2023 (7) TMI 683 - AT - Income Tax

Grant of registration u/s 12AB 80G Denied - receipts from parents of children - assessee is a society engaged in charitable activity for welfare of children suffering from autism serious and non-curable disease - HELD THAT - In so far as 1st reason of receipts from parents of children is concerned, we find that (i) the assessee has not received amounts from parents of all 13 children residing in assessee s campus, the receipts were from parents of 7 children only; and (ii) the receipts are not systematic i.e. neither in all months nor of identical or constant amounts. Furthermore, as argued by Ld. AR, there is no agreement creating any obligation or commitment on the part of parents to make payment to assessee. These factual aspects clearly demonstrate that the payments made by parents are in the nature of mere voluntary contributions and not in the nature of recovery of charges/fee. Had it been from parents of all children and it would have been systematic in terms of periodicity and amount, there might have been a signal of charge/fee but that is absent. Therefore, the Ld. CIT(E) is not correct in perceiving the amounts received by assessee as charge/fee. Regarding 2nd reason of payments to Shri S.K. Shrivastava and Shri Naveen Agrawal, on perusal of evidences placed by Ld. AR, we prima facie find that the payments are in the nature of re-imbursements of actual expenses incurred by those persons for the purposes of assessee. Regarding 3rdreason of issuance of receipts before grant of provisional registration , Ld. AR has demonstrated that there had been a confusion due to MM/DD/YYYY format in place of DD/MM/YYYY only and also there is a clear assertion by Ld. AR that the assessee has not issued any certificate in Form No. 10BE for donations prior to grant of provisional registration. During hearing, the Ld. DR, though dutifully supported the order of CIT(E), but could not rebut or contradict the submissions of Ld. AR. Thus concluded none of the reasons assigned by Ld. CIT(A) for rejection of registration is valid. Therefore, we are inclined to quash both of the impugned orders passed by Ld. CIT(E) denying registration to assessee u/s 12AB and 80G. We also direct Ld. CIT(E) to grant registration to the assessee u/s 12AB and 80G as applied for. Decided in favour of assessee.

Summary

Issues:
The judgment involves the rejection of applications for registration under sections 12AB and 80G of the Income-tax Act, 1961 by the Commissioner of Income-tax (Exemption), Bhopal, based on various reasons.

Registration under Sections 12AB and 80G:
The assessee, a society engaged in charitable activities for children with autism, applied for registration under sections 12AB and 80G. The Commissioner rejected the applications, citing reasons such as receiving amounts from parents of children, making payments to certain parents, and issuing donation receipts before provisional registration. The assessee challenged these reasons, arguing that the amounts received were voluntary contributions, payments to parents were reimbursements for expenses incurred for the society, and there was a date confusion regarding the issuance of donation receipts. The Tribunal found in favor of the assessee, noting that the reasons given by the Commissioner were not valid. The Tribunal directed the Commissioner to grant registration under sections 12AB and 80G to the assessee.

Conclusion:
The Appellate Tribunal ITAT Indore allowed the appeals filed by the assessee, setting aside the orders of the Commissioner of Income-tax (Exemption) denying registration under sections 12AB and 80G. The Tribunal directed the Commissioner to grant registration to the assessee under the mentioned sections, emphasizing that the reasons provided for rejection were not valid.