INFOSYS FEDERATION AND EDUCATIONAL COUNCIL,AMBALA V. CIT EXEMPTION CHANDIGARH, CHANDIGARH

ITA 678/CHANDI/2024

AI Insights

The case involves Infosys Federation and Educational Council, a society registered under the Societies Registration Act, 1860, which appealed against the decision of the CIT Exemptions, Chandigarh. The CIT had earlier rejected the society's application for registration under Section 12AB of the Income Tax Act, 1961, on the grounds that the society acted merely as an implementing agency for government schemes and received remuneration under specific contracts, which did not amount to independent charitable activity. The Tribunal's decision was based on the precedent set by the Hon'ble Kerala High Court in the case of CIT v. Annadan Trust, which held that execution of government schemes under contracts does not constitute charitable activity for the purposes of registration under Section 12AA (now 12AB).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360637 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: misc
• Other Referred Cases: CIT v. Annadan Trust (IT APPEAL NO. 213 OF 2013)[2018] 96 taxmann.com 207 (Kerala)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANAV BANSAL
• Assessee Lawyers: S.P.GOYAL; C.A
• Keywords: Principle of natural justice
• Section: 12AA

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 678/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : Infosys Federation and Educational Council 672/8, Sharda Nagar, Manav Chowk, Rattan Gargh Road, Ambala City- 134003 बनाम The CIT Exemption Chandigarh ˕ायी लेखा सं./PAN NO: AAABI0385A अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri S.P. Goyal, C.A राजˢ की ओर से/ Revenue by : Shri Manav Bansal, CIT DR सुनवाई की तारीख/Date of Hearing : 15/05/2025 उदघोषणा की तारीख/Date of Pronouncement : 19/05/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the assessee against the order passed by the Ld. CIT (Exemptions), Chandigarh dated 16.05.2024 rejecting the application for registration under Section 12AB(1)(b)(ii) of the Income Tax Act, 1961. 2. In the present appeal Assessee has raised the following grounds: That the Worthy CIT Exemption has acted in-haste while finalizing the Order under section 12AB(1)(b) of the Income Tax Act, 1961, thus rejecting Application for registration U/s 12AB and not properly taken on records the submissions and documents placed on the file by the Appellant. So, the order passed u/s 12AB(1)(b) is bad in law and deserved to be annulled. 2. That the rejection order in Form-10AD has been said to be passed on 16.05.2024, which is arbitrary, passed in haste, without issuing any show cause notice, thus total denial of principal of natural justice. As explained earlier in detail in statement of facts that the CIT Exemption first issued on 20.12.2023, in which various documents / information i.e Financial Statements, Bank Statements, Balance Sheets, Copy of ledger account of various expenditure incurred by the assessee on implementation of welfare projects, copy of sanction letter of Central/State Governments under various welfare schemes, copy of photographs evidencing the activities performed, brief write up on activities undertaken etc, about genuiness of activities vis a vis the charitable objectives of the society. All these 2 documents / information was filed in our detailed reply on 29.12.2023. No query was raised doubting the genuiness of the charitable activities vis a vis the objectives of the Society. 3. That the Learned CIT Exemption has refer the decision of Honorable High Court of Kerla, the facts of this case is quite distinguishable & the ratio of the judgment is not applicable in the case of the assessee. In the case of the assessee, the sponsoring Central Government Agency does not pay any remuneration / fee to the Council, only a specific grant / amount is paid in lieu of specific services rendered / activities performed by the assessee for implementation of the welfare scheme of Central/State Government. 4. That in Para-8 of Rejection order, it is mentioned that the Role of applicant society is negligible which is totally incorrect & against the available facts. The assessee work with elite / reputed Central/State Government to implement various Social Welfare Projects. The role of the assessee society is prime as it has to work at ground level for making all logistic arrangements & to identify & educate the beneficiary amongst large population living in remote villages. As these are Central / State Government Schemes, so cooperation or participation of local/ administrative Government is necessary & solicited by the office bearer of the Society alongwith Government official. The Central/State Government role is only supervisory, monitoring, end use verification of Government Grants. 5. That the Learned CIT Exemption totally ignored the facts, detail information / documents / photographs / Sanction letter filed by the assessee. In no where the CIT exemption has shown her adverse opinion about the genuiness of the activities & its objectives not covered U/s 2(15) of Income Tax Act. 6. That in any view of the matter and in any case, the action of Ld. CIT Exemptions in rejecting the registration under section 12AB is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impugned order has been passed without granting adequate opportunity of hearing, by recording incorrect facts and findings and the appellant ought to have been granted the benefit of registration under the law. 7. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. The Assessee is a society registered under the Societies Registration Act, 1860, and had filed an application in Form 10AB seeking registration under Section 12AB of the Act. Earlier, the assessee’s application was rejected by the CIT(E) on 22.09.2022. On appeal, the Tribunal, vide order dated 21.07.2023 in ITA No. 756/CHD/2022, restored the matter back to the file of the CIT(E) for fresh adjudication. 4. Pursuant to the Tribunal’s remand, the CIT(E) issued notices dated 20.12.2023 and 30.04.2024 calling for detailed information. The assessee filed responses dated 29.12.2023 and 01.05.2024, claiming to be engaged in various training and skill development activities sponsored by government and semi-government agencies like NABARD, SBI, NHFDC, etc. 3 5. After considering the material on record, the CIT(E) rejected the application holding that the assessee society was merely acting as an implementing agency for schemes floated by government departments and was being remunerated under specific contracts, which did not amount to independent charitable activity. The Ld. CIT(E) placed reliance on the judgment of the Hon’ble Kerala High Court in case of CIT v. Annadan Trust (IT APPEAL NO. 213 OF 2013)[2018] 96 taxmann.com 207 (Kerala) to support her findings. 6. Before us, the Ld. AR for the assessee contended that the assessee’s activities were genuine and aligned with its charitable objects. It was argued that the society was working for upliftment of the underprivileged sections through empowerment schemes and that the registration under section 12AB could not be denied solely because the activities were sponsored by government bodies. 7. Per contra, the Ld. DR supported the findings of the CIT(E) and reiterated that the assessee society was functioning purely as a service contractor for government-funded programmes and had not demonstrated any charitable activity undertaken independently or voluntarily without contractual consideration. 8. We have heard the rival contentions and perused the material available on record. It is not in dispute that the assessee was earlier granted an opportunity by the Tribunal for fresh adjudication. The CIT(E), after affording due opportunity, concluded that the activities of the appellant society are not charitable in nature inasmuch as they are executed under contractual obligations with pre-defined financial consideration, i.e., for monetary compensation based on deliverables (such as per JLG formation or per beneficiary training). There is no independent charitable activity carried out from the appellant’s own funds or voluntary donations. 9. The Hon’ble Kerala High Court in case of CIT v. Annadan Trust (supra) has clearly held that execution of government schemes under contracts or sub-contracts does not amount to “charitable activity” for purposes of registration under section 12AA (now 12AB). The analogy squarely applies to the present case. The appellant has also not 4 rebutted the fact that no independent infrastructure (land/building) was owned or rented by it for its claimed activities, nor has it furnished sufficient evidence showing voluntary and self-funded charitable undertakings. 10. In view of the above findings and considering the law laid down in case of CIT v. Annadan Trust (supra), we find no infirmity in the action of the CIT(E) in rejecting the application for registration under section 12AB of the Act. 11. In the result, the appeal filed by the assessee stands dismissed. Order pronounced in the open Court on 19/05/2025 Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "