N.M SHAH CHARITABLE TRUST ,MUMBAI V. COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

ITA 753/MUM/2025

AI Insights

The case involves the N.M Shah Charitable Trust appealing against the decision of the Commissioner of Income Tax (Exemptions), Mumbai, which rejected their application for registration under Section 80G of the Income Tax Act, 1961. The rejection was primarily based on the ground that the trust had made donations to students for studies outside India, which was viewed as applying income outside India in violation of Section 11(1)(c) of the Act. The trust contended that the donations were in Indian Rupees and not in foreign currencies, and that they were made within India. The tribunal found that the trust had not provided sufficient explanation or documentation to the CIT(E) initially and granted an opportunity to the trust to present its case afresh.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470968 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: Bijapur Jan Shikshan Sansthan Vs. CIT (E), [2025] 171 taxmann.com 690 (Raipur Trib)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAPRIYA RAGHAVAN
• Assessee Lawyers: ASHWINI KUMAR; ABHISHEK GODASE
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Charitable institution
• Section: 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & HON’BLE SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 753/Mum/2025 (Assessment Year: N/A) N.M Shah Charitable Trust 133, Gopal Nivas, Shamaldas Gandhi Marg, 3rd Floor, Kabadevi, Mumbai – 400002. Vs. CIT(E) Room No. 601, 6th Floor, cumballa Hill, MTNL TE Bldg, Pedder Road, Ld.DR. Gopal Rao, Deshmukh Marg, Cumballa Hill, Mumbai – 400026. PAN/GIR No. AAAAN0086G (Applicant) (Respondent) Assessee by Shri Ashwini Kumar, Adv. & Shri Abhishek Godase, Adv Revenue by Ms. Ramapriya Raghavan, CIT DR Date of Hearing 20.03.2025 Date of Pronouncement 26.03.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the revenue challenging the impugned order 26.12.2024 passed u/s 80G(5)(iii) of the Income Tax Act, 1961 (‘the Act’), by the Commissioner of Income Tax (Exemptions), Mumbai. The assessee has raised the following grounds of appeal: A. GROUND I 2 ITA No. 753/Mum/2025 N.M Shah Charitable Trust, Mumbai The Order dated 26.12.2024 has been passed by the Ld. Commissioner of Income Tax (Exemption), Mumbai without granting any opportunity of being heard to the assessee and thus is in violation of the principles of natural justice, hence is liable to be set aside. B. GROUND II The Ld. Commissioner of Income Tax (Exemption) has failed to appreciate that the donations which he has quoted in the Order dated 26.12.2024 are in Indian Rupees and not in foreign currencies and have been incurred in India as donations to the students for studies. Even if the aforesaid money is utilized as an ancillary support for studies by the students, it cannot be said that the said amounts have been outside India. The Appellant Trust had also vide resolution dated 09.11.2024 has resolved that no donations for application abroad shall be granted by the Trust to any students who are going for further studies outside India, which could not be submitted because no opportunity for being heard was granted by the Ld. Commissioner (Exemptions), Mumbai. C. GROUND III The Ld. Commissioner of Income Tax (Exemption), Mumbai has failed to appreciate that Section 11(1) of the Income Tax Act, 1961 relates to assessment of income of the trust and cannot per se related to genuineness of the activities, if any part of income seems to not falling under purview of the said provision, the benefit under the said provision may be restricted to amounts spend on that part of activities, but is unjust to deny the registration under Section 80G of the Income Tax Act, 1961 on that ground. D. GROUND IV The Ld. Commissioner of Income Tax (Exemption), Mumbai has failed to appreciate that the registration of the assessee under Section 12A/12AA of the Income Tax Act, 1961 is valid till A.Y. 3 ITA No. 753/Mum/2025 N.M Shah Charitable Trust, Mumbai 2026-27 which was granted after satisfaction of genuineness of activities of the trust and now rejection of application for registration under Section 80G on the ground of non- genuineness of activities is not proper and just. The Applicant craves leave this Hon'ble Tribunal to allow addition, alteration or amendment of any Grounds of Appeal at the time of hearing. All the grounds raised by the assessee are with regard to rejecting the application for grant of registration u/s 80G of the Act, therefore we have decided to take all the grounds together and to adjudicate the same through the consolidated order. 