Income Tax Appellate Tribunal - Mumbai
Bacha Kharshedji Mowdavala Charitable ... vs Cit (Exemptions), Mumbai on 20 May, 2026
IN THE INCOME-TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4932/MUM/2025 (A.Y. NA) Bacha Kharshedji Mowdavala v/s. Commissioner of Income Charitable Trust बनाम Tax(Exemptions) Room No. Flat No. 25, 3 r d Floor, Mumtaz 601, 6 t h Floor, Cumballa Hill, Mahal, 63, Wodehouse Road, MTNL TE Building, Pedder Colaba, Mumbai - 400 001, Road, Mumbai - 400 026, Maharashtra Maharashtra स्थायी लेखा सं ./जीआइआर सं ./ PAN/GIR No: AADTB6689F Appellant/अपीलार्थी .. Respondent/प्रतिवादी Assessee by : Shri Dharan Gandhi, AR Revenue by : Shri Amit Kumar Singh (CIT DR) Date of Hearing 08.04.2026 Date of Pronouncement 20.05.2026 आदे श / O R D E R PER PRABHASH SHANKAR [A.M.] :-
The present appeal is filed by the assessee Trust against the order passed by the Learned Commissioner of Income-tax (Exemptions), Mumbai [hereinafter referred to as "CIT(E)"] pertaining to order passed u/s. 12AB of the Income-tax Act, 1961 [hereinafter referred to as "Act"].
2. The grounds of appeal are as under:
1. The Learned Commissioner of Income Tax Exemption [CIT(E)] has erred both on facts and in law in passing the order dated 13thJune, 2025, rejecting the application for final registration u/s 12A(1)(ac)(iii) of the Page |2 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust Income Tax Act, 1961 ["the Act" in Form No. 10AB and not granting the final registration u/s 12A(1)(ac)(iii) of the Act. The reason. given in this regard are improper, unwarranted, unjustified and contrary to the provision of the Act. It be held that on facts and circumstances prevailing in the case, the registration should have been granted.
2. The Learned CIT(E) has failed to appreciate Appellant's contentions and has erred in passing the order for rejection of application for final registration u/s 12A(1)(ac)(iii) of the Act without considering the evidences placed on record and submissions made by the Appellant in response to the notices issued during proceedings u/s 12A(1)(ac)(iii) of the Act. Therefore, Appellant prays that the impugned order be setaside and appellant be granted final registration u/s 12A(1)(ac)(iii) of the Act.
3. The Learned CIT(E) has erred in not providing reasonable opportunity of being heard to the Appellant before passing the rejection order u/s 12AB(1)(b)(ii)(B) of the Act. The Appellant, therefore, prays that the said impugned order be set aside.
4. The Learned CIT(E) has erred not condoning the delay in filing application in Form No. 10AB and thereby rejecting application for final registration u/s 12A(1)(ac)(iii) of the Act.
3. Relevant facts of the case as culled from the impugned order are that the assessee Trust had filed an application in Form 10AB of the Act u/s 12A(1)(ac)(iii) of the Act, seeking registration under section 12AB of the Act. On verification of the application, it was found by the ld.CIT(E) from the trust deed/MOA that as per point nos. 2(c)(5), and 2(c)(10)of the objects of the trust deed/MOA, the applicant intended to apply fund outside India which according to the ld.CIT(E) was in violation of section 11 of the Act. The objects of the trust inter alia provided for, i) awarding scholarships and fellowships in cash or in such Page |3 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust other form on such terms and conditions as the Trustees may think fit for the purpose of undertaking, pursuing and encouraging studies provided that such scholarships and fellowships shall be awarded to such poor and/or deserving students and scholars studying in schools, colleges, universities and other educational institutions in India or abroad and who cannot afford and have no means to pursue the same ii) to render financial help to them to enable them to obtain medical treatment either in India or abroad in cash or in such other forms and on such terms and conditions as trustees shall deem fit provided that that in case of medical treatment to be obtained abroad, financial help should be rendered in India.
