TaxTMI 
TaxTMI 
2026 (5) TMI 738
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....d activities. It has filed an online application in Form 10AB on 16.10.2024 before the CIT (Exemptions), Delhi seeking registration under section 12A(1)(ac) (iv) of the Act. The CIT(E) passed an order in Form 10AD dated 30.05.2025, under section 12AB(1)(b)(ii) (B) and rejected the registration under section 12A on the following grounds: a) the applicant had chosen an inapplicable limb, namely section 12A which is intended for cases where an existing registration has become inoperative by virtue of the first proviso to section 11(7); whereas, in this case, there was no prior operative registration at all. (b) the applicant was not engaged in charitable activity but in commercial provision of services to schools for a fee. c) in AY 2024-25, the applicant had shown business receipts of Rs. 16,01,700 on which TDS was deducted u/s 194JB. d) the applicant had itself filed ITR-6 in AYs 2023-24 and 2024-25, evidencing its own understanding that its activities were business-oriented; and e) the financials showed receipts from "sale of services" of Rs. 24,37,936 in FY 2023-24 and Rs. 10,22,560 in FY 2022-23, which were commercial in nature and exc....
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....ration can be refused at threshold (see, e.g., American Hotel & Lodging Association Educational Institute v. CBDT, 301 ITR 86 (SC) which held that scrutiny of genuineness is permissible at registration stage). 5. The learned DR defended the CIT(E)'s order stating that the CIT(E) examined the Commercial receipts and identified objective financial indicators such as i) business receipts of Rs. 16,01,700/- in AY 2024-25 with TDS under section 194JB; ii) "Sale of services" of Rs. 24,37,936 in FY 2023-24 and Rs. 10,22,560 in FY 2022-23; and iii) filing of ITR-6 for AYs 2023-24 and 2024-25 and relied on Queen's Education Society v. CIT, 372 ITR 699 (SC), where the Court clarified that where surplus and fee- based activities reveal a profit motive, the institution may lose its charitable character. While that case dealt with section 10(23C), the principle is equally relevant: the authority must look at the substance of activities, not merely stated objects. 6. The learned DR submitted that there is no vested right to registration in presence of commercial dominance and relied on Ahmedabad Urban Development Authority v. ACIT, 449 ITR 1 (SC)) to u....
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.... Commissioner is justified in examining accounts and activities to see if they are in line with stated objects and to refuse registration if they are not. The Id DR stressed that use of ITR-6 and 194JB TDS as strong corroborative facts to assessee's own understanding that it is engaged in business/professional services. The Id DR stated that the financials show significant "sale of services" receipts Rs. 24.37 lakh and Rs. 10.22 lakh in two successive years exceeding 20% of total receipts. While the 20% threshold appears in the context of the proviso to section 2(15) for GPU cases, the point here is more basic: the revenue profile is overwhelmingly fee-based, with demonstrated pattern of voluntary donations, grants or non-commercial support typical of genuine charities. Such a profile supports the Commissioner's conclusion that activities are commercial and that the assessee has failed to discharge its onus of establishing genuineness. 10. The CIT(DR) submitted that the Scope of enquiry at registration stage includes examination of accounts and relied on the Delhi High Court in DIT(E) v. Meenakshi Amma Endowment Trust, 354 ITR 219 which held that the Commissioner is just....
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....otion of any structure for holistic development of children, youth and adults 7. To establish support systems that create a culture of education through farming and waste management and inculcate values & skills that empower people to make environmentally friendly choices. 8. To research & advocate an providing education & development through environment, farming and waste management. 13. It is in this factual backdrop of rival pleadings that we advert to the first and foremost issue herein as to under which limb the assessee's case is covered u/s 2(15) of the Act. The Revenue's endeavour all along is that it is an entity engaged in advancing "object of general public utility"; and, therefore, its case is covered under the proviso read with clauses (1) and (2) thereto since it has been found to have been carried out commercial activities going by the specified 20% threshold of the total receipts. 14. We find no merit in the Revenue's instant first and foremost contention as going by the assessee's above extracted object clauses "To promote protection of environment and to spread awareness"; it is covered under "fifth" limb of section 2(15) of the Act which a....