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Facts
The assessee, C-Dot Forum, applied for registration under Section 12A(i)(ac)(iii) of the Income Tax Act, 1961, which was rejected by the CIT (Exemptions). The CIT(E) found that the charitable activities undertaken by the assessee were negligible compared to the substantial funds received from pharmaceutical companies, with most expenses incurred on conferences for doctors in luxury hotels, entertainment, and professional fees to the society's president and relatives.
Held
The tribunal upheld the rejection of the registration application, noting that only a minuscule portion of the funds received was used for actual charitable activities. It found that the primary activities involved organizing lavish events for doctors, which violated the Medical Council of India (MCI) regulations prohibiting doctors from accepting freebies from pharma companies, indicating a quid pro quo arrangement rather than genuine charitable work.
Key Issues
Whether the assessee's activities genuinely constituted 'charitable purpose' under Section 2(15) of the Income Tax Act, 1961, and whether the receipt of funds from pharmaceutical companies and their utilization for doctor conferences violated MCI regulations and public policy.
Sections Cited
Section 12A(i)(ac)(iii), Section 2(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH: AMRITSAR.
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DAS GUPTA
Appellant by Sh. Rishabh Marwaha, CA Respondent by Sh. Sunil Gautam, CIT. DR Date of Hearing 17.12.2025 Date of Pronouncement 29.01.2026 ORDER Per: Udayan Das Gupta, J.M.:
This appeal is filed by the assessee against the order of the Ld. CIT (E) Chandigarh, dated 12th December, 2024, rejecting the application for registration u/s 12A(i)(ac)(iii), filed by the assessee in form 10AB on 30th September, 2023.
2. The grounds of appeal taken by the assessee in form 36 are as follows:
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The Commissioner of Income Tax (Exemptions) Chandigarh, has eared in Law and on facts, in rejecting the application in form 10AB U/S 12AB of the Income Tax Act, 1961, on non- satisfaction of genuineness of the activities of the assessee society, only based on her presumptions in this regard.
The CIT (Exemption) has eared in law, in rejecting the application, having not considered, the tangible material submitted during the proceeding u/s 12AB of Income Tax Act, 1961.
Without prejudice to the above, the CIT has also erred in not considering the fact that the conference expenses as incurred by the appellant the spread of knowledge of best practices and new medicines/ treatments among the doctors includes the public at large, who are affected by the services of such doctors and as such charitable in nature as 'advancement of an object of general public utility'.
4. That the Worthy CIT(A) has erred in not considering the fact that in the absence of the above activities made, in addition to the free distribution of medicines to the poor and free medical camps for the public, the object and purpose of the Medical Relief, Relief to Poor and Advancement of an object of General Public Utility to the public at large i.e. the objects of the assessee society, cannot be met effectively.
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5. That CIT has also erred in rejecting the application for registration of the trust us 12AB only on the basis of volume of the, only alleged, charitable activity undertaken by the assessee society, being the distribution of the free medicines for the diabetes in children at the medical camp.
6. That CIT has also erred in rejecting the application for registration of the trust us 12AB on the basis of the donations being received by the assessee society from the pharma companies, which have been used for the objects of the trust, without pointing out any single instance of benefit being passed on to a single person or interested person us 13(3) of the Act.
7. That CIT has also erred in rejecting the application for registration of the assessee society us 12AB based on conjectures and surmises and against the facts and circumstances of the case.
8. That the appellant craves leave to add or amend the grounds of appeal
before the appeal is finally heard or disposed off.”
3. This is the second round of appeal, whereby the application for registration was originally rejected by the Ld. CIT (E) Chandigarh, on 20th March, 2024, and the matter brought in appeal before the tribunal, was remanded back to the Ld. CIT (E) vide this tribunal order dated 9th July, 2024, for re - consideration of the same, in absence of proper opportunity being provided before rejection, which violated the principles of natural justice.
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In course of fresh hearing various queries were raised by the Ld. CIT (E), in response to which submissions along with documentary evidences (photographs and others) and financial of income and expenditure and bank statements for the year ending March 2022 to March 2024, of the society were filed, along with other relevant documents.
