CIT(E) Erred in Denying 80G Approval Despite Grant of 12AB Registration: ITAT Directs Approval u/s 80G for Charitable Educational Trust [Read Order]
The Tribunal ruled that the CIT(E) erred in denying approval under Section 80G despite granting registration under Section 12AB and held that genuineness of activities and fulfillment of conditions were already satisfied, and directed grant of approval to the educational trust.
![CIT(E) Erred in Denying 80G Approval Despite Grant of 12AB Registration: ITAT Directs Approval u/s 80G for Charitable Educational Trust [Read Order]](https://images.taxscan.in/h-upload/2025/07/22/2067553-charitable-educational-trust-taxscan.webp "CIT(E) Erred in Denying 80G Approval Despite Grant of 12AB Registration: ITAT Directs Approval u/s 80G for Charitable Educational Trust [Read Order]")
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) directed the Commissioner of Income Tax (Exemptions) [CIT(E)] to grant approval under Section 80G of the Income Tax Act, 1961 and held that the denial was erroneous as there was prior grant of registration under Section 12AB. Dr. T.M.A. Pai Foundation (assessee), a charitable educational trust, was registered under...
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) directed the Commissioner of Income Tax (Exemptions) [CIT(E)] to grant approval under Section 80G of the Income Tax Act, 1961 and held that the denial was erroneous as there was prior grant of registration under Section 12AB.
Dr. T.M.A. Pai Foundation (assessee), a charitable educational trust, was registered under sub-clause (i) of clause (ac) of sub-section (1) of Section 12A vide Unique Registration No. AAATD1327MF202211 for Assessment Years 2022-23 to 2026-27.
It was also granted provisional approval under clause (iv) of the first provision to sub-section (5) of Section 80G vide URN AAATD1327MF20221 dated 07.04.2022 up to Assessment Year 2024-25.
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The assessee applied for permanent approval under clause (iii) of the first provision to sub-section (5) of Section 80G in Form No. 10AB on 10.08.2024. The CIT(E) rejected the application, citing reasons including surplus accumulation in fixed deposits without utilization for charitable purposes, high fee receipts not passed on as facilities, and fee receipts not qualifying as donations under Section 80G.
Aggrieved by the CIT(E)’s order, the assessee appealed to the ITAT. The assessee’s counsel argued that the CIT(E) should only verify the genuineness of activities and fulfillment of conditions under Section 80G(5)(i) to (v), which were already satisfied during the grant of Section 12AB registration.
It was contended that fee receipts were from regular educational activities, not donations, and no 80G certificates were issued for them. Further, capital expenditure and 15% accumulation under Section 11(1)(a) were ignored in surplus computation.
The two-member bench comprising PrashantMaharishi (Vice President) and Keshav Dubey (Judicial Member) observed that registration under Section 12A was granted after verifying the genuineness of activities and compliance with laws.
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The bench held that surplus computation and application under Sections 11 and 12 were matters for assessment proceedings, not for 80G approval. It noted that the CIT(E)’s observations on fees not being passed on as facilities were unsubstantiated sweeping statements without evidence of non-genuine activities.
The tribunal observed that fee receipts from educational operations do not disqualify 80G approval, as the trust also receives eligible donations/grants, and the focus is on charitable purposes under Section 2(15) of the Income tax act.
The bench clarified that under Section 80G(5), the CIT(E) must only ensure establishment in India for charitable purposes, genuineness, and fulfillment of specified conditions, without delving into unrelated issues like fee structures. It directed the CIT(E) to grant the approval as applied in Form 10AB. The appeal of the assessee was allowed.
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