AI Structured Summary
Not yet generated for this judgment
Judgment
PER SHRI SUDHIR KUMAR, JUDICIAL MEMBER:
These appeals by the assessee are directed against the order of the Commissioner of Income Tax (Exemption) [hereinafter referred to as “Ld. CIT(E)”) vide separate orders pertaining to A.Y.2026-27 passed u/s 12AB(1)(b)(ii)(B) and 80G of the Income Tax Act. 1961(herein after referred “the Act”).
The brief facts of the case are that assessee filed an application electronically on 29.9.2026 in From 10AB seeking registration u/s. 12A(1)(ac)(iii) of the Income Tax Act, 1961. The applicant was issued questionnaire on 6.12.2025 with a request to furnish certain details and documents in support of its claim for registration u/s. 12A(1)(ac)(ii) on or before 12.12.2025. In response to above, applicant filed its response. After examination of the response of the applicant, the CIT(E) observed that applicant society is mainly involved in activities for generation of income rather than the charity. Accordingly, the applicant was requested to justify its claim for registration u/s. 12AB as its receipts in all years were substantially from commercial activities. In response to the same, assessee applicant filed its reply on 13.3.2026 by emphasizing that since all the receipts are utilized for promoting its objectives, they are not commercial even if the receipts are consideration for services provided on quid pro quo basis. The Ld. CIT(E) observed that the applicant has substantial net surplus in absolute terms and hence its markup for commercial transactions is not nominal. Thus, the applicant is not eligible for registration u/s. 12AB as its purpose is not charitable in terms of the proviso to Section 2(15) of the Act, as it works exclusively as a commercial entity. He further observed that applicant has committed regular specified violation as enumerated in clause e(ii) of explanation to 12AB(4) of the Act as its activities are not being carried out in accordance with all or any of the conditions subject to which it was registered. Thus, the conditions for grant of registration are not satisfied and hence the application filed in Form 10AB for grant of registration u/s. 12A(1)(ac)(ii) was rejected. Further, the applicant has filed an application dated 29.9.2025 in Form 10AB for approval under clause (ii) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961. The applicant was issued a questionnaire dated 6.12.2025 with a request to furnish certain details / documents /clarifications in support of its request for approval u/s. 80G. In support of his claim, the applicant filed the details. However, CIT(E) observed that as the application filed in Form 10AB for grant of registration u/s. 12A(1)(ac)(ii) of the Income Tax Act, 1961 is being rejected by issuing separate order, the application filed in Form 10AB for grant of approval under clause (ii) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 was also rejected. Aggrieved, the aforesaid action of the Ld. CIT(E), assessee is in appeals before us.
We have heard the rival contentions and perused the records. We find that the applicant, is a registered charitable society operating continually since 1896, heavily engaged in advancing the causes of women’s empowerment, education and relief to the poor. The applicant operates a vast network of charitable projects. It is noted that applicant has historically held valid registration under section 12A and simultaneous approval under section 80G(5) of the Act. In compliance, with the amended statutory provisions the applicant filed form no. 10AB for renewal of its approval under section 80G(5) of the Act for getting renewal of section 12A registration. During the proceedings for the 80G renewal, the CIT(E) issued a questionnaire dated 6.12.2025 seeking certain details and clarifications. The applicant submitted a partial reply on 10.1.2026. Subsequently, the CIT(E) issued another letter on 28.2.2026 calling for additional details. It is further noted that CIT(E) has not passed the order u/s. 80G on merits, however, it was a consequential order, rejecting the approval u/s. 80G on the premise that the primary application for renewal of registration under section 12A(1)(ac)(ii) had been rejected. It is noticed that the Tribunal has already adjudicated the issue whether YWCA of India’s activities of running guest houses, hostels, and canteen facilities constitute “business” attracting the proviso to section 2(15) has already been adjudicated by the Tribunal and decided in favour of the applicant. It is further noted in assessee’s own case for assessment years 2009-10 in ITA No. 2408/Del/2013 vide order dated 29.2.2016 and in AY 2011-12 vide order dated 22.9.2016 had already held that the assessee’s activities fall within the first three limbs of section 2(15) relief to the poor, education, and medical relief and not under ‘general public utility’. It is noted that there is an unbroken chain of favourable appellate orders from AY 2009-10 to AY 2016-17 upholding the charitable status of the assessee. We also note that in the AY 2016-17 the CIT(A)-40 vide his order dated 30.5.2019 has observed that “since the facts and circumstances of the case are similar; following the earlier year’s order and on principle of precedence and consistency, it is held that the applicant is a charitable and non-profit organization and that none of the activities of the appellant involves any trade, commerce or business to attract the mischief of the proviso to section 2(15).” In view of the aforesaid factual matrix and respectfully following the precedents in assessee’s own case, we are of the considered view that assessee’s activities fall within the first three limbs of section 2(15) relief to the poor, education, and medical relief and not under ‘general public utility’, thus it cannot be said that the activities of the applicant are commercial and therefore, we direct the CIT(E) that in view of the aforesaid precedents, registration u/s. 12A(1)(ac)(ii) be granted to the applicant, in accordance with law and also consequent approval u/s. 80G be also granted.
In the result, both the appeals filed by the assessee stand allowed in the very terms.