Educational Trust Entitled to Section 80G After 12AB Approval

Bharath Institute of Schooling Education Vs CIT (Exemptions) (ITAT Bangalore)

Wrong Section Invoked, Right Relief Granted: 80G(5), Not 80G(2): Bangalore ITAT Corrects CIT(E)’s Error-

ITAT Allows 80G Registration- Once 12AB Is Granted, 80G Can’t Be Denied on Wrong Provision- CIT(E) Misread Law: Educational Trust Wins 80G Approval- Objects & Genuineness Are the Test—ITAT Directs Grant of 80G

Bangalore ITAT “A” Bench, in   Bharath Institute of Schooling Education Vs CIT (Exemptions), Bangalore (ITA No. 2288/Bang/2024; order dated 31.01.2025), allowed Assessee’s appeal & directed CIT(E) to grant registration u/s 80G, holding that the denial was based on misapplication of law.

Assessee-trust, created by trust deed dated 28.11.2017, is engaged in imparting education. It had already been granted provisional registration u/s 12A & 80G in 2021 & was subsequently granted permanent registration u/s 12AB on 30.09.2024. However, Assessee’s application for permanent registration u/s 80G was rejected by CIT(E) by erroneously invoking section 80G(2).

Tribunal noted that section 80G(2) governs allowability of deduction in the hands of donors, whereas grant of registration to a trust is governed by section 80G(5). Revenue fairly conceded that CIT(E) relied on an incorrect statutory provision.

ITAT held that at the stage of granting registration, authority is required to examine only the charitable nature of objects & genuineness of activities, both of which stood established, especially in light of permanent registration u/s 12AB already granted. Issues relating to application of income, benefits u/s 11 & 13, or whether student course fee constitutes donation, were held to be irrelevant at the registration stage & could be examined only during assessment.

Accordingly, Tribunal set aside the impugned order & directed CIT(E) to grant registration u/s 80G to Assessee. Appeal was allowed.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

The present appeal of the assessee is arising out of the order of the ld. CIT(Exemptions), Bangalore dated 30.9.2024 and relates to denial of registration u/s. 80G of the Act.

2. The brief facts of the case as coming out from the orders of the authorities below are that the assessee is a trust created by virtue of trust deed dated 28.11.2017 at Bangalore. The main object of the trust is to impart education among all the categories of the society. The assessee applied for provisional registration u/s. 12A and got the same vide order dated 28.10.2021, the same is applicable for AY 2022-23 to 2024-25. Copy of the provisional registration is at page 27 of PB. On 16.11.2021, the assessee also got a provisional registration u/s. 80G, copy of the same is at page 30-31 of PB. Thereafter the assessee applied for permanent registration u/s. 12A and 80G. On 30.9.2024 the assessee has got permanent registration u/s. 12A from the department. Copy of the same is at page 104-106 of PB.

3. The assessee has applied for permanent registration u/s 80G on 27.3.2024, however the application filed by the assessee has been rejected by the ld. CIT(Exemptions) referring to provisions of section 80G(2) of the I.T. Act.

4. Aggrieved with the order of the ld. CIT(Exemptions), assessee has come up in appeal and inter alia argued that the ld. CIT(E) has erred in referring to the provisions of section 80G(2) instead of 80G(5) applicable to the present case.

5. The ld. DR fairly conceded that the ld. CIT(E) had erred in relying on the provisions of section 80G(2).

6. We have heard the rival submissions and considered the matter available on record. We observe that it is an undisputed fact that the activities of the assessee are genuine and the objects of the assessee trust are charitable in nature. As evident from the fact, that the assessee has been granted permanent registration u/s. 12AA . We observe that while considering the application of assessee for grant of registration u/s. 80G, the ld. CIT(E) has inadvertently/wrongly referred to provisions of section 80G(2) of the I.T. Act. In our view, these provisions are applicable for claim of deduction of the sums paid to the charitable organisation. We further observe that the relevant clause for considering the grant of registration u/s. 80G is sub-section (5). We are of the firm opinion that assessee has fulfilled all the conditions prescribed u/s. 80G(5) and hence entitled for registration of 80G. We further observe that it is settled position of law that at the time of granting of registration, the authority has to see whether the objects of the applicant is charitable in nature and the activities of the applicant are genuine or not. The benefits of section 11 & 13, application of funds collected by the charitable organisation, are to be examined during the course of assessment proceedings u/s. 143(3) or any under any other section, as the case may be.

7. Issue whether the student course fee falls under the category of donation or not, is not at all relevant in the present proceedings. Therefore, appeal of the assessee is allowed and the CIT(E) is directed to grant 80G to the assessee.

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

Pronounced in the open court on this 31st day of January, 2025.