On examination of the same, it was observed by the Ld. CIT (E) that charitable activity carried on by the assessee are negligible compared to the gross amount of collection received from various “pharma companies” ( as per details contained in page 12 and 13 of the order dated 12/12/2024), and from the enclosed income and expenditure A/c for the relevant years, it has been observed that huge expenses has been incurred for hosting conference for doctors (which includes boarding and lodging , in FIVE star category hotels ) including travelling expenses through hired vehicles , payments for professional fees to the President of the society and his relatives ( as honorarium ), payments made to various event management consultants for organising the events, digital marketing expenses, payments to anchors, taxi operators , etc. but actual charitable activity was negligible .
It is further observed from the financials, that the gross receipts from various pharma companies for the FY 2021-22, 2022-23 and 2023-24 was Rs. & 116/Asr/2025 Assessment Year.: 2022-23 5 10 lakhs, Rs. 18.95 lakhs and Rs. 10.60 lakhs, respectively ( totalling nearly 40 lakhs in three years ), out of which expenditure for FY 2021-22 (as per break up contained in page 146 and 147 of pb), was Rs. 2.31 lakhs paid to event management company and Rs.3.42 lakhs paid for conference at Hotel Novotel which also included entertainment shows by professional singers (Razia Sultana and Soni Singh, as per noting in page 109 of PB) and actual charity expenditure was NIL.
For the FY 2022-23, the breakup of expenses as provided was Rs. 8.73 lakhs for digital marketing to one Gagan Colour images, event managers, anchor etc., Rs. 5.20 lakhs paid to Sepal Hotels for Governing body meeting, Rs. 1.03 lakhs as lecture fees at Novotel Hotel event and the only semblance of charity work is the amount of Rs. 2.51 lakhs paid to Friends Medicine shop for expenditure on account of “insulin for Type – 1 diabetic children”.
The break - up of expenses for FY 2023-24 (as provided in pb page - 147) was stated to be Rs.2.21 lakhs for digital marketing to Gagan colour including an event manager and Rs. 8.01 lakhs transferred to one Garg Pharmaceuticals (for unspecified reasons).
In other words, on the back ground of the entire facts on record , two very basic and pertinent questions has arisen , in this case , firstly the absolute lack & 116/Asr/2025 Assessment Year.: 2022-23 6 of identification of activities carried out by this assessee for “charitable purpose” as per provisions of section 2(15) of the Act 61, for which registration is being sought by the society and secondly whether the assessee in the instant case has violated the (Professional Conduct , Etiquette and ethics) Regulations 2002 prescribed by The Medical council of India ( MCI ) regulations (2002), which prohibits doctors from accepting freebies which such as expenses for travel , hospitality, participation in seminars funded by pharma companies, in exchange for potential product promotion.
Now, the assessee is before the tribunal on the grounds contained in form 36 and the Ld AR in course of hearing submitted that the society has been incorporated in October, 2019 and a diabetes camp ( the first activity of the society ) has been organised during FY 2021-22, and free insulin for children type-1 diabetic has been provided and since the said activity is genuine and also acknowledged by the CIT ( E ) , the quantum or the volume of the activity is not for the Ld Commissioner to object , as long as the genuineness of the activity is accepted (and for support he relied on the Hon’ble Apex court in the case of Gangadeen Niranjan Lal Data charitable trust 463 ITR 695 ).
10.1 He further submitted that holding of physical seminars is covered in the objects of the trust which is necessary for upgradation of skill and knowledge & 116/Asr/2025 Assessment Year.: 2022-23 7 of the doctors , which in turn will benefit the general public and the spreading of awareness among members of general public by organising free medical camps is also covered by its objectives. He further submitted that the source of funds might have been obtained from various pharma companies, but the same are used for the purpose of rendering various charitable service as per the objects of the society.
10.2 Regarding the nature of payments to Dr Kotru, for delivering lectures, the Ld. AR submitted that these are basically fees for professional services given by experts in medical science which has benefitted other doctors for their upgradation of knowledge and in turn will benefit the patients to be treated by them.
