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Facts
The assessee, Abhinav Foundation, appealed against the rejection of its applications for registration under sections 12A r.w.s 12AB and 80G(5) of the Income Tax Act. The Commissioner of Income Tax (Exemptions) rejected the 12A application citing non-submission of supporting documents for activities and taking loans from trustees without Charity Commissioner's approval. The 80G(5) application was rejected solely due to the rejection of the 12A application.
Held
The Tribunal found that the assessee's objects and activities were charitable and supported by documents. It noted that the loans taken from trustees were repaid, used for charitable purposes, and an ex post facto approval application was made to the Charity Commissioner, indicating no violation of Section 12A. Consequently, the Tribunal directed the CIT(E) to grant registration under both sections 12A and 80G(5).
Key Issues
1. Eligibility for registration under Section 12A of the Income Tax Act. 2. Eligibility for registration under Section 80G(5) of the Income Tax Act, specifically regarding loans taken from trustees without Charity Commissioner approval.
Sections Cited
Section 12A, Section 12AB, Section 80G(5), Section 2(15), Section 36A, Section 254(1), Section 12A(1)(ac)(iii)
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Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
ORDER PER DR. DIPAK P. RIPOTE, AM: These two appeals filed by the assessee are directed against the separate orders of ld.Commissioner of Income Tax(Exemption), Pune rejecting the application for grant of registration u/s.12A r.w.s 12AB and 80G(5) of the Income Tax Act, 1961(hereinafter referred to as „the Act‟) dated 11.09.2025 and 16.09.2025 respectively. For the sake of convenience, these two appeals were heard together and & 2293/PUN/2025 [A] are being disposed of by this common order. We treat the appeal in as lead case. The assessee has raised following grounds of appeal :
1. The Ld. CIT Exemption is not granting the Registration u/s 12A of the Income Tax act.
The Ld. CIT Exemption erred in rejecting the registration u/s 80G on the ground that the trust has taken loans without necessary obtaining permissions. He applied provision of Section 4A-Item (B) of Sub-clause
(vi) of clause (ac) of Sub-section (1) of section 12A of the IT Act although there was no material impact on achieving objects of the Trust as regards loan taken by trust without permission.
1. 2.1 The Ld.CIT E ought to have also appreciated the fact that loan taken from trustee was utilized towards charitable activity only & it was repaid.
3. The appellant craves its right to add to or alter the Grounds of Appeal
at any time before or during the course of hearing of the case.” Findings & Analysis :
1. 2. We have heard both the parties and perused the records. In this case, ld.Commissioner of Income-tax(Exemption) has rejected assessee‟s application dated 28.02.2025 for registration u/s.12A(1) of the Act, on the ground that Assessee has not filed supporting documents for the activities, admitting that Assessee Trust is providing educational aid to poor students. Ld.CIT(E) also observed that Assessee had taken loan from Trustees without the approval of Charity Commissioner under section 36A of the Act. 2 & 2293/PUN/2025 [A]
During the proceedings, ld.AR invited our attention to page no.10 which enumerates objects of the Trust. The objects of the trust are as under : “1 The Primary Object of the Trust is to provide financial help and education help to the persons of all caste, creed, who cannot afford to have or undergo costly medical treatment operations, surgery, etc., in India The Objects of the trust, without prejudice to their respective generalities, shall be any one or ail or in combination with each other 2. To establish, set up, promote, organize, run, manage conduct and encourage, give aid to assist and co-operate with nursing homes, hospitals, dispensaries, clinics, sanitarium, diagnostic centers and medical centers, orphanage etc to look after the welfare of poor children by providing them with proper nutrition, look after their health and to give them all the necessary of living and become good citizen 3. To undertake programs, which ensures raising of income levels and expanding employment opportunities of the weaker section of the society, particularly of those living below the poverty line and women by involving participants in the planning implementation and maintenance of activities taken up 4 Raising issues pertaining to lack of infrastructure/facilities to respective Municipal Corporation/any other authority or resolving through self-planned interventions using available donation and funds. 5. Execute various constructive projects to inculcate & develop high values, principles, standards among people to achieve social welfare 6. Provide assistance to people affected by natural calamities such as floods, earthquakes, motor accidents etc. and enable them their displacement and timely rehabilitation 7. To take care of kids of socially deprived women, especially those who are victims of social abuse. To provide them means of livelihood, education and overall incubation. 8. Create innovate training programs and self-employment opportunities for woman and educated unemployed and to work towards prometing adult education. To do all the needful for social, cultural, financial, educational, upliftment of woman 3 & 2293/PUN/2025 [A]
9. To provide shelter/facilities for old people, children and disable persons for their Welfare.” 4. Ld.Authorised Representative(ld.AR) for the Assessee invited our attention to the documents filed before ld.CIT(E) which are from page no.1 to 154 of the paper book. Assessee provides scholarships to the needy students. During the proceedings before the ld.CIT(E), Assessee had provided list of these students along with copy of their 10th examination marks list, Aadhar Card, Application for financial help of most of the students. We have gone through the paper book and observed that Assessee asked the students to file a Google Form along with Aadhar Card, copy of 10th marks list and other educational details. We have gone through some of these forms and noted that Assessee has collected these documents from students to whom financial help was provided. Assessee also filed copy of HDFC Bank Account to demonstrate that amount was paid through Banking Channel to the students.
