Yogayatan Jankalyan Trust Vs CIT (Exemption) (ITAT Mumbai)
In this case, the ITAT Mumbai set aside the rejection of registration u/s 12AB and approval u/s 80G by the CIT(E), which was denied on the ground that the trust granted scholarship to an Indian student pursuing education abroad, allegedly violating Section 11(1)(c).
The Tribunal held that this reasoning was legally incorrect, relying on settled jurisprudence that scholarships granted to Indian students-even for education abroad-constitute application of income for charitable purposes in India. The crucial factor is that the beneficiary is an Indian and the application of funds originates in India, not the geographical location of education.
It was further emphasized that:
- At the stage of granting registration u/s 12AB, the authority must examine objects and genuineness of activities, not adjudicate allowability under Section 11
- There was no adverse finding on charitable objects or genuineness of the trust
- CIT(E) wrongly denied registration based on misinterpretation of Section 11(1)(c)
Since rejection of 80G approval was solely due to denial of 12AB registration, the Tribunal held that both cannot survive once the primary defect is removed.
Final Outcome:
- Rejection of 12AB registration – Set aside
- Direction to grant registration u/s 12AB
- Approval u/s 80G – Also directed to be granted
This ruling clarifies an important principle:
Scholarship to Indian students abroad = valid charitable application in India
Registration stage ≠ assessment stage-scope is limited
FULL TEXT OF THE ORDER OF ITAT MUMBAI
