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Facts
The Assessee applied for registration under Sections 12AB and 80G of the Income Tax Act. The Commissioner of Income Tax (Exemption) rejected the applications, noting clauses in the trust deed/MOA that indicated the Assessee's intent to apply or receive funds outside India, which was considered violative of Section 11.
Held
The Tribunal observed that the Assessee was willing to amend these objectionable clauses. Consequently, the ITAT set aside the Commissioner's orders and remanded both cases for a fresh decision, directing the Assessee to modify the clauses within one month.
Key Issues
The key legal issue was whether the Commissioner could reject applications for registration under Sections 12AB and 80G based on trust deed clauses allowing the application or receipt of funds from outside India, especially when the Assessee offered to amend them.
Sections Cited
11, 11(1)(c), 12A, 12AA, 12AB, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI OMKARESHWAR CHIDARA
Per : Narender Kumar Choudhry, Judicial Member:
These appeals have been preferred by the Assessee against the orders even dated 19.02.2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Exemption) (in short Ld. Commissioner) under section 12AA of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2025-26.
& M/s. Nutrica Foundation 2. ITA No.2253/M/2025 is a lead case as the same pertains to registration u/s 12AB of the Act. Therefore, for the sake of brevity, we are inclined to decide ITA No.2253/M/2025 first.
The Assessee by filing an application in form No.10B had sought for registration u/s 12AB of the Act, which was taken into consideration by the Ld. Commissioner and by issuing a notice dated 09.01.2025 the Assessee was requested to furnish the complete set of documents. The Assessee, in response to such notice filed its submission vide letter dated 24.01.2025. On perusing the submission made by the Assessee, it was noticed by the Ld. Commissioner that “in the trust deed/MOA at point no.3(B)(5), (6), (7) & (15) and point no.4 of the objects there are violations of the provisions of section 11 of the Act, as the Assessee trust intends to apply/receive funds outside India” and therefore he issued a show cause notice dated 03.02.2025 to the Assessee, however, the Assessee made no response. Thereafter, a final opportunity was provided vide notice dated 11.02.2025 to the Assessee, in response to which the Assessee vide letter dated 14.02.2025 has made its submissions as reproduced by the Ld. Commissioner in para No.3. The Assessee before the Ld. Commissioner has claimed that “none of the above mentioned objects of MOA are in violation of section 11(1)(c) of the Act. It is not stated in these objects that the Assessee intends to apply funds outside India. It is merely mentioned that non-profit company intends to work with global recognized bodies. The Assessee assures that no fund will be applied outside India.”
Though the Ld. Commissioner considered the said contention of the Assessee, however, found the same as not acceptable and ultimately rejected the registration u/s 12A of the Act mainly by holding “that the applicant trust ought to have amended theses & M/s. Nutrica Foundation clauses to align with the provisions of the Income Tax Act. However, it has failed to do so. Thus based on the reasons mentioned above, this application for registration u/s 12A of the Act is not allowable. As such in view of the statutory limitation to decide the application on or before 28.02.2025, the undersigned is left with no other option but to reject the application seeking registration u/s 12AB of the Act.”
We have given thoughtful considerations to the peculiar facts and circumstances of the case. Before us the Ld. Counsel for the Assessee has submitted that the Assessee is willing to amend the respective clauses and/or ready to remove the clauses, which allow the Assessee to apply/receive the funds outside India, if the opportunity be given to the Assessee.
The Ld. D.R. did not refute such claim of the Assessee.
Thus considering the peculiar facts and circumstances of the case as the Ld. Commissioner rejected the application filed by the Assessee mainly on the reason that the Assessee intends to apply/receive funds outside India whereas the Assessee has agreed to amend the respective clauses according to parameters enshrined in section 11 of the Act and/or objections/particular clauses raised by the Ld. Commissioner in the impugned order. Thus the impugned order is set aside and consequently the case is remanded to the file of the Ld. Commissioner for decision afresh, suffice to say while affording reasonable opportunity of being heard to the Assessee. The Assessee is directed to amend/modify the respective clauses within one month from the date of receipt of this order.
In the result, the appeal is allowed for statistical purposes.
& M/s. Nutrica Foundation 9. Coming to ITA No.2252/M/2025. This appeal pertains to the non-granting of registration u/s 80G of the Act mainly on the reason that the Assessee does not have any appropriate registration for grant of registry u/s 80G of the Act. In view of our order in ITA No.2253/M/2025, this case is also remanded to the file of the Ld. Commissioner for decision afresh accordingly. Consequently, this appeal is also allowed for statistical purposes.
In the result, both the appeals under consideration are allowed for statistical purposes.
Order pronounced in the open court on 30.07.2025.