TaxTMI 
TaxTMI 
2026 (8) TMI 764
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....plication in Form No. 10AB seeking approval under section 80G was rejected. 2. In ITA No. 242/Jodh/2024, the assessee has raised the following grounds of appeal: 1. The ld. CIT (E) has erred in not granting registration under section 12A/12AA/12AB which is bad in law and bad on facts. 2. The appellant craves leave to add, alter, amend or vary from the above the above grounds of appeal at or before the time of hearing. 3. In ITA No. 243/Jodh/2024, the assessee has raised the following grounds of appeal: 1. The ld. CIT (E) has erred in not granting approval under section 80G which is bad in law and bad on facts. 2. The appellant craves leave to add, alter, amend or vary from the above the above grounds of appeal at or before the time of hearing. Facts of the Case 4. The assessee filed Form No. 10AB on 27.09.2023 seeking regular registration under section 12AB. After considering the assessee's partial compliance with the notices, the learned CIT(E) held that the assessee had not clarified whether the activities contemplated under its objects would be undertaken free of cost and treated those objects as commercial in nature. He further qu....
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.... 9. It was further submitted that the objects relating to old-age homes, orphanages and financial assistance to organisations engaged in the rehabilitation of poor, needy and destitute persons were directly connected with relief to the poor. The objects relating to skill development centres, employment assistance to educated unemployed persons, vocational training for women, computer laboratories and examination centres were connected with education, skill development and public welfare. The enabling object permitting the assessee to receive fees, donations, subscriptions and gifts was intended only to facilitate the fulfilment of its principal objects and could not, by itself, convert the assessee into a commercial organisation. 10. The learned AR submitted that the objects were covered by the definition of "charitable purpose" under section 2(15). According to him, a mere possibility that an amount may be charged while undertaking an activity cannot, without examining its predominant purpose and the manner in which it is actually carried on, justify the conclusion that the object itself is commercial. 11. In relation to the genuineness of the activities, the learned AR sub....
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....the assessee to satisfactorily establish the genuineness of the related expenditure and activities. 16. As regards the application under section 80G, the learned DR relied upon the findings that registration under section 12AB had been denied and that the application in Form No. 10AB was not filed within six months from the stated commencement of activities in June 2022. He submitted that the learned CIT(E) had no statutory power to condone the delay in filing the application and, therefore, the application was rightly treated as non-maintainable. 17. We have considered the rival submissions and perused the material placed on record. The learned CIT(E) rejected the application for registration under section 12AB principally on the grounds that certain objects of the assessee were commercial in nature and that the genuineness of its activities was not established. The learned CIT(E) examined the objects relating to the establishment and operation of parks, gardens, gymnasiums, sports facilities, Dharamshalas, rest houses, hospitals, clinics, blood banks, health centres, old-age homes, orphanages, skill-development centres, vocational training centres for women, computer labora....
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....f a trustee. 21. Upon examination of the objects, we find that the establishment and support of parks, gardens, sports facilities, Dharamshalas, medical facilities, old-age homes, orphanages, skill-development centres and vocational training facilities are not inherently commercial. These objects are capable of falling within medical relief, relief to the poor, education and advancement of objects of general public utility. The impugned order does not identify any object permitting the distribution of profits or application of the assessee's income for the personal benefit of its members. 22. It is true that the assessee did not furnish a specific answer to the query whether every proposed facility would be provided free of cost. Such non-compliance warranted scrutiny. However, the statutory definition of "charitable purpose" does not require every charitable service to be provided entirely free of cost. The mere possibility of charging a fee does not establish that the predominant object is the carrying on of business. The character of the activity depends upon its predominant purpose, the manner in which it is actually carried on and the application of the resulting income.....
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....e activities actually carried on are not genuine or are contrary to the stated objects. 29. Questions concerning the application of income, allowability or adequacy of particular expenditure, accumulation of funds and the consequences arising under sections 11 and 13 ordinarily fall for determination during the assessment proceedings. Such matters would not justify rejection of registration unless the material establishes that the activities are a camouflage, are not genuine or are contrary to the stated objects. 30. In the present case, the objects of the assessee are charitable in nature and the impugned order itself acknowledges that certain charitable activities were undertaken. The inference that the objects were commercial is based primarily upon the absence of a specific statement that every facility would be provided free of cost. The mere possibility of charging a fee does not, by itself, convert an otherwise charitable object into a commercial object. What is relevant is the predominant purpose of the activity, the manner in which it is undertaken and the application of the resulting income. 31. Similarly, the finding regarding non-genuineness is based upon the r....