Case Law Details
Dharmaram College Vs ITO (ITAT Bangalore)
Bangalore ITAT: CIT(E) Cannot Reject 12AB Registration Merely Because Trust Is Religious – Matter Remanded to Grant Registration as Religious Trust
In an important ruling, the Bangalore ITAT held that once the Commissioner himself accepts that the assessee is engaged in genuine religious activities, the application for registration u/s 12AB cannot be rejected merely because the trust was mistakenly described as charitable instead of religious in Form 10AB.
The assessee, Dharmaram College, was a long-standing religious seminary of the Carmelites of Mary Immaculate (CMI) congregation imparting theological and religious training to priests. The trust had earlier enjoyed registration u/s 12A and was also registered under the Foreign Contribution Regulation Act (FCRA) as a Religious Association.
The CIT(E) rejected renewal of registration u/s 12AB primarily on the ground that the trust had failed to establish nexus between its objects, activities and financial pattern and also because the assessee itself admitted that it was carrying on religious activities. The CIT(E) treated this as contradictory to the claim for registration as a charitable institution.
Before the Tribunal, the assessee clarified that while filing Form 10AB, the nature of objects was inadvertently mentioned as “charitable” instead of “religious.” The assessee consistently maintained that it had always functioned as a religious seminary for Christian priests and had never changed its activities since inception. Detailed evidence regarding theological students, priests, seminary administration and religious training was also produced.
The ITAT observed that the trust objects clearly involved promotion of both religious and secular education and operation of a religious educational institution. The Tribunal further noted that the CIT(E) himself had acknowledged the religious character of the institution and there was no adverse material disputing the genuineness of religious activities.
Importantly, the Tribunal held that issues relating to hostel collections, receipts from Christ University and financial application are matters falling within the domain of the Assessing Officer during assessment proceedings and cannot by themselves justify rejection of registration when the objects and genuineness of activities are otherwise established.
Accordingly, the Bangalore ITAT held that the assessee should be treated as a religious trust and restored the matter back to the CIT(E) for fresh consideration of registration u/s 12AB by treating the Form 10AB application as one for registration of a religious institution.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of the assessee is directed against the order of ld. CIT (Exemptions), Bengaluru dated 31/12/2025 vide DIN & Notice No: ITBA/EXM/F/EXM45/2025-26/1084269744(1) rejecting the application filed in Form-10AB dated 16/06/2025 for registration u/s 12AB of the Income Tax Act, 1961 (in short “the Act”).
2. The assessee has raised the following grounds of appeal:-
1. General Ground
1.1. The order passed by the learned Commissioner of Income Tax (Exemptions), Bangalore (hereinafter referred to as CIT(E), Bangalore) under section 12AB(1)(b) of the Act to the extent prejudicial to the appellant is bad in law and liable to be quashed.
2. Rejection of Application filed for registration under section 12AB
2.1 The learned CIT(E), Bangalore erred in rejecting the application filed under section 12A(1)(ac)(ii) for registration under section 12AB of the Income Tax Act, 1961.
2.2 The learned CIT(E), Bangalore erred in not properly understanding the facts of the case, genuineness of religious activities carried on by the appellant and the written submissions along with various documentary evidences filed in reply to hearing notice issued by the CIT(E), Bangalore.
2.3 The learned CIT(E), Bangalore erred in concluding that the the assessee has failed to establish a clear link between its stated objects, its actual activities, financial pattern and therefore the genuineness of the activities of the assessee cannot be established on the basis of the material available on record.
2.4 The learned CIT(E), Bangalore erred in denying registration under section 12AB the claim for registration as a charitable institution is contrary to its own stated position in view of the assessee’s own admission regarding the religious nature of its activities.
2.5 The learned CIT(E), Bangalore erred in not appreciating that the assessee is a religious organization with religious objects carried on continuously and while filing the application for registration under section 12AB, the nature of activities were inadvertently stated to be charitable.
2.6 The learned CIT(E), Bangalore erred in concluding against the appellant for various impugned reasons which were not included in the show cause and for which no opportunity of hearing was provided to the appellant.
2.7 On facts and circumstances of the case and law applicable, the impugned order passed by the CIT(E), Bangalore rejecting the application filed under section 12A(1)(ac)(ii) for registration under section 12AB is bad in law, liable to be quashed and the appellant should be granted registration under section 12AB as a religious organisation.
3. Prayer
3.1. In view of the above and other grounds to be adduced at the time of hearing, the appellant prays that the orders passed under section 12AB of the Act by the learned CIT(E), Bangalore to the extent prejudicial to the appellant be quashed or in the alternative the above grounds and the appeal be allowed.
The Appellant submits that each of the above grounds/ sub-grounds are independent and without prejudice to one another. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Income-tax Appellate Tribunal to decide the appeal according to law.
The appellant prays accordingly.
3. Brief facts of the case are that the assessee is a society registered under the Karnataka Societies Registration Act, 1960 vide registration No. 09/78-79. The assessee society was initially granted registration under section 12A of the Act vide registration number PRO.718/10A/Vol.AI/D.145 issued by the Commissioner of Income Tax, Karnataka- II, Bangalore vide order dated 22.5.1980. Subsequently, the assessee society was also granted registration under sub clause (i) of clause (ac) of sub-section (1) of section 12A of the Act vide Unique Registration Number (URN): AAATD1013AE19801 dated 07/04/2022 effective from AY 2022-23 to AY 2026-27. The assessee society is also registered under the Foreign Contribution (Regulation) Act, 2010 vide Registration Number 094420284 as a Religious Association. Thereafter, the assessee trust filed an application in Form No 10AB for renewal of registration under section 12A(1)(ac)(ii) of the Act on 16.6.2025. However, the contention of the assessee society is that while filing the application for renewal in form 10AB on 16.06.2025, the assessee trust inadvertently mentioned the object of the applicant as “Relief of the Poor, Education, Medical relief & Advancement of any other objects of general public utility” instead of “Religious”. The ld. CIT(E), Bengaluru thereafter, vide notice dated 4.10.2025, called for various details and documents. The AR of the assessee appeared and filed submissions on 15.10.2025. Further, vide SCN dated 27.10.2025, the CIT(E), Bangalore called upon the assessee to show cause as to why the registration under the Act should not be rejected for the reasons mentioned therein. The assessee submitted its response on 23.12.2025 with the detailed explanations to various issues raised by the ld. CIT (E) along with various documents. The ld. CIT(E), Bangalore however passed the order in Form No 10AD on 31.12.2025 and rejected the application filed in Form-10AB dated 16.06.2025 for registration u/s.12AB of the Act with the following observations which are reproduced below-
“7. The reply of the assessee has been carefully considered but is not found to be satisfactory. While the assessee has described its activities as religious in nature, it has failed to prove that the actual activities and financial transactions match with the objects stated in the Memorandum of Association. The assessee has itself admitted that it is not managing any formal educational institution, despite education being a key object. Further, no documentary evidence has been furnished to clearly establish how the substantial receipts from Christ University-associated institutions are applied towards the stated objects of the trust.
8. Similarly, the explanation regarding hostel-related collections remains unsubstantiated, as no approved fee structure, sanction letter or formal letter has been produced. The operation of additional activities such as coconut farm, music academy, language lab and publications has also not been supported by any approvals, beneficiary details or activity-wise financial statements to establish their charitable nature. The explanation regarding receipt of Rs. 21,06,000/- by way of multiple identical deposits has not been supported by documentary evidence as to why, in absence of any agreement with the Christ University, this amount is being transferred to the assessee.
9. Without prejudice to the above, it is also relevant to note that the assessee has itself admitted in its reply that it is engaged in religious activities, by stating that it is a religious institution functioning as a seminary for priests and that its purpose is imparting religious training to priests. Throughout the reply, the assessee has justified its activities by relying on constitutional provisions relating to freedom of religion and by emphasising its religious character. Having taken this stand, the assessee cannot, at the same time, seek registration by claiming that it is carrying on charitable activities. Therefore, the claim for registration as a charitable institution is contrary to its own stated position in view of the assessee’s own admission regarding the religious nature of its activities.
10. Considering the above facts, it is evident that the assessee has failed to establish a clear link between its stated objects and its actual activities and financial pattern. The explanations offered are not supported by adequate documentary evidence. Therefore, the genuineness of the activities of the assessee cannot be established on the basis of the material available on record. In view of these facts and circumstances, the application of the assessee is liable to be rejected, as the assessee has failed to satisfy the conditions prescribed for grant of registration under u/s 12AB of the act. In view of the above, the application in Form-10AB dated 16.06.2025 for registration u/s.12AB vide section 12A(1)(ac)(ii) is therefore rejected.”
