Anantaru Foundation Vs CIT (Exemptions) (ITAT Mumbai)
Overseas Spending Clauses in MOA: ITAT Permits Amendment and Fresh Examination of 12AB Registration
The controversy
The Mumbai ITAT considered whether a charitable institution should receive an opportunity to amend its constitutional documents where registration under section 12AB had been rejected because its Memorandum of Association contained clauses permitting application of funds outside India.
The foundation maintained that these were standard clauses, that no funds had actually been applied abroad and that it was willing to amend the MOA.
Considering the particular facts and its categorical willingness to correct the clauses, the Tribunal restored the registration application for examination after the necessary amendments. The consequential rejection of section 80G approval was also set aside.
Section 8 company faced objection to its MOA
Anantaru Foundation, a Section 8 company incorporated on 25 April 2025, filed Form 10AB seeking regular registration under section 12AB.
During examination, the CIT(E), Mumbai, noticed that certain clauses in its MOA contemplated activities involving application or utilisation of funds outside India.
According to the CIT(E), those clauses did not conform to the requirements of section 11 of the Income-tax Act, 1961.
The objection therefore concerned the scope of activities authorised by the foundation’s constitutional documents. The disputed provisions included clauses 3(b)(5), 3(b)(9), 3(b)(10), 3(b)(16), 3(b)(20), 3(b)(23) and clause 4 of the MOA.
The foundation was called upon to respond to this concern during the registration proceedings.
Willingness to amend did not satisfy the CIT(E)
In its reply dated 23 June 2026, the foundation explained that the relevant provisions were contained in a standard-form MOA. It submitted that their inclusion did not reflect an intention to undertake overseas transactions contrary to the Income-tax Act.
The foundation also expressed willingness to remove the references relating to activities outside India.
The CIT(E), however, considered that a mere expression of willingness was insufficient. Unless the clauses were actually amended, the objection to the existing constitutional documents remained.
The registration application was consequently rejected by an order dated 28 June 2026.
The dispute thus involved the difference between an assurance that the documents would be corrected and completion of the amendments themselves.
Foundation offered to undertake formal corrective steps
Before the Tribunal, the foundation reiterated that no funds had actually been remitted or applied outside India.
It stated that it was willing to convene an Extraordinary General Meeting, pass the requisite Special Resolution and delete, modify or suitably restrict the clauses capable of being construed as permitting overseas application of funds.
Its representative undertook to carry out the necessary amendments and furnish the amended constitutional documents to the CIT(E).
The Revenue relied on the rejection order.
The Tribunal considered these submissions alongside the record showing that the foundation had already offered to amend its MOA during the original proceedings.
Tribunal granted an opportunity to cure the objection
The Tribunal identified the principal objection as the presence of enabling clauses that, according to the CIT(E), permitted application of the foundation’s funds abroad.
It also noted that the rejection had followed despite the foundation’s willingness to remove or restrict those provisions, because the amendments had not yet been completed.
Considering the peculiar facts of the case and the categorical undertaking to amend, the Tribunal held that the application deserved fresh examination once the constitutional documents were corrected.
It set aside the registration rejection and restored the application to the CIT(E).
The foundation was directed to take appropriate steps in accordance with law to amend, delete or restrict the relevant clauses and submit the amended MOA with supporting documents.
Fresh decision required on amended objects
Upon receipt of those documents, the CIT(E) was directed to examine the amended objects and registration application afresh.
The authority was required to pass a speaking order after granting a reasonable opportunity of hearing.
The Tribunal expressly clarified that it had not decided the foundation’s substantive entitlement to registration. All eligibility issues remained open.
The section 12AB appeal was therefore allowed for statistical purposes, rather than through a direction granting registration.
Consequential section 80G rejection restored
The CIT(E) had rejected section 80G approval principally because registration under section 12AB had been refused, considering the requirement under section 80G(5)(i) unfulfilled.
Once the registration application was restored, the section 80G issue became consequential. The Tribunal set aside that rejection too and directed fresh adjudication, having regard to the outcome of the registration proceedings and after a reasonable hearing.
Both appeals were allowed for statistical purposes.
Author’s comments
The decision offers an opportunity to correct constitutional provisions that obstruct examination of a charitable institution’s registration claim. However, the relief depends on actual amendment and subsequent scrutiny; an undertaking alone does not establish eligibility.
The foundation’s assertion that no overseas expenditure had occurred supported its request for reconsideration. The Tribunal nevertheless required correction of the enabling clauses and did not decide whether those clauses, standing alone, necessarily warranted rejection.
