SONAI GLOBAL FOUNDATION,SANGLI V. CIT EXEMPTION, PUNE

ITA 615/PUN/2025

AI Insights

The case involves two appeals by Sonai Global Foundation against the orders of the Commissioner of Income Tax (Exemption), Pune, which rejected the foundation's applications for registration under section 12A and for approval under section 80G of the Income Tax Act, 1961. The CIT(E) had rejected these applications primarily on the grounds of non-compliance, without further opportunity for the assessee to comply. The Tribunal noted that the CIT(E) had not adequately considered the objects and activities of the foundation, which are crucial in determining the eligibility for registration under section 12A. The Tribunal referenced a Supreme Court decision which clarified that entities engaged in business activities are not eligible for registration under section 12A. The Tribunal's decision to remand the case was influenced by the need for a thorough examination of the foundation's activities and compliance with legal requirements.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361044 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Other Referred Cases: ACIT(Exemption) Vs. Ahmedabad Urban Development Authority (SC)/[2022] 449 ITR 1(SC)[19-10-2022]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHINAY KUMBHAR
• Assessee Lawyers: AMOL R. KULKARNI
• Keywords: Depreciation; Gift
• Section: 12A; 80G

Judgement Text

" आयकर अपीलीय अिधकरण ”बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.614 & 615/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year: - Sonai Global Foundation, Office No.11 to 14, Shriram Plaza, Ram Mandir Corner, Sangli – 416416. Maharashtra. V s. The CIT(Exemption), Pune. PAN: ABHCS8830R Appellant/ Assessee Respondent / Revenue Assessee by Shri Amol R. Kulkarni – AR Revenue by Shri Abhinay Kumbhar – CIT(DR) Date of hearing 07/05/2025 Date of pronouncement 23/05/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: These two appeals filed by the assessee are against the separate orders of ld.Commissioner of Income Tax(Exemption), Pune under section 12A of the Income Tax Act, 1961 dated 15.01.2025 and order under section 80G of the Income Tax Act, 1961 dated 15.01.2025. These Two Appeals were heard together and are being disposed of by this common order. We treat appeal in ITA ITA Nos.614 & 615/PUN/2025 [A] 2 No.614/PUN/2025 as “lead case”. The Assessee in ITA No.614/PUN/2025 has raised the following grounds of appeal : “1. Commissioner of Income Tax (Exemptions) (hereinafter referred to as \"the learned CIT(E)], Pune erred on facts in rejecting the registration u/s 12A of the Income Tax Act, 1961. 2. The appellant contends that; the matter be remanded back to the file of learned CIT(E) since CIT(E) rejected the application due to \"non- compliance\" of the notice and also without giving any further opportunity to the appellant to the compliance. 3. The appellant contends that; the matter be remanded back to the file of learned CIT(E) since CIT(E) rejected the application in haste when sufficient time was available to decide the application on merits. 4. The appellant craves / leave to add/modify/delete / amend all / any of the grounds of appeal.” Submission of ld.AR : 2. Ld.AR filed a paper book containing 107 pages. Ld.AR submitted that ld.CIT(E) rejected the appeal of the Assessee only on the ground of non-compliance. Since Assessee failed to submit the details, ld.CIT(E) rejected the application. Ld.AR submitted that Assessee may kindly be provided one more opportunity to file details before the ld.CIT(E). Submission of ld.DR : 3. Ld.DR for the Revenue submitted that sufficient opportunity was provided by ld.CIT(E), but assessee failed to file details. ITA Nos.614 & 615/PUN/2025 [A] 3 Assessee has not given any reason for not filing the details. Therefore, the rejection order may be upheld. Findings & Analysis : 4. We have heard both the parties and perused the records. 4.1 The relevant paragraph of Statement of Facts filed by the Assessee are reproduced here as under : 1. the appellant is a non-profit Company incorporated on 15-02- 2022 under Section 8 of Companies Act, 2013 vide CIN:U85300PN2022NPL208633. ………………………. 3. The appellant is primarily incorporated as CSR Arm of Sonai Infrastructure Private Limited whereby CSR obligation of Sonai Infrastructure Private Limited can be discharged by carrying out various charitable activities through the appellant.” 