KANKARIYA FOUNDATION,JAIPUR vs. EXEMPTION WARD 1, JAIPUR

ITA 578/JPR/2026Status: DisposedITAT Jaipur29 September 2026AY 2025-265 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, considering the rival submissions and the application filed by the assessee before the ROC for amending the Articles of Association, deemed it fit to set aside the matter back to the file of the Ld. CIT(E). The Tribunal directed the Ld. CIT(E) to grant one more opportunity of hearing to the assessee. The assessee is expected to cooperate by filing all required documents and details before the Ld. CIT(E) for passing an order of registration under Section 12AB and 80G(5) of the Act. The Tribunal allowed both appeals filed by the assessee for statistical purposes. The specific findings on each ground of appeal were not elaborated as the matter was remanded for fresh consideration.

What were the facts?

The assessee, Kankariya Foundation, filed applications for registration under Section 12AB and Section 80G(5) of the Income Tax Act, 1961, on September 30, 2025. The Commissioner of Income Tax (Exemption) - CIT(E), Jaipur, denied registration on February 2, 2026. The grounds for denial included discrepancies in the Articles of Association (AOA), specifically Article 41 regarding the purchase of its own shares, and Articles 39, 80-88 concerning capitalization of profits, dividends, and reserves. The CIT(E) also cited the intention to earn profit and non-genuineness of activities, noting the assessee's failure to provide a provisional account for the current year, details of activities/beneficiaries/photos, and a Section 13(1)(c) declaration. The assessee appealed these orders.

What were the issues?

1. Whether the Ld. CIT(Exemption) erred in rejecting the final registration under Section 12AB of the Income Tax Act, 1961, by concluding that the presence of a 'buyback' clause (Article 41) in the AOA implies a non-charitable intent, despite the appellant being a Section-8 company. 2. Whether the Ld. CIT(Exemption) erred in rejecting the registration under Section 12AB based on Articles 39 and 80-88 of the AOA relating to capitalization of profits and dividends/reserves, failing to appreciate that these clauses are superseded by the Section-8 company status mandating application of income solely towards charitable objects. 3. Whether the Ld. CIT(Exemption) erred in rejecting the registration on the ground of non-genuineness of activities, when the trust's activities are genuine and explainable. 4. Whether the Ld. CIT(Exemption) erred in rejecting the application for approval under Section 80G of the Income Tax Act, 1961. 5. Whether the Ld. CIT(Exemption) erred in rejecting the application for approval under Section 80G on the ground of non-registration under Section 12AB. Assessee's contentions: The assessee argued that as a Section-8 company, clauses in the AOA related to buyback, capitalization of profits, dividends, and reserves are superseded by statutory provisions. The buyback clause (Article 41) and clauses on profits/dividends/reserves (Articles 39, 80-88) do not negate the charitable intent. The activities are genuine. The assessee also submitted that it had passed a special resolution to amend the AOA and filed an application with the Registrar of Companies (ROC) for this purpose, and requested one more opportunity to submit all necessary details. The assessee also argued that the cancellation of provisional registration was arbitrary. Revenue's contentions: The Ld. CIT-DR had no objection to setting aside the matters back to the file of the Ld. CIT(E).

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G(5),Section 12A(1)(ac)(iii),Section 13(1)(c),Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, JAIPUR

Before: Smt. Annapurna Gupta & Shri T. R. Senthil Kumar

For Appellant: Shri Anoop Bhatia, CA
For Respondent: Shri Anil Dhaka, CIT

PER : T. R. SENTHIL KUMAR, JUDICIAL MEMBER:- These two appeals are filed by the assessee as against the separate orders both dated 02.02.2026 passed by Commissioner of Income Tax (Exemption), Jaipur, denying the registration u/s. 12AB and 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Brief facts of the case are that the assessee filed application in Form 10AB seeking registration u/s 12A(1)(ac)(iii) and 80G(5)(ii) of the of the Act on 30.09.2025. The Ld. CIT(E) given three opportunities of I.T.A No. 578 & 574/JPR/2026 Page No 2 Kankariya Foundation

hearing to the assessee and found some discrepancies in Article 41 of Articles of Assoc

The order continues below.

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