Dhwani Shristi Foundation Vs CIT (Exemptions) (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has overturned orders issued by the Commissioner of Income Tax (Exemptions) [CIT(E)] that had cancelled the provisional registration of Dhwani Shristi Foundation under Section 12AB of the Income Tax Act, 1961, and its approval under Section 80G of the Act. The Tribunal found the CIT(E)’s reasoning, primarily based on the quantum of expenditure and purported non-commencement of activities, to be flawed and contrary to established legal principles and judicial precedents.
Dhwani Shristi Foundation, a public trust registered on June 28, 2023, is engaged in charitable activities, including providing medical aid to underprivileged sections, which falls under Section 2(15) of the Act. The trust had initially received provisional registration under Form 10AC on July 21, 2023, for Assessment Years 2024-25 to 2026-27. Subsequently, it applied for final registration under Section 12A(1)(ac)(iii) by filing Form 10AB on April 20, 2024. However, the CIT(E), influenced by observations from the Junior Assessing Officer (JAO) and Range Head, rejected this application. The primary grounds for rejection were that the trust had allegedly not incurred a “substantial amount of expenditure” towards its objects, had not submitted sufficient proof of activities, and thus had not commenced its charitable operations adequately. It was noted that out of general donations of Rs. 48,80,444/-, only Rs. 5,90,512/- (approximately 13%) was spent on medical relief, with a significant amount of Rs. 40 lakhs invested in fixed deposits.
