MAA SHARDA KOTHARI FOUNDATION,AHMEDABAD vs. THE CIT(EXEMPTION), AHMEDABAD

During the course of hearing, the learned Departmental Representative (DR) fairly submitted that he has no objection if the delay is condoned.

The assessee is a registered public charitable trust established under a trust deed and duly registered on 31.05.2002. The trust bears Registration or Incorporation No. E/15324/AHMEDABAD and is stated to be engaged in charitable activities. Pursuant to the amended provisions of section 12A(1)(ac) of the Act the assessee filed an application in Form No. 10AB on 01.06.2023, seeking conversion of its provisional registration into regular registration under section 12AB(1)(b) of the Act. It is pertinent to mention that the assessee had earlier been granted provisional registration under section 12AB vide Form 10AC dated 28.02.2023, in terms of clause (vi) of section 12A(1)(ac), for the period from A.Y. 2023–24 to A.Y. 2025–26. The instant application in Form 10AB was filed under section code 12A(1)(ac)(iii), which governs the filing of application for regular registration in a case where provisional registration had already been granted under clause (vi).

Upon receipt of the said application, the CIT(Exemption) initiated verification proceedings and issued a notice dated 04.10.2023, calling upon the assessee to furnish details and documents in support of its claim. Specifically, the assessee was asked to furnish a note on the nature of activities carried out during the last three financial years, details of top five donations received (including names, addresses of donors, amount, and mode of receipt), corresponding expenditure incurred on the objects of the trust, and supporting documentary evidence for the above. In response to the said notice, the assessee furnished its replies on 16.10.2023 and 17.10.2023. On perusal of the same, it was observed by the CIT(Exemption) that the assessee-trust had not commenced any charitable activity since its inception. The CIT(Exemption) also undertook an examination of the audited financial statements submitted by the assessee for the financial years 2019–20, 2020–21, 2021–22, and 2022–23, and recorded that the assessee had neither received any donation nor incurred any expenditure during these years towards the fulfilment of its stated charitable objects. It was thus inferred that the trust had remained inactive and dormant even during the period of provisional registration. The Commissioner further noted that as per section 12A(1)(ac)(iii), where a trust has been provisionally registered under section 12AB, it is required to apply for regular registration either within six months of commencement of its activities, or at least six months prior to the expiry of the period of provisional registration, whichever is earlier. Since the assessee had not commenced any activity at the time of filing of the application in Form 10AB on 01.06.2023, the authority came to the conclusion that the conditions of section 12A(1)(ac)(iii) were not fulfilled. Accordingly, the CIT(Exemption) held that the application filed by the trust for regular registration was premature and not maintainable in law, as the trust had neither undertaken any activity nor received any donations. The application was treated as filed for statistical purposes only, and was rejected by order dated 05.12.2023, citing non- compliance with the statutory requirement of having commenced charitable activity within the prescribed time frame.

Aggrieved by the said order, the appellant has preferred the present appeal before us raising following grounds of appeal:

Considering the facts the DR raised no objection in restoring the matter back to the file of CIT(E) for deciding the matter afresh.

We have considered the rival contentions, perused the material on record, and carefully examined the relevant provisions of the Act as well as the judicial precedent relied upon by the assessee. The issue for adjudication in the present appeal pertains to the rejection of the application for regular registration under section 12AB(1)(b), filed by the assessee on 01.06.2023 in Form No. 10AB. The CIT(Exemption) rejected the application vide order dated 05.12.2023, treating the same as “premature” on the ground that the assessee had not commenced its activities or received any donations as on the date of application, and therefore, the conditions of section 12A(1)(ac)(iii) were allegedly not fulfilled.

