TaxTMI 
TaxTMI 
2025 (6) TMI 571
X X X X Extracts X X X X
X X X X Extracts X X X X
....t there is a delay of one day in filing the appeals against the orders passed by the CIT(Exemption). The assessee has filed an application for condonation of delay explaining the circumstances, stating that the delay was on account of bereavement in the family of the managing trustee. Having considered the explanation, which is supported by a death certificate, and finding the cause to be reasonable and bona fide, the delay of one day is condoned in the interest of substantial justice. Facts of the Case 3. The assessee is a public charitable trust, originally established on 05.12.1952 under the name "Baroda Lakadpitha Panch Property" and registered with the Charity Commissioner, Baroda under the Bombay Public Trusts Act. Subsequently, vide order dated 20.03.2013 passed by the Joint Charity Commissioner, Vadodara, a revised Scheme of Administration was approved, and the name of the trust was reflected as "The Vadodara Timber Merchant Association (Vadodara Lakadpitha Panch Property)," while continuing under the same trust registration number. The assessee filed an application for registration under section 12AB of the Act on 24.01.2024 in Form No. 10AB under item (B) of sub-clause ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r section 12AB was rejected. 5. In the separate order rejecting the application for approval under section 80G(5), the CIT(Exemption) recorded that the Scheme of Administration approved by the Joint Charity Commissioner, Vadodara, dated 20.03.2013, included objects such as "giving gifts for materials in temples" and "to do religious and charitable activity." It was held that these objects are of a religious nature and fall within the prohibition contained in Explanation 3 to section 80G(5), which provides that "charitable purpose" shall not include any purpose the whole or substantially the whole of which is of a religious nature. The assessee argued that these clauses were generic, not directed toward any particular religious community, and that no actual religious expenditure had been incurred. It was further submitted that the use of the word "religious" in the objects clause did not render the trust religious, and that in any case, section 80G(5B) permits up to 5% of total income to be applied for religious purposes without disentitling the trust. 6. The CIT(Exemption), however, rejected these arguments and held that section 80G(5B) only permits expenditure of a religious nat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Charity Commissioner, Vadodara, approving a revised Scheme of Administration, wherein the name of the trust has been reflected as "The Vadodara Timber Merchant Association (Vadodara Lakadpitha Panch Property)". It was explained that while the PAN database reflected the earlier English version of the name as "The Baroda Lakkad Pitha Punch Property," there was no change in the trust's legal entity. In fact, pursuant to the communication issued by the Income Tax Department, the assessee has already filed Form 49A and obtained a corrected e- PAN reflecting the updated name. A copy of the revised PAN and proof of rectification request were submitted along with an application for additional evidence dated 05.05.2025. 9. The learned AR also filed detailed written submissions, which were taken on record. On the question of genuineness of activities, the AR submitted that the learned CIT(Exemption) has proceeded on an erroneous premise by treating the absence of recorded expenditure in the audited accounts as conclusive evidence of absence of charitable activity. It was explained that many charitable initiatives undertaken by the trust such as training programs, educational aid in the for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udicial pronouncements. It was also pointed out that the audited accounts filed before the CIT(Exemption) for financial years 2017-18 to 2022-23 reveal no expenditure whatsoever on religious purposes. In fact, the trust has neither claimed any exemption under section 11 or 12 nor engaged in activities that attract the bar under Explanation 3. Accordingly, the trust qualifies for relief under section 80G(5B) as well, which permits incidental religious expenditure up to 5% of total income. However, even this provision has not been invoked in the assessee's case, since there is no actual religious outgo reflected in the books. The AR submitted that the impugned order proceeds on a misinterpretation of the objects clause and fails to adopt the "substance over form" approach mandated by judicial discipline. The CIT(Exemption) has erred in concluding that the trust is not established solely for charitable purposes, despite the overwhelming documentary evidence to the contrary. The AR, therefore, prayed that the order passed under section 80G(5) be set aside and that the assessee be granted the approval sought. In the alternative, it was requested that the matter be remanded to the CIT(Ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order under section 12AB, the CIT(Exemption) has recorded that the financial statements from FY 2017-18 to FY 2022-23 reveal no expenditure traceable to charitable activities and that no verifiable documentary evidence was produced to establish the genuineness of claimed donor-sponsored programs. Likewise, in the context of section 80G(5), the CIT(Exemption) has observed that the trust's Scheme of Administration contains objects that are religious in nature, and in the absence of any financial statements reflecting exclusive charitable expenditure or demonstrating adherence to the 5% threshold under section 80G(5B), the assessee could not be regarded as existing solely for charitable purposes. These findings are not lightly to be interfered with unless perverse or without basis. 14. At the same time, we are conscious of the settled principles laid down in judicial precedents, wherein it has been consistently held that the inquiry at the stage of registration or approval is confined to the assessment of objects and prima facie genuineness of activities, and not the actual quantification or application of funds which is subject to examination during regular assessment. Further, it h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he trust, having been in existence since 1952, had not applied for registration under the earlier provisions of section 12A or 12AA and had chosen to apply only under the amended regime through Form No. 10AB. In our considered view, this reasoning is neither relevant nor determinative for disposal of the present application. The statute, as amended and the accompanying circulars and procedural forms, provide for different routes and timelines for fresh and re-registration applications, and the assessee's choice to avail a particular route at a later point of time cannot by itself be a ground for drawing adverse inference against it. The eligibility or otherwise for registration must be tested on the basis of statutory compliance with the conditions stipulated under section 12A(1)(ac) and section 12AB, and not on the timing or delay in opting for such registration under the earlier regime. The legislative intent is to enable registration for genuine charitable institutions that come forward to comply under the new scheme, even if they had not previously availed exemption. The CIT(Exemption)'s observation on this point, therefore, is not germane to the core issue and unduly prejudice....