10.3 The Ld. AR further submitted that objects of the society is holding of conference and seminars for upgradation of members as well as for the general public and there is nothing wrong in holding seminars in five star category hotels and to meet the travel expenses of participating doctors (in support he relied on the decision of Heart Care management vs DIT (E) 2012 22taxmann.com105( Delhi) .
10.4 The Ld. AR further submitted that documentary evidences in form of audit reports, newspaper clippings, brochures, photographs of various events & 116/Asr/2025 Assessment Year.: 2022-23 8 and seminars and health camps were also filed before the Ld. CIT (E), which has not been given proper cognizance. He further explained that in the instant case since the funds are pooled from different pharma companies (a mixed group , ) and not from any particular one , it is not possible for any single company to exert undue influence on the participating doctors and gain any benefit out of the same, but on the other hand it leads to upgradation of professional and technical knowledge of doctors with information about advancements in medical science , which is one of the objects of the society.
10.5 The Ld. AR further submitted that apart from the “Diabetes Health Mela ”, the society has also organised a “ Decide Conclave ”, at Novotel Hotel, Chandigarh , which is basically an education programme for doctors to decide effective and correct insulin initiation for type – 2 diabetes, which for all practical purpose is advancement of knowledge of medical practitioners and he submitted that the same falls under the category of “ Object of General Public Utility” ( in support of which he relied upon Indo Americal Society v ADIT [2005] 96 ITD 61 ( Mumbai ), “ Anesthesia Society [2019] 101 taxmann.com227(Rajasthan HC ), Jodhpur CA Society [2003] 127 taxman 90 ( Raj HC ), CIT v Bar Council of Maharastra [1981]6 Taxman 1(SC ) . As such & 116/Asr/2025 Assessment Year.: 2022-23 9 relying on the above submissions, he prayed for setting aside the order of the Ld CIT ( E ) , and requested for grant of registration as per provisions of law.
Per contra the Ld. DR relied on the order of the Ld. CIT(E) and submitted that in the instant case the existence of any charitable activity carried out by the assessee society is almost “negligible” in spite of substantial funds of Rs. Forty lakhs (approx.) received from various pharma companies , as evident from the financial statements and it is apparent that the funds received are utilised for meeting expenditures for conducting various events meetings and seminars , organised at luxurious hotels with full hospitality , attended by doctors and whatever expenses that has been incurred for distribution of type-1 diabetic medicines to children , are negligible considering the volume of receipts and the activities are carried out at “ Max Hospital Bhatinda” and all other activities of the assessee clearly points to the violation of The Medical council of India ( MCI ) regulations (2002), which prohibits doctors from accepting freebies which in this case include expenses for travel , hospitality, participation in seminars funded by pharma companies in exchange for potential product promotion and as such the work or activity carried out by this society, seems solely for the purpose of networking in between the doctors and the pharma companies, which itself is unethical and contrary to public policy as a whole & 116/Asr/2025 Assessment Year.: 2022-23 10 and the activities are found to be quid pro quo arrangement for promoting the pharma companies commercial interests and it seems that the society is used as a conduit to promote the products.
11.1 He further relied on the decision of the coordinate Chandigarh Bench of the ITAT in the case of “Endocrine and Breast Surgery Foundation” ITA 244 and 245 (CHD) of 2025, order dated 8th October, 2025, in support of his contention that in an almost identical situation , where no charitable activity is actually carried out for the benefit of the general public or the community as a whole, and where majority of the expenses has been incurred for organising seminars and conference for medical practitioners at various places , the same is in violation of The Medical Councils Regulations 2002, which points towards the sole purpose of networking between doctors and pharma companies which is unethical and contrary to public policy and he prayed for upholding the findings and the order of the Ld. CIT(E) .
