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Facts
The assessee, Shree Balaji Sewa Trust, applied for registration under Section 80G of the Income-tax Act. The CIT(E) rejected the application, citing that the assessee was engaged in commercial activities due to TDS deductions on certain receipts. The assessee contended that the TDS was unintentional and the receipts were applied for charitable purposes.
Held
The Tribunal held that the mere deduction of TDS by a payer does not automatically classify the assessee's activity as commercial, especially when the assessee's charitable nature is not in dispute. Following the ratio of the Delhi High Court in Aroh Foundation, the Tribunal found no merit in the CIT(E)'s order.
Key Issues
Whether the rejection of registration under Section 80G was justified solely based on TDS deductions, despite the assessee's charitable activities and existing registration under Section 12AA.
Sections Cited
80G, 12AA, 2(15), 194C, 194J, 11, 12
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: MS. MADHUMITA ROY, & SHRI NAVEEN CHANDRA
This appeal by the assessee is preferred against the order of the CIT(E), Delhi dated 27.11.2024 for A.Y 2023-24.
Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules.
Page 1 of 7 assessee is that the ld. CIT(E) was wrong in rejecting the application for registration of the assessee u/s 80G of the Income-tax Act, 1961 [the Act, for short]. The assessee is also aggrieved by the action of the ld. CIT(E) in not providing opportunity the assessee to respond to the notices and submit the required information.
Briefly stated, the facts of the case are that the assesse "SHREE BALAJI SEWA TRUST" is a charitable trust registered under Indian Trust Act, 1882 based in Delhi, incorporated on 30-06-2020. The assessee is running a Dharamshala at Mehandipur Balaji temple, located in Dausa district of Rajasthan, a renowned pilgrimage site dedicated to Lord Hanuman in his childhood form, revered for its healing and exorcism rituals.
During the FY 22-23, the following TDS has been deducted by following persons:
S.N. Name Amount Credited Amount TDS 1. Yatradham E service Pvt Ltd 15,200 152 2. Booking.com 21,800 218 3. Foundation to educate Girls 16,500 1,950 Total 53,500 2,320
Page 2 of 7 Form 10AD, the ld. CIT(E) observed that the assessee is found to be engaged in commercial activity due to the TDS deducted by the above mentioned. The unintentional deduction of TDS (Rs. 1950 + Rs 218+ Rs. 152) on the charitable receipts does not justify the assumption of Trust carrying a commercial activity, whereas such amount received was applied as per the objective of the trust which was in charitable nature.
Further, the ld. counsel for the assessee submitted that as per the provisions of Section 80G, the CIT (E) before granting registration/refusing registration, has to satisfy himself about the objects of the trusts/institution and also no adverse comment on activities of trust except to Transaction of Rs 21800+ Rs.16500 + Rs. 15200 for which TDS was deducted (TDS=Rs. 1950 + Rs 218+ Rs.152), whereas the total receipt was of Rs.49,03,601/- during the year in question (FY 22-23). The same is negligible and should not be considered component for commercial activities.
The assessee submitted that the assessee is already have the registration under sec 12AA of the Act for the A.Ys 2023- 24 to 2027-28 and rejecting the application for registration u/s Page 3 of 7 for the assessee prayed that the same may be restored and the order of the ld. CIT(E) set aside.
Per contra, the ld. DR relied on the orders of the authorities below.
We have heard the rival submissions and have perused the relevant material on record. There is no dispute that the trust is registered under the Indian Trust Act, 1882 and the objects of the trust is to carry out general welfare activities as well as advancement of objects of general public utility. The Trust has been granted registration u/s 12AA of the Act for the A.Ys 2023-24 to 2027-28 which shows that the Revenue is satisfied
We find that the ld. CIT(E) rejected the application for permanent registration u/s 80G of the Act on the ground that the assessee was found to have received payments from “Foundation to Educate Girls Globally” which was not in the nature of donation but receipts from rent/commercial as TDS was deducted by the payer and therefore the CIT(E) held that the assessee is engaged in commercial activities of renting out
Page 4 of 7 Form 10AB for grant of registration u/s 80G of the Act.
We find that in the case of Aroh Foundation Vs Commissioner of Income Tax Exemption & Anr., in WP(C) 4365/2021 dated 05.02.2024, the hon’ble Delhi High Court had held that mere deduction of TDS by Donor on Grants would not disentitle the NGO from sections 11 exemption. The hon’ble Delhi High Court held as under:
If the deductor in its Income Tax Return, under misconception, deducts TDS under Sections 194C and 194J of the Act, the same would not disentitle the assessee to claim benefit under Sections 11 and 12 of the Act unless the case of assessee is specifically hit by the Proviso of Section 2(15) of the Act, which is not the case here. The Proviso to Section 2(15) of the Act would not get attracted merely on the basis of deduction of TDS by the donor under a particular head.
In the instant case the charitable nature and activity of the assessee Trust is not under dispute u/s 2(15) of the Act.
Therefore, following the ratio of the above decision, we hold that the activity of the assessee remains charitable even where the donor has deducted TDS on the payments made by it. In that view of the matter, we do not find any merit in the order of the ld. CIT(E). We, therefore, set aside the order of the Ld. CIT(E) and direct the CIT(E) to grant registration u/s 80G. The ground is allowed.
In the result, the appeal of the assessee in is allowed for statistical purposes.
The order is pronounced in the open court on 22.08.2025.