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Facts
The assessee company applied for registration under Section 12AB of the Income Tax Act. The CIT(E) rejected the application, stating the assessee was not engaged in charitable activities and had earned profit.
Held
The Tribunal noted that for registration under Section 12AB, the CIT(E) can only verify the genuineness of activities and compliance with other laws, not conduct a detailed assessment. The appeal was filed against the CIT(E)'s order.
Key Issues
Whether the CIT(E) erred in rejecting the Section 12AB registration by conducting an inquiry beyond the scope of verification for granting registration.
Sections Cited
12AB, 12A(1)(ac)(iii), 8
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S. R. RAGHUNATHA
अपीलाथ+ की ओर से/Appellant by : Mr. N. Arjun Raj, Advocate ,-थ+ की ओर से/Respondent by : Mr. Bipin, C.N, CIT सुनवाई की तारीख/Date of Hearing : 28.07.2025 घोषणा की तारीख/Date of Pronouncement : 22.09.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM :
This appeal is filed by the assessee against the order dated 28.01.2025 passed by the Commissioner of Income Tax(Exemptions) (hereinafter referred to as “CIT(E”), rejecting the approval for registration u/s.12AB, filed in terms of section 12A(1)(ac)(iii) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).
The assessee is a company registered on 06.01.2023 u/s.8 of the Companies Act, 2013 and it filed an application dated 20.07.2024 in Form 10AB, seeking registration u/s.12AB of the Act. The Ld.CIT(E) rejected the said application dated 20.07.2024 on the ground that the assessee is not engaged in any charitable activities and has not substantiated its nature of activities as charitable. Aggrieved by the order passed by the ld.CIT(E), the assessee is in appeal before us.
The ld.CIT(E), pursuant to the application made by the assessee, for the approval of registration u/s.12AB called for the various records, including the memorandum of association, articles of association and its financial statements. The ld.CIT(E) carried out an analysis of the financial statements and held that the assessee is not carrying out any charitable activities and rejected the approval sought for registration u/s.12AB of the Act.
The case of the ld.CIT(E) is as follows: The income from operations earned by the assessee was Rs.12,992/-, which arises from assessment fees, Authorised Training Centre Affiliation, Consultancy Fee, Empanelment fees, SMART BSDC Online fees, SSC Assessment Fees and Welfare Scheme Assistance. These heads of income point out that the assessee is not engaged in charitable purpose. Further, the assessee collaborates with Leeds Skill Training Centre Private Limited and had conducted skill development program for 100 urban youth who are below poverty line and earned a surplus of Rs.4,77,200/- and Rs.1,57,100/- for year ending March, 2023 and 2024 respectively. Since the assessee had earned profit, it ceases to exist as a charitable organization. Further, the objects of relief of the poor, environmental protection and education are not to be seen from the financial statements and hence the approval was rejected. Further, the ld.CIT(E) held that the more than 20% of its income is applied for the purposes specified above and hence registration could not be granted.
Before the ld.CIT(E), the assessee contended that at the time of grant of registration, the only two conditions that could be verified by the ld.CIT(E), as per section 12AB are (a) the genuineness of activities of the trust or institution and (b) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects. The ld.CIT(E) is not bound to make an enquiry akin to assessment,