We have heard the rival submissions and considered the materials on record. We find that in the instant case out of the total grants of Rs. Forty lakhs ( approx ) received from various pharma companies by the assessee society, in the aforesaid three financial years, only a meagre amount of Rs. 2.51 lakhs , has been incurred as expenditure for sponsoring free medicines for type-1 diabetic & 116/Asr/2025 Assessment Year.: 2022-23 11 children, which is just 6.2%, ( six point two ) of the total receipts. The rest of the amount received from the pharma companies, has been expended for organising various seminars, conference, events, for practicing doctors, including star category hospitality, at luxurious hotels, entertainment by professional singers , travelling expenses, professional fees to the President of the society and relatives and for all other reasons, other than for “charitable purpose” as defined under section 2(15) of the Act 61.
12.1 We further take note that “Uniform code for pharmaceutical marketing practices ( UCPMP ) 2024” also explicitly prohibits the offering of gifts and incentives to doctors or their family members.
12.2 The Hon’ble Supreme court in the case of Apex laboratories Pvt ltd vs DCIT 22 feb 2022 ( SC ) civil appeal no 1554 of 2022, has also considered the Medical council of India ( MCI ) regulations (2002), which lays down as follows :
Regulation 6.8. of the 2002 Regulations states as follows: “6.8. Code of conduct for 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:— & 116/Asr/2025 Assessment Year.: 2022-23 12
(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, road, air, ship, cruise tickets, paid vacation, 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.” The regulation further lays down corresponding action or sanction which can be taken against, or imposed upon, the medical practitioner for violation of each stipulation, based on the monetary value of the same. Thus, acceptance of freebies given by pharmaceutical companies is clearly an offence on part of the medical practitioner, punishable with varying consequences.
12.3 In the instant case as rightly pointed out by the Ld CIT ( E ) , the actual charitable activity conducted by the society is negligible (being only Rs.2.51 lakhs & 116/Asr/2025 Assessment Year.: 2022-23 13 against total grants received from pharma companies amounting to Rs. Forty lakhs), and the rest of the amount are expended for various activities involving the medical practitioners for activities which are other than for charitable purpose as stipulated u/s 2(15) of the act 61, and as such we are in agreement with the view of the Ld CIT ( E ) that funds received from pharma companies has been expended for the doctors in violation of the guidelines of the Medical council of India ( MCI ) regulations (2002), and as such we also concur with the view of the ld. DR that the society in this case has acted for the purpose of networking in between the doctors and the pharma companies and the activities are other than charitable and outside the scope of section 2(15) of the act 61 .
12.4 We further note that Doctors can only participate in research projects funded by pharma companies but the same is to be channelised through approved institutions, publicly disclosed and all legal requirements are to be fulfilled in a transparent manner and Pharma companies are permitted to provide assistance for genuine CME events ( continuing medical education ) , covering reasonable travel, accommodation and registration fees , provided the events are held in appropriate venues in India and are conducive to the main purpose of the event .
12.5 In the instant case before us no such genuine CME events or activities has been pointed out by the ld. AR ( where professionals participating are allowed CME & 116/Asr/2025 Assessment Year.: 2022-23 14 credits) and as such we are also of the opinion that actual charitable activity in this instance in missing and hence the ld. CIT (E) was justified in refusing the application for registration u/s 12A of the Act 61.
ITA No: 116/ ASR / 2025
This appeal is against the rejection of application in form 10AB dated 27/06/2024, seeking approval u/s 80G of the Act 61, on the ground that the application for registration u/s 12AB has been rejected in absence of any activity of charitable nature as per provisions of section 2(15) of the Act 61 and for pursuing activities which are not in accordance with the code of conduct laid down by the Medical council of India ( MCI) regulations (2002), and the appeal against the said rejection u/s 12AB has been upheld by the tribunal vide our order in ITA No : 115/ASR/2025, and the tribunal was in agreement with the view taken by the Ld CIT ( E ) in the said matter.
Our observation and findings in appeal no ITA 115/ASR/2025, also applies mutatis mutandis to this appeal.
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As such in absence of registration u/s 12AB of the Act 61, the requirement for approval as mandated by section 80G(5) is not met in respect of this society and under the circumstances we concur with the view of the ld. CIT (E) in declining to grant approval u/s 80G, on merits of the case.
In the result both the appeals of the assessee are dismissed being devoid of merits.
Order pronounced on 29.01.2026 at Amritsar, Punjab in accordance with Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963.