COMPETITIVENESS MINDSET INSTITUTE (CMI) INDIA,JAIPUR vs. CIT EXEMPTION, JAIPUR

ITA 1414/JPR/2025Status: DisposedITAT Jaipur30 September 2026AY 2025-266 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Commissioner of Income Tax (Exemption) had erred in passing the impugned orders without considering the detailed reply dated 10.06.2025 filed by the assessee, which had an e-acknowledgement. The Tribunal noted that the CIT(E) had marked 'No Reply' and proceeded to deny registration under Section 12AB and approval under Section 80G. In the interest of the principles of natural justice, and given that all necessary details were already filed before the CIT(E) but not considered, the Tribunal decided to set aside the matter. The CIT(E) was directed to provide a proper opportunity of hearing to the assessee, consider all the submissions filed, and then pass fresh orders granting registration under Section 12AB and approval under Section 80G as per the provisions of law. The Tribunal explicitly stated that the appeals were allowed for statistical purposes.

What were the facts?

The assessee, Competitiveness Mindset Institute (CMI) India, a Trust established on 27.12.2019 for charitable activities like education and skill development, applied for registration under Section 12AB and approval under Section 80G of the Income Tax Act, 1961, on 05.12.2024. The Commissioner of Income Tax (Exemption), Jaipur (CIT(E)), rejected the application on 06.06.2025. The grounds for rejection included the deduction of TDS under Section 194J on receipts, which was interpreted as business income; retention of surplus (40%-60%) indicating a profit motive; alleged non-compliance with notices; and activities being treated as non-genuine and beyond the Trust's objects. The assessee filed appeals before the ITAT challenging these orders, citing procedural irregularities and misinterpretation of facts and law by the CIT(E). The appeals were filed with a delay, which the Tribunal condoned.

What were the issues?

1. Whether the deduction of Tax Deducted at Source (TDS) under Section 194J on certain receipts by the assessee implies that the Trust was carrying on business, thereby disentitling it from registration under Section 12AB and approval under Section 80G? 2. Whether the Commissioner of Income Tax (Exemption) erred in holding that the assessee failed to provide proper replies to notices, leading to a violation of the principles of natural justice? 3. Whether the retention of surplus funds in the range of 40%-60% by the Trust is indicative of a profit motive, contrary to its charitable objects? 4. Whether the CIT(E) exceeded his jurisdiction by examining the 'profitability' of the Trust's activities at the stage of granting registration under Section 12A, rather than merely verifying the genuineness of activities and the charitable nature of objects? Assessee's Contentions: - TDS deduction is a statutory compliance by the payer and does not determine the nature of income. - Replies were duly submitted, and the allegation of non-reply is factually incorrect. An adjournment was sought and a detailed reply was filed. - Surplus generated incidentally during charitable activities, if applied for the Trust's objects, does not alter its charitable character. - The CIT(E) is not empowered to scrutinize the 'profitability' at the registration stage; his role is limited to verifying genuineness and charitable nature of objects. - The rejection order was passed without adequate opportunity of being heard, violating principles of natural justice. - The Trust Deed clearly provides for charitable purposes and does not allow profit distribution to trustees or members. Revenue's Contentions: - The Revenue's representative could not dispute the assessee's reply dated 10.06.2025, which was not considered by the CIT(E). The Revenue had no objection to setting aside the matter back to the CIT(E).

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G,Section 194J,Section 2(15),Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, JAIPUR

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

For Appellant: Shri Saurabh Soparkar, Sr
For Respondent: Shri Anil Dhaka, CIT

PER : T. R. SENTHIL KUMAR, JUDICIAL MEMBER:- These two appeals are filed by the assessee as against the separate orders both dated 06.06.2025 passed by Ld. Commissioner of Income Tax (Exemption), Jaipur, denying the registration u/s. 12AB and 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

The Registry has noted that there is delay of 41 days and 143 days respectively in filling both the appeals. The assessee by way of I.T.A No. 1414/JPR/2026 Page No 2 I T A N o . 1 1 2 / J P R/ 20 2 6 Competitiveness Mindset Institute (CMI) India

Notorized affidavit explained that time consumed in ob

The order continues below.

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