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2024 (2) TMI 698 - AT - Income TaxRevocation of Approval granted u/s 10(23C)(iv) - charitable activity u/s 2(15) questioned - as stated by CIT(E) assessee could not give any proper explanation and failed to counter the findings of the Special Audit Team that the assessee is operating as a commercial pharmaceutical company by making its own products and maximising its projects. The activities of the assessee were not charitable and purely commercial in nature. HELD THAT:- The Tribunal vide its order [2023 (1) TMI 755 - ITAT DELHI] held that the said order passed by the Ld. CIT(E) withdrawing the approval granted under section 10(23C)(iv) of the Act is unsustainable as compliance conditions have to be examined in each assessment year and, in case, there is any violation in compliance conditions in any assessment year, assessee's claim of exemption for the said assessment year can be rejected. However, that cannot be a reason to revoke the approval granted under section 10(23C)(iv) of the Act. One more factor which needs consideration is, till date, assessee's registration under section 12A of the Act as a charitable institution subsists. In fact, approval granted under section 80G of the Act is still continuing. These facts reflect the dichotomy in the stand of the revenue. For the purpose of section 12A and 800 of the Act the assessee is recognized as charitable institution, whereas, for the purpose of section 10(23C)(iv) assessee loses its charitable status. This approach of the revenue is unacceptable. The approval under section 10(23C) of the Act cannot be revoked, more so, when the objects of the assessee have remained same. We, for a moment, do not say that the competent authority under no circumstances can revoke the approval granted under section 10(23C)(iv) of the Act. However, for doing so, the revenue must bring on record cogent material to demonstrate that the assessee has deviated from the core objects based on which approval under section 10(23C)(iv) was initially granted to the assessee. It is also a fact on record that the activities of the assessee are in the category of medical relief to the poor. Thus, if we interpret the provisions of section 2(15) of the Act strictly, the proviso would not apply. That being the case, by referring to the proviso to section 2(15) of the Act, it cannot be said that the assessee is engaged in any activity of business or commercial nature, hence, not existing for charitable purpose. Thus hold that the impugned order passed by learned CIT (Exemption) withdrawing the approval granted under section 10(23C)(iv) of the Act is unsustainable. Decided in favour of assessee.
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