TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 26
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....h as handicapped and promotes yoga. 4. The assessee got the provisional registration under section 12AB of the Act as on 30th November 2021. Finally, the assessee filed application for regularization of registration under section 12AB and 80G of the Act on 29-06-2024 which has been rejected by the learned CIT (Exemption) for the reason discussed here under: 1. Lack of Genuine Charitable Activities * The trust claimed to have been created for charitable purposes (eradicating hunger, poverty, malnutrition etc.), but in practice it carried out only one small activity of providing windows, painting tables, and blackboards to a Government school in January 2022. * No further charitable activities were undertaken in FYs 2022- 23 and 2023-24, despite having received large funds. 2. Nature of Donations and Transactions * Donations and contributions came from companies where the trustees themselves hold important managerial roles, namely: o M/s Vasaka Promoters and Developers Pvt Ltd o M/s Alpha Design Technologies Pvt Ltd * This raised doubts about the independence and genuineness of the donations, as they appeared ....
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....23.11.2021. The application was accepted and provisional registration was granted vide Form 10AC dated 30.11.2021. Later, as per CBDT Circular No. 7/2024 dated 25.04.2024, the appellant filed Form 10AB on 29.06.2024 for regularisation of provisional registration. 9.1 It was argued that the trust has carried out charitable activities during the three financial years under consideration and has utilised the donations it received for the same. In FY 2021-22, the trust received donations of Rs.8,38,910/- and in FY 2022-23, Rs.20,00,000/-. These donations have been utilised for charitable purposes, and detailed accounts were submitted before the lower authority. Hence, the allegation of the ld. Commissioner that no charitable activity was undertaken is factually incorrect. 9.2 The learned AR further submitted that Mr. M. Yugandhar donated 50,000 equity shares of M/s Vasaka Promoters and Developers Pvt. Ltd. to the trust on 22.11.2021 as corpus donation. These shares were later sold to M/s Bhavana Holdings Pvt. Ltd. on 20.01.2023 for a consideration of Rs.32.50 crore. The trust received Rs.1.625 crore (5% of the sale consideration) upfront, while the balance was to be paid later. T....
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....rned CIT(Exemptions) rejecting the application of the assessee for registration under section 12AB of the Act is primarily based on two reasons: (i) that the assessee has not carried out any genuine charitable activity, and (ii) that the assessee has not pursued recovery of the outstanding sale consideration from the transfer of shares, thereby treating the entire arrangement as a façade. 11.1 First, we note that the scope and objective of verification under section 12AB of the Act is limited. At the stage of regularisation of registration under section 12AB of the Act, the CIT (Exemptions) is required to satisfy himself about (i) the charitable nature of the objects and (ii) the genuineness of activities. The learned CIT(Exemption) is not required to conduct a full-fledged assessment of individual transactions. We find that the Hon'ble Supreme Court in case of Ananda Social & Educational Trust v. CIT reported in 114 taxmann.com 693 has clarified that "section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done". The early-stage or limited activities are not a ground to refuse/withdraw registration when the objects are undeni....
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....s) on which incurred an amount of Rs. 6,38,910/- only. The assessee further undertakes financial assistance activity of Rs 2 lakh. This can be verified from the income and expenditure account for the period from 30th September 2021 to 31st March 2022 placed on page 69 of the appeal set. However, in the subsequent two years, the assessee has not carried out much of activities. The fact that the first two/three years shows modest or uneven activities does not negate genuineness of charitable objects of the assessee. An emerging trust often scales progressively. The Hon'ble Courts and Tribunal including the coordinate benches (in case of Swayam Siddha Foundation Society and Embassy Charitable Trust cited above) have consistently held that the quantum or spread of activity is irrelevant for registration, once it is established that the objects are charitable and some bona fide charitable activity has been carried out. Therefore, in our considered opinion, the conclusion of the ld. CIT(E) that there were "no genuine activities" rests on an incorrect yardstick. 11.3 We also note that the ld. CIT(E) was influenced by the fact that donations to the appellant assessee arose from companie....
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....reach of any specified law or any adverse action by a competent authority. In the absence of such material facts, we hold that the refusal of application for the regularisation of the registration is based on conjectures about transactions discussed above but the same cannot be sustained. 11.7 On the contrary, the assessee has produced its trust deed, evidence of charitable activity being carried out, financials statements, and explanations regarding corpus/accumulation/recovery steps. Therefore, in the given facts, the burden shifts to the Department to arrange concrete material of non-genuineness of the object and activity of the assessee. Merely labelling the arrangement a "façade" without tangible corroboration does not meet the statutory threshold. The record, as brought before us, discloses charitable objects, some charitable activity, compliant investment, and planned application and it does not disclose any misuse, private benefit, or violation of law. 11.8 Therefore, considering overall facts and circumstances, we hold that the assessee's objects are charitable, and genuineness of activities stands established at this stage. Accordingly, we hereby set aside th....