GRAMNIRBHAR FOUNDATION,KOLHAPUR vs. CIT(EXEMPTION), PUNE, PUNE

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ITA 357/PUN/2025Status: DisposedITAT Pune20 May 20265 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(Exemption) erred in rejecting the registration when the appellant's objects were charitable and aligned with Section 2(15). It was also noted that some incidental expenses are natural for fulfilling charitable objects.

What were the facts?

The appellant, a non-profit company, applied for regular registration under Section 12A(1)(ac)(iii) of the Income Tax Act. The CIT(Exemption) rejected the application, citing that the appellant's activities like shopping festivals and cultural programs were recreational and not charitable, despite agreeing that the objects were broadly charitable.

What were the issues?

Whether the activities of the appellant, though having charitable objects, were genuinely charitable in nature and aligned with its stated objectives, and if incidental recreational expenses invalidate its charitable status.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(iii),Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE

Before: DR.MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri Nikhil S. Pathak, Shri Mayuresh Doshi
For Respondent: Shri Amol Khairnar
Hearing: 23.03.2026Pronounced: 20.05.2026

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of appellant is directed against the order dated 12.12.2024 of ld.CIT(Exemption), Pune rejection the application for grant of regular registration u/s.12A(1)(ac)(iii) of the Act.

2.

We have heard the rival contentions and perused the record placed before us. We note that the appellant is a company registered as section 8 of Companies Act, 2013. It is a Non-profit company formed with the object of enhancing peoples’ lives by improving education, arts, science and skill development etc. Appellant filed an application on Form 10AB u/s.12A(1)(ac)(iii) of the Act on 3006.2024 seeking regular registration. In order to verify the genuineness of activities of the assessee, ld.CIT(Exemption) issued notice through ITBA portal on 2 Gramnirbhar Foundation

13.08.

2024 requesting the appellant to submit certain information/clarification and appellant has filed the requisite details. Thereafter, ld.CIT(Exemption) issued another notice dated 29.11.2024 communicating the discrepancies in the details so filed. Appellant has also furnished its response. However, ld.CIT(Exemption) has rejected the appellant’s application for regular registration u/s.12A of the Act based on the observations that some bills/vouchers are indicating that the appellant is organizing a shopping festival and cultural programs, hosting events such as Haldi Kunkum for women etc., and they are not charitable in nature. Against the said rejection, the appellant is in appeal before this Tribunal.

3 So far as the objects of the appellant are concerned, ld.CIT(Exemption) is satisfied that the objectives align broadly with charitable purposes as defined u/s.2(15) of the Act. However, ld.CIT(Exemption) has rejected the appellant’s application for regular registration u/s.12A of the Act based on the observations of incidental expenses shown for which the bills are produced are not in accordance with the documented objects and the same are recreational in nature. Finding of ld.CIT(Exemption) reads as under :

“6.1 However, contrary to the objectives, as observed from the note on activity, the bills/invoices of expenditure, the applicant's reported activities consist of organizing a shopping festival and cultural programs, hosting events such as Haldi- Kunku for women, recipe competitions, fancy dress competitions, and musical programs, conducting felicitation programs and similar events. Also, the expenditure incurred, as evidenced by furnished bills, pertains primarily to hall rent, decoration, lighting, photography, food, and incidental costs related to these events. The activities carried out are not in accordance with the documented objectives of the 3 Gramnirbhar Foundation

applicant, such as improving education, skill applicant Improving development, or health facilities. Instead, they appear to focus on entertainment, social gatherings, and cultural programs, which are primarily recreational in nature. While cultural programs may be permissible under charitable purposes in limited circumstances, their alignment with the broader objectives must be evident. In this case, the activities do not exhibit a clear intent to serve public utility, education, or welfare as outlined in the MOA. n fact the photographs submitted by the trust are mostly that of general gathering of people, organizing events and celebration. Thus, the assessee has failed to prove the authenticity of its charitable nature and charitable activities. The purported activities lack any charitable impact, such as measurable improvements in education, health, or skill development. Expenses incurred for decoration, photography, and food further prove the non- charitable nature of these activities. Thus, the applicant's actual activities significantly deviate from its aimed objectives, as outlined in the MOA. Therefore, the activities do not qualify as charitable one.

6.

2 Further, on going through the submission it is seen that the donation receipts submitted by the assessee trust describes the purpose of donations as for 'Shopping and Food Festival' which clearly show that the funds were not raised for any charitable activity but for organising a shopping festival event which in any manner cannot be considered to be a charitable activity. So also, the true nature of this income, the identity of such donors and consequential genuineness of donations remained doubtful.”

4.

In para 6 of the impugned order ld.CIT(Exemption) has categorically held that the objectives align broadly with charitable purposes as defined u/s.2(15) of the Act. We also note that objects of the assessee appearing at pages 36 and 38 of the paper book showing the objects appearing in the Memorandum of Association are charitable in nature and the same have not been disputed by the Ld. CIT(Exemption). It is also not in dispute that the appellant Trust is formed with the charitable object for the 4 Gramnirbhar Foundation

benefit of the public at large and for fulfilment of its objects, it is but natural that some incidental expenses have to be incurred.

5.

Under these given facts and circumstances, we are inclined to hold that ld. CIT(Exemption) erred in cancelling the registration even when the objects of the appellant trust are charitable in nature and are in accordance with the provisions of section 2(15) of the Act. We therefore direct ld.CIT(Exemption) to grant regular registration to the appellant u/s.12A of the Act. Finding of ld.CIT(Exemption) is set aside and grounds of appeal raised by the assessee are allowed.

6.

In the result, the appeal of the appellant is allowed.

Order pronounced on this 20th day of May, 2026. (VINAY BHAMORE) ACCOUNTANT MEMBER पुणे / Pune; दिन ांक / Dated : 20th May, 2026. Satish

Satish Kumar Madishetty 5 Gramnirbhar Foundation

आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

2.3.

The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, “A” बेंच, 4. पुणे / DR, ITAT, “A” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER,

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