ITAT Remands Rejection of Charitable Trust Registration Due to Insufficient Verification of Seminar Expenses and TDS Deductions [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has remanded the rejection of applications for registration citing insufficient verification of seminar expenses and TDS deductions by the Commissioner of Income Tax (Exemption) [CIT(E)].

The tribunal ruled that the Commissioner of Income Tax (Exemption) [CIT(E)] failed to adequately verify the trust’s seminar expenses and the implications of TDS deductions by pharmaceutical donors.

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Society on Promotion Activation and Research for Scientific Social Help (assessee), a charitable society founded by three oncologists Dr. Sushant Gupta, Dr. Samit Purohit, and Dr. Hari Goyal filed applications in Form 10AB for registration under Section 12A and approval under Section 80G of the IncomeTax Act.

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The CIT(E) rejected both applications, citing that the trust’s primary expenses on seminars and camps were not charitable, as they were not explicitly mentioned in the trust’s objects, and bills were mainly from hotels for food, banquets, and rooms.

The CIT(E) observed that donors, all pharmaceutical companies, deducted TDS under Section 194C, suggesting non-charitable activities. Aggrieved by the order of CIT(E), the assessee filed an appeal before ITAT.

The counsel for the assessee argued that objects, as per the trust deed included organizing seminars and conferences for continuing medical education, providing medicines to the poor, and donating to similar trusts.

The Counsel for the assessee submitted financials showing significant expenses on medical relief and donations to other trusts. The assessee contended that seminars were integral to medical relief, educating doctors on advanced treatments, and that hotel expenses were necessary for hosting professional conferences.

The assessee relied on the Delhi High Court’s decision in Aroh Foundation vs. CIT(E) [2024], which held that TDS deductions under Section 194C by donors do not alter the charitable nature of receipts unless barred by the provision to Section 2(15) of the Income Tax Act.

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The two-member bench comprising Yogesh Kumar US (Judicial Member) and Brajesh Kumar Singh (Accountant Member) observed that the CIT(E) made general remarks without verifying the purpose of seminars, the nature of medical relief expenses, or the context of TDS deductions.

The tribunal noted that clause 26 of the trust deed explicitly included conferences and seminars, and precedents also supported their charitable nature if linked to the trust’s objects. The tribunal observed that the CIT(E) failed to examine the purpose of the seminars or the trust’s other charitable expenditures. Therefore, the tribunal set aside the rejection orders.

The tribunal remanded the matters to the CIT(E) for fresh adjudication and directed a verification of the trust’s activities, expenses, and TDS deductions, with a reasonable opportunity for the assessee to be heard. The appeals of the assessee were allowed for statistical purposes.

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