No Charitable Activity During Year Not Ground to Reject Section 12AB Registration: ITAT Mumbai

By CA Sandeep Kanoi Income Tax Judiciary October 8, 2026

TaxGuru Citation: 2026 taxguru.in 15081
Case Name: MeWari Tolly Charitable Trust Vs CIT (Exemptions) (ITAT Mumbai)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2026-27
Courts: All ITAT, ITAT Mumbai

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MeWari Tolly Charitable Trust Vs CIT (Exemptions) (ITAT Mumbai)

Summary: ITAT Mumbai directed the CIT(E) to grant renewal of registration under Section 12AB to MeWari Tolly Charitable Trust, holding that registration could not be denied merely because the Trust had not carried out charitable activities during the relevant assessment years. The Trust had filed Form 10AB on 29.09.2025 under Section 12A(1)(ac)(ii). It furnished its Trust Deed, financial statements for FYs 2022-23 and 2023-24, income-tax returns for AYs 2022-23 to 2025-26 and other details sought by the CIT(E). However, the CIT(E) rejected renewal because no expenditure had been incurred towards the Trust’s stated charitable objects and, therefore, according to him, genuineness of its activities could not be established.

The Tribunal followed Ananda Social and Educational Trust Vs CIT, (2020) 426 ITR 340 (SC), where the Supreme Court held that at the registration stage the expression “activities” includes proposed activities. The Commissioner has to examine whether the objects are genuinely charitable and whether proposed activities are genuine and consistent with those objects; registration proceedings are not an assessment of what the trust has actually accomplished.

The Tribunal held that this principle also applies to Section 12AB. It further observed that registration does not automatically confer exemption under Section 11. At the assessment stage, the AO remains entitled to examine whether expenditure was genuinely incurred for charitable purposes and may deny exemption where statutory conditions are not satisfied. The Tribunal also followed Sir C.V. Raman Educational & Charitable Trust Vs CIT(E), (2026) 184 taxmann.com 197 (Chennai-Trib.), which held that mere non-commencement of charitable activities cannot by itself be treated as a specified violation warranting denial of Section 12AB registration. Accordingly, the CIT(E) was directed to grant registration and the Trust’s appeal was allowed.

Cases Discussed

Sir C.V. Raman Educational & Charitable Trust Vs CIT(E), (2026) 184 taxmann.com 197 (ITAT Chennai) — Followed. Non-commencement of charitable activities cannot by itself be treated as a specified violation under Explanation (e)(i) to Section 12A(1)(ac)(iii) so as to deny registration under Section 12AB; proposed charitable activities and surrounding facts have to be considered.
CIT Vs International Health Case Education and Research Institute, (2025) 171 taxmann.com 579 (SC); (2025) 304 Taxman 265 (SC); (2025) 482 ITR 287 (SC) — Considered through Sir C.V. Raman Educational & Charitable Trust. The Supreme Court reiterated that where no activities had yet been carried out, it would be premature to question their genuineness merely on that basis; registration itself does not automatically confer Section 11 exemption, which remains examinable by the AO when exemption is claimed.
Ananda Social and Educational Trust Vs CIT, (2020) 426 ITR 340 (SC) — Followed. At the registration stage, “activities” includes proposed activities. The Commissioner must determine whether the objects are genuinely charitable and whether proposed activities are in line with those objects; absence of commenced activities is not by itself a ground to refuse registration.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal is filed by the assessee against the order of the learned CIT(E), Mumbai in denying registration u/s 12AB of the Act.

2. The learned counsel, at the outset, submitted that the learned CIT(E) denied renewal of registration u/s 12AB of the Act to the assessee on the ground that the assessee-Trust did not carry out any charitable activities. Learned counsel for the assessee, referring to page 1 of the paper book, submitted that in the course of the proceedings, the learned CIT(E) required the assessee to furnish various details, including the financial statements for the financial years 2022-23 and 2023-24 and the activities of the assessee-Trust. The assessee, vide letter dated 19.01.2026, furnished a detailed submission and explained the nature of activities of the assessee- Trust, including copy of Trust Deed, financial statements for the financial years 2022-23 and 2023-24, copy of income tax returns for the assessment years 2022-23 to 2025-26, details of various proceedings before the Assessing Officer were furnished. However, it is submitted by the learned counsel that the application filed on 29.09.2025 in Form 10AB u/s 12A(1)(ac)(ii) seeking renewal of registration u/s 12AB was denied, observing that no activity towards the stated charitable objects during the relevant assessment years was carried out by the assessee. The learned counsel for the assessee, placing reliance on the recent decision of Chennai Bench of the Tribunal in the case of Sir CV Raman Educational & Charitable Trust vs. CIT(E), reported in (2026) 184 taxmann.com 197 (Chennai – Trib.), submitted that non- commencement of charitable activities did not amount to specified violation under Explanation (e)(i) to section 12A(1)(ac)(iii), so as to reject registration u/s 12AB of the Act. Learned counsel for the assessee submitted that while holding so, the Tribunal followed the decision of the Hon’ble Supreme Court in the case of Ananda Social and Educational Trust vs. CIT, reported in (2020) 426 ITR 340 (SC).

