SK FOUNDATION,HYDERABAD vs. CIT(EXEMPTION), HYDERABAD

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ITA 112/HYD/2025Status: HeardITAT Hyderabad16 July 2025AY 2025-26Bench: SHRI VIJAY PAL RAO (Vice President), SHRI MANJUNATHA G (Accountant Member)8 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the order of the learned CIT(E) was to be set aside and the issue was to be restored to the file of the CIT(E) for fresh consideration. The Tribunal found that the first ground for rejection by the CIT(E), concerning the incorrect section code in Form-10AB, was technical in nature. The Tribunal opined that if an incorrect application was filed, the CIT(E) should have directed the assessee to file a correct application and then considered it on merits, provided it was filed by the due date. The second ground for rejection, that the assessee had not carried out charitable activities, was found to be contrary to the material on record. The Tribunal noted that the assessee was running a 150-bedded hospital for public benefit, a fact ignored by the CIT(E). Furthermore, the assessee already possessed a 12A registration for the relevant assessment year. The Tribunal concluded that the application for Section 80G registration should not have been rejected on technical reasons, especially when the assessee had provided explanations for the incorrect code. The Tribunal directed the assessee to file a correct Form-10AB with proper particulars, and the CIT(E) was to consider this revised form as if it were filed on the original date. The CIT(E) was also directed to consider the relevant details proving the activities carried out in previous financial years.

What were the facts?

The assessee, SK Foundation, filed an appeal against the order of the Commissioner of Income Tax (Exemption) [CIT(E)] dated 31.12.2024. The CIT(E) rejected the assessee's application in Form-10AB for registration under Section 80G of the Income Tax Act, 1961, for the assessment year 2025-2026. The rejection was based on two grounds: the assessee filed Form-10AB with an incorrect section code (clause (iv) instead of clause (i) of the first proviso to sub-section (5) of Section 80G) and that the assessee was not carrying out substantial charitable activities. The assessee society had previously obtained 12A registration and 80G registration under section 80G(5)(iv) for earlier assessment years. The assessee argued that the rejection was based on technicalities and that it was actively engaged in charitable activities, including running a 150-bedded hospital.

What were the issues?

1. Whether the learned CIT(E) erred in rejecting the assessee's application for registration under Section 80G of the Income Tax Act, 1961, on technical grounds, specifically the filing of Form-10AB with an incorrect section code? 2. Whether the learned CIT(E) erred in holding that the assessee society was not carrying out substantial charitable activities, thereby violating the provisions of Section 80G of the Act? Assessee's Contentions: The assessee contended that the CIT(E) erred in rejecting the application on technicalities and not considering the submissions proving charitable activities. The assessee explained the reason for the incorrect code in the provisional registration application and highlighted that the CPC had issued registration under clause (iv) of the first proviso to sub-section (5) of Section 80G, even though sub-clause (i) of the first proviso to sub-section (v) of Section 80G should have been applied. The assessee asserted that it carries out charitable activities, including establishing a 150-bedded hospital, which falls under the definition of 'Charitable Purpose' as per Section 2(15) of the Act. The assessee sought a direction to grant registration or a remand for a fresh opportunity. Revenue's Contentions: The revenue supported the CIT(E)'s order, arguing that when an incorrect form with incorrect particulars is filed, the CIT(E) has no choice but to reject the application. Therefore, the revenue submitted that the order of the CIT(E) was correct and should be upheld.

Which sections of the Income-tax Act were involved?

Section 80G,Section 2(15),Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD “B” BENCH: HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “B” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.112/Hyd./2025 Assessment Year 2025-2026 SK Foundation, The Commissioner of HYDERABAD – 500 049 vs. Income Tax (Exemption), PAN AABAM1170F Hyderabad. (Appellant) (Respondent) For Assessee : CA, R V Chalam For Revenue : Sri Narender Kumar Naik, CIT-DR Date of Hearing : 10.07.2025 Date of Pronouncement : 16.07.2025 ORDER PER MANJUNATHA G. :

The above appeal has been filed by the Assessee against the Order dated 31.12.2024 of the learned CIT(E), in rejecting the application filed by the assessee in Form-10AB for Registration u/sec.80G of the Income Tax Act, 1961 [in short “the Act”], relating to assessment year 2025-2026.

2.

Briefly stated facts of the case are that, the assessee SK Foundation is a society, registered by means of 2 ITA.No.112/Hyd./2025 amendment for change of name on 16.05.2018 by Registrar of Societies, Ranga Reddy District, Telangana State. The society is engaged in chargeable activities includes undertaking health promotion activities and establish hospitals and clinics and to widen the horizon of members on the area of prevention and protection and also undertake disability activities. The society was granted 12A Registration on 22.02.2022 for the assessment years 2022- 2023 to assessment year 2026-2027. The society was also granted registration under section 80G(5)(iv) on 07. 04.2022 for the assessment year 2022-2023 to assessment year 2024-2025. The society has filed Form 10AB on 11.06.2024, for renewal of 80G registration. The learned CIT(E) has rejected the application filed by the assessee for renewal of Registration under section 80G of the Act, on the ground that, the assessee has filed Form 10AB with wrong section code and further, no substantial activities are being carried- out by the assessee society which are charitable in nature, which is in violation of provisions of Section 80G of the Act.

3 ITA.No.112/Hyd./2025 3. Aggrieved by the order of the learned CIT(E), the assessee is now, in appeal before the Tribunal.

4.

CA, R V Chalam, Learned Counsel for the Assessee submitted that, the learned CIT(E) is erred in rejecting application filed by assessee in Form 10AB, seeking for registration under section 80G of the Act, on the ground of technicalities and also not considering relevant submissions filed by the assessee, to prove the charitable activity that is carried-out by the society in the past. Learned Counsel for the Assessee further referring the Order of the learned CIT(E) submitted that, the assessee has explained the reasons for filing incorrect code in the application filed for provisional Registration. Further, the CPC itself has issued Registration under clause-(iv) of first proviso to sub-section (5) of Section-80G of the of the Income Tax Act, 1961 [in short "the Act"], even though, they should have issued Registration under sub-clause-(i) of first proviso to sub-section-(v) of Section 80G of the Act. Further, the assessee is carrying charitable activities and has established 150 bedded hospital, which falls under the 4 ITA.No.112/Hyd./2025 definition of “Charitable Purpose” in terms of Section 2(15) of the Act. The learned CIT(E) without considering the relevant facts, has simply dismissed the application filed by the assessee. Therefore, he submitted that, a direction may be given to the learned CIT(E) to grant Registration or in the alternative, matter may be remitted back to the file of learned CIT(E) to give another opportunity to the assessee to substantiate it’s case.

5.

Shri Narender Kumar Naik, learned CIT-DR, on the other hand, supporting the order of the learned CIT(E) submitted that, when assessee filed an incorrect form with incorrect particulars, then, there is no choice for the CIT(E), but, to reject the application filed by the assessee. Therefore, he submitted that, there is no error in the order passed by the learned CIT(E) and the same should be upheld.

6.

We have heard both the parties, perused the material on record and gone through the orders of the authorities below. The learned CIT(E) has rejected the application filed in Form 10AB, seeking for registration

5 ITA.No.112/Hyd./2025 under section 80G of the Act on two grounds. The first reason given by the CIT(E) is, the assessee has filed Form 10AB with wrong section code and was selected clause-(iv) of first proviso to sub-section-(5) of Section 80G instead of clause (i) of first proviso to sub-section-(5) of section 80G of the Income Tax Act, 1961. The second reason given by the learned CIT(E) is that, the assessee has not carried-out any charitable activities. In our considered view, the first reason given by the CIT(E) is technical in nature. If at all, the assessee filed an incorrect application by choosing incorrect code, then, the learned CIT(E) should have directed the assessee to file correct application and consider the application on merits, if such application filed by the assessee is on or before the due date provided under the Act. The second reason given by the learned CIT(E) is contrary to material available on record, which is evident from the details submitted by the assessee and as per the details, the assessee is running 150 bedded hospital for the benefit of public at large and this fact has been ignored by the learned CIT(E), while rejecting the application filed by 6 ITA.No.112/Hyd./2025 the assessee for registration under section 80G of the Act. Further, the assessee society was granted registration under section 12A of the Act, which is in force for the subject assessment year. Therefore, when the assessee society has been granted 12A Registration, after considering the relevant objects and activities, in our considered view, the application filed by the assessee, seeking for Registration under section 80G cannot be rejected on technical reasons, more particularly, when the assessee has explained the reasons for filing application with in correct code. Since the learned CIT(E) rejected the application filed by the assessee society, in a casual manner without considering relevant details filed by the assessee, in our considered view, the issue needs to go back to the file of CIT(E) for fresh consideration. Thus, we set-aside the order of the learned CIT(E) and restore the issue back to the file of CIT(E) for considering the application filed by the assessee in accordance with law, by providing adequate opportunity of hearing to the assessee. Further, we direct the assessee society to file correct Form with proper particulars and the 7 ITA.No.112/Hyd./2025 learned CIT(E) should consider the Revised Form filed by the assessee society, as if the said Form was filed on the date when original Form-10AB was filed by the assessee society seeking for Registration under section 80G of the Act. The learned CIT(E) is also directed to consider relevant details filed by the assessee society to prove the activities carried- out for the previous financial years, while considering the application filed for Registration under section 80G of the Act.

7.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 16.07.2025.

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