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Facts
The assessee, a charitable trust, applied for final registration under Section 12AB of the Income Tax Act, 1961. The CIT(E) rejected the application, stating it was made under the wrong clause of Section 12A(1)(ac) as the trust had claimed exemption under Section 11 in previous years.
Held
The Tribunal held that the incorrect mention of the clause in the application was not fatal to the registration. The matter was set aside to the CIT(E) to consider the application under the correct clause after providing an opportunity of hearing to the assessee.
Key Issues
Whether incorrect mention of a section/clause in an application for registration under Section 12AB is fatal to the application, and whether the matter should be remanded for fresh consideration.
Sections Cited
12AB, 80G(5), 12A(1)(ac), 11, 10(23C), 12A
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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: DR. BRR KUMAR & Shri T.R. SENTHIL KUMAR
Assessee Represented: Shri Mehul Thakkar, A.R. Revenue Represented: Shri Sher Singh, CIT-DR Date of hearing : 29-07-2025 Date of pronouncement : 31 -07-2025 आदेश/ORDER PER BENCH:-
These two appeals are filed by the assessee as against denial of registration under Section 12AB and 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide separate orders dated 02.12.2024 and 03.12.2024 passed by Ld. Commissioner of Income Tax (Exemption), (hereinafter referred to as “Ld. CIT(E)”), Ahmedabad.
& 459/Ahd/2025 Page No 2 Ananya Education and Charitable Trust Vs. CIT(E)
Brief facts of the case are that the assessee is a charitable trust registered under the Bombay Public Trust Act, 1950 with registration certificate dated 25-08-2017. The assessee Trust never been registered under the Income Tax Act till 07-04-2022, when it first time obtained provisional registration u/s. 12AB of the Act for the Asst. Years 2022-23 to 2024-25. Thereafter the assessee filed application in Form 10AB on 29-06-2024 seeking final registration u/s. 12(A)(1)(ac)(vi)–ITEMB of the Act. The Ld. CIT(E) rejected the application on the ground that the assessee made application under clause (vi) of Section 12A(1)(ac) of the Act which applies only to the new Trust and the assessee Trust having claimed exemption u/s. 11 of the Act, assessee’s application for final registration was rejected.
Aggrieved against the order of rejection, assessee is in appeal before us raising the following Grounds of Appeal:
1. The CIT(Exemption), Ahmedabad erred in rejecting the appellant’s application for registration under section 12AB on the ground that the appellant is not eligible to get registered under section 12A(1)(ac)(vi)- ITEM(B) of the Act. The CIT(Exemption) ought to have registered the appellant under some other clause of section 12A of the Act.
2. The appellant craves leave to add, alter or delete any ground either before or in the course of hearing of the appeal.
4. Ld. Counsel Shri Mehul Thakkar appearing for the assessee submitted that the CBDT Circular No. 1/2024 dated 23-01-2024 explaining the provisions of Finance Act, 2023, more particularly clause (e) of Para 15.5.3 of the Circular, the intention of the statute made it clear that those Trust’s and Institution’s which have already commenced activities shall make an application for a & 459/Ahd/2025 Page No 3 Ananya Education and Charitable Trust Vs. CIT(E) regular registration under item-B of sub-clause (6) of Section 12A(1)(ac) of the Act without going into the aspects whether the benefit u/s. 11 or 12 of the Act has been claimed in passed or not. The Ld. Counsel further submitted that without prejudice to the above prayer, made an alternative prayer that mere mistake in making application for grant of registration under a wrong provisions/sections was not fatal to grant registration as held by various decisions of the Tribunal. Therefore the matter may be set aside to the file of Ld. CIT(E) and give one more opportunity of hearing to the assessee trust and dispose the assessee’s application based on the amended provisions of law.
5. Per contra, Ld. CIT-DR appearing for the Revenue supported the order passed by the Ld. CIT(E) and requested to confirm the same.