3. Learned counsel further submitted that the learned CIT(E) is not disputing the charitable nature of the objects of the Foundation, and therefore, merely because the assessee could not commence or carried out the charitable activities during the year, the registration u/s 12AB cannot be denied.

4. On the other hand, the learned DR supported the order of the learned CIT(E).

5. On perusal of the order of the learned CIT(E), it is observed that the renewal of registration u/s 12AB of the Act is denied for the sole reason that no activity towards the stated charitable objects was carried out during the relevant assessment year by the assessee. The learned CIT(E) observed that the genuineness of the activities of the trust cannot be established for the reason that no expenditure has been incurred by the assessee towards attainment of the stated objects of the trust. Therefore, the learned CIT(E) denied renewal of registration u/s 12AB of the Act to the assessee and observed as under:-

“1. M/s MEWARI TOLLY CHARITABLE TRUST (hereinafter referred to as ‘the applicant’) filed an application on 29.09.2025 in Form 10AB u/s 12A(1)(ac)(ii) seeking renewal of regular registration under section 12AB of the Income Tax Act.

1. On verification of the application in Form 10AB filed by the applicant, it was found that the application was not complete, and all the documents required to be accompanying the application were not furnished. Hence, a notice was issued to the applicant vide Notice dated 12.01.2026 requesting the applicant to furnish the complete set of documents mentioned in Rule 17A(2). In response to the above Notice, the applicant made submission on 22.01.2026 and furnished the relevant details and document.

3. On examination of the financial statements and Income and Expenditure Accounts furnished by the applicant trust/institution for Assessment Years 2022- 23 & 2023-24, it is observed that the applicant has not incurred any expenditure towards the objects or charitable activities of the trust during the said assessment years.

3.1 In the absence of any expenditure incurred towards the attainment of the stated objects of the trust, the applicant has failed to demonstrate that it has carried out any charitable activities during the relevant period. Consequently, the genuineness of the activities of the trust/institution cannot be established on the basis of the material placed on record. It is further noted that the applicant was granted regular registration u/s 12A for 5 years in Form 10AC dated 05.04.2022, valid from Assessment Year 2022-23 to Assessment Year 2026-27.

3.2 It is pertinent to note that, in the absence of any charitable activity or application of income towards the stated charitable objects, the genuineness of the activities of the trust/institution could not be established. Mere articulation of charitable objects in the trust deed/MoA is not sufficient to meet the statutory requirements under the Act; what is required is the actual carrying out of activities in furtherance of such objects. The continued absence of any charitable activity over multiple years clearly reflects non-implementation of the stated objects and, therefore, fails to satisfy the statutory test of genuineness as prescribed under the Income-tax Act, 1961.

4. Since registration under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and the compliance of any other law for the time being in force as are material for the purposes of achieving its objects. In view of the above mentioned reason, the undersigned is unable to arrive at a satisfactory conclusion on these parameters and is left with no other option but to reject the application seeking registration under section 12AB of the Act. However, the applicant is at liberty to pursue the remedies available in Statute, without any prejudice.

5. Thus, the application for renewal of regular registration in Form 10AB filed by the assessee is not allowable on the ground of no activity towards the stated charitable objects during the relevant assessment years. In conclusion, this application for grant of registration stands rejected.”

6. We observed that the Hon’ble Supreme Court in the case of Ananda Social and Educational Trust vs. CIT(E), reported in (2020) 426 ITR 340 (SC), held as under:

“5. The above section provides for registration of a trust. Such registration can be applied for by a trust which has been in existence for some time and also by a newly registered trust. There is no stipulation that the trust should have already been in existence and should have undertaken any activities before making the application for registration.

…….

9. Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration.

10. It was argued before us that the Commissioner is required to be satisfied about two things – firstly that the objects of the trust and secondly, its activities are genuine. If there have been no activities undertaken by the trust then the Commissioner cannot assess whether such activities are genuine and therefore, the Commissioner is bound to refuse the registration of such a trust.

