ROTARY BANGALORE GULMOHAR TRUST,BANGALORE V. CIT(EXEMPTIONS) , BANGALORE

ITA 241/BANG/2025

AI Insights

The case involves the Rotary Bangalore Gulmohar Trust, which appealed against the decision of the Commissioner of Income Tax (Exemptions), Bangalore, rejecting their application for registration under section 12AB of the Income Tax Act, 1961. The CIT(E) had rejected the application on grounds of insufficient activity and expenditure towards the Trust's stated charitable objects during the financial year 2023-24. The Tribunal found that the CIT(E) had erred in rejecting the application without proper opportunity for the Trust to clarify its intended activities and without considering the preparatory nature of initial years of operation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396816 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRAMANIAN
• Keywords: Set aside; Capital expenditure

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No. 241/Bang/2025 Assessment Year: NA Rotary Bangalore Gulmohar Trust, No.388, 4th Main, 2nd Block, RT Nagar, Bangalore – 560 032. PAN – AAETR 5758 E Vs. The Commissioner of Income Tax (Exemptions), Bangalore. APPELLANT RESPONDENT Assessee by : None Revenue by : Shri Subramanian, JCIT (DR) Date of hearing : 07.04.2025 Date of Pronouncement : 28.05.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the CIT(E), Bangalore dated 13/12/2024 in DIN No. ITBA/EXM/F/EXM45/2024-25/1071195117(1). 2. This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Exemptions), Bangalore [CIT(E)], dated 13.12.2024, whereby the application filed by the assessee under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was rejected. ITA No.241/Bang/2025 Page 2 of 4 . 3. The assessee filed an application for registration under section 12AB of the Act. The ld. CIT(E) rejected the application primarily on the following grounds: • The assessee had not carried out any substantial activity in alignment with its stated objects during the financial year 2023– 24, except for incurring capital expenditure of ₹1,80,000 for the purchase of a testing machine; • The assessee failed to furnish current year financials and details of activities undertaken; • No substantial expenditure was incurred towards its objects, and there was a lack of documentary evidence or proof of charitable activities. 4. Based on the above, the ld. CIT(E) held that the application for the regular registration was premature and rejected the same due to non-commencement or insufficient activities. 5. Being aggrieved by the order of learned CIT exemption, the assessee is in appeal before us. 6. Before us, the learned Departmental Representative (DR) reiterated the findings of the ld. CIT(E) but stated that the Department has no objection if the matter is remanded to the ld. CIT(E) for fresh consideration as per law. 7. We have carefully considered the submissions of the learned DR and examined the materials on record. From the preceding discussion, we note that the rejection of the application for regular registration ITA No.241/Bang/2025 Page 3 of 4 . solely on the basis of non-commencement or insufficiency of activities or substantial expenditure has not been incurred is not consistent with the scheme of the Act. It is necessary to appreciate the fact that initial years may involve lot of preparatory work. Therefore, the activities may not be substantial during the initial heirs. Furthermore, the learned CIT exemption has also observed that the necessary documents justifying the activities undertaken by the assessee were not furnished. In view of the above, we are of the considered opinion that the ld. CIT(E) erred in rejecting the assessee’s application without affording a proper opportunity or seeking clarifications regarding the intended activities. In the interest of justice, we therefore deem it appropriate to set aside the impugned order and restore the matter to the file of the CIT(E) with a direction to re-examine the application afresh. The CIT(E) shall grant due opportunity to the assessee to furnish the relevant details, documents, and explanations, and shall pass a speaking order in accordance with law. Hence, the ground of appeal of the assessee is allowed for statistical purposes. 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in court on day of May, 2025 Sd/- Sd/- (SOUNDARARAJAN K) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 28th May, 2025 / vms / ITA No.241/Bang/2025 Page 4 of 4 . Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "