AGRA OBSTETRICAL AND GYNAECOLOGICAL SOCIETY,AGRA vs. PCIT, CENTRAL, PUNE

ITA 549/PUN/2023Status: DisposedITAT Pune26 March 2025AY 2022-2373 pages
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What did the Tribunal hold?

The Tribunal held that the assessees' trusts were genuinely and consistently carrying on work for their charitable objects and that the funds received from pharmaceutical companies were applied for these objects. The Tribunal noted that the Indian Medical Council's code of conduct, as amended on December 1, 2016, deleted the specific mention of "Professional Association of doctors," meaning the assessees were no longer explicitly covered by those regulations. Furthermore, the alleged violations and receipt of funds from pharmaceutical companies were for periods subsequent to this amendment. The Tribunal found no violation committed by the assessees. Citing the Bombay High Court's decision in Audyogik Shikshan Mandal, the Tribunal stated that exemptions should only be denied to the extent of the violative portion, and since the assessees were genuinely carrying out charitable activities, their registration could not be cancelled. The Tribunal also distinguished the Apex Court's decision in M/s. Apex Laboratories Pvt. Ltd. vs. DCIT, stating it pertained to claims of expenditure by pharma companies and freebies to doctors, not professional associations. Consequently, the PCIT's finding of cancellation of registration was reversed, and the registrations were reinstated. The grounds of appeal related to merits were allowed. For MOGS, AOGS, and ASI, the findings were applied mutatis mutandis.

What were the facts?

The appeals were filed by four assessees: Poona Obstetrics and Gynaecological Society (POGS), The Mumbai Obstetrics and Gynaecological Society (MOGS), Agra Obstetrical and Gynaecological Society (AOGS), and AIDS Society of India (ASI). These assessees are challenging separate orders dated March 6, 2023, passed by the Principal Commissioner of Income-tax (PCIT), Central Circle, Pune, under Section 12AB(4) of the Income-tax Act, 1961. The PCIT had cancelled the registration granted to these societies under Section 12A of the Act. The common issue across these appeals pertains to the cancellation of their charitable registration.

What were the issues?

1. Whether the Principal Commissioner of Income-tax (PCIT) erred in cancelling the registration under Section 12A of the Income-tax Act, 1961, by invoking powers under Section 12AB(4), on the grounds that the assessees' activities were not genuine or were carried out in accordance with their objects, and that they acted as conduits for tax evasion or distribution of freebies by pharmaceutical companies. Assessee's contentions: The assessees argued that their activities, such as organizing seminars, conferences, and medical camps, were genuine and aligned with their charitable objects. They contended that grants received from pharmaceutical companies were for educational programs and not for providing freebies to delegates, thus not violating Indian Medical Council (IMC) regulations. They also argued that the PCIT erred in equating them with corporate companies or individual practitioners and that the alleged incriminating evidence from "EMCURE Pharma" group related to later assessment years. Some assessees also raised jurisdictional issues and argued that the PCIT passed orders without proper opportunity of being heard or considering their replies. They relied on the fact that the IMC code of conduct, which was amended on December 1, 2016, no longer explicitly covered "professional associations of doctors" for certain violations, and the alleged violations pertained to periods after this amendment. Revenue's contentions: The revenue, through the PCIT's order, held that the activities of the assessees were not genuine and that they acted as conduits for pharmaceutical companies to distribute freebies to medical practitioners, thereby violating the provisions of Section 12AB(4).

Which sections of the Income-tax Act were involved?

Section 12AB(4),Section 12A,Section 12AA,Section 2(15),Section 37(1)

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Cases cited in this judgment(14)Show list

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Heard together (4 matters)

ITA No.518/PUN/2023
ITA No.522/PUN/2023
ITA No.549/PUN/2023
ITA No.417/PUN/2023

Read from the judgment's own cause title. This page is filed under one of them.

सत्यमेव जयते IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.518/PUN/2023

1.

Poona Obstetrics and Gynaecological Society, 302/303, Dr. Neety Mandke IMA House, Tilak Road, Shukrawar Peth, Pune 411 002, Maharashtra PAN : AAATP1435C Vs. Pr.CIT (Central), Pune Appellant Respondent आयकर अपील सं. / ITA No.522/PUN/2023

2.

The Mumbai Obstetrics and Gynaecological Society, C-114, Ist Floor, D-wing Entrance, Trade World, Kamala City, Senapati Bapat Marg, Low Parel (W), Mumbai-400 013 Maharashtra PAN : AAATT4562C Vs. Pr.CIT (Central), Pune Appellant Respondent आयकर अपील सं. / ITA No.549/PUN/2023

3.

Agra Obstetrical and Gynaecological Society, 84, M.G. Road, Agra 282 010, Uttar Pradesh PAN : AABTA6327K Vs. Pr.CIT (Central), Pune Appellant Respondent आयकर अपील सं. / ITA No.417/PUN/2023

4.

AIDS Society of India, Ground Floor, Maharukh Mandsion, Alibhai Premji Marg, Grant Road (E), Mumbai 400 007 Maharashtra PAN : AABTA4129R Vs. Principal Commissioner of Income-tax (Central), Pune Appellant Respondent Gynaecological Socie

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