ORDER
Padmavathy S, Accountant Member.- This appeal by the assessee is against the order of the Commissioner of Income Tax (Exemptions), Chennai (in short “CIT(E)”) dated 29.09.2025. The issue contended in this appeal pertain to the denial of registration u/s. 12AB of the Income Tax, 1961 (in short “the Act”).
2. The assessee is a charitable trust formed vide trust deed dated 15.07.2024. As per the trust deed, the objects of the trust are as listed below:
“1) To set up Out Patient Department, Clinic, Medical facilities to provide health care to public at large at concessional rates/free of cost.
2) Granting of financial assistance to deserving students, educational institutions for granting scholarships, prizes, medals, awards for excellence in studies, sports and scientific research, distribution of books and note books for poor and deserving students.
3) To spread public awareness of Heath Care and Preventive Health Care.
4) To grant aid and provide financial assistance to deserving people for medical treatment.
5) To promote high quality and innovative learning and development programmes, primarily in the field of Cardiology, Cardio-thoracic health, Cardio-thoracic and Vascular Surgery and related medical fields.
6) To advance public awareness in the fields of Cardiology, Cardio-thoracic health, Cardio-thoracic and Vascular Surgery and related disciplines.
7) Establishment, conduct, maintenance of clinical laboratories, hospitals, nursing homes, dispensaries and institutions of similar nature and providing financial assistance to the deserving persons for medical treatment, in any medical institution.
8) To conduct awareness programs including training in advancement in medical skills such as Robotic Surgery in advanced medical procedures.
9) Establishment, conduct, maintenance of old age homes, homes for physically challenged men, women and children and persons with similar disabilities and also for granting financial assistance to Institutions performing similar activities.
10) To organise lectures, conferences, seminars, meetings and workshops for doctors, medical support staff and public at large for purpose of dissemination of information, knowledge about development in medicine, best practices etc.,
11) To spread awareness about advancement of specialised treatment amongst medical fraternity. 2007
12) Providing Medical and Health related support to all without any discrimination to caste, creed or status.
13) To conduct awareness programs including training in Skill development of doctors in various medical programs.
14) To promote nutritional food programme and make nutritional food available to poor students.
15) To conduct awareness programs including training and Development of various illness.”
3. The assessee made an application for registration u/s. 12AB of the Act on 26.03.2025. The CIT(E) called on the assessee to furnish certain details including the financials and bank statement. After perusing the financial statements of the assessee, the CIT(E) held that:
“4.2.2 It is seen that the financials that the beneficiaries of the applicant trust are limited to particular sector i.e. doctors and not the public at large. A charitable institution, must function with the dominant purpose of benefiting the public or a section of the public. By seeking to promote and safeguard the interests of its members, the Society fails the essential public benefit test.
4.2.3 The activities of the applicant are, in fact, meant exclusively for its members. The above financials reinforce this position: the trust has received only membership fees and spent mostly on conference expenses, without undertaking any charitable activity. This shows that the society is functioning on the principle of mutuality, wherein funds are collected from members and utilised only for their common benefit.
4.2.4 . Principle of charity v. Mutuality:
(i) The principle of mutuality was explained in simple terms by Madras High Court in the case of CIT v. Madras Race Club (1975: (8) TMI 26-MADRAS HIGH COURT as follows:-
In considering the case for exemption of the subscriptions collected from the members of the application on the principle of mutuality it is necessary to bear in mind two concepts. The first concept is that the principle of mutuality is based on the doctrine that no person can make a profit out of himself. To take a common instance, supposing a dozen persons’ gather together and agree to purchase certain commodities in bulk and distribute them among themselves in accordance with their individual requirements, they may collect a certain amount provisionally based on the anticipated price of the commodities to be purchased. If it ultimately happens that the commodities are available at a cheaper price so that at the end of the distribution of the commodities among themselves, a part of the original amount provisionally collected is repaid, then what is repaid cannot by any test be classified as income. This would represent savings and not income. The Income-tax Act seeks to tax income and not savings.
