Raja Rajeswari Educational Trust Vs CIT (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT) Chennai ruled on an appeal filed by Raja Rajeswari Educational Trust challenging the order of the Commissioner of Income Tax (Exemptions) [CIT(E)] dated January 28, 2025, which rejected the trust’s application for final registration under Section 12AB of the Income Tax Act, 1961. The ITAT condoned a 3-day delay in filing the appeal after finding a reasonable cause.
The trust had applied for Section 12AB registration on July 11, 2024, using Form 10AB. The CIT(E) rejected this application, primarily on the ground that the trust was not engaged in charitable activities and had not substantiated the charitable nature of its activities.
The CIT(E)’s rejection was based on a detailed analysis of the financial statements for the years ending March 31, 2022, 2023, and 2024. The CIT(E) observed that most of the activities were commercial in nature and failed to enumerate concrete charitable activities. Specific concerns raised by the CIT(E) included the assessee providing skill development programs on a contractual basis and collecting fees subject to TDS under Section 194C from commercial entities like CSC Computer Education Pvt. Ltd. and Leeds Skills Training Centre Pvt. Ltd. Income heads, such as consultancy fees, empanelment fees, HR development fees, mobilization support, and project management consultancy, were cited as evidence that the trust was not engaged in a charitable purpose. The CIT(E) also noted that the trust had earned a profit and applied more than 20% of its income for the specified purposes, concluding that the trust ceased to exist as a charitable organization.