11. We have given our anxious consideration to the above submissions made by Ms. Aishwarya Bhati, learned Senior Counsel appearing for the appellant Director of Income-tax and find that it is not possible to agree with the same. The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine.

12. Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term ‘activities’ in the provision includes ‘proposed activities’. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. In contrast, the position would be different where the Commissioner proposes to cancel the registration of a Trust under subsection (3) of section 12AA of the Act. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust.

13. We therefore find that the view of the Delhi High Court in the impugned judgment is correct and liable to be upheld.”

7. As could be seen from the judgment of the Hon’ble Supreme Court held that section 12AA of the Act pertains to the registration of the Trust and not to assess what a Trust has actually done, and therefore, the term activities in the provisions includes for proposed activities. It was held that Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carrying on are genuine in the sense that they are in line of the objects of the Trust. The ratio of the decision even applies to the provisions of section 12AB of the Act.

8. We further observed that the Hon’ble Supreme Court held that grant of registration u/s 12A of the Act does not automatically confer benefit of exemption u/s 11 of the Act. The Hon’ble Supreme Court held that when the return is filed by the assessee, the Assessing Officer is entitled to look into the materials and satisfy himself as to whether the exemption has been claimed genuinely or not, and therefore, if the Assessing Officer is not convinced, it is always open to him to decline grant of exemption.

9. In the circumstances, the renewal of registration u/s 12AB of the Act cannot merely be denied on the sole ground that no activity is carried out by the assessee during the assessment years. At the time of registration what is to be seen is the charitable nature of the objects as held by various judicial pronouncements. Further it is always open to the Assessing Officer in the course of assessment proceedings to examine the expenditure incurred by the Assessee was for the purpose of its objects or not, if not incurred for charitable purposes and its objects he can always deny exemption u/s 11 of the Act to the Assessee.

10. Further, we find that identical issue came up for consideration before the Chennai Bench of the Tribunal in the case of Sir CV Raman Educational & Charitable Trust (supra) wherein the Tribunal, following the decision of the Hon’ble Supreme Court in the case of Ananda Social and Educational Trust (supra) held that non-commencement of charitable activities did not amount to a specified violation under Explanation (e)(i) to section 12A(1)(ac)(iii) of the Act, observing as under:-

“8. It is seen that, the Ld. CIT(E) had invoked Explanation (e) (i) of Section 12A(1)(ac) (iii) of the Act and held that the activities of the assessee trust were not genuine. According to us, the Ld. CIT(E)’s interpretation of the Explanation (e)(i) of Section 12A(1)(ac) (iii) suffered from fundamental infirmity. If the activities of a charitable trust are yet to commence, it cannot be straight away alleged that the activities are not genuine. So long as the proposed activities of the assessee trust to achieve its objects are found to be charitable in nature, mere non commencement of the activities at the time of filing of application or at the time of passing of order for grant of registration u/s 12AB of the Act, cannot be treated as a ‘specified violation’ to deny registration to an assessee. In our view, where the assessee trust demonstrates that it has been formed for charitable objectsand shows that the proposed activities are charitable in nature, then the conditions prescribed in Section 12AR/act of the given case, the assessee is show that it had carried out charitable activities in the subsequent years, the same is required to be considered on his part to by the Ld. CIT(E) to satisfy himself about the genuineness of the activities and it is unjustified reject the application only because the activities did not commence at the time of filing of application/ passing of the order. Our view finds support from the decision of the Hon’ble Supreme Court in the case of Ananda Social and Educational Trust v. CIT ([2020] 114 taxmann.com 693 (SC)/[2020] 272 Taxman 7 (SC)/[2020] 426 ITR 340 (SC)) wherein it was held as under:- C

13. We therefore find that the view of the Delhi High Court in the impugned judgment is correct and liable to be upheld.”

