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Facts
The assessee, Nanchahal Family Memorial Trust, appealed against the order of the CIT(E) rejecting its application for registration under Section 80G(5). The CIT(E) found that the Trust failed to provide necessary details to support its claim of carrying out charitable activities and satisfy their genuineness, and that activities were not for the benefit of society at large but limited to family members.
Held
The Tribunal noted that a similar issue regarding rejection under Section 12A had been set aside by the ITAT for fresh adjudication. Therefore, the Tribunal decided that the issue of registration under Section 80G should also be set aside to the CIT(E) for fresh consideration, allowing the assessee a reasonable opportunity to present evidence.
Key Issues
Whether the rejection of registration under Section 80G by the CIT(E) was justified, considering that a related issue under Section 12A was set aside for fresh adjudication.
Sections Cited
80G, 10AD, 12A
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Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: MS. MADHUMITA ROY, & SHRI NAVEEN CHANDRA
This appeal by the assessee is preferred against the order of the ld.
CIT(E), dated 27.09.2024 for A.Y 2024-25.
The assessee has raised the following grounds of appeal:
“1. That on the facts and in the circumstances of the of the case, the learned Commissioner of Income Tax (Exemption)i. New Delhi, (hereinafter called CIT(E) for short) erred in dismissing the application u/s 8O G(5) (i) for registration by making observations which reads as In View of the above facts, as the applicant has failed to provide necessary details to support/justify its claim of having carried out charitable activities, and failed to satisfy the genuineness of the activities carried out by it, the application filed in Form 10AB for grant of registration u/s 80G(5)(iii) is hereby rejected.
2. That on the facts and in the circumstances of the case, Ld. CIT(E) erred in holding that the activities held by the Trust are not for the benefit of society at large. The Observation made in the Order of Ld CIT (Exemption)" On a perusal of the submission filed, it is seen that the applicant trust also submitted a copy of supplementary deed which has been submitted for registration with Registrar office, Delhi, along with a copy of Board Resolution dated 05.09.2024 wherein it has been communicated that the Board has considered the Proposal for a new clause to elaborate purpose, as under: "With a view to elaborate the purpose and Benefit from Trust projects for charitable purpose, all Trust Projects approved by Trustees shall be for the purpose and benefit of members of society at large and shall NOT be limited to Nanchahal family members". As per the original Trust Deed dated Page 2 of 8
27.10.2022, "The Trust is created for the purpose of promoting good memories of the Nanchahal family elders. To that end, the Trust will engage in charitable projects that provide needed guidance and support to members and families of the extended Nanchahal clan". Further on perusal of the submissions, it is noted that applicant has furnished financial statements as on year ended 31.03.2023 & 31.03.2024. On perusal of the Income & Expenditure account for the above period, it is seen that all expenses are in the nature of administrative expenses, and there are no expenses shown which are related to any charitable activities undertaken. Further the applicant has also not submitted supporting evidences such as bills/vouchers and justification of the expenses claimed in FY 2022-23 such as salary, library book expenses, repair and maintenance, Gardner expenses and newspaper expenses. In the FY 2023-24, the applicant has shown expense of Rs.15000/- related to food distribution expense in a school for which only a voucher in plain paper has been submitted. The applicant has also not submitted supporting evidences such as bills/ vouchers and justification on expenses claimed such as salary expense of Rs. 2,40,000/- Stem Project Expense of 1,50,000/- and conveyance stem expenses of Rs 55,400/- The applicant has also failed to file supporting documentary evidence of the above expenses claimed.". The trust has also provided the vouchers for the expenses incurred necessary for the conducting of the charitable activities for the FY 2022-2023 and FY 2023-2024.
3. That on the facts and in the circumstances of the case, Ld. CIT(E) erred in accepting the contention that the Trust has not accepted any donation from the Outside world for conducting the activities for the Public Utility and only the trust members are donating the funds of their own for the activities for the benefit of betterment and upliftment of the neglected elderly members of the society. The trust also setup the library which is fully functional where the Elderly members and general members of the society are using the facility for their betterment in lonely life. The trust is extending the arms for the benefit of the elderly members of the society and shall require the contribution from the outside world.
4. That on the facts and in the circumstances of the case. Ld. CIT(E) erred in not accepting the submission made by the Trust about the activities conducted by the trust and produce the Photographs of the activities of the same in the various parts of the Punjab, and the Trust has also provided the Library Facility for the elderly members in Delhi. During the course of Proceedings before the Ld CIT(E), the Trust is also able to provide the Photographs of the activities conducted during the course of period FY 2022-2023 and FY 2023- 2024.
5. That the Appellant Trust craves liberty to add, alter, vary or amend any ground of appeal.”
A perusal of the grounds of appeal raised by the assessee reveal that the grievance of the assessee is that the ld. CIT(E) was not justified in in rejecting the application filed in Form10AB vide order passed under section 10AD along with provisional registration granted under Clause (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 arbitrarily and prejudicially without considering the submissions and information submitted by the assessee.
The ld. counsel for the assessee informed the Bench that the assessee has also filed an appeal before the ITAT against the rejection u/s 12A of the Act and the Tribunal has set aside the issue of rejection u/s 12A to the file of the ld. CIT(E) vide its order dated 27.02.2025.
Therefore, the ld. AR submitted that the issue of rejection of approval u/s 80G of the Act may also be set aside to the file of the ld. CIT(E) for considering the same afresh.
Per contra, the ld. DR did not raise any serious objection and relied upon the order of the ld. CIT(E).
We have heard the rival submissions and have perused the relevant material on record. We find that the ITAT has set aside the issue of rejection u/s 12A of the Act to the file of the ld. CIT(E) for fresh adjudication. We are, therefore, of the considered opinion that as the issue of registration u/s 80G being coterminous with the issue of registration u/s 12A of the Act, the issue u/s 80G should also be set aside to the file of the ld. CIT(E) for consideration afresh. The CIT(E) shall afford reasonable opportunity to the assessee and examine the evidences filed by the assessee to adjudicate the issue of registration u/s 80G. Accordingly, the grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee in is allowed for statistical purposes.
The order is pronounced in the open court on 21.03.2025.