4. Aggrieved by the order of the ld. CIT(E), Bangalore dated 31/12/2025, the assessee trust has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 147 pages containing therein various documents/record/report/ notes/financials/certificates/forms/notices/List of students relied upon by the assessee in support of its case.
5. Before us, the ld. AR of the assessee contended that the ld. CIT(E) has rejected the application for extraneous or irrelevant reasons and the same is not in accordance with the provisions of section 12AB(1)(b) of the Act. Further, the ld. AR of the assessee argued that the genuineness of activities of the Trust as per section 12AB(1)(b) is established in the present case and hence the assessee trust deserves the registration under section 12AB(1)(b) as a religious trust. The renewal of registration under Foreign Contribution (Regulation) Act as Religious Association was relied upon to support the case of the assessee trust.
6. The ld. DR on the other hand relied on the order of the ld. CIT(E) and justified the rejection of the application filed for the registration.
7. We have heard the rival submissions and perused the materials available on record. The assessee is a major study house of the Carmelites of Mary Immaculate (CMI) Congregation. As stated by the AR of the assessee, it aims at educating people who are prepared to commit themselves to the service of the Church and the world, which is accomplished through a holistic, spiritual, intellectual and cultural formation. It is a religious seminary imparting religious education as deemed by its ecclesiastical authority necessary for becoming priests or any other vocation in the religious order of the Carmelites of Mary Immaculate. The assessee society was granted registration under sub clause (i) of clause (ac) of sub-section (1) of section 12A of the Act vide Unique Registration Number (URN): AAATD1013AE19801 dated 07/04/2022 effective from AY 2022-23 to AY 2026-27. The assessee society is also registered under the Foreign Contribution (Regulation) Act, 2010 vide Registration Number 094420284 as a Religious Thereafter, the assessee trust filed an application in Form No 10AB for renewal of registration under section 12A(1)(ac)(ii) of the Act on 16.6.2025. Before proceeding further, it is apposite here to take note of relevant section of the Act for the purposes of this case which reads as under-
Procedure for fresh registration.
12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,—
(a) …………..
(b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) 94[or item (B) of sub-clause (vi)] of the said clause,—
(i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about—
(A) the genuineness of activities of the trust or institution; and
(B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects;
(ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),—
(A) pass an order in writing registering the trust or institution for a period of five years; or
(B) if he is not so satisfied, pass an order in writing,–
(I) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub-section (1) of section 12A rejecting such application and also cancelling its registration;
(II) in a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub-section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard;
Thus, as per the above provisions, the ld. CIT(E) has to call for such documents or information from the trust or institution or make such inquiries as he/she thinks necessary in order to satisfy himself/himself about (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects. We are of the considered opinion that the ld. CIT(E) has to pass an order in writing after satisfying himself/herself about three elements viz.,
(i) the objects of the trust or institution,
(ii) the genuineness of its activities under item (A) and
(iii) Compliance of the requirements under item (B).
7.1 Further, at this relevant juncture, it is also apposite here to take note of the objects of the trust as enumerated in Memorandum of Association which are reproduced below for ease of reference & convenience-
“III. The objects for which the society is established are :-
(a) To promote education both religious and secular and charity and for that purpose to take over the Dharmaram College at Bannerghatta Road, Bangalore and run it as a religious, charitable and educational institution as heretofore, by the Fathers of the Congregation of the Carmelites of Mary Immaculate, in trust, for the benefit of the student-member of the said Congregation, during the period of their study of Theology and other courses of studies that may be given or provided there.
(b) To help an all-round development of Dharmaram College, more importantly in the matter of inter-religious conferences and discussions and setting up of libraries and archieves.
(c) To enable students of other religious orders or congregations to prosecute all or any of the aforesaid studies, afforded them every facility for that purpose and to help retain the individuality of every such religious order while its students remain on the premises along with such of the members of their order under whose charge they will be, to let them have a separate residence in the precinct of the Dharmaram College on which portions of land as may be allowed for that purpose.
(d) To afford the same or such other facilities as may be deemed proper to such others, irrespective of religion, caste or creed as may be desirous of taking all or any of the courses of the studies aforesaid.
(e) For the above purposes, to take over and hold as trustees, all the movable and immovable properties and other assets now or may hereafter be held by Dharmaram College.”
