DELHI YARN MERCHANTS CHARITABLE TRUST,DELHI vs. CIT (EXEMPTION), DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI, BENCH: A BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER AND MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER ITA 6525 & 6524/DEL/2025 िनधा�रण वष�/Assessment Year: -) DELHI YARN MERCHANTS CIT (EXEMPTION) PRATYAKSH KAR CHARITABLE TRUST 4543-44 KRISHNA BAZAR, BHAWAN , E-2 BLOCK CLOTH MARKET, 26TH FLOOR, CIVIC Vs. DELHI-110006, CENTRE, MINTO ROAD NEW DELHI-110002. अपीलाथ� Appellant ��थ� Respondent Permanent A/c Number of Assessee: AAATD3421A

अपीलाथ� �ारा/Appellant represented by: Sh. K. Sampath, Advocate (through VC) ��थ� �ारा/Respondent represented by: Sh. Jitender Singh, CIT, DR सुनवाई की तारीख / Date of conclusion of hearing: 26-May-2026 घोषणा की तारीख / Date of pronouncement: 04.08.2026 आदेश / ORDER PER KAVITHA RAJAGOPAL, JM: The captioned appeals are filed by the assessee Trust challenging the orders of the Ld. Commissioner of Income-tax (Exemptions) [hereinafter referred to as ‘the Ld. CIT(E)’] passed under Sections 12AB and 80G of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). As the facts are 1

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST identical, we hereby pass a consolidated order by taking ITA No.6525/Del/2025 as a lead case.

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST is said to have not substantiated the genuineness of the charitable nature of its activities.

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST registration under Section 12A of the Act be granted to the assessee Trust which is carrying on genuine charitable activities.

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST 7. On perusal of the above, it is observed that the total receipts for FY 2023- 24 and 2024-25 are 2,13,71,797/- and Rs.2,19,74,365/-, respectively, out of which Rs.1,70,14,251/- and Rs.1,68,69,801/- are claimed to be received as donation for FY 2023-24 and 2024-25, respectively. The Ld. CIT(E) held that in most of these cases the assessee has failed to furnish the names and addresses of the donors, thereby holding that the identity of some of the payers are also not revealed making the donation as anonymous donations. The Ld.CIT(E) held that the assessee has failed to substantiate the genuineness of the activities undertaken by the assessee Trust with cogent documentary evidences thereby denying the registration under Section 12A of the Act along with previously granted provisional registration for the period from AY 2023-24 to AY 2025-26. In view of the above factual matrix of the case, it is observed that there is no denial of fact that the assessee Trust has been registered since the year 1963 providing Dharamshala for patients or their attendants seeking treatment in Apollo Hospital at Delhi. The ld.CIT(E) has also not denied this fact, but, had rather claimed the same to be non-voluntary payments which is not of charitable nature and merely a commercial transaction. It is also the contention of the Revenue that the accommodations are not reasonably priced where the assessee was earning a huge margin on this. This, according to us, cannot be the sole reason for denying registration for the reason that at the time of granting registration to the assessee Trust, the Ld.CIT(E) ought to have considered the objectives of the Trust and should be satisfied with the genuineness of the

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST activities carried out by the said Trust. Merely alleging that the accommodation are not reasonably priced does not tantamount to the activities of the assessee Trust to be non-genuine nor the same to be of commercial nature. There is also no finding given by the Ld.CIT(E) doubting the objectives of the Trust and whether they are of charitable nature or not. The Ld.CIT(E) has also not specified how these donations are not voluntary. As per the provisions of law, the Ld.CIT(E) will have to consider whether all the requirements of registration under Section 12AA of the Act has been satisfied by the assessee Trust and in case where the same are as per the provisions of the Act, registration should be granted to the assessee. It is also a settled proposition of law that at the time of registration of the Trust under Section 12A of the Act, the issue of application of income need not be considered by the Ld.CIT(E) which would be the subject matter of assessment if any. It is also not a case of bogus donations or accommodation entries. The Ld.CIT(E) cannot reject the registration under Section 12AB or 12AA of the Act merely on the grounds of commercial activities or anonymous donation as at the stage of registration the inquiry to be conducted by the Ld.CIT(E) is confined to whether the objects of the assessee Trust are charitable and whether the activities are genuine. The Ld.CIT(E) cannot delve into the substantive probe as to the application of income or any incidental commercial activities which are subject matter of detailed assessment.

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST 8. We place reliance on the decision of the Hon’ble Apex Court in the case of M/s Ananda Social and Educational Trust vs. CIT, reported in AIR 2020 SUPREME COURT 1189, wherein this proposition was reiterated and that it is for the Commissioner to establish the fact that the assessee was undertaking activities which were contrary to the objects of the Trust for the purpose of denying registration. It further held that though the facts in the said case was, where the assessee had not carried out any activities, it has been held that the Commissioner will have to emphasise on whether the activities undertaken by the Trust are contrary to the objects of the Trust and only upon satisfying the same the Commissioner is entitled to deny registration.

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST of the Act, the Commissioner is only required to look into two aspects, viz., the genuineness of activities and also about the objects of the Trust. Further, it is always open for the Revenue to assess the income and to levy tax if in case it is found that the income derived is not out of the activities of the Trust or if the expenditure cannot be attributed to the objects of the Trust. The Court reiterated that if registration was not granted in genuine cases, then, the assessee would be deprived of claiming such benefit which it would be entitled to. It was further held that only when the objects of the Trust are against the public policy or are not of charitable purpose, then, registration shall be refused. Further emphasis was also laid on sub-section (3) which was inserted w.e.f. 01.10.2004 where the Commissioner was granted the power of cancellation of registration if it was found that there was any violation of the provision or in case of satisfying that the activities are not genuine. Therefore, registration cannot be rejected on mere presumptions and surmises that the Trust has misused its income or with regard to the applicability funds for the purpose of charitable activities. Also, whether the Trust was earning profit or was misusing income derived from the Trust would be a ground for denying exemption only with respect to that income which is alleged to have been as per the violation of the provisions or the objects of the Trust. It also clarified that mere registration of the Trust does not entitle the assessee to the exemption claimed, but, it merely enhances the process of determining whether the assessee’s claim of exemption under Section 11 or 12 of the Act to be allowable or not.

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST 10. On the above observation, we deem it fit to hold that the order of the Ld.CIT(E) rejecting the registration ought to be set aside, thereby directing the Ld.CIT(E) to grant registration to the assessee if the assessee otherwise satisfies all the conditions prescribed under law.

ITA No.6524/Del/2025.

Order pronounced in the open court on 04th August, 2026.

(M BALAGANESH) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:04th August, 2026. dk

ITA 6525& 6524/DEL/2025 DELHI YARN MERCHANTS CHARITABLE TRUST

Copy to: DELHI YARN MERCHANTS CHARITABLE TRUST, 1 4543-44 KRISHNA BAZAR, CLOTH MARKET, DELHI-110006, DELHI CIT (EXEMPTION), PRATYAKSH KAR BHAWAN , E-2 BLOCK 2 26TH FLOOR, CIVIC CENTRE, MINTO ROAD, NEW DELHI-110002, DELHI 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE