IT2B Research Foundation Vs CIT(Exemptions) (ITAT Delhi)
Software & Start-Up Consultancy Not ‘Charitable’: ITAT Delhi Upholds Denial of 12AA Registration
The Delhi ITAT “F” Bench, in IT2B Research Foundation v. CIT(E) (ITA No. 7766/Del/2018; order dated 29.12.2025), has upheld the order of the CIT(E) denying registration u/s 12AA, holding that the Assessee’s objects and activities do not fall within any of the charitable limbs specified u/s 2(15).
The CIT(E) found that the Assessee’s principal activities—development of software solutions such as “Digital Kisan”, technology research, conducting technical workshops, and start-up consultancy—were commercial and business-oriented in nature. The Tribunal noted that such activities did not amount to “education” as interpreted by the Supreme Court in Loka Shikshana Trust, nor could they be regarded as “relief of the poor” or “preservation of environment”. The benefits, if any, were confined to a limited and selective group (e.g., progressive farmers or niche professionals), not the general public at large.
The Tribunal also took note of the dominant funding from a commercial entity (Azcom Infosolutions), observing that such receipts did not partake the character of voluntary donations or income eligible for exemption u/s 11 & 12. The expenditure pattern—overwhelmingly towards salaries, car lease, travel, and business promotion, largely benefitting the Director—further indicated absence of genuine charitable application. Filing of returns in ITR-6 instead of ITR-7 was also treated as indicative of business activity.
In the absence of any rebuttal material from the Assessee, and considering the detailed factual findings of the CIT(E), the ITAT found no reason to interfere and dismissed the appeal, affirming that entities engaged primarily in software development and consultancy cannot be clothed with charitable status merely by labelling their objects as public-spirited.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax (Exemptions), Chandigarh[“Ld.CIT(E)”, for short], dated 28.09.2018 wherein the CIT(E) denied the registration to the applicant u/s 12AA of the Income Tax Act, 1961 (‘the Act’ for short).
