MLPI FOUNDATION ,BENGALURU V. CIT(EXEMPTIONS), BENGALURU

ITA 113/BANG/2025

AI Insights

M/s. MLPI Foundation, a section 8 company, appealed against the orders of the Commissioner of Income Tax (Exemptions), which had rejected their applications for registration under section 12AB and for a recommendation under section 80G of the Income Tax Act. The Tribunal noted that the Assessee had been under the impression that a second application for registration, which was also subsequently rejected, would render the appeal against the first rejection unnecessary. Upon finding that the second application was also rejected, the Assessee promptly filed the appeal, which was delayed by 82 days. The Tribunal condoned the delay, recognizing it as a result of a bona fide belief held by the Assessee. On the merits of the case, the Tribunal found that the CIT (Exemptions) had not adequately examined the Assessee's operations and activities before rejecting the applications, and thus remanded the matter back for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791063 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2024-2025
• Appeal Filed On: 21-01-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUTHUSHANKAR
• Assessee Lawyers: RAVISHANKAR
• Keywords: Bonafide belief; Source of fund
• Section: 11; 12; 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE – PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 112-113/Bang/2025 Assessment Year:2024-25 M/s. MLPI Foundation, Clayworks Create Building, Arakere, Bannerghatta Road, Bengaluru – 560076 PAN: AAOCM6666M Vs. The Commissioner of Income Tax, Exemptions, Bengaluru. APPELLANT RESPONDENT Assessee by : Shri Ravishankar, Advocate Revenue by : Shri Muthu Shankar, CIT-DR Date of Hearing : 18-11-2025 Date of Pronouncement : 10-12-2025 ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1. ITA No. 112/Bang/2025 is filed by M/s. MLPI Foundation against the order passed by CIT (Exemptions), Bangalore on 28.08.2024 rejecting the application made by the Assessee for registration u/s. 12AB of the Act. 2. ITA No. 113/Bang/2025 is filed by the same trust against the order of the CIT (Exemptions), Bangalore dated 28.08.2024 denying the recommendation u/s. 80G (5) of the Act as the registration u/s. 12AB was already rejected by order dated 28.08.2024. 3. Therefore, Assessee is in appeal before us which are delayed by 82 days.. Printed from counselvise.com ITA No. 112-113/Bang/2025 Page 2 of 7 4. Assessee in condonation petition submitted that in the present case, the appeal is filed late by 82 days. It is submitted that the order of the Ld. CIT (Exemptions) is passed on 28.08.2024 and the Assessee has also filed another application for recommendation u/s. 12AB of 26.06.2024 which is also pending for disposal before the Ld. CIT (Exemptions). Therefore, the Assessee was under a bonafide belief that second application was filed and pending for disposal, there is no need to file any appeal against the main order. This is so because of the reason that if registration is granted against the second application filed, the main order of rejection would become infructuous. It was found that second petition is also dismissed on 18.12.2024 and therefore immediately on 21.01.2025, the Assessee filed this appeal. Therefore, the delay is for sufficient cause and may be condoned. 5. The Ld. Departmental Representative vehemently objected to the same. 6. We have carefully considered the rival contentions and perused the orders of the Ld. lower authorities. 7. Firstly, looking at the delay in filing of the appeal, we find that delay in filing of the appeal is because of the 2 applications filed by the Assessee for the same purpose. First application was rejected. So, Assessee was under the belief that if second application is entertained, the purpose of filing the appeal would be futile. The second application is also rejected and immediately the Assessee has filed the appeal. We find that there is a sufficient cause which caused delay of 82 days and hence same is condoned. 8. Facts in brief shows that Assessee M/s. Milaap India Foundation is a section 8 Company registered under the Companies Act, 2013. It Printed from counselvise.com ITA No. 112-113/Bang/2025 Page 3 of 7 caters from the address Clayworks Create, Arakere, Bannerghatta Road, Bangalore and claimed that it is charitable arm of Milaap Social Ventures India Private Limited and has partnered with them to facilitate the disbursement of funds received through online campaigns hosted on the milaap.org platform. It is also claimed that it acts as vetting and disbursement entity, ensuring that funds reach genuine beneficiaries while adhering to all legal and regulatory requirements. It has a parent company, M/s. Milaap Social Ventures Private Limited which is engaged in operating an online platform for facilitating contribution to various causes like health care emergencies, natural disasters, education etc., It connects the donors to the beneficiaries. However, that private limited company functions as a commercial venture. 9. The Assessee made an application in form no. 10AB on 08.02.2024 for registration u/s. 12AB of the Act. The notice was issued to the Assessee who appeared and furnished the necessary details. The Ld. CIT (Exemptions) perused the objects of the Assessee trust. However, he found that it is not carrying out its activities in accordance with the object of trust. He found that it is not carrying out any activity independently. It has only 3 employees and according to the Ld. CIT (Exemptions) it was not possible to handle such a huge transaction with 3 employees. He found that Assessee has received grant and donation of Rs. 73.24 crores and has also incurred program expenses of Rs. 73.24 crores. Its net income is Rs. 3,59,000/- only. He further referred to the accounts of the Assessee which do not have any source of funds. Whatever is collected as a donation by parent company is diverted to the Assessee depending on the necessity for 80G certificate. He also noted that there is a parent company agreement dated 01.04.2022 by which the important role of collecting the funds is vested with the parent company and the Assessee is merely used as a conduit to transfer money to the beneficiaries. He further referred to Printed from counselvise.com ITA No. 112-113/Bang/2025 Page 4 of 7 the provisions of section 11 and 12 along with rule 17AA of the Income Tax rules and held that in the present case Assessee does not maintain any of these records. All the records are maintained by the parent company. Therefore, he held that Assessee is merely a tool formed only with the aim of issuing 80G certificates and therefore the genuineness of the activities is not satisfied. Accordingly, he rejected the application filed in form 10AB for registration u/s. 12AB of the Act. Assessee is aggrieved with the same and preferred this appeal. 