S. 12AA Registration can’t be denied merely because running a Medical Shop inside Hospital: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ranchi has held that the registration under section 12AA of the Income Tax Act, 1961 cannot be denied to a charitable trust merely because it is running a medical shop inside a Hospital.

The assessee, a Trust was maintaining Pharmacy medical shop inside the hospital, which was for in-house consumption of medicines and treatment packages and for the urgent need of medicines to in-house patients.

The assessee applied for the registration for the charitable trust under Section 12AA of the Income Tax Act, 1961. During verification, the AO has reported that the society is running a medical shop namely ‘Pharmacy’ inside the hospital premise for which no separate books are mentioned.

Considering the above facts, the CIT ( E ) rejected the application since the genuineness of the charitable activities of the society was not proved.

 The Tribunal noted that the objects of the society were not doubted by the ld. CIT(E).

“Therefore, we note that in order to obtain registration u/s. 12AA only objects of the assessee-trust are to be examined. We further note that the assessee society’s main object of running a hospital, which is covered u/s. 2(15) of the Act as charitable purposes being ‘medical relief’. Therefore, simply non-maintenance of separate books cannot be a ground for rejection of registration u/s. 12AA of the Act. We note that the assessee society is also providing medical relief and facilities to every person, conducting blood donation, eye operation, tikakaran, family planning, mother-child safety, AIDS, malaria, T.B, Kustorog and awareness to the general public by way of awareness of medical camps. Therefore, to run the medical shop inside the hospital is the fully charitable purpose and not for commercial purpose. We note that if the assessee is not maintaining separate books of account for the said medical shop does not mean that the assessee is not entitled to obtaining registration u/s. 12AA of the Act. We note that in order to grant registration the objects of the assessee society is to be examined. Therefore, the ld. CIT( E ) should not deny the grant of registration u/s. 12AA merely because the assessee is running medical shop inside the hospital,” the Tribunal said.