In general, the following are the characteristics of a Mutuality organization:
They are carried on the for the benefit of members’ collectively.
They have members that share a common purpose.
Those members are all entitled to participate in that common purpose.
The main purpose for which the organization is established and is operated is the common purpose of the members and all the members contribute to a common fund that gives effect to the common purpose and all contributions are applied for the collective benefit of the members.
The members contribute not with an idea to trade, but with an idea of rendering mutual help.
The receipt in their hands is not really the profit, as no man can make a profit out of himself, just as he cannot enter into a trade or business with himself.
In the applicant case, all the above characteristics of mutuality is applicable and the society is governed by the principle of mutuality and not charity.
(ii) On the other hand, in case of a charitable organization, the primary condition is that the organization cannot distribute surplus amongst the members and the surplus is always for the benefit of public at large. In such a situation, it is always believed that charity and mutuality cannot go together. Thus, the society is for the benefit of particular section of the people and not for the general public. Hence, the society is evolved and exist on the principle of mutuality and not charity.
4.2.5 The charitable institutions must exist for public benefit. However, in the case of the applicant, the benefits are confined to a pre-defined group of individuals. This limited scope of benefit fails the test of charity’. The charitable purpose requires generosity or service to the public, which is absent in the case of applicant which is mutual-benefit society.
5. A A In view of the above facts, the application of the applicant trust cannot be processed. As stated in paragraph 1 of this order, in accordance with the provisions of Section 12AB(1)(b)(ii) (B) of the Income-tax Act, 1961, where an application is made under Section 12A(1)(ac), and the Principal Commissioner or Commissioner is not satisfied with the genuineness of the activities of the trust or institution or the compliance of such requirements as prescribed under the Act, the application can be rejected.”
4. The assessee is in appeal before the Tribunal against the order of the CIT(E).
5. The Ld. Authorized Representative (AR) of the assessee submitted that the objects of the assessee is to provide medical services at concessional rate or free of cost and the assessee is intending to carry out other related charitable activities. The Ld. AR further submitted that the CIT(E) has denied the registration merely based on the financial statements by holding that the beneficiaries of the assessee trust is limited to its members only. The Ld. AR also submitted that the CIT(E) has held that in assessee’s case there is no charitable activity being carried out and that the assessee is functioning on the principle of mutuality. The Ld. AR argued that the assessee’s trust is formed by a group of medical professionals with an intention to help the public at large and that the CIT(E) has denied the registration merely by analysing the income derived by the assessee through conducting a seminar which according to the CIT(E) is for the benefit of the members alone. The Ld. AR further argued that the assessee is in the first year of operations and therefore denying the registration based on one activity conducted by the assessee is not correct. The ld AR also argued that in the case of new trusts who are yet to start full fledged charitable activities, the CIT(E) for the purpose of registration need to consider the proposed activities also and if they are charitable in nature, the registration cannot be denied. The Ld. AR in this regard relied on the decision of the Hon’ble High Court of Chhattisgarh in the case of
CIT (Exemption) v.
Confederation of Pharma Dealers Association [2025] 177
taxmann.com 711 (Chhattisgarh). The Ld. AR also placed reliance on the latest decision of the Coordinate Bench in the case
Sir CV Raman Educational & Charitable Trust v.
CIT (Exemptions) [
2026] 184
taxmann.com 197 (Chennai – Trib.) [ITA No.2940 & 2941/Chny/2025 dated 04.03.2026] wherein it has been held that:
“7. We have heard the rival submissions and perused the material placed on record. It is observed that, the Ld. CIT(E) had rejected the application of the assessee for registration u/s 12AB of the Act primarily on the ground that, the assessee had not commenced any charitable activities, which in his view rendered the assessee trust to be nongenuine. Before adverting to the facts of the case, let us first have a look at the provisions of Section 12AB of the Act, which reads as follows:
“(1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,—
(a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years;
(b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of the said clause,—
(i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about— (A)the genuineness of activities of the trust or institution; and
(B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects;
(ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),—
(A) pass an order in writing registering the trust or institution for a period of five years; or
(B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard;
(c) where the application is made under sub-clause (vi) of the said clause, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought,
and send a copy of such order to the trust or institution.