Ld.CIT(E) in his order has admitted that assessee is providing educational aid to students. The documents referred above by us. were admittedly filed before ld.CIT(E). Providing financial help to needy students for their education is a Charitable Activity as defined 4 in section 2(15) of the Income Tax Act. The said activity is as per & 2293/PUN/2025 [A] the objects of the trust. In these facts and circumstances of the case, we are convinced that Assessee is engaged in charitable activity as per the objects of the trust. Ld.CIT(E) has not brought on record any contrary evidence.
As far as alleged loans are concerned, admittedly, Assessee had taken loans as under:
1. 1. Loan from Mr. Ashish Dagwar (PAN: AEUPD5840D) – Rs.2,50,000/- on 03.02.2024.
2. Loan from Mr.AshishDagwar (PAN: AEUPD5840D) – Rs.1,11,000/- on 04.11.2024 3. Loan from Mr.Rahul Dagwar (PAN: ANMPD7330B) – Rs.25,000/- on 02.02.2024.
7. It was submitted before ld.CIT(E) that the above loans were immediately repaid within the same year. It was also submitted that the amounts have been utilised for Charitable Activity of the Assessee. It is also a fact that no interest has been paid and no charge on any property of the Assessee has been created. During the proceedings before us, ld.AR submitted that Assessee had already applied for ex post facto approval to the Charity Commissioner. Ld.AR submitted that Balance Sheet was submitted to Charity Commissioner regularly and Charity Commissioner has never raised any query. Ld.AR relied on the decision of ITAT Pune in the case 5 & 2293/PUN/2025 [A] of Baramati Vipassana Samiti in & 2643/PUN/2024 and Prerana Samajik Sanskrutik Bahudeshiya Shikshan Sanstha in ITA No.376/NAG/2023.
Admittedly, the impugned loans were repaid during the year. No charge has been created on any property of the Trust. The amount has been utilised for charitable purpose. Therefore, respectfully following ITAT decision in the case of Prerana Samajik Sanskrutik Bahudeshiya Shikshan Sanstha(supra), we hold that Assessee has not violated provisions of Section 12A of the Act.
Hon‟ble Allahabad High Court in the decision of ld.CIT(Exemption) Vs. Reham Foundation LKO [2019] 418 ITR 205 (All) vide order dated 26.09.2019 has held as under : “26. In view of the unfettered power of the Appellate Tribunal in terms of section 254(1) of the Act, 1961 the Tribunal can very well record its satisfaction on the genuineness of the activities and object of the Trust and can very well direct registration of the Trust without remand of case to the Commissioner in case such satisfaction is recorded on the basis of documents and material already available on record at the stage of examination by Commissioner.
& 2293/PUN/2025 [A] 9.1 Thus, Hon‟ble High Court has explained that Tribunal can direct ld.CIT(Exemption) to grant registration u/s.12A of the Act, after satisfying itself about Objects and Activities of the Trust.
In the case of the Assessee, we have already recorded the finding that Objects of the Trust are charitable in nature, activities of the trust are genuine and are as per objects of the trust. In these facts and circumstances of the case, we are convinced that Assessee is eligible for registration u/s.12A of the Act.
Ld.Commissioner of Income Tax(Exemption) has not brought on record any violation of any applicable law, hence, we direct the ld.Commissioner of Income Tax(Exemption)-Pune to Grant the Registration to the Assessee. Accordingly, we direct ld.CIT(E) to grant registration u/s.12A of the Act.
This is an appeal against the order under section 80G(5) of the Act, dated 16.09.2025. Ld.CIT(E) has rejected assessee‟s application for registration under section 80G(5) of the Act, only on ground that provision of section 12A(1)(ac)(iii) of the Act has been rejected vide order dated 11.09.2025. 7 & 2293/PUN/2025 [A]
Since we have already directed the ld.CIT(E) to grant registration under section 12AB r.w.s. 12A of the Act, in Assessee is also eligible for registration u/s.80G(5) of the Act, as ld.Commissioner of Income tax(Exemption) has not brought on record any other reason for not granting registration u/s.80G(5) of the Act. Accordingly, the ld.CIT(E) is directed to grant registration u/s.80G(5) of the Act. Accordingly, grounds of appeal raised by the assessee in are allowed.