3.1 Further, it was noticed by him that the trust had obtained provisional registration in Form 10AC dated 03.08.2022 valid from AY 2023-24 to AY 2025-26. As per section 12A(1)(ac)(iii) of the Act: where the trust or institution has been provisionally registered under section 12AB, at least six months prior to expiry of period of the provisional registration or within six months of commencement of its activities, whichever is earlier. Thus, as per the such provision, the application for regularization of provisional approval must have been made either within six months of start of activities or latest by 30.09.2024 i.e six months prior to expiry of period of the provisional registration.
Page |4 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust However, the applicant had made application in Form 10AB on 30.10.2024. Thus, the applicant had not filed form 10AB for regularization of provisional approval within the prescribed time limit.
3.2 In response to the query with respect to violation of section 11 of the Act, the assessee contended that the trust was registered and operated entirely within the jurisdiction of India. It did not generate or receive any income from sources located outside India. All its activities, donations, grants, and revenue were confined to the Indian Territory. As such, the trust was not subject to foreign income regulations, and it did not require registration under the Foreign Contribution (Regulation) Act (FCRA), unless it intended to receive foreign contributions in the future. The trust continued to file its income tax returns and other statutory reports in accordance with Indian law. Therefore, the trust had not violated any laws. However, the reply was rejected by the ld.CIT(E) observing that that the words in the object, like "....to obtain medical treatment either in India or abroad.., "and "...scholarships and fellowships shall be awarded to such poor and/or deserving students and scholars studying in schools, colleges, universities and other educational institutions in India or abroad..." clearly conveyed that the applicant intended to utilise the funds outside India. Such objects left room for any potential future endeavour that may be undertaken by the Page |5 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust applicant trust which would require expenditure outside India. The applicant trust ought to have amended the clauses of the objects mentioned above which were in violation of the Act, however, the applicant had not considered it. Similarly, in response to the delay in filing Form 10AB, the applicant had admitted that the Trust must apply for regular registration at least six months before the expiry of the provisional registration or within six months of commencement of activities, whichever was earlier, however, it filed the application in Form 10AB with a delay of 30 days. The Trust had started its charitable activities during AY 2023-24 as per the submission. Even if, it was considered that all the activities were performed late during the last month of AY 2023-24 i.e. March 2023, the application in Form 10AB must have been filed latest by the month of September 2023i.e.within six months of commencement of its activities. However, the applicant Trust had made application on 30.10.2024 with a delay of more than a year. Therefore, the claim made by the applicant Trust that the application was filed with a delay of 30 days was completely wrong. The applicant had also not shown any reasonable cause for delay or to establish that the applicant trust had genuine hardship in filing of the application within the due date. Therefore, the application for condonation of delay was not found acceptable. Since Page |6 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust Registration/approval under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and the compliance of any other law for the time being in force as are material for the purposes of achieving its objects. In absence of necessary compliance made by the applicant against the violations as above, the application seeking registration under section 12AB of the Act was rejected.
4. The ld.AR had drawn attention to the objects of the Trust showing that all is activities were confined to the boundary of the country only and had no intention or object to do any activity outside India. He further relied on certain decisions of coordinate benches wherein it was held that the ld.CIT could not deny registration under section 12AB of the Act on the ground that there was existence of any object clause for carrying out any activity outside India. However, such kind of application of income outside India, unless permitted by CBDT will not be exempted under section 11 of the Act. It is claimed that no such activities were carried on or any expenditure incurred by the Trust outside India. Reliance has been placed on the decisions of coordinate bench of ITAT, Mumbai in Sameer Desai Foundation in ITA No.4509 and 4508/Mum/2025,Global Council of Zoroastrians Trust in Page |7 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust ITA No.4928& 4930/Mum/2025 and Elysium Smiles Foundation in ITA No.5005/Mu/2025 in this regard. On the other hand, the ld.DR relied on the impugned order and also the coordinate bench decision in the case of Sila Foundation in ITA No.4274/Mum/2024.
5. We have carefully perused the record, gone through various clauses of the Trust deed. The ld.CIT has categorically stated that certain objects leave room for any potential future endeavour may be undertaken by the assessee Trust which would require expenditure outside India. It appears that he had objections to this clause only on which he inferred that the applicant had left open option for its activity and operation outside India in future endeavours although we find that the applicant had categorically stated in the deed that all its activities as also the beneficiaries would be confined to the boundaries of the country only.
