AANANDI SHREE SANSHTHA,MADANGANJKISHANGARH vs. CIT EXEMPTION, JAIPUR

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ITA 1588/JPR/2025Status: DisposedITAT Jaipur30 July 2026AY 2025-266 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(E) was incorrect in classifying the society's activities as commercial. It stated that the genuineness of activities is tested during assessment proceedings, not at the time of granting registration. Consequently, the Tribunal set aside the CIT(E)'s orders.

What were the facts?

The assessee society, with charitable objects of vocational training, had its application for registration under sections 12AB and 80G denied by the CIT(Exemption). The denial was primarily based on the CIT(E)'s view that the society's activities were commercial in nature, violating Section 2(15) of the Act.

What were the issues?

Whether the activities of the assessee society, including the sale of products made by trainees and nominal registration fees, are commercial in nature and thus violate the charitable purpose requirement. Whether the genuineness of activities should be tested at the time of registration.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G(5),Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, JAIPUR

Before: Smt. Annapurna Gupta & Shri T.R. Sentil Kumar

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, JAIPUR (HYBRID HEARING) Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Sentil Kumar, Judicial Member

ITA Nos: 1588 & 1587/JPR/2025

Aanandi Shree Sanstha CIT Exemption, 48 Arihant Vihar R. K Jaipur Colony, Madanganj Vs Kishangarh, H.O. Kishangarh, Ajmer PAN: AAOAA5144J (Appellant) (Respondent) Assessee Represented: Sh. Mukesh Agarwal, CA (Thr. V.C) Revenue Represented: Sh. Ananad Swaroop, CIT Date of hearing : 22-07-2026 Date of pronouncement : 30-07-2026 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

These two appeals are filed by the assessee as against the separate order both dated 18.09.2025 passed by the Commissioner of Income Tax (Exemption), Jaipur denying registration u/s 12AB and 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Brief facts of the case are, the assessee is a society registered under the Rajasthan Societies Registration Act, 1958 and Rajasthan Public Trust Act, 1959 with the charitable objects to provide for

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vocational training to poor backward person (Handicapped woman) of rural and urban areas and other objects. The assessee society was provisionally registered u/s 12A(1)(ac)(vi) of the Act vide registration dated 16.12.2022 for the period from Assessment Years 2023-24 to 2025-26. Final registration was rejected mainly for want of registration with Devsthan Vibhag. It is thereafter the assessee society got registration with Devsthan Vibhag and applied for new registration before ld. CIT(E) by filing Form No. 10B. Ld. CIT(E) given four opportunities of hearing to the assessee society wherein the assessee partly complied with last two herings. Thereby, the Ld. CIT(E) held that the activities carried out by the assessee are commercial in nature which is violative of section 2(15) of the Act. Thus, denied registration u/s 12AB of the Act. Following the same the claim for registration u/s 80G was also denied to the assessee society.

3.

Aggrieved against the order, the assessee is in appeal before us, raising the following Grounds of Appeal:-

In ITA No.1588/JP/2025 “Rejection of Application u/s 12AB 1. That the ld. CIT(E) grossly erred in law and on facts of the case in rejecting the application moved u/s 12AB for registration. Cancelling Provisional Registration u/s 12A That the ld. CIT(E) grossly erred in law and on facts of the case in cancelling the provisional registration u/s 12A. The appellant prays your honour indulgence to add, alter, amend and/or withdraw any grounds of appeal on or before hearing.” In ITA No.1587/JP/2025 “Rejection of Application u/s 80G(5) 1. That the ld. CIT(E) grossly erred in law and on facts of the case in rejecting the application moved for approval u/s 80G(5) for registration.

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2.

The appellant prays your honour indulgence to add, alter, amend and/or withdraw any grounds of appeal on or before hearing.”

4.

Ld. Counsel appearing for the assessee submitted before us a Paper Book containing 85 pages wherein copy of the trust deed, registration certificate from Rajasthan Societies Registration Act and Rajasthan Public Trust Act, Profit & Loss accounts and balance sheets for three years also, details of charitable activities carried out for three years, list of beneficiaries, newspaper cutting and the submissions made before ld. CIT(E) which reads as follows:- “…..2). Business Activity/objects This wrong impression was caused by Account statement consisting of Income & Expenditure A/c. furnished with Audit Report wherein sales of Rs.73280/- is reflected. For this we beg to clear that the assesse society was formed with objects providing vocational teaching and training to poor, backward, handicapped people, women of villages and town for their livelihood, and employment as given in Annexure 4 furnished to your honour on 8/8/25. This training give some products prepared by students or beneficiaries which have to be sold in exhibition held showing their good training, ability, skill and capability obtained by them in training given by the applicant society. Such sale proceeds forms part of the funds of the society. As such this is not business activity or object but it exhibits beneficiaries' skill, ability, capability obtained by them in training provided by the applicant society. This exhibition and sale of products made by beneficiary motivate them and cause confidence in them for their livelihood and employment. The proceeds of sale is further utilised by the society towards its main objects only. 3) Genuineness of Activities- Genuineness of Activities is evidenced by following documents furnished to your honour and to ld. predecessor- a) List or Attendance sheets of beneficiaries (Ann 11A) b) News and photos published in News papers published. (Ann11B) c) Photographs of working beneficiaries and certificates issued to them. (Ann 11C) d) Attendance and chairing the functions of the society by Government officials and designated reputed persons of the society.

