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Facts
The assessee, Eeswara Seva Samithi, applied for approval under Section 80G(5) of the Income-tax Act, which the CIT(E) rejected. The rejection was based on the assessee's failure to incur substantial expenditure towards its trust objectives or commence activities, despite receiving significant donations and corpus funds with only minor expenses.
Held
The ITAT noted that eligibility for Section 80G(5) approval is contingent upon the assessee first obtaining registration under Section 12AB, an appeal for which is pending. Therefore, the Tribunal restored the Section 80G(5) appeal to the CIT(E) for re-adjudication after the Section 12AB matter is decided, granting the assessee an opportunity of hearing.
Key Issues
Whether the assessee is eligible for approval under Section 80G(5) when its registration application under Section 12AB is pending decision before the ITAT.
Sections Cited
80G(5), 12AB
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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.
Per Prashant Maharishi, Vice President
This appeal is filed by Eeswara Seva Samithi (the assessee/appellant) for the assessment year 2025-26 against the order passed by the Commissioner of Income Tax, Exemptions, [ld. CIT(E)] dated 27.12.2024 wherein the application of the assessee in Form 10AB for recognition u/s. 80G(5) of the Income-tax Act, 1961 [the Act] was rejected.
The brief facts of the case show that assessee filed application in Form 10AB on 30.6.2024 for approval u/s. 80G(5) of the Act. On examination of the details, the ld. CIT(E) found that assessee has not made any substantial expenditure towards the object of the trust and assessee has also not commenced its activities of attainment of the objects. It was noted that assessee has received donation of Rs.4,78,63,616 for the year ended on 31.3.2024, but as per Income & Expenditure account for 31.3.2024, has incurred only the expenditure of audit fees of Rs.15,000. Further, upto 31.3.2024 assessee has received corpus donation of Rs.50 lakhs, but has incurred expenditure of only 25,000 as audit fees and Rs.20,000 as consultation fee. Therefore the ld. CIT(E) has rejected the application of the assessee,
The assessee is in appeal before us.
The ld. AR filed a paperbook containing 130 pages and submitted that assessee has submitted all the details about the activities of the trust. He referred to its reply placed at pages 14 to 129 of the PB. He further submitted that appeal of the assessee against not granting registration u/s. 12AB of the Act in is already heard and order is awaited. The judgment of that appeal will decide the fate of recognition u/s. 80G(5) to the assessee. Therefore, the ld. CIT(E) may be directed to decide this issue after decision in that appeal.
The ld. CIT(DR) supported the order of the ld. CIT(E) and stated that when the assessee has not commenced any activity, there is no purpose in granting recognition to the assessee trust u/s. 80G(5) of the Act.
We have considered the rival contentions and perused the order of the ld. CIT(E) rejecting the application for registration u/s. 80G(5) of the Act to the assessee. It was also pointed out that in the assessee’s registration u/s. 12AB of the Act was also challenged before the ITAT. The appeal of the assessee is heard and order is awaited. If the assessee trust gets registration u/s. 12AB of the Act, naturally thereafter only the assessee can get the approval u/s. 80G(5) of the Act. If the assessee fails to get registration u/s. 12AB of the Act, there is no question of grant recognition u/s. 80G(5) of the Act. As the issue of granting registration u/s. 12AB to the assessee has not been decided yet, in the interest of justice, we restore this appeal back to the file of CIT(Exemptions) to decide after the issue of registration u/s. 12AB is decided, in accordance with law and after granting assessee an opportunity of hearing.