Genuineness of charitable activity determines registration; procedural lapses curable and donation approval follows consequentially for tax benefits.

Registration under section 12A read with section 12AB was granted where the assessee established genuineness of charitable activities; unsecured trustee advances used for the trust's objects and not creating encumbrances did not defeat registration despite absence of provisional registration and prior permission under the relevant public trusts law, because those procedural lapses did not affect substantive compliance. Consequential approval under section 80G(5) was held to follow from valid registration and granted for the same assessment years directed by the decision.

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Issues: (i) Whether the assessee is entitled to registration under section 12A read with section 12AB of the Income-tax Act, 1961 despite not having obtained provisional registration prior to 01.04.2021 and having taken short-term loans from trustees without prior permission of the Charity Commissioner; (ii) Whether approval under section 80G(5) of the Income-tax Act, 1961 should be granted consequentially.

Issue (i): Entitlement to registration under section 12A read with section 12AB despite procedural non-compliance relating to provisional registration and trustee advances.

Analysis: The assessee presented documentary evidence of charitable activities falling within the definition of charitable purpose. The impugned loans from trustees were unsecured, used for the objects of the trust and did not create encumbrances on trust property. The taxing authority's rejection was based on procedural non-compliance (absence of prior provisional registration and absence of prior permission under the Maharashtra Public Trusts Act, 1950). Relevant statutory mandate requires satisfaction about genuineness of activities and compliance with other laws material to achieving objects. Prior permission from the Charity Commissioner in the circumstances was a procedural requirement and the record did not show substantive violation affecting genuineness of activities.

Conclusion: Registration under section 12A read with section 12AB is to be granted in favour of the assessee.

Issue (ii): Grant of approval under section 80G(5) consequential to registration under section 12A.

Analysis: Approval under section 80G(5) follows from valid registration under section 12A/12AB; since registration is directed to be upheld and treated as effective for the stated assessment years, approval follows as consequential relief.

Conclusion: Approval under section 80G(5) is to be granted in favour of the assessee.

Final Conclusion: The appeals are allowed; the regular registration granted on 24.09.2021 is to remain effective until assessment year 2026-27 and approval under section 80G(5) is consequentially effective until assessment year 2026-27.

Ratio Decidendi: For registration under section 12AB the decisive test is satisfaction as to genuineness of activities and material compliance with other laws; procedural lapses such as absence of provisional registration or non-obtaining of prior permission from the Charity Commissioner for unsecured trustee advances that do not encumber trust property are curable and do not justify denial of registration when genuineness of charitable activities is established.

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