KANKARIYA FOUNDATION,JAIPUR vs. EXEMPTION WARD 1, JAIPUR

ITA 578/JPR/2026Status: DisposedITAT Cochin29 September 2026AY 2025-265 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee had filed an application before the ROC for amending its Articles of Association, specifically Article 41 (buyback of shares) and Articles 80 to 88 (dividend and reserves). Considering this development and the assessee's request for an opportunity to file all necessary details, the Tribunal deemed it fit to set aside the orders of the CIT(E). The matter was remanded back to the CIT(E) with a direction to grant one more opportunity of hearing to the assessee. The assessee was directed to cooperate by filing all required documents and details to enable the CIT(E) to pass an order for registration under Section 12AB and 80G(5) as per law. The Tribunal explicitly stated that the appeals were allowed for statistical purposes.

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, citing discrepancies in the Articles of Association (AOA), specifically Article 41 regarding the purchase of its own shares, and Articles 39, 80 to 88 concerning capitalization of profits, dividends, and reserves. The CIT(E) also noted 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, which were passed on February 2, 2026.

What were the issues?

1. Whether the presence of a 'buyback' clause (Article 41) in the AOA of a Section-8 company implies a non-charitable intent, leading to the rejection of final registration under Section 12AB of the Income Tax Act, 1961. 2. Whether clauses in the AOA (Article 39 and Articles 80 to 88) relating to capitalization of profits, dividends, and reserves, in a Section-8 company, justify the rejection of registration under Section 12AB, given that such clauses are superseded by the company's mandate to apply all income towards charitable objects. 3. Whether the denial of registration under Section 12AB on the ground of non-genuineness of activities is justified, when the assessee contends its activities are genuine and explainable. 4. Whether the cancellation of provisional registration previously granted on May 29, 2024, was arbitrary and invalid, without proof of diversion of funds or engagement in non-charitable activities. 5. Whether the rejection of approval under Section 80G of the Income Tax Act, 1961, is invalid on facts and in law. 6. Whether the rejection of approval under Section 80G on the ground of non-registration under Section 12AB is incorrect and unlawful. Assessee's Contention: The assessee argued that as a Section-8 company, its AOA clauses are superseded by statutory provisions mandating application of income towards charitable objects. It submitted that it had passed a special resolution to amend Article 41 and Articles 80 to 88 and filed an application before the Registrar of Companies (ROC). The assessee requested another opportunity to furnish all necessary details. Revenue's Contention: The CIT-DR had no objection to setting aside the matters back to the 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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