Loading judgment…
Facts
The Assessee, a Section 8 company, obtained provisional registration u/s 12A and applied for permanent registration u/s 12A r.w.s. 12AB and 80G. The CIT(Exemption) rejected the application, citing that the Assessee had not commenced any charitable activities, rendering the genuineness of activities unverifiable. The Assessee argued that only its charitable objects should be considered for registration.
Held
The Tribunal confirmed the CIT(Exemption)'s rejection, emphasizing that for permanent registration under Section 12AB, the genuineness of activities must be verified, unlike provisional registration. Since the Assessee had admittedly not started activities, and merely purchasing property does not constitute charitable activity without actual use, the application was premature. The Tribunal noted that the Assessee still held valid provisional registration.
Key Issues
Whether an entity seeking permanent registration under Section 12AB must have commenced charitable activities for verification of genuineness, or if only the objects of the entity are sufficient.
Sections Cited
12A, 80G, 12AB, 2(15), 11, 12AA, 10, 23C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: MS. ASTHA CHANDRA & DR.DIPAK P. RIPOTE
PER DR. DIPAK P. RIPOTE, AM: These two appeals filed by the Assessee are against the order of Commissioner of Income-tax (Exemption), Pune both dated 13.11.2024 rejecting Assessee’s application for registration u/s.12A and 80G of the Act.
as Lead Appeal which is against the order of CIT(Exemption) rejecting Assessee’s application for registration u/s.12A r.w.s.12AB of the Act.
Submission of ld. AR : 3. Ld. AR submitted that Assessee is a Section 8 company. Assessee received provisional registration u/s.12A of the Act on 28.12.2022 which is valid till A.Y. 2025-26. Assessee filed application for permanent registration vide application dated 11.05.2024. CIT(Exemption) has rejected the said application on the ground that no activities have been carried out. Ld. AR submitted that assessee’s objects are charitable in nature. Assessee has purchased a Community Hall which will be used for charitable purpose. Ld. AR relied on the judgment of Hon’ble Supreme Court in the case of CIT (Exemption) Vs. M/s. International Health Care Diary No. 19528/2018 dated 11.02.2025. ld. AR vehemently argued that at the time of registration ld. CIT(Exemption) has to verify only the objects. Therefore, ld. AR submitted that Assessee is eligible for exemption.
3.1 On a specific query from the Bench, ld. AR admitted that activities have not yet started. Submission of ld. DR :
Ld. DR submitted that Assessee has not started activities hence, as per the amended provisions Assessee is not eligible. Ld. DR supported the order of CIT(Exemption).
Findings &Analysis :
We have heard both the parties and perused the records. Assessee is a company registered u/s.8 of the Companies Act. Assessee applied for provisional registration u/s.12A r.w.s.12AB of 2 the Act and got provisional registration u/s.12A r.w.s.12AB of the Act on 28.12.2022. The Assessee’s provisional registration is valid upto A.Y. 2025-26.
5.1 Assessee applied for permanent registration on 11.05.2024. During the proceedings, CIT(Exemption) noted that Assesseeh has not started any activity therefore Commissioner held that genuineness of the activities and charitableness of the activities cannot be verified. Hence, CIT(Exemption) rejected the Assessee’s application stating that Assessee’s application is premature and genuineness of the activities of the assessee could not be verified.
5.2 In this case, the Assessee Shri Samrath Shravak Foundation was earlier known by the name Naval Prem Foundation. Naval Prem Foundation made an application for registration u/s.12A in the name of Naval Prem Foundation on 11.05.2024.
5.3 It is observed from the submission of ld. AR that Naval Prem Foundation changed the name to Shri Samrath Shravak Foundation on 29.05.2024 as per the copy of the Certificate of Incorporation pursuant to change of name filed by ld. AR. Thus, initially Naval Prem Foundation had applied for registration u/s.12A.
5.4 It is an admitted fact by ld. AR that no activities have been started yet. It is noted that Assessee has only purchased an immovable property which seems to be some Hall. However, it is an admitted position that no activities were carried out.
5.5 There were amendments to provisions of section 12A and new section 12AB was introduced. It was in the Finance Bill 2020 the concept of “Provisional Registration” was introduced. It was in Finance Bill the validity of the registration granted was restricted to five years. As a result all the existing Trust/Institutions which were already having registration u/s12AA or 80G(5) was asked to re- apply for registration as per the amendment brought in 2020.
