Swarup Charitable Trust Vs CIT (E) (ITAT Delhi)
Delhi ITAT: Registration U/s 12AB & 80G Cannot Be Denied Before Charitable Project Is Implemented
The Delhi ITAT held that the CIT(E) was not justified in rejecting the trust’s applications for registration under section 12AB and approval under section 80G merely because the trust had not yet commenced its proposed charitable activity. The trust had been constituted to construct one-room residential units for poor and destitute persons, and the building was still under construction when the applications were considered. The CIT(E) denied registration on the grounds that no charitable activity had yet been undertaken, the trust had failed to explain the manner of allotment and charging of beneficiaries, and one of its objects of leasing affordable tenements appeared to be commercial in nature. The Tribunal observed that these objections were premature, as the charitable project had not yet been completed and the actual implementation of the scheme could only be examined after construction and allotment of the houses. It held that the CIT(E) ought to have waited for completion of the project and then verified whether the trust was carrying out genuine charitable activities, instead of rejecting the applications at the threshold. Accordingly, the Tribunal set aside the orders of the CIT(E) and allowed the trust’s appeals, holding that the denial of registration under section 12AB and approval under section 80G before the charitable project had even commenced was unsustainable in law.
FULL TEXT OF THE ORDER OF ITAT DELHI
Appeals in this case have been filed by the assessee against the order dated 19.11.2025 passed by the CIT(E), Delhi. Grounds of appeals are as under :-
(ITA No.8107/Del/2025)
“On the facts and in the circumstances of the case and in law the order of the learned Commissioner of Income Tax (Exemptions), Delhi arbitrarily rejecting the application for renewal of provisional registration under section 80G(5) of the Income Tax Act, 1961 is misconceived, fallacious and illegal which must be quashed with directions to grant the registration as sought.”
(ITA No.8108/De1/2025)
“On the facts and in the circumstances of the case and in law the order of the learned Commissioner of Income Tax (Exemptions), Delhi arbitrarily rejecting the application for renewal of provisional registration under section 12AB(1)(b) of the Income Tax Act, 1961 is misconceived, fallacious and illegal which must be quashed with directions to grant the registration as sought.”
2. During proceedings before us the Ld. Counsel for the assessee brought it to the notice of the Bench that the CIT(E) has denied registration u/s.12AB(1)(b)(ii)(B) of the IT Act giving his findings as under :-
“1. The applicant (Trust) was created in Nov 2022. Since then it has not undertaken any charitable activity. From the financials submitted it is seen that applicant is showing land & building under construction as assets. The applicant stated that same are for one room set residential houses for the poor and destitute. However, it failed to show how these houses will be allotted to beneficiaries & how will they be charged. 00
2. Further as per one of its objects, the applicant tends to construct affordable tenements of one room set and to give them on lease to needy person. This objective is evidently commercial.”
3. He further argued that since the registration u/s.12A alongwith 80 G exemption have been denied, therefore, the assessee is not in a position to get any contribution for the charitable purpose. He also brought it to the notice of the Bench that once building is complete and allocated to the needy persons only thereafter CIT(E) can question the charitable nature of work done by the assessee.
4. But here in this case the Ld. CIT(E) has not waited for completion of the building to be allocated to the needy persons and he has rejected the registration u/s.12A and thereby denied the exemption u/s.80G of the Act.
5. Per contra the Ld. DR relied on the order of the CIT(E).
6. We have considered the findings given by the Ld. CIT(E) in his order and the arguments made by Ld. Counsel for the assessee before us. We are of this considered view that once it has already been brought to the notice of the CIT(E) that after the completion of the construction of one room set provided to the needy people, the Ld. CIT(E) should have waited for completion of the construction and then verified the charitable work done by the trust. But here in this case exemption has been withdrawn and the registration has been cancelled even before construction of building which in our considered view is not justified, therefore, the action of the Ld. CIT(E) cannot be sustained.
7. In the result, the appeals filed by the assessee in both the ITA Nos.8107/Del/2025 and 8108/Del/2025 are allowed.
Order pronounced in the court on 24.07.2026.
