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Facts
The assessee, Kanva Maharishi Trust, filed an application for registration under Section 12AB of the Income Tax Act, 1961. The CIT(Exemptions) rejected the application and cancelled the provisional registration, stating that the trust had not commenced its charitable activities as per its objects.
Held
The Tribunal restored the issue to the CIT(E) for fresh adjudication. The assessee is directed to substantiate that it has carried out charitable activities for charitable purposes and that these activities are genuine.
Key Issues
Whether the CIT(E) was justified in rejecting the application for registration under Section 12AB on the grounds that the trust had not commenced its charitable activities, and whether the activities carried out were for charitable or religious purposes.
Sections Cited
12AB, 10AC, 10AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.
Per Prashant Maharishi, Vice President
This appeal is filed by the Kanva Maharishi Trust [assessee/appellant] against the order passed by the CIT(Exemptions), [ld. CIT(E)] dated 20.11.2024 wherein the application filed by the assessee in Form 10AB dated 30.5.2024 for registration u/s. 12AB of the Income Tax Act, 1961 [the Act] was rejected and provisional registration granted is cancelled.
The brief facts show that assessee is a trust which was granted provisional registration by Form 10AC on 22.10.2023 as trust is established as a pubic charitable trust vide Trust Deed dated 27.9.2023 with the object of performing Annadan and feeding the poor directly to impart Vedas & Mantras, maintain Yagashala and Goshala. The assessee applied for registration u/s. 12AB by filing Form 10AB on 30.5.2024.
The ld. CIT(E) assigned the verification to the jurisdictional Assessing Officer [JAO], who held that assessee trust appears to be religious in nature. It was further found that assessee has received donation of Rs.20,000 which is spent towards administrative expenditure. The assessee has also obtained property on rent from one of the trustees vide rent agreement dated 1.8.2023 at a monthly rent of Rs.12,000 which was entered into by the landlord and one of the trustees.
The ld. CIT(E) after obtaining the report held that assessee has not commenced its activities as per the objects of the trust and therefore the same was rejected. Assessee is in appeal before us.
The ld. AR submitted that the objects of the assessee are charitable in nature and that it has the objects of advancement of Indian culture and literature as well as object of Annadan. This activity is carried out without any discrimination of any caste. It was further stated that donation of Rs.20,000 and further rent agreement itself show that assessee is using the premises taken on rent by one of the trustees as the assessee trust is in early stage. Therefore assessee has already
started its activities. It was further stated that assessee was never asked that the assessee trust has not commenced its activities. Therefore the observation made by the ld. verifying authority is not proper. It was further the claim that had the assessee been asked bout the activities of the trust, explanation would have been given for verification of the genuineness of the activities, if such queries were raised and therefore the order is not proper.
The ld. CIT(DR) vehemently supported the order of the ld. lower authorities and submitted that the ld. CIT(E) has relied upon the report of the ld. JAO who has stated that assessee has not carried out any activities and further it is for the religious purposes. Therefore application was correctly rejected.
We have carefully considered the rival contentions and the order of the ld. CIT(E) rejecting the application of the assessee for registration u/s. 12AB of the act. We find that the observation of the ld. JAO who was assigned the job of verification has stated that assessee is carrying on religious activities. However looking to the objects of the trust, we do not find that assessee is formed for any religious activities. Even otherwise, religious activities are not barred for getting registration u/s. 12AB. No provision of law was shown that trusts with religious purposes is not entitled to registration u/s. 12AB. However, the claim of the assessee needs to be verified that assessee is using the property of the trustees taken on rent for the objects of the trust. Unless these
things are verified, it cannot be said that assessee has not commenced charitable activities.
Therefore, we restore the whole issue back to the ld. CIT(E) with a direction to the assessee to substantiate before the ld. CIT(E) that assessee has carried out charitable activities and it is for charitable purposes and are genuine and therefore registration should be granted to the assessee. The ld. CIT(E) after examination of the details and carrying out due verification, may decide the issue afresh in accordance with law, after providing an opportunity of hearing to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Pronounced in open court on 29.07.2025.