4.2 It is observed that assessee is registered under Section 8 of the Companies Act. The Certificate of Incorporation issued by Assistant Registrar of Companies on 15.02.2022 is at page no.36 of the paper book. The Assessee has filed copy of the Memorandum of Association of the Assessee Company which is at page no.37 to 49 of the paper book. Ld.AR has accepted that Assessee is a Company incorporated under Companies Act. We have requested ld.AR to read the objects mentioned in the Memorandum, accordingly, ld.AR ITA Nos.614 & 615/PUN/2025 [A] 4 read out the objects. The relevant Objects are reproduced here as under : “3. To create, establish and support or aid in the creation, establishment and support of associations, institutions, centers, provident, Gratuity and Superannuation funds, trusts and conveniences calculated to benefit persons who are or have been Directors of or who are or have been employed by or who are serving or have served the Company or any company which is a subsidiary or associate of the Company or its predecessors in business or dependents or connections of such persons and to grant pensions and allowances and to make payments towards insurance for them. To undertake, carry out, promote, and sponsor rural development including any program for promoting the social and economic welfare of or the uplift of the Public in any rural area and to incur any expenditure of any program of rural development and to assist execution and promotion thereof either directly or through an Independent agency or in any other manner. Without prejudice to the generality of the foregoing \"programme of rural development\" shall be regarded as rural areas under Section 35CC of the income Tax Act of the also to include any programme for promoting the social and economic welfare of uplift of the Public in any rural area likely to promote and assist rural development, and that the words \"rural area\" shall include such areas as per income Tax Act, 1961, or any other Law relating to rural development for the time being in force and in order to implement any of the above mentioned objects or purposes, transfer without consideration or at such fair or concessional value and divest the ownership of any property of the Company to or in favour of any Public or local body or Authority or Central or State Government development or Trusts or Societies or Public institutions etc. engaged in rural development. To create any depreciation fund, reserve fund, sinking fund, insurance fund or any ITA Nos.614 & 615/PUN/2025 [A] 5 special or other fund whether for depreciating or for repairing, improving, replacing. renewing, extending, or maintaining any of the properties of the Company or for any other purpose whatsoever deemed beneficial to the company. 4. To buy, repair, alter, improve, exchange, let out on hire, import, and deal in the plant and machinery, equipment, vehicles, and other assets capable of being used in business which the Company is competent to carry on. 5. To rent or let on hire any movable or immovable properties or any rights, patents, or privileges, whether belonging to the Company or not on such rent and on such terms as the Company may think fit and to collect rents and income thereof. 6. To acquire from any person, firm or body corporate incorporated whether in India or elsewhere, technical information, know-how, process, operating data, plans, layouts, and blueprints useful for any business of the Company and to acquire any grant or license and other rights and benefits in the forgoing matters and things. 7. To build, construct, alter, Improve, maintain, enlarge, pull-down, remove or replace and to develop, work, manage, carry out and control buildings, offices, electric works, shops, stores, dwelling units and other works which the Company may think necessary and convenient for the purpose of the business of the Company, and which may seem calculated directly or indirectly to enhance the Company's interest. 8. To carry on any such activity that may seem to directly or indirectly enhance the value of the Company's property or rights with a view to improving, developing. rendering valuable or turning to account any ITA Nos.614 & 615/PUN/2025 [A] 6 property real or personal belonging to the Company or in which the Company may be interested and to do all such things as are incidental or conducive to attainment of the objects of the Company. 12. To accept donations, gifts with such conditions, restrictions, obligations, stipulations, and liabilities, as are not derogative to the provisions of any law. 15. To promote any Company or Companies for the purpose of acquiring all or any of property, rights, and liabilities of the Company. 17. To adopt such means of making known the business of the Company as may seem expedient and in particular by advertising in the press, by circulars, by purchase and exhibition of works of arts or interest, by publication of books and periodicals and by granting prizes, rewards and donations. 