DHENU SAMVARADHAN FOUNDATION,INDORE vs. THE CIT (E), BHOPAL

Feeling aggrieved by order dated 08.02.2023 passed by learned Commissioner of Income-Tax (Exemption), Bhopal [“CIT(E)”] by which the assessee’s application for grant of final registration u/s 12AA and final approval u/s 80G of Income-tax Act, 1961 has been rejected, the assessee has filed this appeal on the grounds mentioned in Appeal Memo (Form No. 36).

The background facts leading to present appeal are such that the assessee is a company claiming to be engaged in charitable purpose. It was granted provisional registration u/s 12AA as well as provisional approval u/s 80G by Income-tax Department through two separate orders both dated 28.11.2021. Subsequently, the assessee applied for grant of final registration u/s 12AA and final approval u/s 80G. The CIT(E), vide a consolidated order dated 08.02.2023, rejected the final registration u/s 12AA as well as final approval u/s 80G. Aggrieved, the assessee has come in appeal before us.

Ld. AR for assessee carried us to Para 2-3 of impugned order to show that the CIT(E) show-caused the assessee to explain following three issues to which the assessee filed explanation but ultimately the CIT(A) rejected assessee’s explanation and thereby dismissed assessee’s applications:

Ld. AR next submitted that the assessee is established for “charitable purpose” only. The assessee neither intended nor engaged in any ‘business’ or ‘commercial’ activity. Further, the assessee neither intended nor made any application of funds outside India. However, for the sake of satisfaction of CIT(E), the assessee has already amended its ‘MOA’ suitably and the copy of amended ‘MOA’ is filed in Paper-Book. So far as the activity of selling of cow milk and other milk products is concerned, Ld. AR submitted that when the assessee is engaged in charitable activity of animals predominantly cows, etc. the selling of cow milk and other milk products would be a necessary part of such charitable activity and the CIT(E) has wrongly understood the same as ‘business’ or ‘commercial’ activity. Then, Ld. AR also carried us to the audited accounts of assessee filed at Page 6 and 7 of Paper-Book to show that the assessee’s receipts from donation was Rs. 11,07,24,000/- and the receipts from sale of cow-milk and milk products

Per contra, Ld. DR for revenue submitted that the activity of selling cow milk and milk products is in the nature of ‘business’. He further submitted that the assessee has filed amended ‘MOA’ which was not before CIT(E).

We have considered submissions of both sides and also perused the documents filed in Paper-Book as well as the impugned order. After a careful consideration, we find that the CIT(E) has referred certain clauses of MOA and observed that the assessee’s objects or activities are ‘business’ or ‘commercial’ in nature and the assessee had authority to apply funds outside India. But, as submitted by Ld. AR, the assessee has amended its MOA and the copy of revised MOA is filed in Paper-Book also. This revised MOA was not available before CIT(E) and the CIT(E) had no occasion to Dhenu Samvardhan Foundation, Indore ITA No. 117/Ind/2023 verify the amendments made by assessee therein. Therefore, this case must go to CIT(E) for necessary verification. Accordingly, we are inclined to restore this matter to CIT(E). The CIT(E) shall, after verifying the amended MOA, also consider afresh the activities of assessee in the light of amended MOA and the decisions of ITAT cited by Ld. AR as narrated in foregoing paras.

Resultantly, this appeal is allowed for statistical purpose.