Institutions should therefore scrutinise standard-form MOAs before seeking registration. Broad clauses can create avoidable disputes even where the intended activities are domestic. Complete amended documents and supporting resolutions will be central to effective adjudication on remand.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
These two appeals filed by the assessee are directed against the orders dated 28/06/2026 passed by the Ld. Commissioner of Income Tax (Exemptions), Mumbai [“Ld. CIT(E)”], rejecting the assessee’s applications for registration u/s. 12AB and approval u/s. 80G(5) of the Income-tax Act, 1961 (“the Act”), respectively.
Since the issues involved in both the appeals are interconnected and arise out of the same set of facts, they are being disposed of by this common order.
ITA No. 8697/Mum/2026 – Registration u/s. 12AB
3. Brief facts of the case are as under:-
Assessee is a Section 8 company incorporated on 25/04/2025 and had filed Form No.10AB seeking regular registration u/s. 12AB of the Act. During the course of proceedings, the Ld. CIT(E) noticed that certain clauses of the Memorandum of Association contemplated activities involving application or utilisation of funds outside India. According to the Ld. CIT(E), such clauses were not in conformity with the requirements of section 11 of the Act.
3.1. In response to the show-cause notice, the assessee, vide reply dated 23/06/2026, explained that the relevant clauses were contained in the MOA in a standard form and did not reflect any intention to undertake transactions outside India in violation of the provisions of the Act. The assessee further expressed its willingness to amend its MOA so as to remove all references relating to activities outside India. The Ld. CIT(E), however, observed that mere willingness to amend the objects was insufficient unless the clauses were actually amended and, accordingly, rejected the application for registration u/s. 12AB.
3.2. Before us, the assessee has specifically challenged the rejection on account of clauses 3(b)(5), 3(b)(9), 3(b)(10), 3(b)(16), 3(b)(20), 3(b)(23) and clause 4 of the MOA. It has also been stated that no funds had actually been remitted or applied outside India and that the assessee was willing to convene an Extraordinary General Meeting, pass the requisite Special Resolution and delete, modify or suitably restrict the relevant clauses in the MOA which may be construed as permitting application of funds outside India.
4. The Ld. AR submitted that the assessee is willing to carry out the necessary amendments to the relevant clauses of the MOA and place the amended constitutional documents before the Ld. CIT(E). The Ld. DR relied upon the impugned order.
We have perused the submissions advanced by both sides in light of the record placed before us.
5. It is evident that the principal objection of the Ld. CIT(E) pertains to the enabling clauses contained in the MOA which, according to him, permit application of the assessee’s funds outside India. At the same time, it is also borne out from the record that the assesse during the proceedings before the Ld.CIT(E), expressed its willingness to amend the MOA and remove/restrict the clauses which gave rise to such objection. The Ld.CIT(E) nevertheless rejected the application on the ground that the amendments had not actually been carried out.
5.1. Considering the peculiar facts of the present case and, particularly, the categorical willingness of the assessee to amend the impugned clauses, we are of the view that the matter deserves to be examined afresh after the necessary amendments are incorporated in the constitutional documents of the assessee. We, therefore, set aside the impugned order dated 28/06/2026 and restore the application for registration u/s. 12AB to the file of the Ld. CIT(E). The assessee is directed to take appropriate steps, in accordance with law, to amend/delete/restrict the clauses in its MOA which permit or may be construed as permitting application or remittance of its funds outside India and to furnish the amended MOA together with the requisite supporting documents before the Ld. CIT(E).
5.2. Upon such documents being furnished, the Ld.CIT(E) shall examine the amended objects and the application of the assessee afresh in accordance with law and pass a speaking order after granting reasonable opportunity of being heard to the assessee. We clarify that we have not expressed any opinion on the merits of the assessee’s entitlement to registration u/s. 12AB, and all issues are left open for examination by the Ld.CIT(E).
Accordingly, the appeal in ITA No. 8697/Mum/2026 is allowed for statistical purposes.
ITA No. 8696/Mum/2026 – Approval u/s. 80G
6. Insofar as the appeal relating to approval u/s. 80G is concerned, the Ld. CIT(E) rejected the assessee’s application principally on the ground that its application for registration u/s. 12AB had already been rejected and, therefore, the requirement contemplated u/s. 80G(5)(i) was not satisfied. Since we have restored the assessee’s application for registration u/s. 12AB to the file of the Ld. CIT(E) for fresh adjudication, the issue relating to approval u/s. 80G necessarily becomes consequential.
6.1. We, therefore, set aside the impugned order dated 28/06/2026 passed u/s.80G and restore the application to the file of the Ld.CIT(E), who shall adjudicate the same afresh, in accordance with law, having regard to the outcome of the proceedings for registration u/s.12AB and after granting reasonable opportunity of being heard to the assessee.
Accordingly, the appeal in ITA No. 8696/Mum/2026 is allowed for statistical purposes.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 08/10/2026.