19. To procure recognition of the Company in any foreign country or place, and to establish branches, agencies, showrooms, depots sales and other offices or workshops in or outside India, and to discontinue and reconstitute such branches. 22. To adopt or give effect to any pre-incorporation or post incorporation agreements or arrangements or Contracts or any modifications and amendments thereto, arrived at between the Company's members, promoters and/or any Government authority (Central, State, Municipal, local or otherwise), company (whether incorporated in India or outside India), firm or person for promoting of the Company, provision of technical know-how to the Company and or in respect of any matters concerning the affairs and business of the Company.” ITA Nos.614 & 615/PUN/2025 [A] 7 4.3 Thus, it can be observed that some of the clauses of the Assessee are clearly showing that assesses intend to do business activity. The object of Hiring, Importing and Renting out Plant and Machinery shows the business activity which assessee intend to carry out under the garb of A Charitable Activity. Assessee also intend to acquire Operating data, Know-how for any business of the company. 4.4 After reading these Clauses, we specifically asked ld.AR for the Assessee, are these Clauses charitable as defined under Section 2(15) of the Act and aren’t they in the nature of business! Ld.AR accepted that some of these Clauses are in the nature of Business. We referred to decision of the Hon’ble Supreme Court in the case of ACIT(Exemption) Vs. Ahmedabad Urban Development Authority (SC)/[2022] 449 ITR 1(SC)[19-10-2022] to the ld.AR and asked him as per the said decision of Hon’ble Supreme Court any Trust which is engaged in the business activity shall not be eligible for registration u/s.12A of the Act. Ld.AR submitted that Assessee will modify the objects. At this juncture, ld.DR for Revenue submitted that Assessee has been formed to promote the activities of its parent ITA Nos.614 & 615/PUN/2025 [A] 8 company i.e.Sonai Infrastructure Private Limited. Ld.DR further submitted that therefore, Assessee’s Objects are not charitable in nature and its Objects are to promote or advertise its parent company Sonai Infrastructure Private Limited. Ld.DR also pointed out that during the year Assessee has received donation from Sonai Infrastructure Private Limited. 4.5 Ld.AR for the Assessee submitted that ld.CIT(E) has rejected the application only on the ground of non-compliance. Ld.CIT(E) had not verified the objects of the Assessee. 4.6 It is a fact that some of the objects of the assessee which we have reproduced above are not charitable as defined under Section 2(15) of the Act. It is also a fact that the assessee company is directly related to Sonai Infrastructure Private Limited. It is an admitted fact that assessee company is formed to carry out CSR obligations of its parent company. The Directors of Assessee are directly related to Sonai Infrastructure Private Limited. However, it is also a fact that ld.CIT(E) has not bothered to read the objects of the trust, though Assessee claims that it was submitted before ld.CIT(E). Be it as it may be, the fact remains that ld.CIT(E) has not ITA Nos.614 & 615/PUN/2025 [A] 9 applied his mind towards the objects of the assessee and activities of the assessee. Ld.CIT(E) has also not verified whether there is any violation of any other law applicable! In these facts and circumstances of the case, we set-aside the order of ld.CIT(E) passed u/s.12A of the Act, dated 15.01.2025 to ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity to the Assessee. Assessee shall file all necessary documents. Accordingly, Grounds of appeal raised by the assessee are allowed for statistical purpose. 5. In the result, appeal of the assessee is allowed for statistical purpose. ITA No.615/PUN/2025 6. Since we have set-aside the order u/s.12A to ld.CIT(E) for denovo adjudication, we also set-aside this current appeal in order u/s.80G of the Act, dated 15.01.2025 to ld.CIT(E) for denovo adjudication. Accordingly, Grounds of appeal raised by the assessee are allowed for statistical purpose. 7. In the result, appeal of the assessee is allowed for statistical purpose. ITA Nos.614 & 615/PUN/2025 [A] 10 8. To sum up, both appeals of the assessee are allowed for statistical purpose. Order pronounced in the open Court on 23 May, 2025. Sd/- Sd/- (VINAY BHAMORE) (DIPAK P.RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 23 May, 2025/ SGR आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "