RYAN INTERNATIONAL FOUNDATION,KODAGU V. COMMISSIONER OF INCOME TAX(EXEMPTIONS) , BANGALORE

ITA 603/BANG/2025

AI Insights

The case involves M/s. Ryan International Foundation appealing against the rejection of their provisional registration under section 12AB of the Income Tax Act by the CIT(E), Bengaluru. The primary contention was the erroneous rejection based on the alleged non-compliance with the trust deed's objectives and the significant expenditures incurred, which the CIT(E) found not commensurate with the trust's objectives. The tribunal noted discrepancies in the financial documentation, particularly concerning electricity expenses, and remitted the case back to the CIT(E) for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398164 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIGNESH K

Judgement Text

"IN INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI. LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI. SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.603/Bang/2025 Assessment Year : NA M/s. Ryan International Foundation, Philip’s Compound, Koyanadu Post, Devarakollimade, Madkeri, Kodagu District – 571 201. PAN : AAETR 5064 M Vs. CIT(E), Bengaluru. APPELLANT RESPONDENT Assessee by : Shri. Vignesh K, CA Revenue by : Shri. Muthu Shankar, CIT(DR)(ITAT), Bangalore. Date of hearing : 02.06.2025 Date of Pronouncement : 03.06.2025 ORDER Per Laxmi Prasad Sahu, Accountant Member : This appeal filed by the assessee against the Order passed by the CIT(E) regarding rejection of the provisional registration granted vide Order dated 24.02.2025 in Form No.10AD on the following grounds of appeal: 1. That the order of the learned Commissioner of Income Tax (Exemptions) in so far isprejudicial to the interest of the appellant is bad and erroneous in law and against the facts and circumstances of the case. Grounds on mandatory clause in the trust Deed: 2. That the learned Commissioner of Income Tax (Exemptions) erred in not considering the fact that the mandatory clauses were inadvertently omitted. ITA No.603/Bang/2025 Page 2 of 12 3. The learned Commissioner of Income Tax (Exemptions) erred in not recognizing that the supplementary/amendment deed was duly made and executed on 10.02.2025, prior to the passing of the order of rejection. Grounds on significant activities of the Trust: 4. That the learned Commissioner of Income Tax (Exemptions) erred in not denying the fact that one of the appellant's main objectives is provide shelter to and empowerment of women who fall under marginalized groups. 5. That the learned Commissioner of Income Tax (Exemptions) erred in not appreciating the fact that 'empowerment of women' comes under 'advance of any other objects of general public utility'. 6. That the learned Commissioner of Income Tax (Exemptions) erred in not denying the fact that the appellant has incurred major expenses towards shelter to women who fall under marginalized groups. Grounds on expenses incurred towards other activities 7. That the learned Commissioner of Income Tax (Exemptions) erred in not considering the tact that the awareness drives, nutrition and health education, etc., was provided by the employees only who are health workers. Each of the above grounds is without prejudice to one another, the appellant craves the leave of the I lon'ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify all or any of the grounds of appeal either before or at the time of hearing of this appeal. 2. Learned AR filed written submissions which is as under: ITA No.603/Bang/2025 Page 3 of 12 ITA No.603/Bang/2025 Page 4 of 12 ITA No.603/Bang/2025 Page 5 of 12 ITA No.603/Bang/2025 Page 6 of 12 ITA No.603/Bang/2025 Page 7 of 12 ITA No.603/Bang/2025 Page 8 of 12 ITA No.603/Bang/2025 Page 9 of 12 ITA No.603/Bang/2025 Page 10 of 12 3. In addition to the above, the learned Counsel submitted that learned CIT(E) has wrongly rejected the application whereas the assessee has incurred expenditure as per its object mentioned in the trust deed. 4. On the other hand, learned DR relied on the Order of the lower authorities and submitted that huge expenditure has been incurred which is not commensurate as per the objectives of the trust deed and the AO and Range Head, after verifying the documents, have not recommended for the registration as per their observation which is incorporated in the CIT(E)’s Order and submitted that ITA No.603/Bang/2025 Page 11 of 12 as per observation of the CIT(E), the institution is not eligible for registration under section 12AB of the Act. 5. After hearing both the sides and perusing the entire material available on records, we noted from the documents that Trust was registered on 07.11.2021 and applied for registration on 24.08.2024 in Form 10AB. The case was transferred to jurisdictional AO (JAO) and Range Head. They have submitted their reports. The AO observed that the assessee has incurred some expenditure which are not in accordance with the trust deed and it is high and not insignificant and the nexus between the aharitable activity and the amount spent towards the expenditure and assessee was directed to amend its trust dded and it was directed to file the amended trust deed by 31.12.2024. Later the trust deed was amended on 10.02.2025 and there was delay in filing the same before the concerned authorities and Order was passed on 24.02.2025. We have also gone through the financial statement submitted by the assessee. We noted that the assessee has incurred huge expenditure under electricity head and in the balance sheet as on 31.03.2024, the assessee has shown under the current liabilities under different heads as payable. In the Invcome & expenditure account a sum of Rs. 37,52,794/- is debited as on 31.03.2025 as electricity expenses , We are of the view that the expenditure incurred and debited into income and expenditure account which requires examination in depth with the external vouchers and during the hearing it was clarified that if any entry is made without support of external voucher, it should not be treated as expenditure incurred for the purpose of object of the society and it was also clarified that the lower authorities will examine beneficiaries with their aadhaar numbers physically and the assessee will assist to the departmental officers . With this direction, the case is remitte back to the CIT(E) for examination and assessee is also directed to substantiate its case with the necessary documents and not to seek unnecessary adjournments for early disposal of the case. ITA No.603/Bang/2025 Page 12 of 12 6. In the result, appeal of the assessee is allowed for statistical purposes. Pronounced in the court on the date mentioned on the caption page. Sd/- Sd/- (SOUNDARARAJAN K) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore, Dated : 03.06.2025. /NS/* Copy to: 1. Appellant 2. Respondent 3. Pr.CIT4.CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "