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Facts
The assessee filed an application in Form-10AB for approval under Section 80G(5) of the Income-tax Act, 1961. The Ld. Commissioner of Income Tax (Exemption) rejected the application, observing that the assessee's activities were commercial in nature.
Held
The Tribunal noted that the Ld. CIT(E) rejected the application finding the activities to be commercial. However, considering the submissions and in the interest of justice, the issue was remitted back to the Ld. CIT(E) for fresh consideration along with a fresh application for registration under Section 12A.
Key Issues
Whether the activities of the assessee are commercial in nature, impacting its eligibility for approval under Section 80G(5), and if a remand is appropriate for fresh consideration by the Ld. CIT(E) along with a new Section 12A application.
Sections Cited
80G, 80G(5), 12A, 12AB, 143(2), 142(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & SHRI HON’BLE S.R. RAGHUNATHA
आदेश / O R D E R
PER MANU KUMAR GIRI, J.M: This appeal preferred by the appellant / assessee is against the rejection of 80G(5) of the Income-tax Act, 1961 (hereinafter “the Act”) application filed by the assessee in Form-10AB dated 27.02.2024 observing that the activity of the assessee is commercial in nature by the Ld. Commissioner of Income Tax (Exemption), Chennai submit the necessary documents to prove the genuineness of the activities of the trust or institution and fulfillment of all the conditions laid down in clause 1 to 5 of section 80G. Accordingly, the approval u/s.80G of the Act was rejected and approval cancelled vide order dated 30/10/2024 by the Ld. CIT(E) in Application No.CIT (Exemption), Chennai/2024-25/12AA/12001 vide DIN & Notice No.
ITBA /EXM/F /EXM45/2024-25/1070053179(1).
The Ld. Authorized Representative (A.R) of the assessee has filed the paper books Vol. 1 to 4 including the case law and submitted that once the registration u/s.12AB of the Act has been granted to the assessee, the approval u/s. 80G(5) of the Act is academic. The assessee filed following documents as per paper books:
Index to Paper Book Vol-1 PAGE PAGE S.NO FROM TO PARTICULARS A Order appealed against Order of CIT(E) dated-30-10-2024 rejecting assessee’s application 1 1 10 for approval under section 80G B Application seeking approval under section 80G Assessee’s application dated-30-04-2024 in Form 10AB to CIT(E) 2 11 20 seeking approval under section 80G(5)(vi) List of documents submitted by the assessee to CIT(E) in the 3 21 22 course of 80G proceedings
C Basic documents Tamil Nadu Government Notification G.O.MS.NO.79, dated 30-03- 4 23 28 2017 sanctioning the constitution of CUBE 5 Memorandum of Association and Rules and Regulation of CUBE 29 47 Letters from various Government Bodies sanctioning the grant of 6 48 52 Rs.10,00,00,000 Order for registration of CUBE under section 12AB(1)(b) 7 r.w.s.12A)1)(ac)(iii) dated 25-07-2023 and valid for the period AY- 53 57 2021-22 to AY-2025-26. 8 Board of Governors of CUBE 58 59 Details of the Grant of Rs.10 Crores received by CUBE from Tamil 9 60 60 Nadu Government D Assessee’s Financial statements ,ITR and Form 9A Audited Financial statements for the 3years -AY-2021-22, AY-2022- 10 61 102 23, AY-2023-24 11 Memo of Income for AY-2023-24 103 104 12 Form 9A filed for AY-2023-24 105 106 13 ITR Copy for AY-2023-24 107 155 14 Calculation of surplus made by the assessee in AY-2023-24 156 158 E Scrutiny assessment proceedings for AY-2023-24 15 Notice under section 143(2) dated-19-06-2024 159 161 16 Notice under section 142(1) dated-18-10-2024 162 165 17 Show Cause Notice (SCN) dated-2-03-2025 166 169 18 Reply to SCN dated-14-03-2025 170 206 Scrutiny assessment order under section 143(3) dated 27-03-2025 for 19 207 213 AY-2023-24 F Scrutiny Assessment for AY-2019-20 20 Scrutiny Assessment Order dated 24-09-2021 for AY-2019-20 214 222 G Assessee’s projects and Activities 21 Project wise activities carried on by CUBE in AY-2023-24 223 227 Detailed description of Top 7 Projects executed by CUBE in AY-2023- 22 228 229 24 23 Copies of Invoices raised by CUBE for work done 230 252
