SHAMKRIS CHARITY FOUNDATION ,MUMBAI vs. COMMISSIONER OF INCOME TAX EXEMPTION , MUMBAI

5. Considering the facts and circumstances of the case and in law, the Commissioner of Income-Tax, Exemption erred in passing the rejection order without condoning the delay in filing Form 10AB when the delay in filing application under section 12A(1)(ac) (iii) was on account of reasonable cause. 6, The Appellant craves leave to add to, alter or amend, vary, omit, substitute or modify the aforesaid Grounds of Appeal

or add new grounds of appeal as and when advised.”

2. The assessee is a company incorporated on 06.08.2021 u/s.8 of the Companies Act, 2013 with the key objects namely education, medical relief, relief to the poor and any other objects of general public utility. The assessee made an application for provisional registration u/s. 12A and the same is granted from AYs 2022-23 to 2024-25 on 02.10.2021. The assessee made the application for the final registration on 24.08.2024 before the Ld. CIT(E). The Ld. CIT(E) rejected the final registration on the ground that the assessee has made the application belatedly and that the objects of the trust contain, clauses which enables potential application of funds outside India. The assessee is in appeal before the Tribunal against the order of the Ld. CIT(E).

Shamkris Charity Foundation 3. There is a delay of 19 days the filing the appeal before the Tribunal and the assessee has filed an application for condonation of delay. After hearing both the parties, we are of the view that there is sufficient and the reasonable cause for delay in filing the appeal and accordingly we condone the delay by following the ratio laid down by the Hon'ble Supreme Court in the case of Collector, Land acquisition vs M.S.T. Katiji&Ors. (167) ITR 471 (SC).

4. We heard the parties and perused the material on record. The assessee is having a provisional registration under section 12A of the Act from AY 2022-23 to 2024-25 (page 26 to 28 of paper book). The assessee made an application in Form 10AB for final registration on 24.08.2024 which was rejected by CIT(E) on the ground that there is a delay in filing the Form 10AB and that the object clause of the trust deed contains clause which enables potential spending outside India. With regard to the delay in filing the application for final registration, the assessee submitted a petition for condonation of delay (page 107 to 109 of paper book) before the CIT(E) stating that the delay is due to the inadvertent error on the part of the employee who was in charge of the income tax related matters of the assessee. The ld DR vehemently opposed the said submission stating that the trustees should have monitored the income tax matters and should have taken some action against the said employee which is not the case here. In this regard it is relevant to notice that prior to 01.10.2024, the power to condone the delay in filing Form 10AB was vested with CBDT and CBDT has been extending the time limit for making the application from time to time, the last one of which extended the time limit to 30.06.2024. The Finance Act (No.2) of 2024 inserted the following proviso to section 12A(1)(ac)(vi) which reads as under – "Provided that where the application is filed beyond the time allowed in sub- clauses (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filing the application, Shamkris Charity Foundation condone such delay and such application shall be deemed to have been filed within time"

5. The Memorandum explaining the provisions Finance Bill in this regard stated that – A trust or institution desirous of seeking registration under section 12AB is inter alia required to apply within timelines specified in clause (ac) of sub- section (1) of section 12A 2. It has been noted that at times trusts or institutions are unable to file application within specified timelines. In case a trust or institution is unable to apply within time specified, it may become liable to tax on accreted income as per provisions of Chapter XII-EB of the Act. A situation of permanent exit of trust or institution from the exemption regime may also arise.

Shamkris Charity Foundation 2) To work as a single point source of all information for Technologies for IOT and 10E and/or other Technologies assigned to the Company and connect to all the researchers, institutes and other centers of Excellence. 3) To receive or support projects to other institutes, industry and work towards delivery of technologies and applications and focus on generation of new knowledge through basic and applied research in areas assigned to the Company, to develop itself and act as the source for fundamental knowledge/technologies needed to keep India prepared for the next generation of technologies and develop new knowledge (intellectual property) and highly knowledgeable human resource with top-order skills, besides serving as a repository of papers and patents. 4) To render special technical and/or advisory support and act as an Accelerator to organizations in accordance with the policies of the Company and provide the ecosystem for technology development and deployment and delivering technologies or technology solutions for the development of the nation.

