GLOBAL COUNCIL OF ZOROASTRIANS TRUST,MUMBAI vs. CIT (EXEMPTIONS), MUMBAI

The Learned CIT(E) has erred in not providing reasonable opportunity of being heard to the Appellant before passing the rejection order u/s 12AB(1)(b)(ii)(B) of the Act. The Appellant, therefore, prays that the said impugned order be set aside.

The Ld. Authorised Representative submitted that the approach adopted by the Ld. CIT(E) is contrary to the settled legal position governing registration proceedings. It was contended that, at the stage of Section 12AB, the authority is required to confine itself to examination of the objects of the trust and the genuineness of activities, and not to embark upon an enquiry regarding possible future application of income or apprehended violations.

It was further submitted that the mere fact that the trust’s objects refer to a particular community does not automatically attract Section 13(1)(b) at the stage of registration. Reliance was placed on the judgment of the Hon’ble Supreme Court in Dawoodi Bohara Jamat (364 ITR 31) and the judgment of the Hon’ble Delhi High Court in M.K. Nambyar Saheb Law Charitable Trust (269 ITR 556). The Ld. AR also relied on the recent decision of the Mumbai Bench of the Tribunal in Sameer Desai Foundation (ITA Nos. 4509 & 4508/Mum/2025). The Ld Global Council of Zoroastrians Trust AR further draws our attention to the clause 2(vii) of objects where it has been stated providing relief irrespective of caste, creed, religion to poor.

The Ld. Departmental Representative supported the orders of the Ld. CIT(E).

We have carefully considered the rival submissions and perused the material available on record. The scheme of section 12AB makes it clear that registration is to be granted after the prescribed authority satisfies itself about the objects of the trust or institution and the genuineness of its activities, and compliance with such other laws as are material for achieving its objects. The scope of enquiry at this stage is therefore limited and does not extend to examination of actual application of income in a particular manner or to hypothetical future conduct of the trust.

The Hon’ble Supreme Court in Dawoodi Bohara Jamat (364 ITR 31) has held that even where the objects of a trust are for the benefit of a particular community, registration cannot be denied at the threshold, and the applicability of Section 13 is to be examined at the stage of assessment. Similarly, the Hon’ble Delhi High Court in M.K. Nambyar Saheb Law Charitable Trust (269 ITR 556) has held that the registration authority cannot reject registration based on presumptions or apprehensions of future violations.

In the present case, a perusal of the impugned order shows that the Ld. CIT(E) has proceeded substantially on the basis of apprehended future application of funds outside India and possible violation of Section 13(1)(b). Such an approach, in our considered view, travels beyond the permissible limits of enquiry under Section 12AB. The Act itself provides adequate safeguards by way of cancellation of & 4930/M/2025 Global Council of Zoroastrians Trust registration under Section 12AB(4) if the trust actually violates the statutory conditions in future.

Having regard to the totality of facts and the judicial precedents, we are of the considered opinion that the impugned orders dated 25.06.2025 cannot be sustained in their present form.

Accordingly, we set aside the orders passed by the Ld. CIT(E) rejecting the assessee’s applications under section 12AB and restore the matter to the file of the Ld. CIT(E) for fresh consideration in accordance with law, after affording reasonable opportunity of being heard to the assessee. The Ld. CIT(E) shall confine the examination strictly to the parameters laid down under the respective provisions.

The application under Section 80G has been rejected consequent to the rejection of registration under Section 12AB. As the matter relating to Section 12AB has been restored to the file of Ld. CIT(E) for fresh consideration, this appeal is also restored to the file of Ld. CIT(E).

In result, both the appeals filed by the assessee are allowed for statistical purposes.