ANNAI LOGAMBAL TRUST,GUDUVANCHERI vs. ITO, EXEMPTIONS WARD-1, CHENNAI

आदेश / O R D E R

PER BENCH: Captioned appeals are filed by the assessee-trust challenging the orders passed by the Commissioner of Income Tax (Exemptions), Chennai [CIT(E)] in Form No. 10AD dated 28.09.2024. By the first order, the Ld. CIT(E) rejected the assessee's application dated 29.03.2024 seeking registration u/s. 12AB of the Income Tax Act, 1961. Consequentially, by a separate order of even date 28.09.2024, the application seeking approval u/s. 80G was also rejected.

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 2 :: 2. Aggrieved by the aforesaid orders, the assessee preferred separate appeals before the Tribunal. However, there was a delay of 396 days in filing the appeals. In support of the petition seeking condonation of delay, the Trustee of the assessee-trust filed an affidavit explaining the circumstances that resulted in the delay and prayed that the same be condoned in the interest of justice.

2.1 After considering the contents of the affidavit and hearing the submissions of both parties, we are satisfied that the delay was occasioned by bona fide reasons and was neither deliberate nor attributable to any mala fide intention. Since substantial justice deserves to prevail over technical considerations, the delay of 396 days in filing the appeals is condoned and the appeals are admitted for adjudication on merits.

3.1 In the said application, the trust disclosed its charitable objects under the categories of “Relief of the Poor” and “Yoga”. In furtherance of the object of Yoga, the trust undertakes to motivate and train individuals in “Simplified Kundalini Yoga” as propounded by Swami Vedathri Maharishi. Under the object of Relief to the Poor, the trust conducts value-based and skill-oriented training

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 3 :: programmes for economically weaker sections of society in fields such as Typewriting, Shorthand, Tally Accounting, Tailoring and other vocational disciplines at nominal charges.

3.2 Simultaneously, claiming itself to be a charitable institution, the assessee also applied for approval u/s. 80G through Form No. 10AB on 29.03.2024.

4.1 The ld. CIT(E) also observed that the trust was providing coaching and vocational training services to persons approaching it for such training on a quid pro quo basis. Since the trust had not furnished corroborative evidence to establish that the beneficiaries belonged to economically weaker sections of society, the ld.CIT(E)

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 4 :: concluded that the activities were essentially commercial. Relying upon the principles laid down by the Hon’ble Supreme Court in Ahmedabad Urban Development Authority, the ld.CIT(E) held that the assessee had failed to satisfy the conditions necessary for registration and consequently rejected the application filed u/s. 12A(1)(ac)(vi)(B) seeking registration u/s. 12AB.

4.2 On the same breath and reasoning and identical findings of fact, the application seeking approval u/s. 80G(5)(iv)(B) was also rejected.

5.1 The ld. AR further submitted that the institute run by the trust imparts systematic instruction and practical training in computer education, typewriting, tailoring and similar vocational disciplines. These are short-duration skill-development programmes which are generally not offered by mainstream educational institutions. It was pointed out that the Government of India itself recognises the

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 5 :: importance of such vocational training for enhancing employability and livelihood opportunities. Reference was made to the Jan ShikshanSansthan (JSS) Scheme functioning under the Ministry of Skill Development and Entrepreneurship, which promotes vocational courses including tailoring and computer education. Therefore, it was argued that an institution engaged in promoting such nationally recognised skill-development objectives on a not-for-profit basis cannot be regarded as non-charitable merely because it charges nominal fees.

6.1 We have carefully considered the rival submissions and perused the material available on record. It is evident that the principal reason for rejection of registration u/s. 12AB was the finding of the ld.CIT(E) that the trust was operating on commercial lines.There is no dispute that the trust charges fees for the vocational and skill- development courses conducted by it. However, the crucial question is whether the collection of such fees by itself is sufficient to deny registration u/s. 12AB.

6.2 From the nature, nomenclature and duration of the courses offered, it is apparent that the programmes are directed towards skill development and livelihood enhancement rather than formal academic education. In our considered opinion, the ld.CIT(E) has adopted an unduly narrow interpretation of the expression “Relief to the Poor”. The concept of relief to the poor is not confined merely to

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 6 :: distribution of alms or direct financial assistance. Any activity intended to benefit and empower economically or socially disadvantaged persons would fall within the ambit of the said charitable purpose u/s. 2(15).This principle finds support in paragraph 2.1 of CBDT Circular No. 11/2008 dated 19.12.2008, wherein it has been clarified that “Relief of the poor” encompasses a broad range of activities directed towards the welfare of economically and socially disadvantaged sections of society.

