LAKSHMI SEVA SANGHAM,DINDIGUL vs. ITO, EXEMPTIONS WARD,, MADURAI

PDF · subscribers
ITA 559/CHNY/2025Status: DisposedITAT Chennai04 May 20265 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the CIT(Exemptions) rejected the applications primarily on the ground that the assessee's activities were commercial, without adequately examining the trust's objects and the nature of its activities. It was also an admitted position, as fairly submitted by the assessee's counsel, that complete supporting documents were not furnished, and certain expenditures were reflected under general heads. However, the assessee has now placed additional materials on record in the form of a paper-book containing activity reports and photographs. The Tribunal opined that these aspects require proper verification and examination at the CIT(Exemptions) level. Considering the totality of facts, the Tribunal found that the matter required fresh adjudication by the CIT(Exemptions) with reference to the trust's objects, the nature of activities, and the supporting evidence now on record. Accordingly, the Tribunal set aside the impugned orders and remitted the matter to the CIT(Exemptions) for de novo consideration, after affording an adequate opportunity of being heard to the assessee, and to pass an order in accordance with law. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, M/s. Lakshmi Seva Sangham, filed appeals against the orders of the CIT(Exemptions), Chennai, dated 28.12.2024. These orders rejected the assessee's applications for registration under Section 12AB of the Income Tax Act, 1961, filed in Form 10AB, and for renewal of approval under the first proviso to Section 80G(5) of the Act. The assessee, established in 1977 and engaged in welfare activities for destitute women, deserted wives, abandoned children, and socially disadvantaged persons, had filed its applications on 28.06.2024. The CIT(Exemptions) rejected both applications, holding that the assessee's activities were not charitable in nature. The appeals were filed before the Income Tax Appellate Tribunal (ITAT), Chennai Bench.

What were the issues?

1. Whether the CIT(Exemptions) erred in treating the assessee's activities as commercial, thereby rejecting its applications for registration under Section 12AB and renewal of approval under Section 80G of the Income Tax Act, 1961, when such activities are charitable in nature as defined under Section 2(15) of the Act? Assessee's Contentions: - The CIT(Exemptions) erred in treating the activities as commercial without appreciating the objects and actual conduct of the trust. - The assessee is engaged in providing employment to rural women, including widows, destitutes, and differently-abled persons, with a significant portion of beneficiaries belonging to vulnerable sections. - Activities like training in procurement of herbs, preparation of indigenous medicines, conducting medical camps, awareness programs on Siddha medicine, and promoting rural livelihood through traditional knowledge systems fall within the ambit of 'charitable purpose' under Section 2(15). - The assessee had not furnished complete supporting documents before the CIT(Exemptions) and certain expenditures were reflected under general heads like 'salary' and 'administrative charges'. - A paper-book with activity reports and photographs has now been filed. - The impugned order was passed without affording a personal hearing, violating principles of natural justice. - The matter may be remanded for fresh consideration. Revenue's Contentions: - The Ld.DR supported the orders of the CIT(E).

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G(5),Section 2(15),Section 12A(1)(ac)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 28.04.2026Pronounced: 04.05.2026

आदेश/ O R D E R

PER GEORGE GEORGE K, VICE PRESIDENT: These appeals filed by the assessee are directed against the orders of the CIT(E), Chennai both dated 28.12.2024 rejecting applications filed in Form 10AB seeking registration u/s. 12AB of the Income Tax Act, 1961 (hereinafter called ‘the Act’) another application under first proviso to section 80G(5) of the Act seeking renewal of approval u/s.80G of the Act.

ITA Nos.559 & 649 /CHNY/2025 :- 2 -:

2.

Brief facts of the case are as follows: The assessee is a society established in 1977. The assessee society is engaged in welfare activities for destitute women, deserted wives, abandoned children and socially disadvantaged persons, functioning under the aegis of the Gandhigram Trust with a focus on rural upliftment. The assessee filed Form 10AB on 28.06.2024 seeking registration u/s.12A(1)(ac)(iii) of the Act and also applied for approval u/s.80G(5) of the Act. The CIT (Exemptions), Chennai, vide orders dated 28.12.2024, rejected both applications holding that the activities of the assessee are not charitable in nature. Aggrieved, the assessee is in appeals before the Tribunal.

3.

The Ld.AR submitted that the CIT (Exemptions) erred in treating the activities of the assessee as commercial without appreciating the objects and actual conduct of the trust. It was submitted that the assessee is engaged in providing employment to rural women, including widows, destitutes and differently- abled persons, and that about 38% of the beneficiaries belong to vulnerable sections of society. The assessee also undertakes training in procurement of herbs and preparation of indigenous medicines, conducts medical camps and awareness programmes

ITA Nos.559 & 649 /CHNY/2025 :- 3 -:

on Siddha medicine, and promotes rural livelihood through traditional knowledge systems, which, according to the learned AR, fall within the ambit of “charitable purpose” u/s.2(15) of the Act. The Ld.AR fairly submitted that before the CIT (Exemptions), the assessee had only explained the nature of activities but had not furnished complete supporting documents, and that certain expenditures relating to charitable activities were reflected under the heads “salary” and “administrative charges.” It was further submitted that the assessee has now filed a paper-book comprising 22 pages containing relevant materials, including activity reports and photographs evidencing the activities carried on. The learned AR also contended that the impugned order was passed without affording a personal hearing, in violation of the principles of natural justice, and accordingly prayed that the matter may be remanded to the file of the CIT (Exemptions) for fresh consideration.

4.

The Ld.DR supported the orders of the CIT(E).

5.

We have heard the rival submissions and perused the material available on record. We find that the CIT (Exemptions) has rejected the applications primarily on the ground that the

ITA Nos.559 & 649 /CHNY/2025 :- 4 -:

activities of the assessee are commercial in nature, without adequately examining the objects of the trust and the nature of activities carried on. At the same time, it is an admitted position, as fairly submitted by the Ld.AR, that complete supporting documents evidencing the activities and application of funds were not placed before the CIT (Exemptions), and certain expenditures relating to such activities were reflected under general heads such as “salary” and “administrative charges.” We further note that the assessee has now placed additional materials on record in the form of a paper-book containing activity reports and photographs. In our considered view, these aspects require proper verification and examination at the level of the CIT (Exemptions). Considering the totality of facts and circumstances, we are of the view that the matter requires fresh adjudication by the CIT (Exemptions) with reference to the objects of the trust, the nature of activities and the supporting evidences now placed on record. Accordingly, we set aside the impugned orders and remit the matter to the file of the CIT (Exemptions) for de novo consideration, after affording adequate opportunity of being heard to the assessee and to pass order in accordance with law. It is ordered accordingly.

ITA Nos.559 & 649 /CHNY/2025 :- 5 -:

6.

In the result, both the appeals filed by the assessee in ITA Nos.559 & 649/CHNY/2025 are allowed for statistical purposes.

Order pronounced in the open court on 4th May, 2026 at Chennai.

Sd/- Sd/- (एस.आर. रघुनाथा) (जॉज� जॉज� के) (S.R. RAGHUNATHA) (GEORGE GEORGE K) उपा�य� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER

चे�ई/Chennai, �दनांक/Dated, the 4th May, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Madurai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.05.06 11:49:15 +05'30'

More judgments on Section 12AB

All 5,972 judgments and leading authorities on Section 12AB →

Recent GST High Court judgments

Search GST case law →