ITAT Delhi Rejects Conditional U/s 12AB Registration and Restores Original Application Date

Eklavya Foundation Vs CIT (Exemption) (ITAT Delhi)

Registration Cannot Be Granted With A “Self-Destruct” Condition—ITAT Directs Unconditional Section 12ab Registration From Original Application Date

Summary: The Delhi Bench of the Income-tax Appellate Tribunal has held that once the Commissioner (Exemptions) is satisfied about the charitable objects and genuineness of the activities of an institution, registration under section 12AB cannot be granted subject to ad hoc conditions contemplating its automatic cessation. Describing the procedure adopted as intended to “harass the applicant,” the Tribunal directed that registration be granted without the disputed condition and with effect from the date of the assessee’s original application. The application under section 80G was separately restored for fresh consideration.

Facts of the case

Eklavya Foundation was established on 26 October 1982 and had previously been registered under section 12A. Its activities included publication and sale of general-interest books under a scheme promoted by the Government to encourage reading habits. The books were not textbooks.

In earlier proceedings, the Revenue had taken the view that the sale of books constituted commercial activity falling outside the definition of “charitable purpose” under section 2(15). Cancellation of the existing registration had consequently been recommended.

The assessee successfully challenged that action before the appellate authorities. The High Court also decided the issue in favour of the assessee and dismissed the Revenue’s appeal.