5.1 We find that similar issue came foe adjudication before the coordinate Bench of ITAT, Mumbai in the case of Dedhia Music Foundation v. CIT(E) (ITA nо. 743-744/Mum/2025 in which the Hon‟ble Tribunal has considered the above issue in the light of the old and the new provisions relating to the registration of Trust. The matter before it was also examined in the light of Explanation providing for Page |8 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust „Specified Violations‟ also so as to determine the eligibility of the trust for registration. Relevant parts of the order are extracted as under for the sake of clarity and brevity:
"11. As is evident from the above, the section lists various activities which qualify as charitable purpose but there is no restriction to the scope of such activities within the geographical boundary of India. It is only section 11, as reproduced above, which places a geographical restriction allowing exemption only to incomes applied to charitable purposes in India. But even the said section does not completely rule out exemption to incomes applied outside India for charitable purposes, granting exemption to certain such applications, as mentioned in section 11(1)(c), subject to being approved by the Board.
12. As is evident from the above, in the scheme of the Act, incomes applied outside India for charitable purposes are not completely and categorically ruled out from being eligible for grant exemption.
13. The Ld. Pr. CIT‟s order ,in the present case, therefore denying registration to the applicant assessee merely for the reason that its objects included application of income outside India, we hold, is not in accordance with law. More particularly when, admittedly, this was not the sole and main object of the applicant assessee, but only its ancillary and incidental object. It is not the case therefore that there is to be no application of income within India at all as per the objects. In fact the main object of the applicant assessee involves carrying out charitable activities in India. In this factual situation, denying registration u/s 12AA of the Act, for the reason that its incidental object entailed application of income outside India, we find, would result in the assessee being denied exemption to income applied in India, which it would otherwise be entitled to under law.
14. Further as rightly pointed out by the Ld. Counsel for the assessee, the provisions of section 11(1)(c) of the Act, which the Ld.CIT(E) has relied upon for holding that only activities carried out in India will qualify as charitable for grant of registration, is only for the purpose of determining the income which qualifies for exemption u/s 11 of the Act. The said section comes into operation only once registration is granted u/s 12A of the Act and therefore cannot be relevant for the purposes of granting registration u/s 12A of the Act. The scheme of the Act is that all entities carrying out charitable activities, as defined in section 2(15) of the Act, qualify to be registered as charitable entities subject to satisfaction of the concerned officer vis-a-vis their objects and activities, but the exemption is provided/restricted only to the extent of income which is applied for charitable purpose in India.
15. The issue we find, is squarely covered in favour of the assessee by the decisions relied upon by the Ld. Counsel for the assessee before us. In the case of MK Nambyar SAARC Law Charitable Trust (supra), we find, the application for grant of registration was rejected on the ground that the applicant itself had admitted that the scholarship could be paid to members even outside India. The Hon‟ble High Court held that the application of income outside India is not a relevant criteria for rejecting the application for Page |9 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust grant of registration u/s 12AA of the Act and the officer has to only restrict himself to the satisfaction about the objects and genuineness of the activities of the trust while granting registration with no restriction on the activities being carried out inside or outside India. The relevant findings of the Hon‟ble High Court is as under:
„The judgment of the court was delivered by B.C. Patel C.J. - M.K. Nambyar SAARC Law Charitable Trust has filed this petition against the order made by the Director of Income-tax (Exemptions) New Delhi, on February 24, 2004. The aforesaid trust submitted two applications in Form No. 10A for registration under section 12A and recognition under section 80G of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The application was rejected on the ground that the applicant itself has admitted that the scholarships can be paid to the members even outside India. It is in view of this admission that the activities will be extended outside India as per the objects laid down, it was held that the registration cannot be granted under section 12A of the Act and the approval of exemption under section 80G also cannot be granted. Section 11 of the Act refers to income from property held for charitable or religious purposes.
The relevant provisions are reproduced hereunder: "11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income-
(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent, of the income from such property; . ..
