ITA 3224/DEL/2019: K.P. Singh Charitable Foundation vs CIT(E), New Delhi

Case Overview

The case ITA No. 3224/DEL/2019 involves an appeal filed by K.P. Singh Charitable Foundation, based in New Delhi, against the Commissioner of Income Tax (Exemption) [CIT(E)], New Delhi. The appeal was filed on April 12, 2019, and the final order was pronounced on October 7, 2019. The case concerns the rejection of the application for registration under section 12AA and exemption under section 80G of the Income-tax Act, 1961.

Background of the Appeal

K.P. Singh Charitable Foundation filed applications in Form No.10A and 10G seeking registration under section 12AA and exemption under section 80G of the Income-tax Act, 1961. These applications were rejected by the CIT(E) on the grounds that the assessee had not filed the requisite details nor submitted any evidence to show the charitable activities, thus failing to establish the genuineness of the activities.

Appeal Grounds

The appellant raised several grounds in the appeal:

• The CIT(E) was not justified in rejecting the application for registration under section 12AA without disputing the charitable nature of the trust’s objects.
• The trust is formed for charitable purposes, including providing education, relief to the poor, medical relief, and other objects as enshrined in the trust deed, which align with the provisions of section 2(15) of the Income-tax Act.
• The rejection of the application was based on extraneous grounds and beyond the statutory powers of the CIT(E).
• The activities of the trust are in accordance with its objects, and the CIT(E) failed to appreciate this.
• The benefit of medical assistance provided was charitable and in line with the trust’s objects.

Proceedings Before the Tribunal

The case was heard before the Delhi Bench ‘D’ of the Income Tax Appellate Tribunal (ITAT), comprising Shri R.K. Panda, Accountant Member, and Shri Kuldip Singh, Judicial Member. The Tribunal noted that the trust had been established only on March 27, 2018, and within a short span of less than one year, it is not feasible to demonstrate extensive charitable activities.

Tribunal’s Findings

The Tribunal observed that the CIT(E) had not disputed the charitable purpose of the trust but focused on the absence of evidence for charitable activities. The Tribunal highlighted that within a short period, such activities could not be realistically expected to commence and that the CIT(E) should have primarily ensured that the trust was established for charitable purposes. The verification of activities could be conducted by the Assessing Officer during the assessment process.

Legal Precedents

The Tribunal referred to the Hon’ble Allahabad High Court’s ruling in CIT(E) vs. Yamuna Expressway Industrial Development Authority, where it was held that the examination of whether an entity is entitled to exemption under sections 11 or 12 is within the jurisdiction of the Assessing Officer and not the Commissioner (E).

Final Judgment

Order:
The Tribunal allowed the appeal, directing the CIT(E) to provide registration under section 12AA and grant exemption under section 80G of the Income-tax Act, 1961.

Key Takeaway

This case underscores the importance of focusing on the primary objectives of a charitable trust when considering applications for registration and exemption. It also highlights the procedural aspect where the detailed verification of activities can be undertaken by the Assessing Officer during the assessment stage.

Order pronounced on October 7, 2019.
(R.K. PANDA)
ACCOUNTANT MEMBER
(KULDIP SINGH)
JUDICIAL MEMBER
Date: 7th October, 2019

Copy forwarded to:

1. Appellant
2. Respondent
3. CIT
4. CIT(E), New Delhi
5. DR, ITAT

Asst. Registrar, ITAT, New Delhi

ITA 3224/DEL/2019: K.P. Singh Charitable Foundation vs CIT(E), New Delhi