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Facts
The assessee trust, established on 31.05.2022, applied for registration under section 12AB of the Income Tax Act. The CIT(E) rejected the application, holding that the assessee was engaged in commercial activities by providing services for a 10% management fee, rather than charitable activities. The CIT(E) also noted the timing of agreements with NSDC and Edujobs Academy Pvt. Ltd.
Held
The Tribunal held that the objects of the trust deed clearly indicate charitable activities. The assessee's explanation regarding the management fee as a recovery of operational costs and the timing of agreements was accepted. Therefore, the CIT(E) was directed to grant registration under section 12A and consequently exemption under section 80G.
Key Issues
Whether the assessee's activities, including charging a 10% management fee and the sequence of entering into agreements, constitute charitable or commercial activity for the purpose of registration under section 12AB.
Sections Cited
12AB, 12A(1)(ac)(vi), 12A(1)(ac)(iii), 12(1)(ac)(iii), 80G, 12A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI C. N. PRASAD & SHRI M. BALAGANESH
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in & 2154/Del/2025 for AYs 2023-24 to 2025-26, arises out of the order of the Commissioner of Income Tax (Exemptions)-Delhi [hereinafter referred to as „ld. CIT(E)‟, in short] in Appeal No. ITBA/EXM/F/EXM45/2024-25/1074991739(1) dated 25.03.2025 for registration of u/s 12AB of the Income Tax Act, 1961.
Let us take up the appeal of the assessee in ITA No. 2153/Del/2025.
The only issue to be decided in this appeal is as to whether the ld CIT(E) was justified in denying the registration u/s 12AB of the Act to the assessee.
We have heard the rival submissions and perused the materials available on record. The assessee trust was started on 31.05.2022. The assessee obtained registration u/s 12A(1)(ac)(vi) of the Act on 12.08.2022. The assessee filed an application on 20.09.2024 in Form 10AB for regular registration u/s 12A(1)(ac)(iii) of the Act. The main objects of the assessee as per the Form 10AB of the Act as noted by the ld CIT(E) are for imparting education and advancement of any other object of general public utility. The assessee explained that it is a registered trust of the National Skill Development Corporation (NSDC) acting as an approved training partner under the National Skill Development Programme of Ministry of Skill Development and Entrepreneurship, Govt. of India, in order to encourage, promote and facilitate skill development, impactful employability, entrepreneurship skill and competency and create mechanism/ structure for information “outreach”, for generating awareness about the prospects which would open up on acquiring specific skills. The assessee submitted the copy of agreement dated 24.09.2024 with NSDC. The ld CIT(E) noted that as per the said agreement with the NSDC agreement, the assessee is a mere service provider for providing training services to NSDC for consideration of payment of 10% on actual expenses as compensation. The assessee submitted before the ld CIT(E) that 10% management fee collected is only to recover the operation cost incurred by the assessee trust. It is not profit driven fee charges but only reimbursement to sustain the trust‟s activities, ensuring efficient execution of its objects. Further, the ld CIT(E) noted that the assessee had entered into an agreement with M/s. Edujobs Academy Pvt. Ltd on 11.09.2024 wherein M/s Edujobs Academy Pvt. Ltd was appointed as its co- implementation partner to oversee full implementation of the skilling programme in Odisha. The assessee was asked to explain how the agreement has been entered into with M/s. Edujobs Academy Pvrt. Ltd Page | 2 even before the parent agreement with NSDC. The assessee submitted that though the formal agreement had been executed on 24.09.2024, the agreement with NSDC is applicable from 01.04.2024 to 31.03.2009. The work had already started and discussion had already been taking place with NSDC to start the services on ground. The agreement with M/s. Edujobs Academy Pvt. Ltd executed on 11.09.2024 was in anticipation of the formalization of the NSDC agreement as it was already in pipeline and discussions were going on. This was necessary to ensure operational readiness and alignment with the broader objectives of the scheme.
The ld CIT(E) however did not agree with the contentions of the assessee and concluded that the assessee has not engaged in the charitable activities but only engaged in rendering services of collection of management fees of 10%. Hence, he concluded that the activities carried out by the assessee are business/ target oriented and commercial in nature rather than charity-focused. Accordingly, he held that the assessee had failed to satisfy the genuineness of the charitable activities carried out by it and hence, the application seeking for registration u/s 12(1)(ac)(iii) of the Act was rejected. Consequentially, the claim of exemption u/s 80G of the Act was also rejected by the ld CIT(E).
The copy of the trust deed is enclosed in pages 5 to 22 of the Paper Book. The objects of the trust are reflected in pages 8 to 11 of the Paper Book in the trust deed which are not reiterated herein for the sake of brevity. On perusal of the trust deed, we find that the Settlor of the Trust is National Skill Development Corporation (NSDC), a Government body, through its initial trustees. A sum of Rs. 1 lakh stood deposited into the bank account of the trust as initial contribution. The list of students who are enrolled for the training programmes are provided from pages 77 to 94 of the Paper Book containing the full name, gender, date of birth, email Page | 3 id, marital status, father‟s name, mother‟s name, domicile state, mobile number and permanent address. No expenditures were incurred by the assessee for the year ended 31.03.2023 and 31.03.2024 by the trust. The provisional balance sheet of the assessee trust as on 31.12.2024 was placed on record which are enclosed in pages 101 to 103 of the Paper Book, wherein it can be seen that a sum of Rs. 56,73,335/- has been spent on activities carried out by it. The assessee submitted the complete details together with the bills, vouchers and photographs in respect of activities carried out by it. The details of training sessions conducted at the Skill India Training Centre at various locations together with the respective candidates undergoing training of the assessee trust were filed. The bills and vouchers raised by M/s. Edujobs Academy Pvt. Ltd in relation to the training activity carried out were enclosed on sample basis before the ld CIT(E). The assessee gave the details of its operating skill training at 5 centers in Odisha wherein, training is being provided to candidates in the below mentioned job roles:- i. IT Help desk ii. F&B steward iii. Graphic designing iv. Story Board Artist v. Stitcher Goods and Garments vi. Cutter Goods & Garments vii. Part Making Helper viii. Barista Executive ix. Footwear and fashion accessory in retail
The assessee submitted that 608 candidates had been enrolled in the above mentioned job roles out of which 212 candidates were trained and the balance were undergoing training. We find all these aforesaid details were not doubted/ disputed by the ld CIT(E). The main grievance of the ld CIT(E) is that assessee is a service provider charging 10% management fee; and assessee had entered into agreement with M/s. Edujobs Academy Pvt. Ltd on 11.09.2024 as co- implementing partner, whereas the parent agreement with NSDC was entered only on 24.09.2024. In this regard, the assessee had explained in detail that the discussions with NSDC were in the pipeline and the formal agreement was executed on 24.09.2024. What is to be seen at the time of grant of registration by the ld CIT(E) is that whether the activity carried out which are mentioned in the trust deed or the activity proposed to be carried out are indeed charitable in nature. There is absolutely no doubt on perusal of the objects of the trust deed that the activities mentioned thereon are indeed charitable in nature. Hence, we direct the ld CIT(E) to grant registration u/s 12A of the Act to the assessee trust holding that it is engaged in charitable activity and consequentially grant claim of exemption u/s 80G of the Act.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 30/06/2025.