(b)****** (c )income derived from property held under trust-- (
i)created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii )for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India ;
Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income;
(d)******
3. So far as the benefit of section 11(1)(a) is concerned, it can be extended only to the extent to which such income is applied to such purposes in India. However, if the income is applied to the purposes outside India, then clause (c) will be applicable and if the permission is granted by the Board either by general or special order then, benefit can be extended. Section 12AA prescribes the procedure for P a g e | 10 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust registration. Reading the section, it becomes clear that after the application is made, the officer has to call for documents or information from the Trust to satisfy himself about the genuineness of the activities of the Trust. He can make further enquiry as he may deem necessary. It is only after satisfying himself about the objects of the Trust and the genuineness of its activities that he has to pass an order in writing registering the Trust or institution. And if he is not satisfied, he can reject the same. This section does not refer to the activities in India or outside India. It refers to application of income for charitable or religious purposes in India as also with direction or order of the Board for application of income as aforesaid outside India. Reading the order dated 24-2-2004, it is very clear that there is non- application of mind. It was necessary for the Commissioner to examine the purpose for satisfying himself that the activities are genuine. It was open for him to make necessary enquiries in this behalf and to pass an order as per the procedure laid down under section 12AA of the said Act. So far as income which is applied outside India is concerned, is not a relevant criteria for rejecting the application. In absence of order under section 11(1)(a)( c), one cannot seek benefit for application of income for charitable or religious purposes, outside India. Therefore, the order dated 24-2-2004 made by the Director of Income-tax (Exemptions), Annexed at page 32 which is based on irrelevant criteria is quashed and set aside with a direction to consider the application strictly in accordance with law. It is made that even application under section 80G is required to be considered afresh. It is directed that the application shall be disposed of within a period of four weeks by the Commissioner.
16. The aforesaid decision of the Hon‟ble Delhi High Court has been followed by the Coordinate Benches of the Tribunal in the case of National Informatics Centre Services Inc. (supra) ( [2017] 88 taxmann.com 878 (Delhi))
17. In view of the above, the order passed by the Ld. CIT(E) denying registration u/s 12A of the Act is set aside and the Ld.CIT(E) is directed to grant registration as applied for by the assessee.
18. In the result, the appeal of the assessee is allowed."
6. We may examine whether the ratio of above said decision would also apply to the applications processed by Ld CIT(E) under new provisions of sec.12AB of the Act. Under the provisions of sec.11 to 13 of the Act, which are applicable to charitable trusts or institution, two authorities are involved, viz.,
(a) the Ld PCIT or CIT is empowered to grant or cancel registration u/s 12A, 12AA or 12AB as the case may be.
P a g e | 11 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust
(b) the assessing officer is the authority who assesses the total income of the charitable trust or institution for every assessment year.
7. We shall examine the provisions of sec.12AB of the Act. The authority to grant registration u/s 12AB is the Ld PCIT or CIT. Under sec, 12AB of the Act, the three steps have been prescribed for the process of registration or cancellation of charitable trusts or institution.
(a) For new charitable trusts or institutions, provisional registration is granted u/s 12AB(1)(c) of the Act for a period of 3 years from the assessment year for which the registration is sought.
(b) Permanent registration shall be granted u/s 12AB(1)(a)/12AB(1)(b) of the Act for a period of five years, when the charitable trusts or institutions apply for the same.
(c) Where a provisional registration or permanent registration is granted u/s12AB(1) of the Act, the Ld PCIT/CIT is empowered u/s 12AB(4) of the Act to cancel the registration in accordance with that provisions.
8. As noticed earlier, the assessing officer is the authority who is empowered to determine the income of a charitable trust or institution and granting of exemption u/s 11 of the Act. As per sec.11(1), exemption u/s 11 is restricted "to the extent to which such income is applied to charitable purposes in India". Thus the recognition of geographical jurisdiction wherein the income was applied needs to be recognised or examined while computing total income of the charitable trust or institution. We also noticed that the income applied for non- charitable purposes or applied outside India will not be exempt u/s 11 of the Act, i.e., such income shall be taxable in India.
9. We shall compare the provisions of sec.12AA and sec. 12AB of the Act which prescribe the conditions for granting registration. (A) SECTION 12AA:-
"12AA. [Procedure for registration.] (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A, shall--
(a)[call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about,--
(i)the genuineness of activities of the trust or institution; and
(ii)the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects, and may also make such inquiries as he may deem necessary in this behalf; and] P a g e | 12 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause], he--
(i)shall pass an order in writing registering the trust or institution;
(ii)shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant."
(B) SECTION12AB 12AB. [Procedure for fresh registration.] [Ins. by the Act No. 38 of 2020, w.e.f. 1- 4-2021.] (1)The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub- section (1) of section 12A, shall,--
(a)where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years;
(b)where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of the said clause,--
(i)call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about-- (A)the genuineness of activities of the trust or institution; and (B)the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects;
(ii)after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),-
-
(A) pass an order in writing registering the trust or institution for a period of five years; or (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard;
(c) where the application is made under sub-clause (vi) of the said clause, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the trust or institution. 9.1. We notice that the provisions of sec.12AA(3) and 12AA(4) of the Act describes the power of Ld CIT(E) to cancel the registration. Similarly, the provisions of sec.12AB(4) empowers the Ld CIT(E) to cancel the registration already granted either provisionally or permanently. It can be noticed that the provisions relating to cancellation of registration granted under sec.12AA and sec.12AB are identically worded under the respective P a g e | 13 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust provisions. Hence, in our view, the ratio of the decision rendered in the context of sec.12AA can be conveniently applied to the applications processed by Ld CIT(E) u/s 12AB of the Act.
10. However, it is noticed that the provisions of sec.12AB(4) is elaborate vis-a- vis sec.12AA(3) & (4). Even though, in the instant case, the Ld CIT(E) has not specifically invoked the provisions of sec.12AB(4) of the Act, we may examine the applicability of the said provision to the facts of the present case. The provisions of sec.12AB(4) reads as under:-
"(4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,--
(a) the Principal Commissioner or Commissioner has noticed occurrence of oneor more specified violations during any previous year; or
(b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub- section (3) of section 143 for any previous year; or
(c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall-
-
(i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation;
(ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place;
(iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations;
(iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or nstitution.
Explanation.--For the purposes of this sub-section, the following shall mean "specified violation",--
(a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or
(b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or P a g e | 14 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust
(c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public; or
(d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or
(e) any activity being carried out by the trust or institution--
(i) is not genuine; or
(ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or
(f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality."
11. It can be noticed from the provisions of sec.12AB(4) of the Act, the registration already granted either provisionally or permanently may be cancelled by Ld CIT(E), if he is satisfied that one or more specified violations have taken place. If he is not satisfied so, he may refuse to cancel the registration granted u/s 12AB of the Act. The expression „specified violation‟ is defined in the Explanation. It can be noticed that the said definition is not an "inclusive definition", since it starts the expression "For the purposes of this sub-section, the following shall mean "specified violation"". Hence, it is an exhaustive definition. Consequently, if there is any violation other than those stated in the Explanation, then the Ld CIT(E) shall not get power to cancel the registration.
12. In the present case, according to Ld CIT(E), the objects clause enables the assessee to apply its income outside India. According to Ld CIT(E), the same is not permitted under the Act and hence the registration provisionally granted to the assessee may be cancelled. We shall now examine as to whether the existence of objects for carrying out activities outside India or actual application of income outside India in accordance with its objects, would fall under any of the categories of "specified violations" listed out in the Explanation to sec. 12AB(4) of the Act or not.
(i) Clause (a) would be attracted only if any income derived from the property held for charitable purpose is applied other than for the objects of the charitable trust or institution. Hence, so long as any income is applied for the objects of the charitable trust or institution, the clause (a) would not get attracted. Thus, if the objects clause of a charitable Trust or Institution P a g e | 15 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust permits carrying on objects outside India and if any income is applied for such objects, then it cannot be considered as application of income "for objects other than the objects of the charitable trust or institution" falling within the meaning of clause (a). Consequently, the clause (a) would not be attracted.