(4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,—
(a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or
(b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to subsection (3) of section 143 for any previous year; or
(c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year,
the Principal Commissioner or Commissioner shall—
(i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation;
(ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place;
(iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations;
(iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution.
Explanation.—For the purposes of this sub-section, the following shall mean “specified violation”,—
(a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or
(b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or
(c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or (d)the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or
(e) any activity being carried out by the trust or institution—(i)is not genuine; or(ii)is not being carried out in accordance with all or any of the conditions subject to which it was registered; or
(f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality. .
“8. It is seen that, the Ld. CIT(E) had invoked Explanation (
e)(
i) of Section 12A(1)(ac)(
iii) of the Act and held that the activities of the assessee trust were not genuine. According to us, the Ld. CIT(E)’s interpretation of the Explanation (
e)(
i) of Section 12A(1)(ac)(
iii) suffered from fundamental infirmity. If the activities of a charitable trust are yet to commence, it cannot be straight away alleged that the activities are not genuine. So long as the proposed activities of the assessee trust to achieve its objects are found to be charitable in nature, mere noncommencement of the activities at the time of filing of application or at the time of passing of order for grant of registration u/s 12AB of the Act, cannot be treated as a ‘specified violation’ to deny registration to an assessee. In our view, where the assessee trust demonstrates that it has been formed for charitable objects and shows that the proposed activities are charitable in nature, then the conditions prescribed in Section 12AB cannot be said to be not satisfied. If in the facts and circumstances of the given case, the assessee is able to show that it had carried out charitable activities in the subsequent years, the same is required to be considered by the Ld. CIT(E) to satisfy himself about the genuineness of the activities and it is unjustified on his part to reject the application only because the activities did not commence at the time of filing of application/ passing of the order. Our view finds support from the decision of the Hon’ble Supreme Court in the case of
Ananda Social and Educational Trust v.
CIT (
426 ITR 340)wherein it was held as under:-
“5. The above section provides for registration of a trust. Such registration can be applied for by a trust which has been in existence for some time and also by a newly registered trust. There is no stipulation that the trust should have already been in existence and should have undertaken any activities before making the application for registration.
9. Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration.
10. It was argued before us that the Commissioner is required to be satisfied about two things – firstly that the objects of the trust and secondly, its activities are genuine. If there have been no activities undertaken by the trust then the Commissioner cannot assess whether such activities are genuine and therefore, the Commissioner is bound to refuse the registration of such a trust.
11. We have given our anxious consideration to the above submissions made by Ms. Aishwarya Bhati, learned Senior Counsel appearing for the appellant – Director of Income-tax and find that it is not possible to agree with the same. The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine.
12. Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term ‘activities’ in the provision includes ‘proposed activities’. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. In contrast, the position would be different where the Commissioner proposes to cancel the registration of a Trust under subsection (3) of section 12AA of the Act. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust.
13. We therefore find that the view of the Delhi High Court in the impugned judgment is correct and liable to be upheld.”
