ITAT Grants Relief to Charitable Trust: Section 12A and 80G Rejection Set Aside
Tribunal Says Proposed Activities Must Be Considered
Landmark Ruling Strengthens Rights of Charitable Institutions
By Legal Reporter
New Delhi: February 09, 2026:
In a significant judgment, the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, has ruled in favour of an old charitable trust whose applications for registration under Section 12A and approval under Section 80G were rejected by the Commissioner of Income Tax (Exemptions). The tribunal held that registration cannot be denied simply because the trust had not carried out substantial activities by the time of application.
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This ruling is expected to benefit many charitable institutions across India, especially those in their early stages of operation, by clarifying that proposed activities and the genuineness of objectives must be considered.
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Background of the Case
The trust had applied for registration under Section 12A, which allows charitable and religious institutions to claim exemption on income, and under Section 80G, which enables donors to claim tax deductions for contributions.
The Commissioner of Income Tax (Exemptions) rejected the applications, citing that the trust had only conducted a single charitable activity (a bhandara donation) and that this was not properly reflected in its bank statements. Consequently, both Section 12A registration and Section 80G approval were denied.
The trust appealed to the ITAT, producing bank statements, photographs, and explanations of entries to prove its charitable intent and activities.
Key Observations by ITAT
- Activities Include Proposed Activities: The tribunal emphasized that charitable registration cannot be denied merely because activities have not substantially commenced. Proposed activities must also be considered.
- Evidence of Charitable Intent: The trust provided proof of charitable activities, including photographs and bank records, which supported its claim.
- Genuineness of Objects: The tribunal noted that the genuineness of the trust’s objectives and alignment of activities with those objectives are the key factors in granting registration.
- Relief Granted: The ITAT set aside the rejection orders and restored the matter to the Commissioner of Income Tax (Exemptions) for fresh consideration.
Legal Significance
This ruling is important for charitable trusts and non-profit organizations across India. It clarifies that:
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- Registration under Section 12A and approval under Section 80G should not be denied on technical grounds.
- Authorities must examine the genuineness of objectives and proposed activities, not just past records.
- Early-stage charitable institutions should not be penalized for limited activities at the time of application.
Legal experts believe this judgment will encourage more trusts to apply for registration without fear of rejection due to insufficient initial activities.
Public and Legal Reactions
- Charitable Institutions: Many trusts welcomed the ruling, saying it will help them secure tax exemptions and donor support.
- Tax Professionals: Experts noted that the judgment aligns with the spirit of the law, which aims to promote charitable activities.
- Donors: The ruling ensures that donors can continue to claim deductions under Section 80G when supporting genuine charitable institutions.
Conclusion
The ITAT’s ruling is a landmark in the field of charitable law. By recognizing that proposed activities must be considered, the tribunal has ensured that genuine charitable institutions are not denied registration due to technicalities.
This judgment strengthens the rights of trusts and non-profits, encourages charitable work, and reassures donors that their contributions will continue to receive tax benefits.
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