SPANDAN FOUNDATION,COIMBATORE V. CIT EXEMPTIONS, CHENNAI

ITA 160/CHNY/2025

AI Insights

The case involves Spandan Foundation, a trust registered under section 12A of the Income-tax Act, which sought approval under section 80G(5) for its charitable activities. The CIT(E) initially rejected the application, citing that the trust's primary activity of organizing medical conferences, sponsored by pharmaceutical companies, did not qualify as a charitable activity. The Tribunal found that the CIT(E)'s rejection was based on an incorrect application of the law, particularly regarding the commercial nature of the conferences and the financial threshold under section 2(15) of the Act. The Tribunal emphasized that organizing academic or professional conferences does not inherently imply commercial intent and that the 20% financial threshold should be assessed during income assessment under sections 11-13, not at the approval stage under section 80G.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361349 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Other Referred Cases: Fifth Generation Education Society v. CIT 185 ITR 634 (All.), Anugraha Education Trust vs. CIT(E) [2025] 173 taxmann.com 852 (Banglore-Trib)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. JUSTIN
• Assessee Lawyers: N. ARJUN RAJ
• Keywords: Set aside; Opportunity of being heard
• Section: 11; 12A; 80G

Judgement Text

"आयकर अपीलीय अिधकरण, ‘सी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0019ी जॉज जॉज क े, उपा एवं \u0019ी जगदीश, लेखा सद' क े सम BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.160/Chny/2025 Spandan Foundation, 66, Race Course Road, Coimbatore – 641 018. Vs. The Commissioner of Income Tax (Exemptions), Chennai. [PAN: ABFTS 5974F] (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीला थ: की ओर से/ Appellant by : Shri N. Arjun Raj, Advocate <=थ: की ओर से /Respondent by : Shri V. Justin, CIT सुनवा ई की ता रीख/Date of Hearing : 07.05.2025 घोषणा की ता रीख /Date of Pronouncement : 23.05.2025 आदेश / O R D E R PER JAGADISH, A.M Aforesaid appeal filed by the assessee arises out of the order of Learned Commissioner of Income Tax (Exemptions), Chennai [hereinafter “CIT(E)”] dated 19.11.2024. 2. The only effective ground of appeal in this appeal of assessee is against rejection of application seeking approval u/s 80G(5) of the Income-tax Act, 1961 (hereinafter “the Act”). ITA No.160/Chny/2025 :- 2 -: 3. The assessee is a trust registered u/s. 12A of the Act and has made an application in Form-10AB seeking approval under clause (iv) B of first proviso to sub section (5) of Section 80G of the Act. The Ld. CIT(E) has rejected the application holding that the trust is primarily engaged in conduct of conference for medical fraternity, sponsored by various companies, who also nominates the participants i.e., doctors. The Ld. CIT(E) held that the holding conference is not charitable activity in nature as the same was sponsored by the donors, which may be commercial pharmaceutical organization and does not under the heads of education or medical relief as claimed by the Trust. The Ld. CIT(E) also examined the financial of the trust and noted that trust’s only source of income was from medical conference income i.e 100% of its income earned was in the nature of commercial only and therefore even if trust is considered for advancement of general public utility, it exceeded the threshold of 20% laid down in proviso to section 2(15) of the Act. The Ld CIT(E) has further observed that surplus alone for the year ending 31.03.2023 was Rs. 45.8% which is more than 20% of the limit prescribed in Section 2(15) of the Act ITA No.160/Chny/2025 :- 3 -: 4. The Ld Authorized Representative (AR) of the assessee vehemently contested these findings and submitted that the analysis of receipts by the CIT(E) was incorrect both in law and in fact. It was argued that the 20% threshold prescribed under the proviso to section 2(15) is relevant only for the purposes of assessing the income u/s. 11 and does not constitute a ground for rejecting approval under section 80G at the time of application. The AR placed reliance on the judgment of the Hon’ble Allahabad High Court in the case of Fifth Generation Education Society v. CIT 185 ITR 634 (All.) and ITAT decision in the case of Anugraha Education Trust vs. CIT(E) [2025] 173 taxmann.com 852 (Banglore-Trib) 5. On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of Ld CIT(E) and argued that application was correctly rejected. 6. We have heard the rival submissions and perused the material available on record. The assessee has been granted registration u/s. 12A of the Act on 30.01.2023 for the A.Y 2023-24 to 2025-26 and has also granted provisional registration u/s. 80G(5) of the Act on 28.02.2023. The primary basis for rejection appears to be the alleged ITA No.160/Chny/2025 :- 4 -: commercial nature of the conferences organized and the quantum of receipts from pharma companies and participating doctors. However, organizing academic or professional conferences per se does not ipso facto imply commercial intent. Whether the purpose and nature of such events align with charitable objectives particularly education or advancement of general public utility requires a detailed and holistic analysis. Moreover, the application of the 20% threshold under the proviso to section 2(15) has been a subject of judicial scrutiny, and we find force in the assessee’s contention that this aspect is better examined during the assessment of income under sections 11–13, rather than at the stage of approval under section 80G, more so when the trust has already been granted 12A registration. In light of the above and in the interest of justice, we are of the view that the matter requires reconsideration. We accordingly set aside the impugned order of the CIT(E) and restore the matter to his file with a direction to re- examine the application afresh in accordance with law. The CIT(E) shall consider the assessee’s submissions, financial statements, relevant judicial pronouncements, and provide a reasoned order after granting an opportunity of being heard. ITA No.160/Chny/2025 :- 5 -: 7. In the result, the appeal filed by the assessee is allowed for statistical purposes only. Order pronounced on 23rd May, 2025. Sd/- Sd/- (जॉज जॉज क े) (George George K) उपा / Vice President (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 23rd May, 2025. EDN/- आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF "