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Facts
The assessee, Plaksha Incubation Centre, filed an application for approval under Section 80G(5)(iii) of the Income Tax Act. The CIT(E) rejected the application observing that the assessee was engaged in incubation activity but had not made any investment and had not started the centre in earnest.
Held
The Tribunal held that while the assessee might not have expanded substantial resources, it was in the process of undertaking its objectives, and its activities would take time to fructify. No violation of provisions was noted, and the registration could not be denied.
Key Issues
Whether the rejection of an application for approval under Section 80G(5)(iii) was justified when the assessee was in the process of establishing its activities and no violations were observed.
Sections Cited
80G(5)(iii), 12AB(1)(b)
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of an application seeking approval u/s 80G(5)(iii) of the Act vide impugned order dated 25-11-2024 of Ld. Commissioner of Income Tax (Exemption), Chandigarh, [CIT(E)], the assessee is in further appeal before us. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. The Ld. CIT(E) observed that the assessee was engaged in incubation centre activity but it had not made any investment towards the same. The perusal of financial statements would show that the assessee had not started the incubation centre in the right earnest.
There had been no investment in the physical and governance infrastructure. In the absence of any credible genuine activity, the application was rejected against which the assessee is in further appeal before us.
From case records, it emerges that the assessee has been granted regular registration u/s 12AB(1)(b) on 16-03-2024 for AYs 2023-24 to 2027-28 which is placed on Page Nos.11 to 14 of the paper-book. The assessee has been registered as Sec. 8 Companies under The Companies Act, 2013. The report on the activities of assessee trust has been placed on Page Nos.89 to 138 of the paper- book. Further, the assessee has entered into MOU for incubation on 20-05-2024 with M/s Agmira Technologies Private Ltd. Though the assessee may not have expanded substantial resources towards attainment of its objectives yet it is in the process of undertaking the same. The activities of the assessee are such that it would take longer period of time to fructify. No violation of provisions has been noted. On these facts, in our considered opinion, the impugned registration could not be denied to the assessee. The Ld. CIT(E) is directed to grant the impugned registration to the assessee as per its application.