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Facts
The assessee, a Trust registered on 12/09/2003, was granted provisional registration under section 12AB for AY 2022-23 to 2024-25. The assessee was required to apply for final registration under clause (iii) of section 12A(1)(ac) but inadvertently applied under clause (vi). The CIT(E) rejected the application for final registration.
Held
The Tribunal held that mistakenly choosing the wrong clause for registration application is not fatal to the application. The Tribunal set aside the order of the CIT(E) and remitted the issue back for considering a rectified application under the correct clause.
Key Issues
Whether mistakenly selecting the wrong clause in the application for registration of a trust is a fatal error leading to rejection, or if the same can be rectified.
Sections Cited
12A, 11, 12AB, 12A(1)(ac), 10(23C)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Sunrise Education Trust Vs. The CIT (Exemption) C/o. Chavda Dhirubhai P. Ahmedabad–380 015 PO Tuva, Wadhwancity Surendranagar - 363 421 PAN No. : AAFTS 9891 J (Appellant) (Respondent) .. Assessee by : Shri Chirag Shah, AR Revenue by : Shri Rignesh Das, CIT-DR Date of Hearing 17/07/2025 Date of Pronouncement 30/07/2025 आदेश / O R D E R
PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER:
This appeal is filed by the assessee as against the order dated 02/12/2024 passed by the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”] denying registration under section 12A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
Brief facts of the case are that the assessee is a Trust incorporated on 12/09/2003 providing education at affordable cost to the needy students of the Society. The Trust was registered under section 12A of the Act, claiming exemption under section 11 of the Act. As per the new provisions of the Act, with effect from 01/04/2021, the assessee-trust was to be re-registered as per the Sunrise Education Trust vs. The CIT(Exemption), Ahmedabad - 2 - procedures mentioned in clauses (i) to (vi) under section 12A(1)(ac) of the Act. Thus, the assessee-trust sought a provisional registration u/s.12AB of the Act, which was granted by Ld.CIT(E) vide order dated 31/05/2021 from A.Y. 2022-23 to A.Y.2024-25. The assessee was required to make application for final registration under clause (iii) of section 12A(1)(ac) of the Act. However, inadvertently the assessee-trust applied under clause (vi) of section 12A(1)(ac) of the Act in Form No.10AB. 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 which has not commenced its activities. As the assessee-trust had claimed exemption u/s.11 of the Act, the assessee’s application was rejected by Ld.CIT(E).
Aggrieved against the order of rejection, the assessee is in appeal before us raising the following Grounds of Appeal:
“1. The order passed by CIT (EXEMTION) for rejecting 12AA is bad in law and deserved to be uncalled for. 2. All the condition required for registration under 12AA are fulfilled by the appellant and order passed by the CIT (EXEMTION) should be uncalled for. 3. The appellant craves to reserve his right to add, alter, amend, or delete any ground of appeal during the course of hearing.”
4. Heard rival submissions and perused the material available on record. Ld.Counsel for the assessee submitted before us copy of Form No.10AB filed by the assessee, wherein the assessee-trust inadvertently claimed for regular registration under clause (vi) of section 12A(1)(ac) of the Act. Whereas the assessee being a trust Sunrise Education Trust vs. The CIT(Exemption), Ahmedabad - 3 - already registered under the Act and also got a provisional registration under the new regime on 31/05/2021. The assessee ought to have made application in clause (iii) of section 12A(1)(ac) of the Act.
4.1. 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.). 4.2. 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 of provisional regn or within 6 10AB Final registration provisional registration and is (iii) for 5 years months of commencement of applying for regular registration activity, whichever is earlier Trust has modified its objects (not Within 30 days from adoption 10AB Fresh registration (iv) in conformity with existing or modification of the objects for 5 years registration conditions)
Sunrise Education Trust vs. The CIT(Exemption), Ahmedabad - 4 -
Time Limit for Filing Type of Clause When to Apply Form Application Registration At least 1 month prior to Trust not previously registered Provisional commencement of the previous (v) and applies before commencement 10A registration for 3 year relevant to the assessment of charitable activities years year Trust not previously registered Provisional Within the financial year in (vi) and applies after commencement 10A registration for 3 which activities commenced of 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
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 Sunrise Education Trust vs. The CIT(Exemption), Ahmedabad - 5 - the file of CIT(E) to consider the registration under correct provision by accepting in fresh Form 10AB and pass order in accordance with the provisions of law.
6.1. 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 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 the result, the appeal filed by the assessee is allowed for statistical purposes.