The assessee-society was engaged in providing medical relief through running/operating of hospital and medical research. The society was granted registration under S .12A of the Act .DIT (. E ) had withdrawn the registration granted earlier under S. 12A on the ground that the assessee had not been operating as a charitable institution as it had allowed its property/hospital to be taken over by Max group by creating various financial and legal obligations and had virtually handed over the activity of the hospital to Max group which were corporate bodies established with a clear intention of profit motive which, according to him, was against the basic principles of charitable organizations and further, it was held that the assessee-trust did not fulfil the minimum notified criteria of providing 25 per cent of OPD and 10 per cent of beds in IPD as free treatment to the economically weaker section. This, according to the DIT(E ) is  against the basic principles of the charitable organizations. He, therefore, held that the assessee was not entitled to the exemption under S. 11 as its activities could not be classified as charitable activities since inception. Therefore, the registration granted under S. 12A was cancelled by him since inception.The Tribunal upheld the action of the DIT (E ) in cancelling the registration of the assessee granted under S. 12A since its inception. The High Court restored the issue to the file of the Tribunal for fresh decision in accordance with law.

Tribunal held that there is nothing on record to suggest that the assessee has refused admission to any person of the economically weaker section nor the Government has taken any action against the assessee for such violation. The argument of the assessee that the statistics have always been displayed near the reception giving the list of patients and such copy was also always filed with the Director of Health Services, Government of Delhi and neither any patient has made any complaint nor the Government has taken any action could not be controverted by the revenue. Since there is no allegation by the revenue that the activities of the trust/society are not genuine or are not being carried out in accordance with the objects of the trust and since the assessee has demonstrated clearly that the management and control of the hospital was always with the assessee society and the assessee society has not virtually handed over the management of the hospital to the Max group of concerns which are corporate bodies established with the clear intention of profit motive and since the revenue also failed to bring on record any material to suggest that the assessee-trust has refused any patient from the economically weaker section of the society in violation of the guidelines laid down by the Delhi High Court, there was no justification on the part of the DIT (E ) in withdrawing the registration granted under S. 12AA with retrospective effect. Accordingly the order of the DIT (E ) is set aside and the registration granted earlier under S. 12A is restored.