5.6 The Hon’ble Finance Minister in Budget Speech 2020 has said as under :
Quote “In order to simplify the compliance for the new and existing charity institutions, I propose to make the process of registration completely electronic under which a unique registration number (URN) shall be issued to all new and existing charity institutions. Further, to facilitate the registration of the new charity institution which is yet to start their charitable activities, I propose to allow them provisional registration for three years. ” Unquote. Finance Bill 2020 “(vi) an entity making fresh application for approval under clause (23C) of section 10, for registration under section 12AA, for approval under section 80G shall be provisionally approved or registered for three years on the basis of application without detailed enquiry even in the cases where activities of the entity are yet to begin and then it has to apply again for approval or registration which, if granted, shall be valid from the date of such provisional registration. The application of registration subsequent to provisional registration should be at least six months prior to expiry of provisional registration or within six months of start of activities, whichever is earlier”
5.7. When we read the Budget Speech of the Hon’ble Finance Minister 2020 and the Memorandum of Finance Bill, 2020 together, it becomes clear that the concept of Provisional registration was mainly to facilitate the registration of newly formed Trust/Institutions which have not yet begun the activities. 4 5.8 Thus, the concept of provisional registration was introduced for the first time by Finance Bill, 2020. Hon’ble Finance Minister explained the concept that in order to facilitate the newly formed Trust who have not started the activities, concept of provisional registration was introduced.
5.9 As per the amended provisions, section 12AB was introduced w.e.f. 01.06.2020. Section 12AB lays down the procedure for registration. Therefore, as per the new procedures, the newly formed Trust are eligible for provisional registration. At the time of provisional registration, the activities are not verified. The provisional registration is granted by Centralized Processing Centre, without verifying activities.
5.10 The section 12A(iii) is reproduced here as under :
“(iii) where the trust or institution has been provisionally registered under section 12AB [or provisionally approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10], at least six months prior to expiry of period of the provisional registration [or provisional approval, as the case may be] or within six months of commencement of its activities, whichever is earlier; 5.11 As per sub clause (iii) the Trust which gets provisional registration has to apply for registration before six months of expiry of provisional registration or within six months of commencement of its activities.
5.12 In this case, Assessee has admittedly not started activities. Assessee’s provisional registration was valid till A.Y. 2025-26. Therefore, with the help of provisional registration, Assessee was 5 eligible for taking benefits u/s.11 of the Act. Therefore, no prejudice is caused to the assessee by the order of CIT(Exemption) dated 13.11.2024 rejecting assessee’s application for permanent registration.
5.13 As per section 12AB, CIT(Exemption) has to verify objects of the Trust, i.e. whether the objects are Charitable as defined u/s.2(15) of the Act, Activities of the Trust, Genuineness of the activities, i.e. whether activities of the Trust are carried out as per the objects of the Trust or not. The CIT(Exemption) also has to verify whether there is any violation of any other law applicable. This provision was brought into w.e.f. 01.06.2020. Therefore, in this case, ld.CIT(Exemption) as per section 12AB of the Act called for the documents from the Assessee to verify genuineness of the activities of the assessee, violation of any other law applicable. In this case, admittedly no activities have been carried out. Ld. AR submitted that some immovable property has been purchased. Purchase of immovable property cannot be said to be an activity for Charitable purpose as defined u/s.2(15) of the Act. Only when the said immovable property is put to use for the objects of the Trust, then only the Assessee can claim that it has carried out activities as per the objects. In this case, even during the hearing before this Tribunal, no evidence has been filed to demonstrate activities.
Assessee has relied on the decision of Hon’ble Supreme Court in the case of CIT (Exemption) Vs. M/s. International Health Care Diary No. 19528/2018 dated 11.02.2025. The said decision pertains to the Section 12AA of the Act. Section 12AA of the Act is not applicable after the amendments brought by Finance Act, 2020. It is 6 also observed from para 5 of the order of Hon’ble Supreme Court that in the case of M/s. International Health Care (supra), the Trust was created on 01.01.2008 and it had applied for registration on 18.02.2008, i.e. immediately after incorporation. Even in the case of M/s. International Health Care (supra), the Hon’ble Supreme Court observed in para 14 as under :
“14. We may agree to a certain extent with the learned ASG that the very purpose for any assessee to seek registration under section 12AA of the Act is to claim exemption under sections 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature.”
6.1 Thus, even Hon’ble Supeme Court observed that before seeking registration the Trust must file documents so that Commissioner satisfies himself about genuineness of the activities and its charitable nature.
In this case, admittedly Assessee has not carried out any activity. The case law relied on by the Assessee has been discussed in earlier paragraph wherein Hon’ble Supreme Court has observed that Commissioner has to satisfy about genuineness of the activities.
In these facts and circumstances of the case, we are of the opinion that ld.CIT(Exemption) was right in rejecting the application of the Assessee. Accordingly, order of ld.CIT (Exemption) is confirmed. We again repeat here that Assessee is having valid provisional registration upto A.Y. 2025-26 hence no prejudice is caused to the assessee when CIT(Exemption) rejected 7 assessee’s application. we find that that facts are similar. Hence, our decision given in shall hold good mutatis mutandis to this appeal as well. Order of ld.CIT(Exemption) is confirmed. Grounds of appeal raised by the Assessee are dismissed.
In the result, both the appeals of the Assessee are dismissed.
Order pronounced in the open Court on 26th August, 2025.