INSTITUTE OF PUBLIC AUDITORS OF INDIA,NEW DELHI vs. CIT(EXEMPTION), NEW DELHI

IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI M. BALAGANESH, HON’BLE ACCOUNTANT MEMBER

ITA No. 1810/DEL/2026 A.Y. : 2026-27 INSTITUTE OF PUBLIC AUDITORS OF VS. CIT (EXEMPTIONS) INDIA, CIVIC CENTRE, 223, 2ND FLOOR, MINTO ROAD, C-WING, AUDIT BHAWAN, I.P. ESTATE, NEW DELHI NEW DELHI – 2 (PAN: AAAT10770P) (Appellant) (Respondent) Assessee by : Sh. Pranav Sharma, CA Department by : Sh. Zafarul Haque Tanweer, CIT(DR)

Date of Hearing 08.09.2026 Date of Pronouncement 16.09.2026

O R D E R PER MAHAVIR SINGH, VP:

This appeal by the assessee is emanating from the order of the Ld. Commissioner of Income Tax (Exemption), Delhi (hereinafter referred as CIT(E)), New Delhi dated 27.12.2025 u/s. 12AB (1)(b)(ii)(B) of the Income Tax Act, 1961 (hereinafter referred as Act)

capacity building activities, and that all its activities are charitable in nature. The CIT(E) after examining all the documents, clarifications in support of assessee’s application for registration including the submissions, audited accounts, activities undertaken, MOU with Govt. Agency noted that assessee is a GPU engaged in commercial activities and hence, proviso to section 2(15) applied. CIT(E) relied on the decision of the Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority vs. CIT (449 ITR 1). He also noted that assessee is engaged in activities of payment made to its members for professional services and therefore, hit by firstly to proviso to Section 2(15) of the Act as well as violation of provisions of section 13(1)(c) 13(2) and 13(3) of the Act. Therefore, the CIT(E) rejected the registration of application. CIT(E) also cancelled the registration granted by the CPC u/s. 12A vide order dated 23.92.2021 having URN ‘AAATI0770PE20215’.

activities of the assessee are in the business nature. We noted that assessee is a professional paid, engaged in public auditing accounting, governance, capacity building activities and all its activities are charitable in nature. This fact has been admitted by the Department while framing assessment for the assessment year 2012-13 wherein, ITO(E), Trust Ward 1(2), Delhi while framing assessment u/s. 143(3) of the Act has clearly noted as under:-

“The main object of the society are to advance the disciples of public auditing, public fiancé, public sector accounting, maintenance aiding and endowment of prize to promote, compile and publish research studies and statistics etc. The activities of the assessee are charitable within the meaning of section 2(15) of the Income Tax Act, as such, exemption is allowed to the assesse u/s. 11 of the Income Tax Act, 1961.” 5. The assessment for AY 2018-19 also assessed u/s. 143(3) of the Act vide

order dated 5.4.2021 wherein, the assessee’s income was assessed as a registered

trust u/s. 12A of the Act after allowing exemption u/s. 11 of the Act. The relevant

assessment order is enclosed in the Assessee’s Paper Book at page no. 108 to 110.

We are of the view that the CIT(E)’s reliance on proviso to section 2(15) of the Act

is misplaced because the 20% threshold gross receipts for rejecting registration

and ignoring the applicability of proviso to section 2(15) is a matter of to be

examined by the AO during assessment proceedings and it cannot take as a ground

for denial of registration u/s. 12AB of the Act. The CIT(A)’s entire premise for

rejecting the assessee’s registration or that the activities of assessee are not genuine

solely on the basis of fees are charged for professional assignments and nothing 3

else. The CIT(E) equated this fee-based professional assignments with ‘business’

u/s. 2(13) of the Act and erred in holding that such activities can never be

charitable. The CIT(E) also admitted that the assessee falls under the limb of

‘advancement of any other object of general public utility’ i.e. assessee is GPU.

We have gone through the entire arguments made from both sides as well as order

passed by the CIT(E) and noted that CIT(E) simply was of the view that assessee’s

activities are in the nature of business and hit by the proviso to Section 2(15) of

the Act, which is contrary to registration provisions. The observations made by

the CIT(E) in para 6 of that the assessee is relying on ex-officio patronage of the

CAG to establish its public character. But the contention of the assessee was that it

has not contended that ex-officio patronage of CAG by itself automatically confers

charitable status, but reference to such patronage only to demonstrate the public

character, credibility and institutional nature of the assesse and not as a substitute

for compliance with the statutory definition of charitable purpose. The CIT(E)

has proceeded to reject the registration by determining the commercial character

of activities, the applicability of the proviso to section 2(15) of the Act and the

consequences on exemption, all of which are matters that fall squarely within

domain of assessment proceedings. At the stage of registration u/s. 12AB, the

statute does not empower the CIT(E) to adjudicate upon the taxability,

commerciality or the year wise applicability of the provision to section 2(15).Even

assuming, the proviso to section 2(15) is attracted in a particular year, the

statutory consequence is limited to denial of exemption under sections 11 and 12

of the Act for that year alone, and does not warrant rejection or cancellation of

registration. In view of these facts and circumstances of the case, we quash the

impugned order passed by the Ld. CIT(E) and grant the registration.

Order pronounced in the Open Court on 16.09.2026. Sd/- Sd/-

(M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT

SRBhatnaggar Date: 16-9-2026