Thus, the main objects of the assessee trust is to promote education both religious & secular and for that purpose to take over the Dharmaram College at Bannerghatta Road, Bangalore and run it as a religious, charitable and educational institution. The contentions of the assessee trust are that the objects although do make a mention of running a charitable institution, the assessee has not ventured into charity and remained as a religious residential institution for Christian priests. We also take note of the fact that the ld. CIT(E) has also noted the religious activities at para 9 of the rejection order by stating that “Without prejudice to the above, it is also relevant to note that the assessee has itself admitted in its reply that it is engaged in religious activities, by stating that it is a religious institution functioning as a seminary for priests and that its purpose is imparting religious training to priests.” The objects of the assessee society are thus religious in nature. Further, we also take note of the fact that the assessee trust is also granted registration under the Foreign Contribution (Regulation) Act, 2010 vide Registration Number 094420284 as a Religious Association.
7.2 Before us, the AR of the assessee vehemently contended that while filing the application for renewal in form 10AB on 16.06.2025, the assessee trust inadvertently mentioned the object of the applicant as “Relief of the Poor, Education, Medical relief & Advancement of any other objects of general public utility” instead of “Religious”. However, when the Bench enquired about the status of previous Registrations dated 22/05/1980 as well as 07/04/2022 i.e. whether those were granted as charitable institution or religious institution, the ld. AR of the assessee submitted that none of the registration certificate mentioned about the granting of registration as a charitable entity or religious institution. However, in the present case, the assessee has explained in detail that it is a religious organization by way of the submissions and details filed before the ld CIT(E) vide petition dated 23.12.2025. It is categorically stated therein that the assessee trust has not changed its activities in fulfillment of its objectives from the time of its inception. It has been a ‘Religious Seminary’ for the priests of the Religious Order of the “Carmelites of Mary Immaculate” from the date if its inception and continues to be the same till date. The Carmelites of Mary Immaculate are a religious order of the Christian Roman Catholic denomination. Religious instruction and religious teachings pertinent to the denomination and the religious order are conducted for persons who wished to be priests in the religious order. It was with a vision to provide a proper legal structure and regulate this activity; the assessee society was formed to take over the Dharmaram College which was the existing system of religious education that existed under the religious order. The assessee is a residential institution for priests and for those who desire to enter into the vocation of priesthood and this is the main object which is been carried on by the assessee society. In order to justify its religious activities with documentary evidences, the assessee also submitted the complete list of students studying the religious courses viz., Bachelor of Theology, Bachelor of Philosophy, Diploma in Philosophy and Master in Philosophy. It also submitted the appointment letters of Rector, Administrator and others issued by the Prior General, Carmelites of Mary Immaculate. It is also not in dispute that the renewal of registration of assessee society under Foreign Contribution (Regulation) Act is issued as a Religious organization. The income and expenditure account include expenses of religious nature like expenses on upkeep of priests, students and religious functionaries, chapel maintenance, contributions to various other religious institutes etc. It is thus evident that the activities carried on by assessee society are religious in nature. We are also of the considered opinion that the ld. CIT(E) has also not brought on record any adverse material to dispute the religious activities carried on by the assessee trust. Further, we are also of the considered opinion that the financial transactions such as hostel related collections, substantial receipts from Christ University and associated institutions and its application towards the religious objects of the assessee society is the domain of the Assessing Officer to be examined during the assessment stage. It has nothing to do with the genuineness of activities of trust or institution. At the time of granting the Registration, as stated earlier, the ld. CIT(E) has to satisfy himself/herself about three elements viz., the objects of the trust or institution, the genuineness of its activities under item (A) and Compliance of the requirements under item (B). In our opinion, the ld. CIT(E) having noted the religious character of the assessee trust, could have granted registration as a religious trust instead of rejecting the application.
7.3 We take note of the fact that though no application was made for registration as a religious Trust as mentioned by the ld. CIT(E) & the assessee before us contended that the same was an inadvertent error, accordingly we deemed fit & proper to remit the entire issue to the file of the ld. CIT(E) to decide afresh in accordance with law by treating the application filed in form 10AB on 16/06/2025 for registration as a Religious Trust. As we have already held the assessee trust to be religious trust, the ld. CIT(E) has to satisfy himself/herself about three elements viz., the objects of the trust or institution, the genuineness of its activities under item (A) and Compliance of the requirements under item (B) before granting registration as a religious trust. Needless to say, reasonable opportunity of being heard must be granted to the assessee. It is ordered accordingly.
8. In the result the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 19th May, 2026
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