Section 12AB of the Income Tax Act

Income-tax Act, 2025: ss.332–355

Section 12AB of the Income-tax Act, 1961 corresponds to sections 332 to 355 of the Income-tax Act, 2025, the provisions on registered non-profit organisations.

Read the 2025 provisions

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 12AB is Sole Trustee, Loka Shikshana Trust v. CIT (101 ITR 234), cited in 323 of the 5,972 judgments on BharatTax that turn on this section.

Leading authorities on Section 12AB

Sole Trustee, Loka Shikshana Trust v. CIT
101 ITR 234 · 1975 · Supreme Court
323
citing judgments

This case defines 'education' under Section 2(15) of the Income Tax Act as systematic instruction, schooling, or training given to the young for preparation for the work of life. It clarifies that 'education' in this context has a narrow meaning, not extending to every acquisition of further knowledge.

Vedabhai v. Santaram
253 ITR 798 · 2002 · Supreme Court
262
citing judgments

When substantial justice and technical considerations are in conflict, substantial justice should be prioritized. Condoning delay requires a cautious approach without malafide or dilatory tactics, and 'sufficient cause' should be interpreted liberally to advance substantial justice.

CIT v. Andhra Chamber of Commerce
55 ITR 722 · 1965 · Supreme Court
167
citing judgments

An organization qualifies as having a charitable purpose if its primary object is the advancement of general public utility, even if its members receive incidental benefits. The existence of incidental non-charitable objects does not negate its charitable status.

India Trade Promotion Organization v. DGIT(Exemption)
371 ITR 333 · 2015 · High Court
128
citing judgments

An institution engaged in the advancement of general public utility retains its charitable character and eligibility for exemptions under Section 11 or approval under Section 10(23C)(iv) provided profit is not its predominant motive, even if it generates incidental surpluses or collects fees.

Ananda Social and Educational Trust v. CIT
426 ITR 340 · 2020 · Supreme Court
116
citing judgments

For registration under Section 12AA, the Commissioner (Exemptions) must examine the objects of the trust and the genuineness of its proposed activities, even if the trust has not yet commenced actual charitable activities or incurred expenditure.

Velu Palandar v. DCIT
83 ITR 683 · 1972 · High Court
94
citing judgments

The opportunity of hearing provided to an assessee must be real, effective, and realistic, not merely notional, and tax authorities are incumbent to decide cases on their merits after affording due opportunity.

CIT v. Dawoodi Bohra Jamat
364 ITR 31 · 2014 · Supreme Court
83
citing judgments

A trust's objects, even if based on religious tenets, can qualify as charitable for tax exemptions if its benefits are not exclusively restricted to a particular religious community or caste.

CIT v. Ahmedabad Rana Caste Association
140 ITR 1 · 1983 · Supreme Court
82
citing judgments

An object beneficial to a section of the public, as distinguished from an individual or group of individuals, qualifies as an object of general public utility under Section 2(15) and hence a charitable purpose. This applies even if the benefits are restricted to a specific caste, community, or professional group.

Trustees of Shri Kot Hindu Stree Mandal v. CIT
209 ITR 396 · 1994 · High Court
80
citing judgments

Membership fees and subscription amounts received by a trust or society from its members are not considered 'voluntary contributions' under Section 12 of the Income-tax Act, as they are not gratuitous payments or gifts but are made with consideration.

CIT v. Bar Council of Maharashtra
130 ITR 28 · 1981 · Supreme Court
74
citing judgments

An organization’s purpose qualifies as 'general public utility' under section 2(15) if its primary objective is charitable, even if it incidentally benefits a specific group or generates some profit, provided the dominant motive is not profit-making. Such an entity is eligible for exemptions under the Act.

Judgments on Section 12AB

Chartered Accountants Sports Association, Uttar Pradesh, Lucknow vs. Commissioner of Income Tax (Exemptions), Lucknow, Uttar Pradesh

In the result, the appeal of assessee is allowed for statistical purposes

ITA 278/LKW/2023[2023-24]Status: DisposedITAT Lucknow30 Sept 2024AY 2023-24

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y. 2023-24 Chartered Accountants Sports Commissioner Of Income Tax Association, B-2/878, Vinay Vs. (Exemptions), Lucknow Khand Gomtinagar, Lucknow- 226010, U.P. Pan:Aaeac2488B (Appellant) (Respondent) Assessee By: Sh. Aakash Agrawal, C.A. Revenue By: Sh. S.H. Usmani, Cit Dr Date Of Hearing: 7.08.2024 Date Of Pronouncement: 30.09.2024 O R D E R Per Nikhil Choudhary: This Is An Appeal Filed Against The Order Of Ld. Cit(Exemptions), Under Section 12Ab(1) (B) (Ii) Of The Income Tax Act, 1961 Rejecting The Application Of The Assessee Dated 26.09.2022 For Registration Under Section 12A(1)(Ac)(V) Of The Income Tax Act, 1961. The Grounds Of Appeal Preferred Are As Under:- “1. That The Ld. Cit(Exemptions) Has Erred In Law & On Facts By Rejecting The Application Filed In Form 10Ab Under Sub Clause (V) Of Clause (Ac) Of Sub-Section 1 Of Section 12A Due To Modification In Objects To The Assessee Society By Holding That Form 10Ac Is Valid For Five Years From Ay 2022-23 To Ay 2026-27 Without Appreciating The Fact That The Assessee Had Filed Application Within 30 Days From The Date Of Adoption/Modification Of The Objects Of The Society. 2. That The Ld. Cit(Exemptions) Has Erred In Law By Inadvertently Invoking Sub Clause (Iii) Of Clause (Ac) Of Sub-Section 1 Of Section 12A Inpsite Of The 1 A.Y. 2023-24 Chartered Accountants Sports Association Fact That Its Mentioned In Para 1 Of Order That Said Application Is Filed Under Sub Clause (V) Of Clause (Ac) Of Sub-Section 1 Of Section 12A. Therefore, Rejection Of Registration U/S 12A(1)(Ac)(V) Of The Income Tax Act, 1961 Is Not Correct & The Registration Should Be Granted. 3. That The Assessee Craves Leave To Add / Alter Any Of The Grounds Of Appeal On Or Before The Date Of Hearing.”

For Appellant: Sh. Aakash Agrawal, C.AFor Respondent: Sh. S.H. Usmani, CIT DR
Section 1Section 12ASection 12A(1)(ac)Section 154