We have considered rival submissions and perused the material available on record. Section 12A(1)(ac) was introduced by the Finance Act, 2020, and became effective from 1st April 2021. It provides for mandatory re-registration or fresh registration for trusts and institutions under certain conditions. This provision replaced the earlier system of permanent registration with a renewable registration regime for every five years. It mandates a Trust to apply in prescribed circumstances for:
New registration (first-time applicant), Provisional registration (for new entities), Re-registration (due to modification or expiry), Fresh registration (due to missed deadlines, etc.). & 459/Ahd/2025 Page No 4 Ananya Education and Charitable Trust Vs. CIT(E)
6.2. For better understanding the clauses (i) to (vi) of section 12A(1)(ac) of the Act, which are applicable to various categories of Trust are tabulated as follows: Time Limit for Filing Type of Clause When to Apply Form Application Registration Trust or institution already registered under section On or before 30.06.2021 (later 10A Fresh registration (i) 12A/12AA and wants to migrate to extended via circulars) valid for 5 years new regime Trust already registered u/s 12AB At least 6 months before expiry (ii) and its registration is due for 10AB Renewal for 5 years of current registration renewal At least 6 months before expiry Trust/institution that has provisional of provisional regn or within 6 10AB Final registration registration and is applying for (iii) months of commencement of for 5 years regular registration activity, whichever is earlier Trust has modified its objects (not Within 30 days from adoption or 10AB Fresh registration (iv) in conformity with existing modification of the objects for 5 years registration conditions) At least 1 month prior to Trust not previously registered and Provisional commencement of the previous (v) applies before commencement of 10A registration for 3 year relevant to the assessment charitable activities years year Trust not previously registered and Provisional Within the financial year in applies after commencement of 10A registration for 3 (vi) which activities commenced activities years Trust/institution whose registration became inoperative under Section Before expiry of the approved 10A Provisional/Fresh (via) 11(7) (due to 10(23C) approval) and period under Section 10(23C) or registration now applies again under Section immediately thereafter 12A
In the present case, the assessee had made application under section 12A(1)(ac)(vi)(B) of the Act. As rightly held by the ld. CIT(E), the condition under that sub-clause was not fulfilled by the assessee as it has claimed exemption under section 11 of the Act in different years. The contention of the assessee is that it did not fulfill the condition as stipulated in clauses (i) to (vi) of section 12A(1)(ac) of the Act. It is true that apparently the case of the assessee does not fall in any of the sub-clauses (i) to (vi). Since the & 459/Ahd/2025 Page No 5 Ananya Education and Charitable Trust Vs. CIT(E) assessee has been provisionally registered under section 12AB of the Act, it is eligible to make an application under section 12A(1)(ac)(iii) of the Act. But the application under this sub-clause is required to be made within the period of six months prior to the expiry of period of provisional registration or within six months from the commencement of the activities, whichever is earlier. The contention of the assessee is that the period of six months from the commencement of activities had already expired, which was earlier than grant of provisional registration, and, therefore, it was not eligible for making application under this sub-clause as well. In fact, this sub-clause makes the grant of registration to entities, who have commenced their activities and thereafter apply for provisional registration, very restrictive. An assessee trust might have commenced its activities much prior to the grant of provisional registration. The new trust or institution are required to apply for the provisional registration/approval at least one month prior to the previous year relevant to the assessment year from which the said registration/approval is sought. In the present case the provisional registration was granted to the assessee on 07.04.2022 for the A.Ys. 2022-23 to 2024-25. This was in spite of the fact that the commencement of activities of the trust was much earlier, wherein exemption u/s 11 was claimed for the first time. The intention of the Legislature would not be that a trust will be precluded from applying for final registration, even after the grant of provisional registration, particularly in a case, where the provisional registration was granted after six months from the commencement of its activities. Therefore, the provision of section 12A(1)(ac)(iii) has to be liberally interpreted in order to make such & 459/Ahd/2025 Page No 6 Ananya Education and Charitable Trust Vs. CIT(E) trust or institution eligible for registration, where they have been allowed provisional registration after six months from the commencement of their activities.
7.1 As per clause (iii) of section 12A(1)(ac) of the Act, the assessee-trust should make application for regular registration within six months before expiry of the provisional registration or six months of commencement of the activity whichever is earlier. However, this time limit has been extended till 30/06/2024 vide CBDT Circular No.7/2024 dated 25/04/2024. Thus, the assessee- trust filed application in Form No.10AB on 29/06/2024 for final registration, however, inadvertently chosen clause (vi) of section 12A(1)(ac) of the Act, which is not applicable to this assessee-trust.
This issue of wrong mentioning of the provisions for registration is no more res integra since various decisions passed by the Co-ordinate Benches, namely, Aatman Foundation vs. CIT(E) 174 taxmann.com 1109 (Ahmedabad-Trib.), Gandhinagar Ayyapa Pooja Samiti vs. CIT(E) 174 taxmann.com 901 (Ahmedabad-Trib.) and Rotary Charity Trust vs. CIT(E) 170 taxmann.com 797 (Mumbai-Trib.) held that wrong quoting of the clause in the Application for registration of a trust is not fatal and set aside the rejection order to the file of CIT(E) to consider under the registration under correct provision by accepting in fresh Form 10AB and pass order in accordance with the provisions of law.
8.1. Following the above decisions, we are of the considered view that there is merit in the claim of the Ld.Counsel that the assessee- trust which had selected wrong clause inadvertently while filing & 459/Ahd/2025 Page No 7 Ananya Education and Charitable Trust Vs. CIT(E)
Form No.10AB. Therefore, we deem it fit to set aside the impugned order and remit the issue back to the file of Ld.CIT(E) with a direction to consider the rectified application of the assessee under clause (iii) of section 12A(1)(ac) of the Act and grant approval by giving opportunity of hearing to the assessee-trust and well within the provisions of the law.
In view of the above facts, the matter is set aside to the file of the ld. CIT(E) with a direction to consider the application of the assessee for registration under the provisions of section 12A(1)(ac)(iii) of the Act. If necessary, the assessee may be directed to file a fresh application under this provision. The appeal of the assessee is allowed for statistical purpose.
The application of the assessee under section 80G(5) of the Act should be decided after adjudicating the issue of registration under section 12A(1)(ac) of the Act. Therefore, the appeal of the assessee in is also set aside for statistical purpose.
In the result, both the appeals of the assessee are allowed for statistical purpose.
Order pronounced in the open court on 31-07-2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad: Dated 31/07/2025 & 459/Ahd/2025 Page No 8 Ananya Education and Charitable Trust Vs. CIT(E) आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file.