5. The Ld.AR argued and filed a paper book containing pages 1 to 109, which is kept on record. The Ld.AR stated that the assessee - trust formed as per section 8 of the Companies Act, 2013 and in collaboration with Indian Institute of Technology, Bombay (IIT, Bombay), Ministry of Science & Technology, Government of India. The said agreement with the formation of the Trust is duly amexed at pages 5 to 227 of the paper bool The Ld. CIT(E) had rejected the said registration on the ground that the assesse has executed foreign expenses for running the thot which is contravening the provisions of section 11 of the Act. The relevant paragraphs 4 to 6 of the impugned order of Lad CITTE) are extracted below: 4. Applicant's reply is neither satisfactory nor conclusive. In its reply, the applicant states that The objects referred in the notice from pt. nn 3 (B) are from the objects or ancillary to the attainment of the mate objects for which company is established. This contention does not make moch difference to the fact that the objects are in violation of section 11 of the Act because as per the MOA these objects are categorised as "Objects incidental or ancillary to the attainment of the main objects for which the Company is established (i.e. Main object)". Thus, even though these are not main objects, these are very much integral to attainment of main objects of the MOA. Such objects leave room for any potential future endeavour may be undertaken by the assessee trust which would require expenditure outside India Further, in point no. 4 of the MOA, the applicant clearly expresses that the objects of the Company are extended to the whole of India and abroad. This point removes all the doubts and confirms that all the objects are extendable to anywhere in the world which will automatically result in expenditure outside India. The applicant trust ought to have amended the clauses of the objects mentioned above which are in violation of the Act as discussed above, however, the applicant has not considered it. The assessee has not presented/submitted any documentary evidence/proof of passing the resolution Shamkris Charity Foundation regarding amendment in trust deed nor has it provided any proof that it has initiated the process for amendment in trast deed/MoA before the competent authority.

6. In conclusion, this application for grant of registration stands rejected."

7. The Ld. AR further respectfully relied on the order of coordinate bench of ITAI- Mumbai, D-Bench in Dedhia Music Foundation v. CIT (Exemption) [2025] 173 taxmann.com 394 (Mumbai - Trib.) date of order 0204-2025. The observation in relevant paragraphs 12 to 15 are reproduced as follows "12. In the present case, according to Ld CIT(E), the objects clause enables the assessee to apply its income outside India. According to Ld CIT(E), the same is not permitted under the Act and hence the registration provisionally granted to the assessee may be cancelled. We shall now examine as to whether the existence of objects for carrying out activities outside lodia or actusal application of income outside India in accordance with its objects, would fall under any of the categories of "specified violations" listed out in the Explanation to sec. 12AB(4) of the Act or not. "(i) Clause (0) would be attracted only if any income derived from the property held for charitable purpose is applied other than for the objects of the charitable trust or institution. Hence, so long an any income is applied for the objects of the charitable trust or institution, the clause (0) would not get attracted. Thus, if the objects clause of a charitable Trust or Institution permits carrying on objects outside India and if any income is applied for such objects, then it cannot be considered as application of income "for objects other than the objects of the charitable trust or institution" falling within the meaning of clause (o). Consequently, the clause (a) would not be attracted. (ii) Clause (b) would be attracted only if any business or profession is carried on and there is violation as mentioned therein. This clause will not be attracted for application of income for permined objects outside India. (iii) Clause (c) would be attracted when income of trust held for private religious purposes is applied for those purposes, which does not ensure for the benefit of public. The assessee herein is not a trust held for private religious purposes and hence this clause will not apply to the assessee herein. (iv) Clause (d) would be attracted when income of the trust is applied for particular religious community or caste. This clause will also not apply to the assessee herein. (v) Clause (e) would be attracted when any activity being carried out by the trust or institution- (i) is not genuine; or Shamkris Charity Foundation (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered. This clause would be attracted when the activities of the charitable trust or institution is not genuine or in violation of any of the conditions subject to which the registration u/s 12AB was granted. In the instant case, the Ld CIT(E) has stated the activities claimed to have been carried on is not supported by the expenses incurred. According to Ld A.R, the above said observations are against the facts available on record. Hence the above said observations of Ld CIT(E) is dealt with separately infra. (vi) Clause (1) would be attracted when there is failure to comply with the requirements of "any other law". Under this clause "any other law" would mean any law other than Income tax Act. This meaning can be understood from the Sub-clause (B) of clause (1) of sec. 12AB(1)(b) of the Act, which reads as under. "(B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects". The Ld CIT(E) has to ensure that the charitable trust or institution has complied with the requirement of any other law for the time being in force', as are material for the purpose of achieving its objects. Here, it is pertinent to note that the verification by Ld CIT(E) should be restricted to compliance of those laws as are material for the purpose of achieving its objects. 12.1. It may be noticed that clauses (a), (c), (d) and (e) would be attracted only when there is application of income as mentioned in those clauses. Hence "actual application of income" is the condition to he satisfied for attracting the above said four clauses.

