Matha Medical Centre Trust Vs CIT (Exemption) (ITAT Chennai)
Income Tax Appellate Tribunal (ITAT), Chennai Bench, has ruled that providing medical facilities at nominal charges in rural areas qualifies as a charitable activity under the Income Tax Act, 1961. This decision came in the case of Matha Medical Centre Trust vs. CIT (Exemption), Chennai, concerning the rejection of the Trust’s application for approval under Section 80G of the Act.
The Matha Medical Centre Trust, established in 1996, operates with the primary objective of providing medical relief, education, and relief to the poor. The Trust had secured approval under Section 12A of the Act in April 2022, valid until Assessment Year 2026-27. Subsequently, in August 2024, the Trust applied for 80G approval, which was denied by the Commissioner of Income Tax (Exemption) (CIT(E)).
The CIT(E) had contended that the Trust’s activities, which involved collecting fees for medical services and pharmacy sales, constituted a commercial endeavor. The rejection order cited the proviso to Section 2(15) of the Income Tax Act, arguing that if an activity involves rendering service for a fee and its aggregate receipts exceed twenty percent of total receipts, it should not be considered charitable.
The Trust appealed this decision, asserting that its core purpose was medical relief, which falls under the first six limbs of Section 2(15) of the IT Act, categorized as “per se charitable.” The Trust’s legal representative emphasized that the proviso to Section 2(15) is applicable only to entities whose purpose is “advancement of any other object of general public utility,” and not to activities specifically defined as medical relief, education, or relief of the poor.