9. In the above judgment, the Hon’ble Supreme Court took cognizance of the fact that there may be varied reasons due to which the assessee trust may not find suitable circumstances to commence its activities, but such inaction cannot be treated as a case of carrying out the activities contrary to its objects. This view has been reiterated by the Hon’ble Supreme Court in the case of CIT v. International Health Case Education and Research Institute ([2025] 171 taxmann.com 579 (SC)/[2025] 304 Taxman 265 (SC)/[2025] 482 ITR 287 (SC). In this case also, the assessee trust, though formed in 2008, had not undertaken any charitable activities. The Ld. CIT(E) did not point out any defects in the objects of the trust but rejected the application on the ground that there was no activity in the trust and therefore the genuineness of the activities was in question. On appeal, both the Tribunal and the Hon’ble High Court held in favour of the assessee and directed the CIT(E) to grant registration to the trust. On further appeal by the Revenue, Hon’ble Apex Court held that it would be premature for the Ld. CIT(E) to comment on the genuineness of the activities when there was noctivity carried out until then. The Hon’ble Supreme Court clarified that registration does not automatically confer benefit of exemption u/s 11 of the Act and that when the assessee filed the return of income upon.commencement of activities, the AO would be entitled to look into the materials and satisfy himself as to whether the claim of exemption is genuine or not. The relevant findings of the Hon’ble Supreme Court is as follows:-

“14. We may agree to a certain extent with the learned ASG that the very purpose for any assessee to seek registration under Section 12AA of the Act is to claim exemption under Sections 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature.

15. To the aforesaid extent there is no problem. We may only say that mere registration under Section 12- AA automatically does not entitle any charitable trust to claim exemption under Sections 10 and 11 respectively of the Act, 1961. When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.”

10. Having taken note of the provisions and the position of law, we revert back to the case before us. From the facts placed on record it is observed that, the assessee is a registered public charitable trust which was formed on 12.04.2006 with the following objects:

“5. OBJECTS a. Educational – to run, maintain or assist any educational or other or to grant individual scholarships for poor, deserving and needy students for elementary and higher education.

b. Medical – to run, maintain or assist any medical institution, nursing home or clinics or to grant assistance to needy and indigent persons for meeting the cost of medical treatment.

c. Relief of the poor to give financial or other assistance in kind by way of distribution of books, notebooks, clothes, uniforms, or meals for the poor and indigent.

d. Other objects of general public utility:-

(i) To acquire property for the sole use for public good by making it available for public purposes as for example, housing a library, clinic, creches and/or as community hall to be available for public use as trading classes, seminars, discourses and other public functions for benefit of the community in general;

(ii) To undertake any other activity incidental to the above activities but which are not inconsistent with the above objects.

If any of the above objects is found to be inconsistent with the objects of a public charitable institution under section 11 or any other section of the Income Tax Act 1961 or any other direct tax law or any other law applicable to such trusts as now enacted or as may be enacted or amended at a future date, the objects stated above will be treated as so modified to accord with such law or amended law so that any concessions, privileges, conditions or regulations available to and applicable to such public charitable institutions will be available or applicable to this Trust as well so that this Trust will continue to retain its character as a public charitable institution without profit motive with public character within the meaning of all such laws. All the objects of the trust and its activities will be confined to India and will be carried on without profit motive and without any distinction on account of caste, creed, color or religion.”

11. A perusal of the above objects shows that, they are charitable in nature and the same has not been disputed by the Ld. CIT(E) as well. It is also not in dispute that, the assessee trust was formed for the benefit of the public at large. It has also been brought to our notice that, the assessee in pursuance of its objects relating to education had acquired 17.3 acres of agricultural land at Varadharajapuram, Kundrathur. It is also observed that, the trustees at that material time comprised of senior medical professionals, well known educationalists and reputed social workers. These trustees had obtained loans from the entities of their close relative to finance the acquisition of the land. Since the land was agricultural in nature, unless zonal conversion was done, assessee trust could not have proceeded to construct an educational institution on such land. The Ld. AR explained to us that, due to old age of the trustees and lack of patronage being received from the public for setting up an educational institution, the activities of the assessee trust got stalled. It was in 2022, when there was a change in trustees, whereby Mrs. D Sindhu, a young medical professional, Mrs. M Jayakumari, teacher by profession having several years of experience and Mr. D Harish Kumar, an engineering professional, came on board, that the trust recommenced the activities, applied for conversion of land in 2023, obtained approval in 2026 etc. The assessee is thus noted to have demonstrated that it had indeed undertaken activities towards achievement of its charitable objects. Having taken note of these facts, we hold that the Ld. CIT(E) was unjustified in holding that the assessee trust did not undertake any activity whatsoever, particularly when the contemporaneous facts show that the assessee trust had acquired land parcels for setting up medical educational institution.”

11. Thus, respectfully following the decision of the Hon’ble Supreme Court in the case of Ananda Social and Education Trust vs. CIT (supra) and the decision of the Chennai Tribunal in the case of Sir C.V. Raman Educational & Charitable Trust vs. CIT(E) (supra), we direct the learned CIT(E) to grant registration u/s 12AB of the Act to the assessee-Trust.

12. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 19/08/2026