9. We have carefully considered the rival submissions and perused the material available on record. It is an undisputed fact that the assessee is a not-for-profit company incorporated under Section 8 of the Companies Act, 2013, established pursuant to the directions of the Ministry of Science and Technology, Government of India, and hosted by IIT Bombay. The assessee has been granted registration under Section 12AB of the Act for earlier assessment years, ie., A.Υ. 2021-22 το Α.Υ. 2025-26, and the present application was filed for continuation of registration. The only basis for rejection of registration by the Ld. CIT(E) is the possibility of the assessee incurring expenditure outside India in furtherance of its objects, which, according to the Ld. CIT(E), contravenes the provisions of Section 11 of the Act. However, such reasoning does not find support either in the statutory scheme of Section 12AB or in judicial precedents. In this regard, the Hon'ble Delhi High Court in the case of N.K. Nombyar Saarf Law Charitable Trust (supra) has categorically held that the scope of Section 12AA (now Section 12AB) is limited to examining the genuineness of activities and the objects of the trust, and not the place of application of income. The Hon'ble Court observed that the fact that the trust may apply income outside India does not constitute a valid ground for denial of registration, since Section 11 itself provides a framework for allowing or disallowing exemption based on application of income in or outside India. Thus, this objection, being premature and irrelevant at the stage of registration, cannot be sustained. Similarly, the Coordinate Bench of the ITAT, Mumbai in Dedhia Music Foundation (supra) has held that the mere existence of an object permitting application of income outside India does not amount to a "specified violation" under Explanation to Section 12AB(4) of the Act. The Tribunal concluded that unless and until the income is actually applied outside India in violation of the conditions of Section 11, it cannot be construed as a ground for cancellation or denial of registration under Section 12AB. Moreover, the application of income outside India, even if made, would only affect the exemption under Section 11(1), but cannot be construed as a contravention of law attracting rejection of registration. In the present case, the assessee has neither undertaken any impermissible application of income nor has the Ld. CIT(E) brought on record any specific violation of conditions prescribed under Section 12AB(1)(b) or Explanation to Section 12AB(4). The objects of the assessee are in line with the mission Shamkris Charity Foundation of the Central Government under the NM-ICPS initiative, and the activities are genuine and aimed at technological development in public interest. In view of the foregoing legal position and judicial precedents, we find the order passed by the Ld. CIT(E) to be unsustainable in law. Accordingly, we direct the Ld. CIT(E) to grant registration to the assessee under Section 12AB of the Act. The grounds of appeal

are succeeded.”

8. Accordingly we direct the CIT(E) to keep in mind the ratio laid down by the decision of the coordinate bench in the above case while considering the application of the assessee for final registration on merits. It is ordered accordingly