S. PAGE PARTICULARS PAGE NO. A Case Laws From TO Delhi High Court – India Trade Promotion Organization 29 1 1 (2015) taxmann.com 404 (Delhi) – W.P (C) No. 1872 of 2013 Delhi High Court – India Trade Promotion Organization 32 2 30 (2023) taxmann.com 490 (Delhi) – IT Appeal Nos. 3, 4 & 5 of 2022 Supreme Court – India Trade Promotion Organization 34 3 33 (2023) taxmann.com 491 (SC) – SLP (Civil) Diary No. 12361 of 2023 Supreme Court – India Trade Promotion Organization 36 4 (2024) taxmann.com 6 (SC) – Review Petition (Civil) Diary No. 5686 of 35 2024 Supreme Court – Ahmedabad Urban development Authority (2022) 143 144 5 37 taxmann.com 278(SC)
B Tamil Nadu Non Trading companies Act 1972 6 Bare Act 145 148 Copy of certificate of registration 149 149 C Tamil Nadu Societies Registration Act 1975 and relevant Rules 7 Bare Act attached separately
Index to Paper Book Vol-3
PAGE PAGE S.NO PARTICULARS FROM TO Further details of the activities of CUBE 1 1 1 Details of policy formulations for Tamil Nadu State undertaken by CUBE 2 2 2 Details of R&D projects undertaken by CUBE 3 3 4 Details of Capacity Building and Training Programs Conducted by CUBE 4 5 7 Invoices related to the policy formulation activity 5 Invoices related to capacity-building and training activity 8 20 Extract from CUBE’s report presented to TNUIFSL (Tamil Nadu Urban Infrastructure And Financial Services Limited) on Preparation of training 6 21 46 needs assessment for capacity building and training program for various Urban Local Bodies in Tamil Nadu Extract from Vision Tamil Nadu 2023- Theme 6 - Strategic Plan for 7 47 57 Infrastructure Development in Tamil Nadu CBDT Circular, Memorandum etc.
Centre for Urbanisation Building and Environment :- 5 -: Sample list of institutions approved u/s 10(23C)(iv) as taken from the 8 58 62 website of Income Tax Department 9 63 64 CBDT Circular NO. 11 of 2008 dated 19-12-2008 10 65 67 Memorandum explaining the provisions of the Finance Bill 2008 Case Laws 11 68 73 Gujarat High Court - Hiralal Bhagwati – [2000] 246 ITR 188 (GUJ.) 12 74 75 Supreme Court - Surat City Gymkhana [2008] 170 Taxman 612 (SC) Gujarat High Court - N.N. Desai Charitable Trust - [2002] 123 Taxman 866 13 76 82 (Gujarat) ITAT Lucknow - Shiv Raj Sharma Shiksha Samiti Bilaspur - ITA 14 83 87 No.78/LKW/2018 – order dated 16-5-2019 Supreme Court decision in Shri Ramtanu Co-Operative Housing vs State of 15 88 97 Maharashtra – dated 5-8-1970 (Refer internal Page 7 and 8 – which was cited in AUDA) Gujarat High Court - Orpat Charitable Trust - [2002] 121 Taxman 451 16 98 100 (Gujarat) ITAT Mumbai Bench – – Global Chamber of 17 101 103 Saraswat Entrepreneurs – Order dated 3-4-2025 Index to Paper Book Vol-4 S.No. PARTICULARS PAGE PAGE From To 1 Extract from Memorandum to Finance Bill 2012 1 1 2 Extract from Memorandum to Finance Bill 2024 2 3 3 Form 9A filed for AY 2021-22 4 5 4 Form 9A filed for AY 2022-23 6 7 5 History of orders passed for registration u/s. 12AA/12AB 8 8 6 History of orders passed for Approval u/s. 80G 9 9 CASE LAWS 1. Supreme Court decision in P.A. Inamdar & Ors vs. State Of 10 58 Maharashtra & Ors dated 12 August, 2005 – Appeal (Civil) 5041 of 2005 2 ITAT Bangalore Bench decision in Anugraha Education 59 66 Trust [2025] 173 taxmann.com 852 (Bangalore-Trib)
