Charitable registration and 80G approval turn on genuineness of activities; procedural lapses over trustee loans may not defeat eligibility.

Charitable registration under the Income-tax Act depends on satisfaction about the trust's objects, genuineness of activities, and compliance with other law material to those objects. The note discusses a refusal based on the absence of provisional registration and on the lack of prior Charity Commissioner permission for unsecured loans taken from trustees. It records that, where the loans were used for trust objects, no encumbrance was created on trust property, and the omission was only procedural, the lapse was not treated as a material violation for registration under section 12AB. It also notes that approval under section 80G(5) would follow consequentially from the sustained registration.

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Issues: (i) whether the assessee's application for regular registration under the Income-tax Act could be rejected on the ground that provisional registration had not first been obtained and on the ground that prior permission of the Charity Commissioner had not been taken for loans from trustees; (ii) whether approval under section 80G(5) was to follow consequentially.

Issue (i): whether the assessee's application for regular registration under the Income-tax Act could be rejected on the ground that provisional registration had not first been obtained and on the ground that prior permission of the Charity Commissioner had not been taken for loans from trustees.

Analysis: The assessee had already been granted regular registration and the record showed that the activities were charitable in nature. The denial was founded mainly on the alleged absence of provisional registration and on the absence of prior approval under section 36A of the Maharashtra Public Trusts Act, 1950 for small unsecured loans taken from trustees. The governing test under section 12AB(1)(b) is whether the objects and genuineness of activities are satisfied and whether compliance with other law material for the objects is shown. On the facts, the loans were unsecured, no encumbrance was created on trust property, and the amounts were used for the objects of the trust. The omission to obtain prior permission was treated as a procedural lapse and not a disqualifying violation.

Conclusion: The rejection of regular registration was not justified, and the assessee was entitled to registration under section 12A read with section 12AB.

Issue (ii): whether approval under section 80G(5) was to follow consequentially.

Analysis: Once the regular registration was held to remain effective, the basis for refusing approval under section 80G(5) did not survive. The approval was therefore linked to the registration already found sustainable.

Conclusion: The assessee was entitled to approval under section 80G(5) consequentially.

Final Conclusion: The impugned refusal orders could not be sustained, and the assessee's charitable registration and related approval were held to continue in effect up to assessment year 2026-27.

Ratio Decidendi: Where the charitable objects and genuineness of activities are not doubted, a procedural omission to obtain prior Charity Commissioner permission for unsecured trustee advances, without encumbrance on trust property, does not amount to a material violation for denial of registration under section 12AB.

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