Loading judgment…
Facts
The assessee, Andhra Pradesh Capital Region Development Authority, appealed against the CIT(E)'s order which rejected its application in Form No. 10AB for registration under Section 12AB of the Income Tax Act. The CIT(E) claimed the assessee was not carrying out substantial charitable activities, while the assessee submitted evidence of its activities and substantial expenditure.
Held
The Tribunal observed that the CIT(E) did not specify which activities were not charitable, despite the assessee having been previously granted registration under Section 12AB. Finding that the assessee incurred substantial expenditure, the Tribunal set aside the CIT(E)'s order and remanded the matter for reconsideration.
Key Issues
Whether the Commissioner of Income Tax (Exemption) was justified in rejecting the assessee's application for registration under Section 12AB of the Income Tax Act without specifying the activities deemed non-charitable, given prior registration and evidence of substantial expenditure.
Sections Cited
12AB, 12A(1)(ac)(vi)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI K.NARASIMHA CHARY & SHRI MADHUSUDAN SAWDIA
सुिवधई की तधरीख/Date of hearing: 20/03/2025 घोर्णध की तधरीख/Pronouncement on: 20/03/2025 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 07/12/2024 passed by the learned Commissioner of Income Tax (Exemption), Hyderabad [learned CIT(E)], in the case of Andhra Pradesh Capital Region Development Authority (“the assessee”) assessee preferred this appeal.
At the outset, learned AR submitted that the learned CIT (E) rejected the application of the assessee in form No. 10AB seeking registration under section 12AB of the Income Tax Act, 1961 (for short “the Act”) stating that no substantial activities which are charitable in nature are being carried out by the assessee, which is in violation of the provisions of the sec. 12 AB of the Act, without specifying any details thereof. The learned AR brought to our notice the statement of income and expenditure for the year ending 31.03.2021 and 31.03.2022, Balance Sheet and Income & Expenditure as on 31.03.2023 and Andhra Pradesh Acts, Ordinances and Regulations etc.Act No.11 of 2014 evidencing the activities of the assessee. Without pointing out which activity of the assessee does not fall in the category of charitable activities, the learned CIT(A) is not justified in rejecting the application for registration under section 12AB of the Act.
Learned DR placing heavy reliance on the impugned order and submitted that the learned CIT(E) took a plausible view on a perusal of the submissions made by the assessee that the assessee did not do any considerable activity of charitable in nature.
We have gone through the record in the light of the submissions made on either side. It is an undisputed fact that by order dated 21/03/2022, registration under section 12AB of the Act was granted under section 12A(1)(ac)(vi) of the Act, subject to the condition that if it is subsequently found that the activities of the assessee are not genuine or if they are not carried out in accordance with all or any of the conditions subject to which such the registration was granted, there is no compliance of the assessee while meeting any of the conditions mentioned in this registration, the order is liable to be withdrawn by the prescribed authority.
The income and expenditure account of the assessee for the years ended with 31/3/2021, 31/3/2022 and 31/3/2023 clearly show that the assessee incurred substantial expenditure as against the grant receivable establish that the assessee did considerable activities during the year. Ld.CIT(E) did not specify any activity that does not fall in the category of charitable activity.
In the circumstances, we are of the considered opinion that it is a fit case to set aside the impugned order and restore the issue to the file of the learned CIT(E) with a direction to reconsider the issue in the light of the material and decide as per law. Grounds are answered accordingly.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on this the 20th day of March, 2025.