PUNJAB PHARMACY COUNCIL,MOHALI vs. COMMISSIONER OF INCOME TAX EXEMPTIONS, CHANDIGARH

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ITA 543/CHANDI/2024Status: DisposedITAT Chandigarh02 June 2025AY 2024-25Bench: SHRI LALIET KUMAR (Judicial Member), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)1 pages

AI SummaryAllowed

Facts

The assessee, a statutory authority established under the Pharmacy Act, 1948, was denied registration under Section 12AB by the CIT(E). The denial was based on the significant surplus generated by the assessee from its statutory functions of regulating pharmacy and pharmacists, which the CIT(E) considered as commercial activity, despite the assessee's stated object of 'medical relief'.

Held

The Tribunal held that the assessee is performing statutory functions as a regulatory body for the pharmacy profession, which is a public function. Relying on the Apex Court's decision in CIT vs. Ahmedabad Urban Development Authority, the Tribunal ruled that monies charged for public services by statutory authorities are not to be considered commercial receipts. The Tribunal also noted that similar organizations had been granted registration.

Key Issues

Whether the surplus generated by a statutory authority from its statutory functions, like regulating a profession and charging fees, amounts to commercial activity disentitling it from registration under Section 12AB.

Sections Cited

12AB, 2(15), 12A(1)(ac)(i), 12A(1)(ac)(iv)(item B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH

Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

Punjab Pharmacy Council CIT (Exemptions) बनाम/ 2nd Floor, Medical Education Bhawan Central Revenue Building, Vs. Sector 69, Chandigarh. 160062. Sector 17, Chandigarh-160017. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAALP-1134-A (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Ajay Jain (CA) – Ld. AR ��थ�कीओरसे/Respondent by : Smt. Kusum Bansal (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 15-04-2025 घोषणाकीतारीख /Date of Pronouncement : 02-06-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of an application seeking registration u/s 12AB vide impugned order dated 24-04-2024 as passed by learned Commissioner of Income Tax (Exemptions), Chandigarh [CIT(E)], the assessee is in further appeal before us.

The Ld. AR advanced arguments and relied on various documents as placed on record to assail denial of registration to the assessee. The Ld. CIT-DR also advanced arguments supporting rejection of application. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.

The assessee is holding provisional registration u/s 12A(1)(ac)(i) for AYs 2022-23 to 2026-27. The assessee is a statutory authority established on 04-03-1948 under The Pharmacy Act, 1948. The council issues registration to the pharmacy pass-outs as mandated by the said act. For the same, the assessee charges fees from the pharmacy pass-outs and grants registration to them. The refusal of registration by Ld. CIT(E) prima- facie stem from the fact that the surplus as generated by the assessee for FYs 2019-20, 2020-21 and 2021-22 were to the tune of 43.43%, 29.96% and 37.10% respectively. The assessee quoted ‘medical relief’ as its sole objects. However, the main function of the assessee was to act as a regulatory body and registration of pharmacists. Though the assessee was performing statutory functions and it could be said to be existing for charitable purpose u/s 2(15), it was merely regulating the profession and practice of pharmacy for which it was charging statutory fees. It was providing service to pharmacy business and it was continuously generating surplus in the range of 30% to 45% in each of the year. Accordingly, the aforesaid registration as sought by the assessee u/s 12A(1)(ac)(iv)(item B) was denied against which the assessee is in further appeal before us.