2. At the very outset, we noticed that grant of registration u/s 80G of the Act in the case of the assessee was rejected by Ld. CIT(E) on the ground that assessee trust had given donation to three persons for studies outside India. Since, according to Ld. CIT(E) the said transaction is in violation of the provisions of Sec.11(1)(c) of the Act as the income is applied outside India, therefore on this basis the application for seeking approval u/s 80G was rejected. 3. In this regard while challenging the said action Ld. AR submitted that Ld. CIT(E) failed to appreciate the donation which has been calculated in the impugned order are in Indian rupees and not in foreign currency and have been 4 ITA No. 753/Mum/2025 N.M Shah Charitable Trust, Mumbai incurred in India as donations to the students for studies. However Ld.DR vehemently rebutted the contentions raised by the assessee and submitted that ‘sufficient and proper opportunities’ were granted by Ld. CIT(E) to the assessee but even then the assessee has not provided any explanation regarding the above mentioned payments / donations and has not submitted any general / specific order by the Board directing the assessee trust to apply the income outside India, in terms of proviso below section 11(1)(c) of the Act and also relied upon the decision of the Coordinate bench in the case of Bijapur Jan Shikshan Sansthan Vs. CIT (E), [2025] 171 taxmann.com 690 (Raipur Trib). 3. We have heard the counsels for both the parties and perused the material placed on record, judgments cited before us and the orders passed by the revenue authorities. From the records we noticed that the application was rejected by the Ld. CIT(E) solely on the ground that the assessee trust has given donation to certain persons for studies outside India and the said transaction is in violation of the provisions of Sec. 11(1)© of the Act as the income is applied outside India. It is worth mentioning here that assessee has also filed an application for placing additional documents for admission in the shape of resolution passed by the assessee trust 5 ITA No. 753/Mum/2025 N.M Shah Charitable Trust, Mumbai that in future no donation would be given by the trust for study of students abroad. 4. Apart from this we have also noticed that assessee has not provided any explanation before Ld. CIT(E) regarding the above mentioned payments / donations as now before us assessee has taken specific stand that the donations mentioned in the impugned order were made in India and not in foreign currency and have been incurred in India as donations to the students for the studies. 5. On the contrary Ld. DR while rebutting arguments of the assessee submitted that by virtue of filing the application for production of additional documents, the assessee himself has admitted that the donations were made in violation of the provisions of Sec. 11(1)C of the Act and moreover no explanation has been provided along with documentary evidences before Ld. CIT(E) by the assessee. 6. Be that as it may, we are of the view that since assessee could not produce any explanation regarding the above mentioned payments / donations before revenue authorities therefore in the interest of justice Bench is inclined to grant one more opportunity to the assessee to provide all the required explanations / documents before Ld. CIT(E) subject to cost of Rs.2000 imposed upon the 6 ITA No. 753/Mum/2025 N.M Shah Charitable Trust, Mumbai assessee for his non-cooperation. This amount shall be deposited in the Prime Minister Relief Fund and a copy of the receipt shall be placed on file before Ld.CIT(E) within 30 days from the date of receipt of this order. 7. Keeping in view our above discussion the matter is restored back to the file of CIT(E) with a direction to decide the same afresh on merits after providing fair opportunity of hearing to both the parties. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of proceedings. 8. Before parting, we make it clear that our decision to restore the matter back to the file of the Ld.CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the Ld. CIT(E) independently in accordance with law. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 26.03.2025. Sd/- Sd/- (RENU JAUHRI) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 26/03/2025 7 ITA No. 753/Mum/2025 N.M Shah Charitable Trust, Mumbai KRK, PS आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant 2. \r\u000eथ\f / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, मु\u0003बई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u000eािपत \rित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai "