Tusli Eye Hospital Vs Exem Ward 2(4) (ITAT Mumbai)
ITAT Mumbai Sets Aside Rejection of Section 12AB and Consequential Section 80G Renewal Based Solely on FCRA Renewal Rejection
The Mumbai ITAT disposed of two appeals challenging orders dated 26.03.2026 by the Commissioner of Income Tax (Exemptions) rejecting the assessee’s application for renewal of registration under Section 12AB and the consequential renewal of approval under Section 80G of the Income-tax Act.
The CIT(E) had rejected the Section 12AB application after noting that the assessee’s application for renewal of registration under the Foreign Contribution (Regulation) Act, 2010 (FCRA) had been rejected by the competent authority, and treated this as non-compliance with a law material for achieving the trust’s objects. The Section 80G application was rejected consequentially.
The assessee submitted that the FCRA authority had granted liberty to file a fresh application after satisfying the prescribed conditions, that no foreign contribution had been received for several years, and that rejection of FCRA renewal had no bearing on the genuineness of its charitable activities or entitlement to renewal under the Income-tax Act. The Revenue supported the impugned orders.
The Tribunal observed that although the CIT(E) identified the statutory requirements relating to the trust’s objects, genuineness of activities and compliance with other material laws, the impugned order contained no independent examination of the trust’s objects or the genuineness of its activities. It further noted that the CIT(E) had not examined whether the alleged FCRA non-compliance materially affected the assessee’s ability to achieve its charitable objects. The Tribunal also observed that the order did not distinguish between cancellation of FCRA registration and rejection of an application for its renewal, nor examine the significance of the liberty granted to submit a fresh FCRA application or the assessee’s contention that it had not received foreign contributions for several years.