It is not in dispute that the assessee had been granted provisional registration under section 12AB vide Form 10AC dated 28.02.2023, for the period from A.Y. 2023–24 to A.Y. 2025–26. The application for final registration was filed within the currency of the said provisional registration, i.e., on 01.06.2023, anticipating the commencement of activities. Although the trust had not yet commenced operations at that stage, it is an admitted fact now placed on record through an audited report in Form 10BB for F.Y. 2023–24, that the activities have indeed commenced in March 2024. The return of income for A.Y. 2024–25 was also filed on 29.09.2024, evidencing active operations. The assessee has also submitted that despite the commencement of activities, it was technically unable to file a fresh Form 10AB in November 2024 due to portal-related errors, as confirmed by internal screenshots and portal error logs. These facts remain uncontroverted and were brought to our notice during hearing. In support of its case, the assessee has rightly placed reliance on the decision of the Coordinate Bench of the ITAT, Kolkata in Susamskar Foundation v. CIT(Exemption) [ITA No. 1113/KOL/2023, order dated 06.03.2024]. In that case, the CIT(Exemption) had similarly rejected the assessee’s application for regular registration on the ground that the application was premature as provisional registration was still valid. The Co-ordinate Bench set aside the rejection, holding that there is no bar in moving the application for final registration at the earliest possible. The relevant paras of the said decision are reproduced hereunder for the sake of clarity: 7. We have heard rival contentions and perused the records placed before us. The sole grievance of the assessee is that ld. CIT (Exemption) erred in law and on fact for not granting the benefit of permanent registration u/s 12AB of the Act. We observe that the assessee is a charitable Trust registered u/s 12AA of the Act vide order u/s 12AA(1)(b)(i) of the Act effective from 01.05.2018 (AY 2018-19). Subsequent to the amendments brought in the Act by Finance Bill, 2020, there was a requirement of provisional registration as well as final registration for new as well as existing Institutions/Trusts. The assessee has been granted provisional registration up to AY 2026-27 and before the expiry of the period, the assessee has applied for final registration. However, ld. CIT (Exemption) has treated the said application as non-maintainable only on the ground for being premature and that the assessee has already been granted provisional registration valid till AY 2026-27.

We find that under the similar set of facts and circumstances, this Tribunal in the case of Ramkrishna Mandal Institute of Education vs. CIT (Exemption) in order dated 20.02.2024 in which one of the co-signatory is the author of this order and the issue has been examined and decided in the following manner: “3. We have heard the rival contentions and gone through the record. The assessee- institution has been granted registration u/s 12AB(l)(a) of the Act for five years vide order dated 28.05.2021 which is valid from A.Y 2022-23 to A.Y 2026-27. As per the provisions of section 12A(l)(ac)(iii) of the Act, the assessee-institution is supposed to apply for final registration after grant of provisional registration u/s 12AB of the Act. The relevant part of the provisions of section 12A(l)(ac) of the Act is reproduced as under: “12A(1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely [(ac) notwithstanding any contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution, - (iii) where the trust or institution has been provisionally registered under section 12AB, at least six months prior to expiry of period of the provisional registration or within six months of commencement of its activities, whichever is earlier; ...and such trust or institution is registered under section 12AB.”

A perusal of the aforesaid provisions of section 12A(1)(ac)(iii) of the Act would reveal that where the trust or the institution was provisionally registered u/s 12AB of the act, the application for final registration can be made at least six months prior to the expiry of the period of provisional registration or within six months of the commencement of its activity, whichever is earlier, which means that the application for final registration has to be made at the earliest possible event i.e. either within six months of the commencement of the activities or at least six months prior to the expiry of the provisional registration. The aforesaid provision does not mean that there is any bar on the applicant to move an application before the period of six months from the expiry of the provisional registration. What has been provided is that the application must be made before the expiry of six months from the date of expiry of final registration. There is no bar in moving the application at the earliest possible event, rather, i.e. it is expected from the assessee-trust to do so. In view of this, the impugned order of the ld. CIT(Exemptions) is set aside and the matter is restored to the ld. CIT(Exemptions) to consider the application of the assessee for final registration and grant the same if the same is otherwise so admissible to the assessee.” … 10. From perusal of the above finding and also considering the fact that facts and issues are verbatim similar. We therefore, hold that there is no bar in moving the application for final registration at the earliest possible. We accordingly, set aside the impugned order and restore the matter back to the file of ld. CIT (Exemption) to consider the application of the assessee for final registration and grant the same for if the same is admissible to the assessee as per the provisions of the Act. Accordingly, all the grounds of appeal raised by the assessee are allowed for statistical purposes.

We also note that the CIT(Exemption) did not call for further clarification or issue a fresh notice after activities had commenced, nor did he invoke his powers under section 12AB(1)(b)(i) to conduct an inquiry as to the genuineness of the activities or compliance with conditions of registration. Instead, the application was disposed of as “premature” and “non-maintainable,” without any adjudication on merits. This approach, in our view, frustrates the very purpose of the statutory framework for charitable registration.

Having regard to the totality of facts, and following the binding coordinate bench decision in Susamskar Foundation (supra), we are inclined to set aside the impugned order of the CIT(Exemption) and restore the matter back to his file with a direction to adjudicate the application for regular registration under section 12AB(1)(b) afresh, in accordance with law and on merits, after considering the Form 10BB, ITR and all other relevant materials placed by the assessee evidencing commencement of charitable activities.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Court on 15th July, 2025 at Ahmedabad.