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Facts
The assessee trust filed an application for registration under Section 12AB of the Income Tax Act, 1961, and also for approval under Section 80G. The CIT(E) rejected the application for registration, citing that the application was filed under the wrong clause and that the trust was running a pharmacy, which is a commercial activity, not charitable. The CIT(E) also rejected the approval for 80G.
Held
The Tribunal held that the rejection of the application due to a clerical mistake in selecting the wrong clause should not deprive the assessee of its substantive right to registration. The Tribunal also noted that the CIT(E) did not consider the complete list of trust objects and relied only on three. Consequently, the Tribunal set aside the order and remitted the matter back to the CIT(E) for fresh consideration, allowing one more opportunity to the assessee.
Key Issues
Whether rejection of registration under Section 12AB for a clerical error in the application clause is justified, and if the approval under Section 80G requires re-consideration along with the registration.
Sections Cited
12AB, 12A(1)(ac)(vi), 12A(1)(ac)(iii), 80G(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeals filed by the assessee arises out of the orders of Learned Commissioner of Income Tax (Exemption), Chennai [hereinafter “CIT(E)”] dated 26.06.2025 in rejecting application for registration u/s. 12AB of the Income-tax Act, 1961 (hereinafter “the Act”) and approval u/s 80G of the Act.
& 2235/Chny/2025 Kumarann Charitable Trust :- 2 -: ITA No.2154/Chny/2025:
The Ld. CIT(E) has rejected the application filed by the assessee in Form No. 10AB under section 12A(1)(ac)(vi) of the Act on 18.10.2024, seeking registration u/s. 12AB of the Act. The Ld. CIT(E)
observed that the assessee had not submitted any evidence in support of its contention that it was providing subsidized or free medicines to prove charitable nature of activities as medical relief or relief to poor.
The Ld. CIT(E) held that the assessee-trust was running a pharmacy, which is commercial in nature, and was not actually engaged in any charitable activity that could be categorized as “relief of the poor. In view of these findings, the Ld. CIT(E) rejected the application for registration under section 12AB of the Act.
The Ld. Authorized Representative (A.R.) for the assessee submitted that the Ld. CIT(E) was not justified in holding that the application could not be processed merely because it was filed u/s. 12A(1)(ac)(vi) instead of section 12A(1)(ac)(iii) of the Act. It was contended that the selection of the wrong clause was only a clerical mistake, which should not deprive the assessee of its substantive right to registration. The Ld. A.R further submitted that the Ld. CIT(E) failed & 2235/Chny/2025 Kumarann Charitable Trust :- 3 -: to consider the complete list of the trust’s objects, which were twenty- seven in number, and instead relied only on three objects mentioned in Form No. 10AB. The Ld. A.R therefore pleaded that, in the interest of justice, one more opportunity be provided to the assessee to substantiate its case before the Ld. CIT(E).
On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.
We have heard both the parties and gone through the order of the Ld. CIT(E). The Ld. CIT(E), in para 4.2.1 of his order, has observed that the assessee made an application u/s. 12A(1)(ac)(vi) – Item B instead of section 12A(1)(ac)(iii) of the Act, and hence, held that the same could not be processed. The Ld. CIT(E) also noted that the assessee had not produced any evidence to substantiate its claim that subsidized or free medicines were provided to deserving persons, so as to qualify under the charitable objects of “relief of the poor” or “medical relief.” Considering the submissions, and in the interest of justice, we are of the view that the assessee should not be punished for clerical mistake in not selecting the appropriate clause in the & 2235/Chny/2025 Kumarann Charitable Trust :- 4 -: application. We accordingly direct Ld CIT(E) to consider the application as filled under the provisions of section 12A(1)(ac)(iii) and provide one more opportunity to the assessee to present its case and submit the necessary supporting documents. Accordingly, we set aside the impugned order of the Ld. CIT(E) and remit the matter back to his file for fresh consideration of the assessee’s application, in accordance with law, after affording a reasonable opportunity of being heard to the assessee. The assessee is also directed to comply with all notices issued by the Ld. CIT(E) and furnish all relevant details for fresh consideration. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.
: 6. Since we have already remitted the matter relating to registration u/s. 12AB back to the file of the Ld. CIT(E) for fresh consideration, we are of the considered opinion that the issue of approval u/s. 80G(5) of the Act also requires re-consideration. Accordingly, we remit this matter as well to the file of the Ld. CIT(E) for fresh adjudication, after giving due opportunity to the assessee to substantiate its claim. The assessee is also directed to comply with all the notices issued by the Ld. CIT(E) and furnish all relevant details for its fresh consideration.
& 2235/Chny/2025 Kumarann Charitable Trust :- 5 -:
In the result, both the appeals filed by the assessee is allowed for statistical purposes.
Order pronounced on 30th day of October, 2025 at Chennai.