The CBDT in Para 2.1 of the Circular No. 11/2008 cited above had categorically stated that: “2.1 The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15), i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities.”

Providing need-based vocational training and livelihood skills to vulnerable and underprivileged sections of society serves to bridge the gap between subsistence and self-sufficiency. Such activities unquestionably constitute relief to the poor. The nature of the courses, the area of operation and the overall manner in which the activities are conducted support the assessee's claim of charitable purpose.

6.3 The primary objective of the trust is not profit generation but the enhancement of employability, livelihood opportunities and economic self-reliance among disadvantaged persons. The vocational training activity is merely the means through which the charitable object is achieved. Consequently, any surplus generated

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 7 :: from such activity remains incidental to the attainment of the charitable purpose.

6.4 The Hon’ble Supreme Court in Thiagarajar Charities v. Additional Commissioner of Income-tax [1997] 92 Taxman 152 (SC) and Assistant Commissioner of Income-tax v. Thanthi Trust [2001] 115 Taxman 126 (SC) has consistently held that business activities carried on as an integral part of achieving charitable objectives do not lose their charitable character merely because income is generated therefrom. The income derived from such undertakings is only an incidental outcome of property held and utilised for charitable purposes.

6.5 In Thanthi Trust (supra), the Hon’ble Supreme Court specifically held that a public charitable trust established for relief of the poor, education and medical relief would continue to qualify for exemption where business activities are carried on in the course of actually accomplishing its charitable objectives. Thus, where the predominant object remains poverty alleviation and social welfare rather than profit-making, exemption cannot be denied.

6.6 In the present case, the materials on record clearly demonstrate that the objects and activities of the assessee-trust fall within the recognised charitable categories of “Relief to the Poor” and “Yoga” u/s. 2(15) of the Act. These activities do not fall within the residual category of “Advancement of any other Object of General Public Utility”. Consequently, the mere fact that certain activities involve collection of fees or generate surplus does not disentitle the trust from claiming charitable status.The CBDT has categorically clarified

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 8 :: in paragraph 2.1 of Circular No. 11/2008 that the proviso to Section 2(15) does not apply to institutions engaged in relief of the poor, education or medical relief and that such institutions would continue to qualify as charitable even where commercial activities are carried on incidentally.

6.7 Indeed, if charitable institutions were altogether prohibited from engaging in any business activity, there would have been no necessity for the Legislature to enact Sections 11(4), 11(4A) and 13(8) of the Act. Further, Explanation 4(b) to Section 12AB(4) contemplates withdrawal of exemption only where profits and gains from business are not incidental to the attainment of charitable objects or where separate books of account are not maintained in respect of such incidental business activities.

6.8 In the present case, the ld.CIT(E) has not identified any violation of the aforesaid statutory requirements. In the absence of such findings, rejection of registration solely on the ground that fees were collected from beneficiaries cannot be sustained.Accordingly, for the reasons stated above, we hold that the ld.CIT(E) was not justified in rejecting the assessee’s application for registration u/s.12AB of the Act. The impugned order dated 28.09.2024 is therefore set aside and the ld.CIT(E) is directed to grant registration to the assessee-trust and issue the requisite certificate in Form No. 10AD.

6.9 Since the rejection of approval u/s. 80G was founded entirely upon the same reasoning and factual findings that formed the basis for rejection of registration u/s. 12AB, our conclusions herein apply

ITA No 4137 & 4138/Chny/2025 (AYs ) Annai Logambal Trust (Vs) ITO (E) W 1 :: 9 :: with equal force to the application u/s. 80G. Consequently, we hold that the ld.CIT(E) was not justified in rejecting the application seeking approval u/s. 80G and direct that the approval be granted in accordance with law. In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open court on the 12th day of June, 2026, in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER चे�नई/Chennai, +दनांक/Dated: 12th June 2026. SNDP, Sr. PS आदेश क ��त,ल-प अ.े-षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF