AADYA FOUNDATION,DELHI vs. CIT(E), DELHI

आदेश /O R D E R

PER C.N. PRASAD, J.M.

2. Ld. Counsel for the assessee referring to page 5 of the order passed by the Ld. CIT(Exemptions) submitted that the Ld. CIT(E) stated that the assessee has not justified of the charitable activities 1 have been carried out by the trust. It was also the observation of the Ld. CIT(E) that majority expenses are in the nature of administrative expenses and commercial/trade nature. Ld. Counsel for the assessee referring to pages 1 to 42 of the Paper Book submitted that the assessee has furnished all the details called for by the CIT(E) including the photographs of the assessee trust in proof for carrying out the charitable activities of distribution of food to poor people without cast, creed and religion. Ld. Counsel submitted that these photographs are placed at pages 18 to 27 of the Paper Book referring to page 28 to 29 the Ld. Counsel submits that the trust also conducting yoga classes. Ld. Counsel referring to page 1 of the Paper Book submitted that assessee filed note on activities before the CIT(E) stating that the assessee is a charitable trust involved in the activities of distributing food and clothes to the poor and providing spiritual education to strengthen the mind and body by yoga, meditation and spiritual upliftment of health mind.

3. The Ld. Counsel further submits that the Ld.CIT(E) did not point out a single incident of any activity of the trust which is not genuine, whether any surplus is accumulate, any fee collected by the trust was utilized for any purpose other than object of the society. The Ld. CIT(E) had only stated that assessee is only having commercial activities, majority of expenses are administrative and assessee did not conduct charitable activities. Ld. Counsel for the assessee further submitted that the assessee trust generated revenue of Rs.10,95,908/- from the sale of educational and books and other income of Rs.1,38,804/-. Out of the total receipts, Rs.10,60,368/- was incurred towards incidental expenses directly related to such educational activities. The remaining balance was utilized for charitable purposes, mainly for distribution of food and clothing, along with minor administrative expenses such as audit fees and bank charges. Accordingly, the trust has not incurred only administrative expenses. The entire expenditure relates exclusively to costs incidental to the sale of books used for imparting spiritual education and administrative expenses are just bank charges and audit fees. While dealing with application for registration, the Ld. CIT(E) is required to examine the genuineness of the objects of the society, whether is charitable or not. At the stage of granting registration u/s 12AA, the CIT(E) is required only to assess the genuineness of activities and the objects of the trust, not the quantum or nature of income or expenditure. In the instance case, the Ld. CIT(E) had no objection on the objectives of the trust.

4. Reliance was placed on the following decisions by the Ld. Counsel for the assessee which is as under: - S.No. Name of case Court Held 1. Institute of Chartered Hon’ble Delhi Held that interviews for fees Accounts of India vs. High Court for the purpose of campus Director General of placements of its students does Income Tax not amount to carrying on a (Exemptions), 2013 358 business so as to deny ITR 91/217 Taxman exemption u/s 11 of the Act. It 152/35 taxmann.com is further observed that if the 140 (Delhi) object or purpose of an institution charitable, the fact that the institution collects certain charges does not alter the character of the institution.

6. The Tribune Trust vs. Hon’ble Punjab The Hon’ble High Court has CIT & CIT (Exemptions) & Haryana High approved the predominant vs. Improvement Trust, Court object theory that is, if the Moga [2017] 390 ITR 547 predominate motive or act of (P&H) the trust is to achieve its charitable objects, then merely because some incidental income is being generated, that will not dis entitle the trust t claim exemption u/s 11 read with section 2(15) of the Act.

7. India Trade Promotion Hon’ble Delhi The Hon’ble High Court reading Organization vs. DIT(E) High Court down the scope of the proviso 371 ITR 333 (Delhi) to section 2(15) has held that an assessee could be said to be engaged in business, trade or commerce only where earning of profit was the predominant motive, purpose and object of the assessee and that mere surplus from incidental or ancillary activities did not disentitle claim of exemption u/s 11 of the Act.

considering an application u/s 12AA, should primarily focus on the genuineness of the trust’s proposed activities and their alignment with the trust’s objectives as outlined in the trust deed. The Supreme Court’s decision reinforces the principle that at the registration stage, the focus is on the trust’s plans and stated objectives, not its past actions.

5. On the other hand, the Ld. DR strongly supported the orders of the authorities below.

The Ld. CIT(E) did not doubt the objects of the assessee trust as not charitable in nature. The materials placed before us in the form of photographs which were also filed before the Ld. CIT(E) clearly show that the assessee was distributing food to poor people as per the objects of the trust. The Ld. CIT(E) did not make any comments on the genuineness of the objects of the trust. The registration u/s 7 12A as well as 80G was denied certain expenses are in the nature of administrative and commercial. As held by various High Courts while granting registration u/s 12A one has to see whether the objects of the trust are charitable and the activities of the trust are genuine. The evidences furnished by the assessee prove that the assessee is a charitable trust and the activities carried on by the assessee are genuine. The queries raised and details required by the Ld. CIT(E) were all subject matter of verification by the AO while completing the assessment. Since the genuineness of the objects of the trust and the activities of the trust were not doubted by the Ld. CIT(E). He should not have rejected the registration u/s 12A as well as 80G of the Act. Thus, we direct the Ld. CIT(E) to restore the provisional registration granted to the assessee us 12A and also direct to grant registration u/s 12A as well as 80G to the

Order pronounced in the open court on 29/05/2025