9. In the above judgment, the Hon’ble Supreme Court took cognizance of the fact that there may be varied reasons due to which the assessee trust may not find suitable circumstances to commence its activities, but such inaction cannot be treated as a case of carrying out the activities contrary to its objects. This view has been reiterated by the Hon’ble Supreme Court in the case of CIT v. International Health Case Education and Research Institute (
482 ITR 287). In this case also, the assessee trust, though formed in 2008, had not undertaken any charitable activities. The Ld. CIT(E) did not point out any defects in the objects of the trust but rejected the application on the ground that there was no activity in the trust and therefore the genuineness of the activities was in question. On appeal, both the Tribunal and the Hon’ble High Court held in favour of the assessee and directed the CIT(E) to grant registration to the trust. On further appeal by the Revenue, Hon’ble Apex Court held that it would be premature for the Ld. CIT(E) to comment on the genuineness of the activities when there was no activity carried out until then. The Hon’ble Supreme Court clarified that registration does not automatically confer benefit of exemption u/s 11 of the Act and that when the assessee filed the return of income upon commencement of activities, the AO would be entitled to look into the materials and satisfy himself as to whether the claim of exemption is genuine or not. The relevant findings of the Hon’ble Supreme Court is as follows:-
“14. We may agree to a certain extent with the learned ASG that the very purpose for any assessee to seek registration under Section 12AA of the Act is to claim exemption under Sections 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature.
15. To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption under Sections 10 and 11 respectively of the Act, 1961. When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.”
10. Having taken note of the provisions and the position of law, we revert back to the case before us. From the facts placed on record it is observed that, the assessee is a registered public charitable trust which was formed on 12.04.2006 with the following objects:
“5. OBJECTS
a. Educational – to run, maintain or assist any educational or other or to grant individual scholarships for poor, deserving and needy students for elementary and higher education.
b. Medical – to run, maintain or assist any medical institution, nursing home or clinics or to grant assistance to needy and indigent persons for meeting the cost of medical treatment.
c. Relief of the poor – to give financial or other assistance in kind by way of distribution of books, notebooks, clothes, uniforms, or meals for the poor and indigent.
d. Other objects of general public utility:-
(i) To acquire property for the sole use for public good by making it available for public purposes as for example, housing a library, clinic, creches and/or as community hall to be available for public use as trading classes, seminars, discourses and other public functions for benefit of the community in general;
(ii) To undertake any other activity incidental to the above activities but which are not inconsistent with the above objects.
If any of the above objects is found to be inconsistent with the objects of a public charitable institution under section 11 or any other section of the Income Tax Act 1961 or any other direct tax law or any other law applicable to such trusts as now enacted or as may be enacted or amended at a future date, the objects stated above will be treated as so modified to accord with such law or amended law so that any concessions, privileges, conditions or regulations available to and applicable to such public charitable institutions will be available or applicable to this Trust as well so that this Trust will continue to retain its character as a public charitable institution without profit motive with public character within the meaning of all such laws. All the objects of the trust and its activities will be confined to India and will be carried on without profit motive and without any distinction on account of caste, creed, color or religion.”
11. A perusal of the above objects shows that, they are charitable in nature and the same has not been disputed by the Ld. CIT(E) as well. It is also not in dispute that, the assessee trust was formed for the benefit of the public at large. It has also been brought to our notice that, the assessee in pursuance of its objects relating to education had acquired 17.3 acres of agricultural land at Varadharajapuram, Kundrathur. It is also observed that, the trustees at that material time comprised of senior medical professionals, well known educationalists and reputed social workers. These trustees had obtained loans from the entities of their close relative to finance the acquisition of the land. Since the land was agricultural in nature, unless zonal conversion was done, assessee trust could not have proceeded to construct an educational institution on such land. The Ld. AR explained to us that, due to old age of the trustees and lack of patronage being received from the public for setting up an educational institution, the activities of the assessee trust got stalled. It was in 2022, when there was a change in trustees, whereby Mrs. D Sindhu, a young medical professional, Mrs. M Jayakumari, teacher by profession having several years of experience and Mr. D Harish Kumar, an engineering professional, came on board, that the trust recommenced the activities, applied for conversion of land in 2023, obtained approval in 2026 etc. The assessee is thus noted to have demonstrated that it had indeed undertaken activities towards achievement of its charitable objects. Having taken note of these facts, we hold that the Ld. CIT(E) was unjustified in holding that the assessee trust did not undertake any activity whatsoever, particularly when the contemporaneous facts show that the assessee trust had acquired land parcels for setting up medical educational institution.