Index
S.No. List of earlier registrations under Section 12AA/12AB Page Page and approvals u/s. 80G From To 1. Registration u/s. 12AA dated 28.03.2018 1 2 2. Provisional Registration u/s. 12A(1)(ac)(vi) read with 3 5 sec 12AB(1)(c) dated 27.05.2021 valid for 3 AYs-AY 21-22 to AY 23-24 3. Regular Registration u/s. 12A(1)(ac)(iii) read with Sec 6 10 12AB(10(b) dated 25.07.2023 and valid for 5 years Centre for Urbanisation Building and Environment :- 6 -: from AY 2021-22 to AY 2025-26 4. Provisional Approval u/s. 80G(5)(iv) dated 27.05.2021 11 12 valid for 3 years from AY 2021-22 to AY 2023-24 5. Provisional Approval u/s. 80G(5)(iv) dated 11.08.2023 13 14 valid for 3 years from AY 2024-25 to AY 2026-27
The Ld. counsel further submitted that the Ld. CIT(E) failed to appreciate the points referred at Sr. No.4 to 15 of the grounds of appeal raised by the assessee. The Ld. Counsel further submitted that the old registration granted has been expired in the month of March, 2025 and assessee has again applied in March, 2025 itself for the fresh registration u/s 12A of the Act. Therefore, he requested that if a chance is given to the assessee, and undertook that the assessee will be able to prove that the activity of the assessee trust is not in commercial in nature and engaged in the charitable activity. He further prayed that the present application may remand back to Ld. CIT(E) to relook along with the fresh application filed seeking registration u/s. 12A of the Act.
On the other hand, the Ld. DR relied on the order of the Ld.CIT(E) and noted that the activities are commercial in nature as observed by the Ld. CIT(E) and therefore, the approval u/s. 80G(5) should not be granted to the assessee. provided hearings to the assessee on 20.06.2024, 21.10.2024, 23.10.2024 and 29.10.2024 and assessee has filed requisite details as called by the Ld. CIT(E). However, we find that within 10 days all exercise has been done by the Ld. CIT(E). Therefore, he requested that if a chance is given to the assessee, and undertook that the assessee will be able to prove that the activity of the assessee trust is not in commercial in nature and engaged in the charitable activity.
Considering the facts of the case and in the interest of justice, we remit the issue back to the file of Ld. CIT(E) for fresh consideration and decision as per law along with the application in Form 10AB seeking registration u/s 12A of the Act which has been filed in March, 2025.
The Ld. CIT(E) is directed to give a reasonable opportunity of being heard to the assessee and assessee is directed to produce the necessary documents for substantiating its case and not to seek unnecessary adjournment for early disposal of the case. In case of failure, the leniency shall not be granted to the assessee.
We also observe that the Ld. CIT(E) while disposing of the present application has noted in para 4.0 as under:
Centre for Urbanisation Building and Environment :- 8 -: “Under the facts and circumstances of the case, its application dated 30.05.2024 filed in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961, seeking approval u/s. 80G is not maintainable for the reasons stated in para 3.1 to 3.3 of this order and hence the application is rejected.” Having gone through the para 4 of the Ld. CIT(E) order, we are of considered view that the application filed by the assessee in Form No.10AB either ‘not maintainable’ or liable to be ‘rejected’. Both the terminology cannot be used therein by the Ld. CIT(E) as the same connotes different situations.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 06th day of June, 2025 at Chennai.