CENTRE FOR RURAL DEVELOPMENT AND EDUCATION,RAMANATHAPURAM vs. CIT EXEMPTIONS, CHENNAI

ITA 2819/CHNY/2026Status: DisposedITAT Chennai28 September 202613 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Commissioner of Income Tax (Exemption) had erred in rejecting the applications for renewal of registration under Section 12AB and approval under Section 80G. Regarding the first issue, the Tribunal found that the assessee's activities, which included imparting practical, skill-based training (e.g., tailoring, beautician, palm leaf making) to rural youth and women, assisting them in forming SHGs, and facilitating bank finance for productive ventures, were genuine and squarely fell within the realm of 'relief for poor' as defined under Section 2(15) of the Act. The Tribunal noted that the assessee did not charge beneficiaries any fees and received financial aid from banks and institutions for organizing training programs. The allegation of engaging in microfinance activities was found to be unsubstantiated by the records, as the assessee did not carry on its own lending activity, earn interest income from such activity, or maintain a loan portfolio. The Tribunal concluded that the CIT(E)'s observation that expenses were not directed towards charitable activities was factually incorrect. The Tribunal directed the CIT(E) to grant the registration under Section 12AB and approval under Section 80G to the assessee.

What were the facts?

The assessee, Centre for Rural Development and Education, filed appeals against the order of the Commissioner of Income Tax (Exemption) (CIT(E)), Chennai, dated 30.03.2026. The CIT(E) rejected the assessee's applications for renewal of registration under Section 12AB and approval under Section 80G of the Income Tax Act, 1961. The assessee, a trust engaged in welfare activities for rural youth and women, had its registration previously renewed for AYs 2022-23 to 2026-27 and was also approved under Section 80G. The CIT(E) was of the view that the assessee's receipts were not voluntary and expenses were not directed towards charitable activities, and that its activities did not fall within the scope of Section 2(15) of the Act. The appeals pertain to Assessment Years not explicitly stated but relate to the rejection of applications filed on 28.09.2025.

What were the issues?

1. Whether the Commissioner of Income Tax (Exemption) erred in rejecting the assessee's application for renewal of registration under Section 12AB of the Income Tax Act, 1961, on the grounds that the receipts were not voluntary and expenses were not directed towards charitable activities, and that the activities did not fall within the definition of charitable objects under Section 2(15) of the Act? The assessee contended that its activities, including skill training for rural youth and women, forming Self-Help Groups (SHGs), and facilitating bank finance for livelihood activities, were genuine and aimed at the welfare of the poor, falling under 'relief for poor' as per Section 2(15). It argued that it had been operating for decades with prior approvals and that its revenue was derived from grants, aids, and donations, utilized for its charitable objects. The revenue, through the Learned Departmental Representative (DR), supported the CIT(E)'s findings and argued that the assessee was undertaking microfinance activities under the guise of a charitable institution. 2. Whether the Commissioner of Income Tax (Exemption) erred in rejecting the assessee's application for approval under Section 80G of the Act? The arguments presented for this issue are intertwined with the first issue, as the rejection of Section 12AB registration often impacts Section 80G approval.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G,Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 19.08.2026Pronounced: 28.09.2026

PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the order of the Learned Commissioner of Income Tax (Exemption), (hereinafter referred to as ‘Ld. CIT(E)’), Chennai, dated 30.03.2026 denying registration u/s. 12AB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and approval u/s. 80G of the Act.

2.

The brief facts of the case are that the assessee is a trust which was earlier registered u/s 12A / 12AB of the Act. It is seen that, the ITA 2819 & 2820 /Chn

The order continues below.

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