ESCORTS SPORTS CLUB,FARIDABAD vs. INCOME TAX OFFICER EXEMPTION WARD, FARIDABAD

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ITA 5912/DEL/2026Status: DisposedITAT Delhi17 July 2026AY 2026-273 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 learned CIT(E) erred in rejecting the assessee's application for registration. Regarding the donation of ₹50,000, the Tribunal found from the paper book that it was made on 30th October, 2025, which contradicted the CIT(E)'s premise that it was made after the issuance of notice. The Tribunal accepted the assessee's categorical admission that no sports activities were carried out for the last three years, but noted that taxes were paid on the accumulated income for the relevant assessment years. The Tribunal observed that the assessee had complied with all conditions under Section 12A, and the CIT(E) had not cast any doubt on the charitable nature of the assessee's objects and activities. Therefore, the Tribunal concluded that the assessee is a genuine trust and the rejection of registration by the CIT(E) was without basis. The Tribunal directed the learned CIT(E) to grant registration to the assessee trust. The order of the learned CIT(E) was reversed, and the appeal of the assessee was allowed.

What were the facts?

The assessee, M/s Escorts Sports Club, filed an appeal against the order of the learned CIT(Exemptions), Chandigarh, dated 2nd March, 2026. This order rejected the assessee's application for registration under Section 12A(1)(ac)(ii) of the Income-tax Act, 1961, filed in Form No. 10AB. The assessee was established to promote indoor and outdoor games, sports tournaments, and scholarships. The CIT(E) rejected the application primarily on two grounds: (1) a donation of ₹50,000 made in FY 2025-26 was considered an isolated, post-facto activity after the issuance of notice, and (2) the assessee had not carried out any activities for the past three years, failing to demonstrate genuine charitable activities. The amount in dispute relates to the eligibility for registration under Section 12A.

What were the issues?

1. Whether the learned CIT(E) erred in rejecting the assessee's application for registration under Section 12A(1)(ac)(ii) of the Act, despite the assessee fulfilling the twin conditions of genuineness of activities and compliance with applicable laws as prescribed under Section 12AB(1)(b) of the Act? Assessee's contentions: The assessee argued that the CIT(E) failed to appreciate the twin conditions. Specifically, it was contended that a donation of ₹50,000 made on 30th October, 2025, was erroneously considered by the CIT(E) to be made after the issuance of notice, whereas it was made prior to it. The assessee also admitted to not carrying out sports activities for the last three years but stated that taxes were paid on accumulated income for FY 2022-23 to 2024-25. The assessee claimed to have complied with all conditions under Section 12A and that its objects were charitable. Revenue's contentions: The revenue, through the CIT(E)'s order, contended that the donation was made after the notice was issued, rendering it an isolated and post-facto activity. Furthermore, the absence of activities for the past three years was seen as a failure to demonstrate genuine charitable activities.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(ii),Section 12AB(1)(b),Section 12A

AI-generated summary — verify with the full judgment below

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

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

For Appellant: Shri R.M .Mehta, Advocate
For Respondent: Shri Lal Ram Sanga Sailo, CIT-DR
Hearing: 13.07.2026Pronounced: 17.07.2026

PER MAHAVIR SINGH, VP:

This appeal by the assessee is arising out of the order of learned CIT(Exemptions), Chandigarh dated 2" March, 2026 passed under Section 12A(1)(ac)(ii) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), rejecting the application filed by the assessee in Form No.10AB.

2.

The assessee has raised the issue that learned CIT(E) failed to appreciate the assessee’s specific twin conditions prescribed under Section 12AB(1)(b) of the Act i.e., genuineness of the activities and compliance with all applicable laws for the purpose of achieving its objectives and therefore, is eligible for registration.

3.

Brief facts are that the assessee trust i.e., Escorts Sports Club has been established for the purpose of promoting indoor and outdoor games, sports, conducting sports tournaments, disbursing scholarships to deserving and talented young sportsmen and for promoting and encouraging sports amongst the employees of industries of Faridabad.

2 ITA-5912/Del/2026

Since its establishment, the trust has promoted various games and sports activities including incurring capital expenditures on renovation of certain sports complexes in the region of Faridabad. The assessee before learned CIT(E) claimed that the assessee club did not get opportunity to apply its accumulated funds in the last few years and accordingly, it has paid taxes on these accumulated funds. The assessee filed application in Form 10AB on 26" September, 2026 for registration under Section 12A(1)(ac)(ii) of the Act along with provisional registration order dated 24° September, 2021, notes on activities, audited accounts for financial year 2022-23 to 2024-25, certificate of registration and bye laws. Learned CIT(E) rejected the assessee’s registration application only on two premises i.e., that the donation of %50,000/- in financial year 2025-26 was after issuance of notice by learned CIT(E). Accordingly, learned CIT(E) held that such isolated and post-facto activities undertaken after initiation of proceedings cannot establish genuineness of activities for the preceding years. Secondly, for past three years, the assessee has not carried out any activity and hence, assessee failed to demonstrate that it had carried out genuine charitable activities in accordance with its stated objects during the relevant period. Therefore, application filed by the assessee in Form 10AB under Section 12A(1)(ac)(ii) of the Act was rejected and it was also held that this rejection would also supersede any registration granted under Section 12AB of the Act by any authority at any earlier point of time.

4.

We have heard the arguments of both the sides and perused the material placed before us. We noted from the arguments of the learned Counsel for the assessee as well as the paper book containing 77 pages, wherein the assessee has enclosed the first evidence of contribution of €50,000/- towards sports contribution at pages 65 to 67, wherein this donation was made on 30° October, 2025 as against the claim made by the learned CIT(E) that it was donated after issuance of notice. The learned Counsel pointed out that the entire premise of learned CIT(E) is wrong and it is clear that this donation was made by 3 ITA-5912/Del/2026

the assessee club on 30" October, 2025. Further, learned Counsel admitted categorically that this trust is not carrying out any sports activities for the last three years but it has paid taxes on the accumulated income from financial year 2022-23 to 2024-25 relevant to assessment year 2023-24 to 2025-26 and for this, he drew our attention to pages 75 to 77 of the paper book, wherein assessee has enclosed the copy of acknowledgement, by virtue of which, assessee has paid taxes on returned income on the accumulated funds. We noted that the assessee has complied with all the conditions as mentioned in the provisions of Section 12A of the Act, and assessee’s case does not fall in any of the specified violations and moreover, there is no doubt casted by the learned CIT(E) that the activities and objects of the assessee trust are not charitable in nature. Accordingly, we are of the view that the assessee is a genuine trust and rejection of registration by the learned CIT(E) is without any basis. We direct the learned CIT(E) to grant registration to the assessee trust and accordingly, the order of learned CIT(E) is reversed and the appeal of the assessee is allowed.

5.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 17" July, 2026. (MANISH AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT

Date : 17.07.2026 VK.

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