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Facts
The assessee, Khardah Public Cultural and Welfare Association, applied for approval under Section 80G(5)(iii) of the Income Tax Act. The CIT(E) rejected the application, holding that the assessee's "macro insurance activities" involved financial and commercial transactions, thus not qualifying as an activity solely promoting general public benefit or welfare.
Held
The Tribunal condoned an 18-day delay in filing the appeal and set aside the CIT(E)'s order. The case was remitted back to the CIT(E) for fresh consideration, with directions to pass a fresh order after hearing the assessee and reviewing all documentary evidence and judicial pronouncements on the nature of the macro insurance activities.
Key Issues
Whether the assessee's "macro insurance activities" constitute commercial transactions, thereby disqualifying it from approval under Section 80G(5)(iii) of the Income Tax Act for being a charitable institution.
Sections Cited
80G(5)(iii), 12A, 12AB, 80G(5)(vi), 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the assessee against the order of Commissioner of Income Tax (Exemption)- Kolkata (hereinafter referred to as the Ld. CIT(E)] dated 28.12.2024.
It appears from the report of the registry that the appeal has been filed after a delay of 18 days for this the assessee has filed condonation petition. On perusal of the condonation petition, the reason for delay in filing the appeal seems to be genuine and bonafide. The Ld. D.R did not raise any objection in condoning the delay. Keeping in view, the condonation petition as well as judicial pronouncement that the case should be decided on merit not on technical issue, the delay is hereby condoned.
Brief facts of the case of the assessee is that the assessee filed an application for approval u/s 80G(5)(iii) in form 10AB the assessee submitted various details in respect to the notices along with supporting documents. The Ld. CIT(E ) after going over the submission and explanation made by the assessee has held that macro insurance activities by their nature involved financial and commercial transaction and cannot be categorized as activity that solely promote general public benefit or welfare as required under the Act. Hence the application filed by the assessee treated as non-maintainable and rejected. The provisional certificate issued to the assessee has also been cancelled.
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
The Ld. A.R challenges the very impugned order thereby submitting that the assessee is a registered society under Registrar of firm, societies and non-trading corporation, W.B. and it is carrying charitable and philanthropy activities. The ld. A.R submits that institution is a purely charitable and voluntary organization but Ld. CIT (E) has wrongly held that activity of conducting macro insurance involved commercial elements. The Ld. A.R filed documentary evidences and submits that the documents Assessment Year: ….. Khardah Public Cultural and Welfare Association filed by the assessee will prove that the assessee is purely a charitable and voluntary organization. The prayer of AR is that matter be remitted back to the file of Ld. CIT (E) for fresh consideration going over the documentary evidence filed by the assessee.
The Ld. D.R though supports the impugned order but did not raise any objection in remitting the appeal back to the file of Ld. CIT(E ) for fresh consideration.
Upon hearing the submission of the counsel of the respective parties, we have perused the order of Ld. CIT(E ) and find that the Ld. CIT( E ) has rejected the application filed by the assessee u/s 80G(5)(iii) on the ground that macro insurance activities by their nature involved financial and commercial transaction and cannot be categorized as activity that solely promote general public benefit or welfare as required under the Act. It is pertinent to mention here that the assessee is a registered society and voluntary organization, pecuniary help to poor people and public. The income is not sufficient for running and maintaining the activity of the organization. So, the donation which requires to be received from the member and well-wishers of the institution is very essential for running and maintain for the activity. The Ld. A.R has brought to the notice of the Tribunal on the Gazette of India in which macro insurance agent has been defined. He has also placed following documents: i) Registration certificate along with memorandum of Association and Regulation of Assassination with alteration in Memorandum / Regulation ii) Registration Certificate u/s 12A and 12AB i.e. Form 10AC( new Provision under Finance Act, 2020) iii) Approval of Exemption Certificate u/s 80G(5)(vi) and Clause (iv) of First proviso to Sub-section (5) of Section 80G i.e. Form 10AC (new Provision under Finance Act, 2020) iv) Registration of DARPAN v) Statutory Audited Accounts for the year ended on 31.03.2022, 31.03.2023 and 31.03.2024. vi) Income Tax Return Acknowledgement vii) List Bank and Governing Body list Assessment Year: ….. Khardah Public Cultural and Welfare Association 8. Keeping in view, the averments made by the Ld. A.R and having gone through the order passed by the Ld. CIT (E), we find that the issue of whether macro finance is a commercial activity or is very commercial activity of the charity could have to be decided by the Ld. CIT(A) at its own level keeping in view and going over the documents filed by the assessee. Accordingly, we set aside the order passed by the Ld. CIT(E) and remit the appeal of the assessee back to the file of Ld. CIT(E) for fresh consideration with a direction to pass a fresh order after being heard to the assessee and going over the documents and judicial pronouncements on this issue.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 11th August, 2025