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Facts
The assessee, a charitable society registered under section 12A, applied for registration under section 80G. The CIT(E) rejected the application finding the assessee failed to establish the genuineness of its charitable activities, particularly concerning the gross margin earned on selling medicines at concessional rates.
Held
The Tribunal noted that the assessee's gross profit margin of 6.77% was relatively low, but also observed that complete details were not filed to substantiate the genuineness of activities. Consequently, the matter was remanded to the CIT(E) for proper verification.
Key Issues
Whether the assessee's activities were genuinely charitable and if sufficient documentation was provided to establish this for 80G registration.
Sections Cited
80G, 12A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI E BENCH: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “E” BENCH: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER [Assessment Year : NIL] Shalimar Bagh Samaj Seva vs CIT(Exemption) Samiti, BR-64A, West Shalimar Delhi Bagh, Delhi-110088 PAN-ABDAS5882R APPELLANT RESPONDENT Appellant by Shri V.K.Sabharwal, Adv. Shri Ashok Babbar, Adv. & Shri Rajiv Kumar, Adv. Respondent by Ms. Amish S Gupt, CIT DR Date of Hearing 28.01.2026 Date of Pronouncement 28.01.2026 ORDER
PER MANISH AGARWAL, AM :
The present appeal is filed by assessee against the order dated 20.12.2024 by Ld. Commissioner of Income Tax (Exemption), Delhi [“Ld.CIT(E)”] passed u/s 80G clause (ii)(b)(B) of the Income Tax Act, 1961 [“the Act”] pertaining to Assessment Year NIL.
Heard the parties and perused the material available on record. The assessee is a charitable society and is having registration u/s 12A of the Act. The assessee applied for the registration u/s 80G of the Act in form 10AC before the ld. CIT(E) who rejected the same on the ground that assessee has failed to satisfy the genuineness of the charitable nature of its activities. Upon perusal of the impugned order, it is observed that assessee was providing medicines at concessional rates to the poor section of the society and gross margin earned from the sale of medicines of Rs.4,04,93,883/- was of Rs. 27,40,322/- which comes to 6.77%. The CIT(E) observed that this margin of profit is not a nominal markup and further observed that assessee has not provided complete details of the bills etc. to establish that the genuineness of charitable activities. Since the assessee has been able to demonstrate that it had earned GP of only 6.77% on the sale of medicines which is comparatively very low as compared to the GP prevailing in the retail trading of medicines. Further, the assessee has also submitted copies of few bills in support however, since complete details were not filed, therefore, in the larger interest of justice, we remand back the matter to the file of ld. CIT(E) with the directions to properly verify the genuineness of the activities of the assessee. At the same time, assessee is also directed to file all the relevant details in order to justify the charitable nature of activities carried out by it. With these directions, all the grounds of appeal of the assessee are partly allowed for statistical purposes.
In the result appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 28.01.2026.