Case Law Details
S.J.S Foundation Vs CIT (Exemptions)
The CIT(E) rejected the assessee trust’s application for registration under Section 12AB citing doubts over genuineness of a ₹25 lakh donation to another trust and alleged violation of CSR rules due to common directors and lack of a 3-year track record.
The ITAT found that the assessee had already furnished relevant documents such as registration certificates (12A & 80G) of the recipient trust and statutory filings (Forms 10BD/10BE), which sufficiently established the genuineness of the donation. It held that non-submission of the trust deed alone cannot justify rejection, especially when details were verifiable independently.
Further, the Tribunal clarified that CSR rules do not mandate a 3-year track record where the implementing entity is set up by the company itself. Also, mere commonality of trustees and company directors cannot be a ground to doubt genuineness.
Accordingly, the ITAT set aside the CIT(E)’s order and directed grant of registration under Section 12AB as well as approval under Section 80G. Both appeals were allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The present appeals filed by the assessee are directed against the order passed by the Learned Commissioner of Income Tax (Exemptions) [hereinafter referred to as “the learned CIT(E)”] dated 30.09.2025.
ITA No. 2747/Bang/2025 relating to the application made u/s 12AB of the Act.
2. The only issue involved in these appeals is whether the learned CIT(E) erred in rejecting the application filed by the assessee for registration under section 12AB of the Act.
3. Briefly stated, the facts are that the assessee is a trust which filed an application for regular registration in Form No. 10AB on 04.02.2025 under section 12AB of the Act. During the course of proceedings, the learned CIT(E) observed the following:
(i) The assessee trust had made a donation of ₹25,00,000/- to another trust, namely Varchass National Seva Trust. However, the Trust Deed of the said trust was not furnished for verification of the genuineness of the transaction.
(ii) The assessee trust was formed in the year 2024 by SJS Enterprises Limited. The trustees of the assessee trust and the directors of the said company were common. The learned CIT(E) further observed that the assessee received funds from SJS Enterprises Limited, which, according to him, was in contravention of the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014, on the ground that the trust was not having registration under sections 12A and 80G of the Act and did not possess a track record of three years in carrying out similar activities.
3.1 Based on the above observations, the learned CIT(E) was not satisfied with the genuineness of the activities of the assessee and accordingly rejected the application for registration under section 12AB of the Act vide order dated 30.09.2025.
4. Aggrieved by the order of ld. CIT-E, the assessee is in appeal before us.
5. The learned Authorized Representative (AR) filed a paper book (pages 1 to 102) and submitted that the assessee had furnished Form No. 10BE, Form No. 10BD, and the registration certificates under sections 12A and 80G of the recipient trust, i.e., Varchass National Seva Trust, which were also acknowledged by the learned CIT(E) in the impugned order. It was contended that these documents sufficiently establish the genuineness of the donation of ₹25,00,000/-.
5.1 The learned AR further submitted that the assessee trust was established in the year 2024 by SJS Enterprises Limited for carrying out Corporate Social Responsibility (CSR) activities. Merely because the trustees of the trust and directors of the company are common, no adverse inference can be drawn. It was also submitted that the assessee has been granted provisional registration under sections 12A and 80G of the Act, as evidenced from the documents placed in the paper book.
5.2 With regard to the requirement of a three-year track record, the learned AR submitted that no such condition is applicable in cases where the trust is established by the company itself for undertaking CSR activities, as per the Companies (Corporate Social Responsibility Policy) Rules, 2014. Accordingly, it was prayed that the assessee be granted registration under section 12AB of the Act.
6. Per contra, the learned Departmental Representative (DR) strongly supported the order of the learned CIT(E).
7. We have heard the rival submissions of both the parties and perused the materials available on record. It is an undisputed fact that the assessee has furnished relevant documents, including certificates under sections 12A/80G and Forms 10BD/10BE, to substantiate the donation made to Varchass National Seva Trust. In our considered view, merely because the Trust Deed of the recipient trust was not furnished, no adverse inference can be drawn, especially when the registration details of the recipient trust were already available on record. The learned CIT(E), if so required, could have verified the same independently.
7.1 Further, it is not in dispute that the assessee has been granted provisional registration under sections 12A and 80G of the Act as evident from the details available on record. It is also pertinent to note that, under the Companies (Corporate Social Responsibility Policy) Rules, 2014, there is no requirement of a three-year track record in cases where the implementing entity is established by the company itself. Therefore, the allegation of violation of CSR provisions by the learned CIT(E) is not sustainable.
8.2 In view of the above facts and circumstances, we set aside the findings of the learned CIT(E) and direct him to grant registration to the assessee under section 12AB of the Act. Accordingly, the ground of appeal raised by the assessee is allowed.
9. In the result, the appeal of the assessee in ITA No. 2747/Bang/2025 is allowed.
ITA No. 2748/Bang/2025
10. As the facts involved in ITA No. 2748/Bang/2025 are identical, we respectfully follow our above decision and direct the learned CIT(E) to grant registration under section 80G of the Act in this case also.
11. In the result, the appeal of the assessee in ITA No. 2748/Bang/2025 is allowed.
12. In the combined result, both the appeals filed by the assessee are allowed.
Order pronounced in court on 17th day of April, 2026
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