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Carrying out of Charitable Activity at the Stage of Commencement of Institution is not relevant for Granting 12AA Registration

The Income Tax Appellate Tribunal recently ruled that carrying out of charitable activity at the stage of commencement of institution is not relevant for granting registration under section 12AA of the Income Tax Act, 1961.

A division bench including Vice President D. Manmohan and Judicial Member D.S. Sunder Singh allowed the appeal filed by assessee trust against order of the Commissioner of Income Tax (Exemptions), wherein the approval claimed u/s 80G (5) of the Income Tax Act, 1961 was not accorded on the ground that the assessee has not undertaken much activity in accordance with the objects.

The assessee trust was aimed at carrying on charitable activities such as providing medical aid, to impart education, provide food and shelter to the poor & needy. It has filed an application for registration u/s 12AA of the Act and also seeking approval u/s 80G of the Act along with relevant declarations.


The commissioner of granted the registration under 12 AA of the act, however with regard to the grant of approval u/s 80G of the Act, he observed that the assessee did not carry much of its activity since inception.

The assessee pointed out that the approval was made 3 months after its inception and it cannot expect miracle in carrying out its activity within such a short span.

On the other hand, the revenue submitted that there should be a gap between seeking approval u/s 12AA of the Act and for seeking approval u/s 80G of the Act as per ITAT Lucknow bench order reported in 2015 Tax Pub (DT) 5082 (Luck-Trib) as otherwise claim of approval u/s 80G of the Act can be rejected.

While considering the rival submission the tribunal bench made a crystal clear mention that the aforesaid decision of the ITAT, Lucknow bench is not applicable to the case on hand and also added that the decision of the ITAT Kolkata Bench, as rightly been pointed out by the Ld. Counsel, supports the stand of assessee that if the activities of the trust are genuine, at the stage of commencement of institution, registration has to be granted automatically and claim u/s 80G of the Act can be followed with grant of registration.

The tribunal bench finally held that the assessee could not undertake much activity within the short span of 3 months, the Commissioner (Exemptions) should not have refused the claim of approval u/s 80G(5) of the Act.

Under this situation the tribunal directed the Commissioner to consider the issue pragmatically and grant approval under Section 80G (5) of the Income Tax Act.