CONFEDERATION OF INDIAN FOOTWEAR INDUSTRIES,DELHI vs. COMMISSIONER OF INCOME TAX (EXEMPTION), DELHI

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ITA 6018/DEL/2026Status: DisposedITAT Delhi10 August 2026AY 2026-275 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(E) did not doubt the core activities of the assessee but only objected to income from other activities. The matter was remanded for reconsideration after giving the assessee an adequate opportunity to be heard.

What were the facts?

The assessee, a Section 8 company promoting the footwear industry, applied for registration under Section 12AB. The CIT(E) rejected the application, classifying the assessee's receipts from various activities as commercial and exceeding the 20% threshold.

What were the issues?

Whether the assessee's activities, including those generating income from subscriptions and exhibition charges, disqualify it from charitable status under Section 2(15) and registration under Section 12AB. Whether the CIT(E) erred in rejecting the application without providing an opportunity of being heard.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI

Before: SH. MAHAVIR SINGH & SH. KRINWANT SAHAY

For Appellant: CA Sh
For Respondent: Dr. Rajinder Kaur, CIT DR
Hearing: 10.08.2026Pronounced: 10.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘E’ NEW DELHI BEFORE SH. MAHAVIR SINGH, VICE PRESIDENT AND SH. KRINWANT SAHAY, ACCOUNTANT MEMBER

I.T A. No.6018/Del/2026 (A.Y 2026-27) Confederation of Indian CIT(E) Vs. Delhi Footwear Industries H-32, Udyog Nagar, Indl. Area, New Delhi-110041 PAN No.AAFCC5552M

Appellant by: Sh. Pramod Jain, CA Sh. Mukul Gupta, Advocate Respondent by : Dr. Rajinder Kaur, CIT DR

Date of Hearing 10.08.2026 Date of Pronouncement 10.08.2026

ORDER PER KRINWANT SAHAY AM Appeal in this case has been filed by the Assessee against the order dated 27.03.2026 passed by the CIT(E), Delhi for the A.Y. 2026-27. Grounds of appeal are as under :- 1 | P a g e

“1. That the order passed by Ld. CIT (E) is bad in Law and against facts of the case, 2. That the Ld. CIT (E) erred in rejecting the application made for registration u/s 121. 3. That the Ld. CIT(E) erred in holding that the appellant- company is not eligible for registration u/s 12AB without appreciating that the appellant is a section 8 company and having objects of promotion, protection and welfare of the footwear industry and having no profit-distribution motive. 4. That the Id. CIT(E) erred in treating the activities of the appellant company as commercial activities, without appreciating that such activities are directly connected with and incidental to the main object of advancement of general public utility. 5. That the Ld. CIT(E) erred in rejecting the application without issuing any show cause notice. 6. That the appellant carves leave to add, alter, modify or delete any of the ground of appeal.

2.

Brief facts of the case are as under :- “The assessee, Confederation of Indian Footwear Industries, is a Section 8 company/not-for-profit institution having PAN AAFCC5552M, formed with the object of promotion, protection and welfare of the footwear industry and engaged in activities for the advancement and development of the footwear industry, including organizing exhibitions, trade fairs, seminars, workshops and awareness programmes for manufacturers, traders, suppliers, machinery providers and other stakeholders of the footwear sector. The assessee filed an application in Form 10AB seeking registration u/s 12A(1)(ac)(ii) of the Income- tax Act, 1961.

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During the course of proceedings, notices dated 26.12.2025 and 18.02.2026 were issued by the Ld. CIT(E), Delhi calling for details, documents and clarifications. The assessee filed replies, which were taken on record. The Ld. CIT(E) observed from the audited financial statements that the assessee had receipts from subscription fees, sponsorship fees, sale of services, entrance fees, accommodation charges, commission on stall booking and exhibition charges and classified the same as "commercial receipts" and held that such receipts exceeded 20% of total receipts in F.Y. 2022-23, F.Y. 2023-24 and F.Y. 2024-25. The Ld. CIT(E) has rejected the application for renewal of registration u/s 12A of the act without giving any opportunity of being heard. The Ld. CIT(E) also relied upon the decision of the Hon'ble Supreme Court in Ahmedabad Urban Development Authority and observed that the assessee's activities were similar to structured commercial services rendered for a fee. That the Id. CIT(E) failed to appreciate that the appellant exists for the benefit and development of the footwear industry as a whole and not for the benefit of any individual member, shareholder or private person.

3.

During proceedings before us the Ld. Counsel of the assessee argued that the Ld. CIT(E) has failed in appreciating the fact that the assessee trust has come into existence with the object of promotion, 3 | P a g e

protection and welfare of the footwear industry and engaged in activities for the advancement and development of the footwear industry only, other activities taken up by the trust is for collection of some fund in order to promote the objectives of the trust. The Ld. CIT(E) has given his findings on these issues which is as under :-

“6.7 From the discussions above it is evident that the applicant has substantial net surplus in absolute terms and hence its markup for commercial transactions is not nominal. In other words, the applicant fails the test of nominal markup as enumerated in the case of AUDA supra as well. Thus, in light of the law laid down by the Hon'ble v. CIT, the applicant Supreme Court in Ahmedabad Urban Development Authority does not qualify as a charitable institution within the meaning of section 2(15) of the Income-tax Act, 1961.”

4.

We have considered the findings given by the Ld. CIT(E) in his order and we have also considered the brief facts submitted by the assessee and the arguments made during proceedings before us by both the parties. We are of this considered view that the Ld. CIT(E) has never doubted the core activities of the assessee trust. The only objection is the income from other activities of the trust. Therefore, we are of this considered view that the matter once again be looked into by the Ld. CIT(E) after giving adequate opportunity to the assessee as required under law and the assessee is also directed to

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file all the relevant papers and details before the Ld. CIT(E) so that the matter may be decided at the earliest. 5. In the result, the appeal filed by the assessee is allowed for statistical purpose.

Order pronounced in the open Court on 10.08.2026.

Sd/- Sd/-

SD (MAHAVIR SINGH) (KRINWANT SAHAY) VICE PRESIDENT ACCOUNTANT MEMBER Dated :21 /08/2026 *Neha Sr. PS* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI

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