Charity Must Benefit Public, Not Celebrities: 12A & 80G Registration denied

TIF Foundation Vs CIT Exemptions (ITAT Chandigarh)

Charity Must Benefit Public, Not Celebrities – 95% Funds on Sports Awards, Not Charity – ITAT Chandigarh Upholds Rejection of 12A & 80G

Background

Assessee Trust formed on 04.12.2023 sought registration u/s 12A(1)(ac)(iii) & Approval u/s 80G. Provisional registration granted for AYs 2024-25 to 2026-27. Trust commenced activities on 14.06.2024.

CIT(E)’s Findings

• Trust’s stated objects: food relief, medical aid, education, environment, volunteerism.
• Actual activities: Only ₹2.79 lakh spent on food (main object), ₹57.25 lakh spent on prize & award distribution & ₹1 crore donation to Indian Women Chess Association.
• Large portion of funds routed from related entities (Capgro Pvt. Ltd., Ideaz Factory) linked to trustee (also President of All India Chess Federation).
• Observed round-tripping of funds & activities unrelated to objects.
• Held that activities benefited privileged individuals, not the general public.
• Rejected 12A registration & consequential 80G approval.

Assessee’s Arguments

• Claimed that sports promotion & awards fell under “volunteerism” object.
• Expenditure on chess promotion motivated youth & aligned with charitable purpose.
• Denial of approval unjustified.

Tribunal’s Observations /Order

• Charitable activity must benefit the general public, not a select privileged few.
• Major expenditure (95%) was on activities not in trust deed.
• Awards to renowned sports personalities out of loans from related parties cannot be treated as charitable.
• Circular movement of funds between related entities undermined genuineness.
• Very little effort made towards stated core objects (food, education, health).
• Rejection of 12A registration upheld.
• Since 80G approval is consequential, its rejection also upheld.

ITAT Chandigarh upheld rejection of TIF Foundation’s applications for 12A & 80G. Tribunal held that spending 95% funds on awards & chess association donations, routed via related entities, was inconsistent with trust’s declared charitable objects, such activities benefiting privileged individuals could not be considered “charitable”.