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We therefore pray your honour that present application for registration u/s.12A(1)(ac)(iii) and 80G may please be approved. 2. Though we have already furnished bank statements (Ann 13A) along with transaction wise details exceeding Rs.20000/- rather than Rs.10000/- since inceptions to date of last hearing, we now furnish such list for amount exceeding 10000/- and bank statements till date in the given format as Annexure B1 and B2 respectively. 3. That copy of audited final accounts for F.Y. 2024-25(Ann C1) and provisional (Ann C2) to till date along with details of expenses in form of ledger accounts with bills and vouchers, (Ann C3 and C4), payment mode, list of beneficiaries (Ann C5 and Ann C6), photographs and news papers cuttings and other supporting proof (Ann 7 to Ann9) of the same year are enclosed herewith 4. As regards to 'Rent expenses', we beg to request and submit that no rent is paid for society's permanent office as owned by President and her husband for which NOC has already been furnished to your honour on 8/8/2025 as Annexure 12B. Rent expenses as per Income and Expenditure A/c is with respect to temprory places taken and used for holding Different Training Camps and exhibition as details furnished as Annexure 19 on 8/8/2025. 5. That required all cash books for the period from inception of the society to 31.3.2025 are enclosed herewith as Annexure D 6. That list of beneficiaries who have benefited from the society activities like 'Silai, Mehndi, Parlour and Handicraft' though already furnished as Annexure 11A, is enclosed herewith once again. That the applicant Society Charges nominal fees of Rs. 100/- per trainee as registration fees for the various camps organized and rest all activities are done free of cost. This Nominal registration fees of Rs. 100/- per trainee is taken from them with purpose that they remain sincere in the training and have a belongingness to the training camps. Further as per clause no. 3(9) of the Constitution deed, the society is carrying out all activities without any profit. 7. That details of sales made of the products/handicrafts made by the women/trainees are potlis of various types like designer potlis, sikka potlis, net potlis, gud potlis, roti base, thalposh, Envelops, purse, pouches, bages, laddu gopal dresses, scrunchies, apron etc. 8. That details of the trainers, name, PAN, payments made, mode of payment, to whom the coaching classes fees paid is enclosed herewith as Annexure E

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9.

That details of rent paid for temporary places taken and used for holding Different Training Camps and exhibition is enclosed herewith as Annexure F We hope the above will clear your honour's all doubts and satisfy and suffice your honour's requirement to grant registration u/s.12A and approval u/s 80G. However the applicant society is always ready to comply with any more requirements as and when it is desired.”

4.1. However, ld. CIT(E) did not satisfy the above reply and denied both the registration u/s 12AB and 80G(5) of the Act. Therefore, ld. Counsel prayed to set aside the matter back to the file of ld. CIT(E) for one more opportunity to grant registration u/s 12AB and 80G(5) of the Act.

5.

Per contra, ld. Sr. DR appearing for the Revenue supported the orders passed by the ld. CIT(E).

6.

We have given our thoughtful consideration and perused the materials available on record. It is undisputed fact that the first application filed by the assessee for Registration was rejected for not getting registered with “Devsthan Vibhag”. It is thereafter the assessee society get registered with “Devsthan Vibhag” and applied for new registration before ld. CIT(E) and complied with various details namely list attendance sheets of beneficiaries (Annexure 11A), news and photos published in News papers published (Annexure 11B), photographs of working beneficiaries and certificates issued (Annexure-11C). The assessee explained that the registration fee for Rs. 100/- is charged is a nominal fees with the object to continue the beneficiaries attendance in the training programme, which is not a business/commercial receipt. Further, clause 3 of Trust Deed clearly

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provides all the activities or without profit motive. Thus, ld. CIT(E) is not correct in holding activities carried out by the assessee society is commercial in nature. Further the activities carried out by the society cannot be doubtful from the Paper Book filed by the assessee society. Ld. CIT(E) also should have in mind that genuineness of the activity of the Trust can be tested during assessment proceeding and not at the time of granting Registration. Therefore, we hereby set aside the orders passed by the ld. CIT(E) and grant registration u/s. 12AB and 80G(5) of the Act.

7.

In the result, both the appeals filed by the assessee are allowed.

Order pronounced in the open court on 30-07-2026

Sd/- Sd/- (ANNAPURNA GUPTA ) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 30/07/2026 *Ganesh Kr., Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Jaipur 6. Guard file. By order/आदेश से, सहायक पंजीकार आयकर अपील�य अ�धकरण, t;iqj

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