OKKALIGA GOWDA SEVA SANGHA KADABA,DAKSHINA KANNADA V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), BENGALURU

ITA 352/BANG/2025

AI Insights

The case involves the Okkaliga Gowda Seva Sangha Kadaba, a trust based in Dakshina Kannada, which appealed against the cancellation of its registration under section 12AB and approval under section 80G of the Income Tax Act by the CIT(Exemptions), Bengaluru. The CIT(Exemptions) had cancelled the registration and approval on the grounds that the trust had not utilized the donations received for charitable activities but rather for purchasing land and constructing a building. The Tribunal found that the CIT(Exemptions) had not adequately justified the cancellation and remitted the matter back for a thorough examination of the trust's activities and their alignment with its charitable objectives.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774929 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2024-2025
• Appeal Filed On: 24-02-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MURALI MOHAN
• Assessee Lawyers: GOKUL
• Keywords: Capital asset; Opportunity of being heard
• Section: 80G

Judgement Text

"ITA Nos.352 & 353/Bang/2025 Okkaliga Gowda Seva Sangha Kadaba, Dakshina Kannada IN THE INCOME TAX APPELLATE TRIBUNAL “B’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA Nos. 352 & 353/Bang/2025 Assessment Years : NA Okkaliga Gowda Seva Sangha Kadaba Kadaba Dakshina Kannada 574 221 Karnataka PAN NO : AACAO1775F Vs. CIT(Exemptions) Bengaluru APPELLANT RESPONDENT Appellant by : Sri Gokul, A.R. Respondent by : Sri Murali Mohan, D.R. Date of Hearing : 25.06.2025 Date of Pronouncement : 01.09.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: These appeals at the instance of the assessee are directed against the order of the ld. CIT(Exemptions) Bangalore both dated 27.12.2024 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024- 25/1071624450(1) cancelling the registration u/s 12AB of the Act and DIN & Notice No. ITBA/EXM/F/EXM45/2024- 25/1071624556(1) cancelling the approval u/s 80G of the Act of the Income Tax Act, 1961 (in short “The Act”). 2. First, we take up ITA No.352/Bang/2025 for adjudication. In this appeal, the assessee has raised the following grounds of appeal:- Printed from counselvise.com ITA Nos.352 & 353/Bang/2025 Okkaliga Gowda Seva Sangha Kadaba, Dakshina Kannada Page 2 of 7 3. Brief facts of the case are that on receipt of application in form 10AB dated 05.06.2024 for the registration u/s 12AB of the Act, the ld. CIT(E) assigned the case to the JAO for verification. The Printed from counselvise.com ITA Nos.352 & 353/Bang/2025 Okkaliga Gowda Seva Sangha Kadaba, Dakshina Kannada Page 3 of 7 JAO issued letters/notices through official mail/post calling for the details/documents. 3.1 The ld. CIT(E) observed that the assessee entity is a trust registered on 5.4.2023. During the F.Y 2023-24, the assessee received donations of Rs.1,27,30,995/-. The assessee has claimed that it has made payments to the extent of Rs.1,03,92,899/- 3.2 The ld. CIT(E) further observed that the major expenses are towards purchase of land and building construction. The assessee spent Rs.23,34,680/- on purchase of land and spent Rs.80,25,219/- towards building construction. The ld. CIT(E) is of the opinion that the assessee has not spent any amount towards charitable activities of trust. The assessee has utilized donations only for the purchase of land and construction of building. 3.3 In view of the above fact, the ld. CIT(E) came to the conclusion that the donations received during the year were not put into use towards the charitable activities of the trust and accordingly held that the activities made by the assessee trust are not in a charitable nature. Hence the application in Form 10AB dated 5.6.2024 filed for registration u/s 12AB of the Act was rejected and registration was cancelled by the ld. CIT(E). 4. Aggrieved by the order of ld. CIT(E) dated 27/12/2024, the assessee filed the present appeal before this Tribunal. 5. Before us, the ld. A.R. of the assessee submitted that the ld. CIT(E) cancelled the registration only by holding that assessee has not spent any amount towards the charitable activities of the trust and the assessee has utilized donations only for the purchase of land and construction of building. Further the ld AR submitted that Printed from counselvise.com ITA Nos.352 & 353/Bang/2025 Okkaliga Gowda Seva Sangha Kadaba, Dakshina Kannada Page 4 of 7 for a charitable activity to be undertaken, the trust needs an establishment and for which investment is made in the capital asset. Lastly the ld AR submitted that nothing is brought on record to show that the activity is non-charitable in nature. 6. Ld. D.R. on the other hand relied on the order of ld. CIT(E) and requested to dismiss the appeal as the assessee has utilized donations only for the purchase of land and construction of the building. 7. We have heard the rival submissions and perused the materials available on record. We are of the firm opinion that for the purpose of granting registration, the ld. CIT(E) shall call for such documents or information or make such inquiry as he/she thinks necessary in order to satisfy himself/herself about the twin object:- (a) the genuineness of the activity of the trust and (b) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its object. We are also of the opinion that at the time of granting registration the ld. CIT(E) should not steps into shoes of the AO & in the guise of Registration proceeding starts the assessing the Income of the assessee Trust. On going through the order of the ld. CIT(E), we observe that the only contention for rejecting the application of registration is that the assessee has utilized donations only for the purchase of land and construction of the building which according to ld. CIT(E) is not in a charitable nature. It is not in dispute that the activities of the assessee trust have not commenced. We do agree with the contention of the ld. AR of the assessee that for a charitable activity to be undertaken, the trust needs an establishment and for which the applications were made in purchase of land & construction of the building. Therefore, Printed from counselvise.com ITA Nos.352 & 353/Bang/2025 Okkaliga Gowda Seva Sangha Kadaba, Dakshina Kannada Page 5 of 7 the purchase of the land & the construction of the building are also for the purposes of the charitable object of the Trust. We are of the considered opinion that the ld. CIT(E) without giving any cogent reasons had merely affirmed that the purchase of land & construction of the building is not in a charitable nature. We also agree with the contention of the ld. AR of the assessee that merely because the assessee trust has purchased land & started construction of the building for the purpose of achieving the aims & objectives of the trust, it cannot be said that it is not in a charitable nature. Further the ld. CIT(E) also not brought any material on record to suggest that these activities are non-genuine or non charitable in nature. This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue of registration to the file of ld. CIT(E) to decide in accordance with law. The ld. CIT(E) shall verify the object clause of the Trust Deed & satisfy himself about the purposes of the purchase of land & construction of the building & see whether they are in accordance with the object of the Trust or not? Further the ld. CIT(E) shall also call for & verify further activities carried on the said building & its present status along with the other activities of the Trust. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. We also direct the assessee to produce/submit all the necessary details/documents/record/ financials/reports in support of its claim. It is ordered accordingly. 8. In the result, appeal of the assessee is partly allowed for statistical purposes. 9. Now we take up ITA No.353/Bang/2025, wherein the assessee has raised following grounds of appeal: Printed from counselvise.com ITA Nos.352 & 353/Bang/2025 Okkaliga Gowda Seva Sangha Kadaba, Dakshina Kannada Page 6 of 7 10. Since we have remitted the entire issue of registration u/s 12AB of the Act to the file of ld. CIT(E), we deem it fit and proper to remit this issue of approval u/s 80G of the Act to the file of ld. CIT(E) to decide afresh in accordance with law as the ld. CIT(E) had rejected the approval u/s 80G(5) of the Act by mentioning the same reason while rejecting the registration u/s 12AB of the Act . It is ordered accordingly. Printed from counselvise.com ITA Nos.352 & 353/Bang/2025 Okkaliga Gowda Seva Sangha Kadaba, Dakshina Kannada Page 7 of 7 11. In the result, appeal filed by the assessee in ITA No.353/Bang/2025 is also partly allowed for statistical purposes. 12. In the combined result, both the appeals filed by the assessee are partly allowed for statistical purposes. Order pronounced in the open court on 1st Sep, 2025 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 1st Sep, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. Printed from counselvise.com "