10. Before us, the Assessee has filed a detailed chart of various activities carried out by the Assessee. The Assessee further submitted the Certificate of Incorporation and Memorandum of Association of the Assessee trust. It was submitted that it is found to grant financial assistance to school, colleges, educational institutes, hospitals etc., He further stated that, that as Assessee does not have much of the work but to transfer the funds to the respective beneficiaries the finding of the Ld. CIT (Exemptions) are not correct. It was further stated that Assessee has incurred the expenses of Rs. 12,08,566/- and hasalso earned service income of Rs. 22,91,761/-. He submits that the finding of the Ld. CIT(Exemptions) that Assessee is merely a conduit is without examining the relevant detail. He further referred to the Annual Report of the Assessee wherein various activities are carried out. He also referred to the various testimonials placed on paper book page no. 66-82. He submitted that the finding of Ld. CIT (Exemption) that Assessee is a conduit is devoid of any merit. 11. On merits of the case, the Ld. Departmental Representative vehemently supported the order of the Ld. CIT (Exemptions). 12. We have carefully considered the rival contentions and examined the issue of the merits of the case. We find that Assessee is a section 8 company registered under the Companies Act. The objects of the Printed from counselvise.com ITA No. 112-113/Bang/2025 Page 5 of 7 Assessee are mentioned at clause 3 of the Memorandum of Association which shows that Assessee is formed with the object to grant financial assistance to schools, colleges, hospitals and other institutions. It is also found for assisting Non-Governmental Organizations to receive donations through technology platform, to find volunteers etc., The Assessee made and application in form no. 10AD on 08.02.2024 for registration u/s. 12AB of the Act. The CIT(Exemptions) found that, that the Assessee is associated with M/s. Milaap Social Ventures India Private Limited which was formed on 09.06.2021 and is acting as a conduit. We find that the observations of the Ld. CIT (Exemptions) that the Assessee received grants and donations of Rs. 73.24 crores and also disbursed program expenses of Rs. 73.24 crores. He held that it has only 3 employees and 3 employees’strength cannot handle the level of financial transactions reported. He further referred to the partner agreement and held that the Assessee is merely a conduit. 13. According to the powers envisaged u/s. 12AB of the Act, the Ld. CIT (Exemptions) is empowered to satisfy himself about the genuineness of the activities of the trust. It is not a mere formality. As soon as he finds that the genuineness of the activities is doubtful, he should have probed further and examined whether the object of the trust and the activities carried out by the Assessee are synchronized or not. Before us, the Assessee has submitted the details of the beneficiaries to provide medical help. The Assessee has also submitted the annual report and the details of work done. These have not been examined by the Ld. CIT (Exemptions). 14. In view of the above facts, we restore the whole issue back to the file of the Ld. CIT (Exemptions) with a direction to the Assessee to explain the modus operandi of the Assessee, where from the huge donation of Rs. 73.24 crores are received, who solicits the donation and how these donations are diverted to beneficiaries. It is also important to notice Printed from counselvise.com ITA No. 112-113/Bang/2025 Page 6 of 7 how these beneficiaries are identified and on what basis financial assistance are provided. If all these activities are examined, then only it can be ascertained whether the Assessee activities are genuine or not. Unless the above examination is made with a proper hearing and opportunity to the Assessee to explain its case, the registration cannot be rejected. It is for Assessee to substantiate its modus operandi, process of acquiring donation, process of identification of beneficiaries and diverting of funds from the donors to the beneficiaries. The Assessee is directed to show that it is not a conduit but carries on charitable activities. The Ld. CIT (Exemptions) may examine the same and then decide the issue a fresh after making proper enquiries. 15. In the result, appeal filed by the Assessee is allowed as above. 16. The second appeal filed by the Assessee in ITA No. 113/Bang/2025 is with respect to the recommendation u/s. 80G of the Act which is consequently to registration u/s. 12AB of the Act. As the rejection of recommendation u/s. 80G was for the reason that, that Assessee application for registration u/s. 12AB was rejected, the Ld. CIT (Exemptions) may examine the same after deciding the application for registration u/s. 12AB of the Act. 17. In view of this, both the appeals filed by the Assessee are allowed for statistical purposes. Order pronounced in the open court on 10th December 2025. Sd/- Sd/- (SOUNDARARAJAN K.) (PRASHANT MAHARISHI) JUDICIAL MEMBER VICE-PRESIDENT Bangalore, Dated, the 10th December 2025. *TNTS* Printed from counselvise.com ITA No. 112-113/Bang/2025 Page 7 of 7 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. CIT(A) By order Assistant Registrar, ITAT, Bangalore Printed from counselvise.com "