12. We also find that, none of the activities undertaken by the assessee trust relating to acquisition of land or which was undertaken subsequently involving conversion of land usage, expending for charitable purposes, can be regarded as non-genuine or contrary to the objects for which the assessee trust was formed. There is also merit in the submission of the Ld. AR that, once the registration is in place, then it would give impetus to the assessee trust to pursue its charitable objects by obtaining patronage from the public at large. Unless the registration is granted, the educational institution, the activities of the assessee trust got stalled. It was in 2022, when there was a change in trustees, whereby Mrs. D Sindhu, a young medical professional, Mrs. M Jayakumari, teacher by profession having several years of experience and Mr. D Harish Kumar, an engineering professional, came on board, that the trust recommenced the activities, applied for conversion of land in 2023, obtained approval in 2026 etc. The assessee is thus noted to have demonstrated that it had indeed undertaken activities towards achievement of its charitable objects. Having taken note of these facts, we hold that the Ld. CIT(E) was unjustified in holding that the assessee trust did not undertake any activity whatsoever, particularly when the contemporaneous facts show that the assessee trust had acquired land parcels for setting up medical educational institution.
12. We also find that, none of the activities undertaken by the assessee trust relating to acquisition of land or which was undertaken subsequently involving conversion of land usage, expending for charitable purposes, can be regarded as non-genuine or contrary to the objects for which the assessee trust was formed. There is also merit in the submission of the Ld. AR that, once the registration is in place, then it would give impetus to the assessee trust to pursue its charitable objects by obtaining patronage from the public at large. Unless the registration is granted, the Ld. AR submitted that the assessee was unable to carry out the proposed activities as the donors required valid registrations under the Act so as to be associated and involved with the assessee trust. To demonstrate the same, the Ld. AR showed us that once the provisional registration was received, the assessee trust had received corpus donations in FYs 202425 and FY 2025-26, which assisted in furtherance of the objects of the assessee trust. Accordingly, on these given facts and following the ratio decidendi laid down by the Hon’ble Supreme Court (supra), we hold that, the CIT(E) was unjustified in rejecting the registration due to noncommencement of activities, which in our view does not qualify as ‘specified violation’ under Explanation (e)(i) to Section 12A(1)(ac)(iii) of the Act.
13. In so far as the Ld. CIT(E)’s observation regarding fixed assets and unsecured loans is concerned, it is observed that, the fixed assets of Rs.1,26,31,451/- comprised of the land parcels acquired by the assessee for setting up the educational institution and therefore, the genuineness of purchase of such assets could not have been doubted. It is indeed noted that, there was an omission on the assessee’s part to describe this asset in column no.14 of the application form in Form 10AB, but at the same time, it is seen that, the details of this fixed asset was evident from the face of the financial statements enclosed with the said form and the same was also submitted before the Ld. CIT(E). Hence, we are in agreement with the Ld. AR that, the inadvertent omission to describe this asset in column no. 14 could not be stated to be reason for disputing the genuineness of the trust.
14. Further, as noted earlier, the land parcels were acquired out of the loans arranged by the trustees from their close relative. The Ld. CIT(E) however disputed the genuineness of the outstanding loan due to nonrepayment and non-charging of interest. Having regard to the facts discussed above, we find that the financials of the assessee trust show that, it did not have any liquidity to repay the loan or discharge any interest thereon and therefore it cannot be said that the non-repayment of such loan or interest thereon was unusual or not genuine.
15. The case of the assessee is also squarely supported by the decision of the ITAT, Hyderabad in the case of Ujwal Foundation v. CIT(E) (
175
taxmann.com 276). In this case also, the Ld. CIT(E) had rejected the application u/s 12AB of the Act on the ground that there was noncommencement of activities at the time of filing of application/ passing of the order. The Tribunal had reversed the findings of the Ld. CIT(E) by observing as under:-
“7. If the activities are yet to be commenced, then it cannot be the case of the activities are not genuine. If the proposed activities of the assessee trust are to achieve its objects, which are accepted as charitable in nature, then non-commencement of the activities at the time of filing the application or at the time of passing the order for grant of registration u/s 12AB cannot be a sole reason for denial of registration without considering the proposed activities of the assessee. There is no dispute that the assessee has not carried out any charitable activities till the application was filed and the impugned order was passed. However, the learned AR of the assessee has stated that in the subsequent year, the assessee trust has carried out the activities. We further note that the learned CIT (E) has dismissed the application summarily without even discussing anything which is held to be non-genuineness of the activities of the assessee. Only in the case where the assessee has already started or carried out its activities which were found to be not in line with the objects of the assessee, then the conditions as prescribed u/s 12AB can be regarded as not satisfied. Accordingly, in the facts and circumstances of the case, when the assessee has claimed to have carried out the charitable activities in the subsequent years which are required to be considered by the learned CIT (E) to satisfy himself about the genuineness of the activities carried out for achieving the objects of the Trust. Hence, the impugned order of the learned CIT (E) is set aside and the matter is remanded to the record of the learned CIT (E) for fresh adjudication.”
16. For the reasons set out above, we hold that the Ld. CIT(E) was unjustified in rejecting the application of the assessee u/s 12AB of the Act and therefore, quash the impugned order dated 22.09.2025. the Ld. CIT(E) is directed to issue the registration in Form 10AD to the assessee trust.
17. Since the reasons given by the Ld. CIT(E) for rejecting the approval u/s 80G of the Act and the argument put forth by the assessee are verbatim same as involved in relation to the issue of registration u/s 12AB of the Act, following our observations above, we hold that, the Ld. CIT(E) was unjustified in rejecting the application seeking approval u/s 80G of the Act and direct him to grant the same.”
6. The Ld. Departmental Representative (DR), on the other hand, vehemently argued that the assessee’s claim that it is for the welfare of the general public is not substantiated. The Ld. DR further argued that the activity as reflected in the financial statements is held for the specific community i.e, doctors and therefore the CIT(E) has corrected the denied the registration u/s. 12AB of the Act. The Ld. DR also argued that the onus is on the assessee to substantiate the claim that the activities of the assessee are charitable in nature to the satisfactions of the CIT(E) for the purpose of registration u/s. 12AB of the Act. Accordingly, the ld. DR supported the order of the CIT(E).
7. We have heard the parties, and perused the material available on record. The Coordinate Bench in the case of Sir CV Raman Education & Charitable Trust (supra) has laid down the ratio that for the purpose of registration u/s. 12 AB of the Act, the CIT(E) is required to also consider the proposed activities of the trust as to whether they are of charitable in nature. The Coordinate Bench has further laid down the ratio that merely because the assessee did not commence the activities cannot be the reason for denial of registration unless the CIT(E) is able to establish that the assessee is engaged in activities which are considered as “specified violations” for the purposes of registration u/s. 12AB of the Act. From the perusal of the objects as stated in the main object of the trust it is clear that the assessee trust is established for charitable purposes. Further clause(ix) of the trust deed provides that in the event the assessee trust is unable to function in fulfilment of the objects after discharging all the liabilities the trustees shall transfer the assets of the trust to any public charitable institutions or institutions having similar objects. We further notice that the assessee for the year under 31.03.2025 has conducted a conference which according to the Ld. AR is for sharing of knowledge and best practices in the medical field which would ultimately benefit the public at large. Therefore, we see merit in the argument of the Ld. AR that merely based on the reason that the assessee has conducted a medical conference which benefits only the members the registration cannot be denied stating that it is for the mutual benefit of the members alone. Considering the overall facts and circumstances of the case, and by placing reliance on the above judicial precedence, we hold that the CIT(E) is not correct in the denying the registration u/s. 12AB of the Act. Accordingly, we direct the CIT(E) to consider the application made by the assessee in the light of our above findings and grant the registration.
8. In result, the appeal of the assessee is allowed.