(ii) Clause (b) would be attracted only if any business or profession is carried on and there is violation as mentioned therein. This clause will not be attracted for application of income for permitted objects outside India.
(iii) Clause (c) would be attracted when income of trust held for private religious purposes is applied for those purposes, which does not ensure for the benefit of public. The assessee herein is not a trust held for private religious purposes and hence this clause will not apply to the assessee herein.
(iv) Clause (d) would be attracted when income of the trust is applied for particular religious community or caste. This clause will also not apply to the assessee herein.
(v) Clause (e) would be attracted when any activity being carried out by the trust or institution-
(i) is not genuine; or
(ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered. This clause would be attracted when the activities of the charitable trust or institution is not genuine or in violation of any of the conditions subject to which the registration u/s 12AB was granted. In the instant case, the Ld CIT(E) has stated the activities claimed to have been carried on is not supported by the expenses incurred. According to Ld A.R, the above said observations are against the facts available on record. Hence the above said observations of Ld CIT(E) is dealt with separately infra.
(vi) Clause (f) would be attracted when there is failure to comply with the requirements of "any other law". Under this clause "any other law" would mean any law other than Income tax Act. This meaning can be understood from the Sub-clause (B) of clause (i) of sec.12AB(1)(b) of the Act, which reads as under:-
"(B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects".
The Ld CIT(E) has to ensure that the charitable trust or institution has complied with the requirement of „any other law for the time being in force‟, as are material for the purpose of achieving its objects. Here, it is pertinent to note that the verification by Ld CIT(E) should be restricted to compliance of those laws as are material for the purpose of achieving its objects.
P a g e | 16 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust 12.1. It may be noticed that clauses (a),(c),(d) and (e) would be attracted only when there is application of income as mentioned in those clauses. Hence "actual application of income" is the condition to be satisfied for attracting the above said four clauses.
13. ...........................
14. The foregoing discussions would show that the application of income of a charitable trust or institution outside India for carrying out its objects will not fall under any of the categories of "specified violation" as mentioned in the Explanation to sec.12AB(4) of the Act. Hence, the decision rendered by Hon‟ble Delhi High Court in the case of M.K. Nambyar Saarf Law Charitable Trust (supra) will apply to the provisions of sec.12AB of the Act also, since the provisions of sec.12AB also do not refer to the activities carried in India or outside India.
15. In view of the foregoing discussions, it can be concluded that existence of any object for carrying out any activity outside India will not enable the Ld CIT(E) to deny registration u/s 12AB of the Act. As observed earlier, such kind of application of income outside India (unless it is permitted by the CBDT) will not be exempted u/s 11 of the Act."
16. Hence, the first reasoning given by Ld CIT(E) is liable to be quashed." 5.2 We find that the above decision of the coordinate bench is squarely applicable to the facts of the case as here also the ld.CIT( E) has rejected the application for registration solely on account of intended activity outside the country. So far as the benefit of section 11(1)(a) is concerned, it can be extended only to the extent to which such income is applied to such purposes in India. However, if the income is applied to the purposes outside India, then clause (c) will be applicable and if the permission is granted by the Board either by general or special order then, benefit can be extended. Section 12AA prescribes the procedure for registration. Reading the section, it becomes clear that after the P a g e | 17 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust application is made, the officer has to call for documents or information from the Trust to satisfy himself about the genuineness of the activities of the Trust. He can make further enquiry as he may deem necessary. It is only after satisfying himself about the objects of the Trust and the genuineness of its activities that he has to pass an order in writing registering the Trust or institution and if he is not satisfied, he can reject the same. This section does not refer to the activities in India or outside India.
5.3 It was necessary for the Commissioner to examine the purpose for satisfying himself that the activities are genuine. It was open for him to make necessary enquiries in this behalf and to pass an order as per the procedure laid down under section 12AA of the said Act. So far as income which is applied outside India is concerned, is not a relevant criteria for rejecting the application. In absence of order under section 11(1)(a)(c), one cannot seek benefit for application of income for charitable or religious purposes, outside India. Therefore, the order impugned order which is based on irrelevant criteria is quashed and set aside with a direction to consider the application strictly in accordance with law.
P a g e | 18 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust
6. In so far as the delay is concerned, admittedly, the assessee society was granted provisional registration and had filed Form 10AB for regular registration. As observed above, the CBDT, vide Circular No. 7/2024 dated 25.04.2024, had extended the "due date" for filing such application till 30.06.2024, therefore, there can be no denying the fact that the application filed by the assessee society was beyond the prescribed time limit. However, apart from the delay, we find that the impugned order did not record any defect either in the activities or objects of the assessee company or the documents submitted. Also, its bonafides are not in dispute, and the delay in filing the application, in our considered view, prima facie, does not appear to be deliberate. Nothing in the impugned order suggests that the ld. CIT(E) doubted the objects or genuineness of activities of the trust. On the contrary, his own findings record that the assessee is an existing trust that had already been granted provisional registration. Once the CIT(E) himself acknowledges commencement of activities, the correct statutory provision governing regular registration stands identified, and the error in clause selection in the first application assumes the character of a mere procedural defect rather than a substantive non-compliance.
6.1 We find that on identical issue of delay, the coordinate bench of ITAT, Mumbai in the case of Narke Green Foundation P a g e | 19 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust Charitable Institution ITA no.1864/Mum/2025 gave following directions:
"5.9 At this juncture we refer to the pragmatic approach advocated by Justice V.R. Krishna Iyer, wherein he advocated a flexible approach to procedural law, that serve as "handmaid" to justice, and not a hinder it. The Principle of Justice Krishna Iyer emphasised that procedural laws should be tools to facilitate administration of justice various decisions of Hon'ble Supreme Court has emphasised to strike a balance between strict adherence to procedural rules and the need to ensure that justice is not denied due to technicalities. 5.10 We agree with the above preposition observed by Hon'ble Pune Tribunal. However genuine and bonafide reason stated by the assessee cannot be over looked. Further we also note that, flexible and pragmatic approach to such procedural laws is necessary as against recognising a strict adherence to do which could sometime lead to injustice. Hon'ble Supreme Court in plethora of cases always emphasised that while considering delay, one must first ascertain bonafides of the explanation offered by the party seeking condonation. Thereafter there must be sufficient cause which is sustainable based on the genuine reasonable explanation. 5.11 While condoning the delay it is crucial to ensure the party seeking condonation provide genuine explanation for the delay. In present facts of the case, we note that, the reason that caused delay is based on a bonafide belief on behalf of the assessee without there being any malafide intention.
6. In our considered opinion assessee must get an opportunity to present its case before the Ld.CIT(E) and to explain the reason that caused the delay. The Ld.CIT(E) shall consider the application of assessee seeking condonation of delay in accordance with law keeping in view to the above principles of natural justice."
7. Having regard to the totality of facts, including the assessee being an existing trust carrying out charitable activities, the nature and genuineness of its charitable activities and the fact that the defect in the original application was purely technical and not substantive, we are of the considered view that the assessee‟s application could not be rejected on the ground of an inadvertent clause selection or alleged delay.
P a g e | 20 ITA No. 4932/Mum/2025 Bacha Kharshedji Mowdavala Charitable Trust Accordingly, the impugned order is set aside and the ld.CIT(E) is directed to grant the registration to the assessee u/s 12A of the Act, if otherwise admissible in law, by treating the application as validly made within time and under the appropriate clause. The grounds of appeal are therefore, allowed for statistical purposes.
8. In the result, the appeal is allowed for statistical purposes.
Order pronounced in the open court on 20/05/2026.
Sd/- Sd/-
SAKTIJIT DEY PRABHASH SHANKAR
( उपाध्यक्ष / VICE PRES IDENT ) (लेखाकार सदस्य /ACCOUNTANT MEMBER)
Place: मुंबई/Mumbai
ददनाुंक /Date 20.05.2026
Lubhna Shaikh / Steno
आदे श की प्रतितलति अग्रेतिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयुक्त / CIT
4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai
5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //True Copy// आदे शानु सार/ BY ORDER, उि/सहायक िं जीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.