JEEVAN SAMVARDHAN FOUNDATION,KALYAN vs. INCOME TAX OFFICER (E), THANE

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ITA 4180/MUM/2026Status: DisposedITAT Mumbai07 July 2026AY 2020-216 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that while registration under Section 12AA is a prerequisite for Sections 11 and 12 benefits, the entire donation cannot be taxed without verifying expenditure. The matter was restored to the AO for de novo assessment as an AOP.

What were the facts?

The assessee, Jeevan Samvardhan Foundation, claimed deduction under Section 11 for donations received. However, it lacked registration under Section 12AA, leading the AO to treat donations as income and disallow expenses. The CIT(A) upheld this.

What were the issues?

Whether donations received by an unregistered trust can be taxed entirely without allowing for genuine expenses incurred for its activities, and if so, under which provisions.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 12AA,Section 37(1),Section 57(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI ANIKESH BANERJEE

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: J(SMC) BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER

ITA 4180/MUM/2026 िनधा�रणवष�/AssessmentYear:2020-21) JEEVAN SAMVARDHAN INCOME TAX OFFICER (E) FOUNDATION 7th Floor, Ashar It Park, D/11/109 New Lulla Complex Jail Neheru Nagar, Wagle Vs. Rd/Umbarde Rd , Bh Shree Industrial Estate, Thane Complex Kalyan, Kalyan- Thane-400604, Maharashtra Dombivali-421301, Maharashtra अपीलाथ�Appellant ��थ� Respondent

Permanent Account Number of Assessee: AADAJ0363R

अपीलाथ��ारा/Appellant represented by: Shri Sanjeev Bramhe, CA (Virtually present) ��थ��ारा/Respondent represented by: Ms. Jayshree Thakur (SR. DR) सुनवाईकीतारीख/Date of conclusion of hearing: 02-Jul-2026 घोषणाकीतारीख/Date of pronouncement: 07-Jul-2026 आदेश / ORDER

PER: ANIKESH BANERJEE,(JM): The instant appeal of the assessee filed against the order of NFAC, Delhi [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’), for Assessment Year 2020-21, date of order 30.01.2026. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity ‘Ld. AO’), order passed under Section 143(3) r.w.s. 144B of the Act, date of order 19.09.2022.

2.

We have considered the condonation petition and the affidavit duly sworn by Trustee dated 07/04/2026 filed by the assessee explaining the delay of 9 days in filing the present appeal. In our considered view, the delay is short and the explanation furnished constitutes sufficient cause within the meaning of the law. Since there is no material to suggest that the delay was deliberate or attributable to mala fide intent, and in order to advance substantial justice, we condone the delay of 9 days in filing the appeal and admit the same for adjudication on merits.

3.

We heard the rival submission and considered the document available in the record. The assessee filed the return and has claimed deduction u/sec. 11 of the Act. The assessee’s case was selected for scrutiny and it is found that the assessee made online application in Form No.10A for approval of Trust or Institution u/sec. 12AA of the Act on 28.06.2019. But however, in absence of necessary evidence, the application of the assessee was rejected vide order u/sec. 12AA/12AA(1) of the Act dated 18.12.2019. The Ld. AO found that the in absence of the registration u/sec. 12AA. So, the donation duly received by the assessee amount to Rs.18,13,787/- is considered as income and the expenses claimed by the assessee u/sec.11 and 12 of the Act is duly disallowed. The Ld. AO also observed that the assessee is not allowable the expenses as per provision of section 37(1) or Section 57(iii) of the Act. Hence, the donation received amount of Rs.18,13,787/- are entirely added back with the total income of the assessee. The aggrieved assessee file an appeal before the Ld.

CIT(A). The Ld. CIT(A) uphold the impugned assessment order. Being aggrieved assessee filed an appeal before us.

3.

The Ld. AR argued and contended that the assessee is till date had not able to get the registration u/sec. 12A of the Act. This admitted that the in absence of registration u/sec. 12A the assessee is treated as AOP. The observations of the Ld. CIT(A) noted in the impugned appellate order contended in the relevant paragraphs are reproduced as below:

“Ground No. 1 “Amount collected as donation and applied on charitable activities has not been allowed as deduction or application of income by the Assessing Officer by invoking section 37(1) or section 57(iii) of the Act. The assessee, being an AOP, though not registered under section 12A or 80G, is eligible to carry out charitable activities, and the donation income of 18,13,787 has been wholly and exclusively applied for charitable purposes.” The grievance of the appellant is against the action of the Assessing Officer in treating the entire donation receipts amounting to 18,13,787 as taxable income and in disallowing the expenditure claimed against such receipts. The Assessing Officer has held that since the appellant was not registered under section 12A/12AA during the relevant assessment year, the benefit of exemption under sections 11 and 12 was not available, and further, that the expenses claimed were not allowable under section 37(1) or section 57(iii) of the Act. During appellate proceedings, the appellant reiterated that it is a society engaged in charitable activities and that the donations received were fully utilised for such purposes. It has been contended that mere non-registration under section 12A/80G does not prohibit the assessee from carrying out charitable activities. It has further been argued that the Assessing Officer did not properly appreciate the nature of activities and the utilisation of funds. I have duly considered the above submissions. However, the legal position in this regard is well settled. Registration under section 12A/12AA is a statutory precondition for availing exemption under sections 11 and 12 of the Act. In the absence of such registration during the relevant previous year, the income of the trust or association is required to be computed under the normal provisions of the Act, without granting the benefit of exemption available to registered charitable entities. In the present case, it is an admitted and undisputed fact that the appellant was not registered under section 12A/12AA for the assessment year under consideration. The application for registration had already been rejected prior to the relevant assessment year, and no valid registration existed during the year. Consequently, the appellant is not entitled to claim exemption of income or application thereof under sections 11 and 12 of the Act. The Assessing Officer has further examined whether the expenditure claimed could be allowed under section 37(1) or section 57(iii). It is noted that section 37(1) applies only to expenditure laid out wholly and exclusively for the purposes of business or profession, whereas section 57(iii) applies to expenditure incurred wholly and exclusively for the purpose of earning income chargeable under the head “Income from other sources”. In the appellant’s case, the income consists of voluntary donations, and the activities carried out are charitable in nature, not in the nature of a business or income-earning commercial activity. Therefore, the expenditure claimed cannot be said to have been incurred for the purpose of earning taxable income in the sense contemplated under sections 37(1) or 57(iii). It is also evident from the assessment record that despite multiple statutory notices, the appellant did not furnish complete and verifiable documentary evidence before the Assessing Officer to substantiate the genuineness and allowability of the expenditure claimed. The Assessing Officer has recorded detailed reasons demonstrating that only partial and insufficient details were furnished, and that the basic requirements for allowing deduction under the normal provisions were not satisfied. These factual findings have not been controverted by bringing any new material on record at the appellate stage. The contention of the appellant that non-registration does not bar charitable activity is legally correct only to a limited extent. While an entity may carry out charitable activities in fact, the tax consequences under the Act are governed strictly by statutory provisions. In the absence of registration under section 12A/12AA, such activities do not entitle the assessee to exemption or deduction merely on equitable considerations. In view of the above discussion, I find that the Assessing Officer has correctly applied the law in treating the donation receipts as taxable income and in disallowing the expenditure claimed. The assessment order is reasoned, based on facts on record, and in accordance with the provisions of the Act. I find no infirmity or illegality in the action of the Assessing Officer warranting interference. Ground No. 1 raised by the appellant is dismissed. The addition of 18,13,787 made by the Assessing Officer is confirmed. In the result, the appeal filed by the assessee is dismissed. “ 4. The Ld. DR argued and contended that the assessee is not eligible for deductions u/sec. 11 and 12 due to absence of registration u/sec. 12A of the Act. The assessee had received donation and there is an absence of any business income. Admittedly, the assessee is also not eligible to get the benefit of section 37(1) or Section 57(iii) of the Act. The Ld. DR stands in favor of the orders of revenue authorities.

5.

We have given our thoughtful consideration to the rival submissions and perused the material available on record. It is an undisputed fact that the assessee was not granted registration under section 12AA of the Act during the relevant assessment year. Consequently, the assessee is not entitled to claim exemption under sections 11 and 12 of the Act. The assessee has also fairly conceded that, in the absence of such registration, it is liable to be assessed in the status of an Association of Persons (AOP). However, merely because the assessee is not eligible for exemption under sections 11 and 12, it does not follow that the entire amount of voluntary donations received is liable to be taxed without allowing any deduction for the expenditure genuinely incurred in carrying out its activities. Once the assessee is assessed as an AOP under the normal provisions of the Act, its taxable income is required to be computed in accordance with the provisions applicable to such an assessee. Therefore, the receipts cannot be brought to tax in their entirety without examining the admissibility of the expenditure incurred for earning such receipts or for carrying out the activities of the assessee. In the present case, we find that the Ld. AO disallowed the entire expenditure primarily on the ground that the assessee failed to furnish complete supporting evidence. Since the necessary details and supporting documents were not properly examined, the issue requires fresh verification. In the interest of justice, we deem it appropriate to restore the matter to the file of the Ld. AO for a de novo examination. The Ld. AO shall assess the assessee in the status of an AOP and compute its taxable income in accordance with the normal provisions of the Act after verifying the 5 genuineness and allowability of the expenditure incurred in connection with its activities. The assessee is directed to furnish all relevant books of account, vouchers, and other documentary evidence in support of its claim. The Ld. AO shall consider the same in accordance with law after affording the assessee a reasonable opportunity of being heard. Accordingly, the impugned order of the Ld. CIT(A) is set aside, and the matter is restored to the file of the Ld.AO for fresh adjudication in accordance with law. We have not expressed any opinion on the merits of the claim, and all contentions of both the parties are kept open. The grounds raised by the assessee are allowed for statistical purposes.

6.

In the result, the appeal of the assessee bearing ITA No.4180/Mum/2026 is allowed for statistical purpose. Order is pronounced in the open court on 07th day of July 2026.

Sd/- Sd/-

(OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 07/07/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI

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