisory capacities, as consultants, as researchers, as treating doctors or in any other professional capacity. In doing so, a medical practitioner shall always: (i) Ensure that his professional integrity and freedom are maintained. (ii) Ensure that patients interest are not compromised in any way. (iii) Ensure that such affiliations are within the law. (iv) Ensure that such affiliations/employments are fully transparent and disclosed. h) Endorsement: A medical practitioner shall not endorse any drug or product of the industry publically. Any study conducted on the efficacy or otherwise of such products shall be presented to and/or through appropriate scientific bodies or published in appropriate scientific journals in a proper way".

The title of Section 6.8 shall be further amended by deleting the words "and professional association of doctors" in terms of Notification published on 01.02.2016 in Gazette of India as under:- "6.8 Code of conduct for doctors in their relationship with pharmaceutical and allied health sector industry" The Section 6.8.1(b) shall be substituted in terms of Notification published on 01.02.2016 in Gazette of India, as under:- 30. From perusal of the above clause of Indian Medical Council, we notice that vide Notification published on 01.12.2016 the words “Professional Association of doctors” has been deleted from clause 6.8. Prior to this amendment, code of conduct was applicable for doctors and professional association of doctors but then vide Notification 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.

32. Since the facts and circumstances for the other appeals namely MOGS, AOGS and Aids Society of India are also same, the finding given by us on merits in the case of POGS will hold good mutatis mutandis for these assessee(s) trusts as well. Finding of ld. PCIT in respect of MOGS, AOGS and Aids Society of India is reversed and the registration granted u/s.12A/12AA/12AB of the Act are hereby reinstated and will remain in force. Common grounds of appeal raised on merits in the case of assessee‟s MOGS, AOGS and ASOI are allowed as per terms indicated above.

549/PUN/2023 and 417/PUN/2023 are allowed whereas is partly allowed in the terms indicated above.

Order pronounced on this 26th day of March, 2025.