SHRI SAMARTH SHRAVAN FOUNDATION,PUNE vs. ITO, EXEMPTION WARD 1(1), PUNE

We will take up ITA No.2730/PUN/2024 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.

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).

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 ITA Nos.2730 and 2729/PUN/2024

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.

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.

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.

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.

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;

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.

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 eligible for taking benefits u/s.11 of the Act. Therefore, no ITA Nos.2730 and 2729/PUN/2024

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 ITA Nos.2730 and 2729/PUN/2024

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 assessee’s application.

In so far as ITA No.2729/PUN/2024, we find that that facts are similar. Hence, our decision given in ITA No.2730/PUN/2024 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.

गाडफ़ाइल / Guard File. आदेशानुसार / BY ORDER,