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Facts
The assessee, a society formed by bank officers, applied for registration under sections 12AB and 80G of the Income Tax Act. The CIT(Exemptions) denied the registration based on observations of limited income sources and lack of spending towards trust objects.
Held
The Tribunal held that the CIT(Exemptions) failed to appreciate substantial income from donations and membership fees, and also overlooked expenses incurred for societal welfare. The appeals were deemed to require fresh consideration.
Key Issues
Whether the denial of registration under sections 12AB and 80G was justified based on the assessee's income and expenditure, and whether a fresh consideration by the CIT is required.
Sections Cited
12AB, 80G, 12A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI PRAKASH CHAND YADAV
PER PRAKASH CHAND YADAV, JUDICIAL MEMBER:
Present appeals of the assessee are arising from the order of CIT(Exemptions), Bangalore dated 25.12.2024 and relates to denial of registration u/s 12AB as well as 80G (5) of the Income Tax Act, 1961 (in short “The Act”).
Brief facts of the case as coming out from the orders of authorities below are that the assessee is a society formed by Bank officers/employees of various public sector and private sector banks. The main objective of the society was to develop the quality of life in village to provide educational aids to the school children in Government schools, to provide health checkups for school children, to provide school uniforms to the children belonging to the poor localities, etc. The assessee has got provisional registration on 6.4.2022 from assessment years 2022-23 to 2024-25. Similar is the & 321/Bang/2025 Bankers Club, Hubli Page 2 of 3 facts for the application filed u/s 80G of the Act, wherein the assessee has got provisional registration on 6.4.2022 for assessment years 2022-23 to 2024-25. Thereafter, the assessee applied for permanent registration u/s 12AB as well as 80G of the Act vide application dated 5.6.2024. The ld. CIT(Exemptions) forwarded the application of the assessee to the concerned AO and sought a report from the concerned AO. After receiving the report from the AO, the ld. CIT (Exemptions) observed that the assessee trust has earned only interest income from bank in assessment year 2021-22 and rental income in assessment year 2022-23. The ld. CIT (Exemptions) was of the opinion that the assessee is not spending the amount collected towards the object of the trust and hence not entitled for the registration u/s 12A as well as 80G of the Act.
Aggrieved with the order of ld. CIT (Exemptions), assessee has come up in appeal before us.
Ld. Counsel for the assessee appearing on behalf of the assessee vehemently argued that the observations of the ld. CIT (Exemptions) are not in accordance with the facts of the case. Ld. Counsel for the assessee further argued that on certain issues such as income from rent as well as claim of depreciation, the ld. CIT((Exemption) never sought any explanation from the assessee as evident from the fact that no show cause notice asking these details have been issued to the assessee.
Ld. D.R. appearing on behalf of the revenue fairly conceded that the matter requires fresh consideration at the end of ld. CIT (Exemptions) since there are certain issues on which the office of ld. CIT(Exemptions) has not categorically asked the details from the assessee.
& 321/Bang/2025 Bankers Club, Hubli Page 3 of 3 6. We have heard the rival submissions and perused the materials available on record. We observe that the ld. CIT(Exemptions) while deciding the application of the assessee has failed to appreciate that in assessment year 2024-25, the assessee has shown substantial income from donations, annual membership, life membership, etc. Similarly, on the expenditure side of the balance sheet, the assessee has also shown expenses, which are incurred for the welfare of students and other parts of the society. Therefore, in our view, these appeals require fresh consideration at the end of ld. CIT (Exemptions). We direct accordingly. Both these matters are restored to the file of ld. CIT(Exemptions) for examining afresh and after considering the replies as well as evidences of the assessee.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 24th Apr, 2025