Income Tax Appellate Tribunal - Chandigarh
Bahra Foundation,Mohali vs Cit(Exemptions), Chandigarh on 23 March, 2026
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, 'A' CHANDIGARH
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND
SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.555 & 556/CHD/2025
नधारण वष / Assessment Year: 2025-26
Bahra Foundation, The CIT (Exemptions),
SCO 2475-2476, Sector 22-C, Vs Chandigarh.
Chandigarh.
थायी लेखा सं./PAN NO: AAFTB2555A
अपीलाथ /Appellant यथ /Respondent
Assessee by : Shri Harry Rikhy, Advocate
Revenue by : Shri Manav Bansal, CIT, DR
Date of Hearing : 26.02.2026
Date of Pronouncement : 23.03.2026
PHYSICAL HEARING
ORDER
PER RAJPAL YADAV, VP The p res ent t wo ap pe als ar e dir ected at th e i nst anc e of the a ssess ee agains t th e separ ate or de rs of ld.
Co m m issio n er o f Incom e T ax (E xemp t io ns) [i n shor t 't he C IT (E ) '] da ted 2 4 .03. 20 25 v ide whi c h r egist ration u/s 12 A (1 )( ac)( ii i) a nd app r ov al u / s 80 G (5) of the I ncom e T ax Act, 19 61 ha ve been d enied t o the asse sse e.
ITA No.555 & 556/CHD/2025 A.Y.2025-26 2
2. T he gri evan ce of t he as sess ee is that the ld. CI T (E) has err ed in not gr anti ng reg i str at io n u/s 12 A ( 1) (ac) (i ii) as we l l as a pp rova l u/s 80G o f t he Ac t t o th e asses se e T r us t .
3. T he br i ef facts o f the case are that a ssess ee Tr u s t came int o ex is t en c e on 20. 07. 20 23 . We wil l be r ef erri ng its ai ms an d objects i n the lat er par t o f t his o r de r . It has appli ed fo r gr a nt of pr ovisio nal r egist rat io n u/s 12A (1) (a c)( vi ) of the Inco m e Tax Act . T his ap p li c at io n w as pr oce s se d and an or d er in Fo r m N o . 10AC has b e e n is s ued to the as ses see on 21 .03 .2 02 4 vid e whi ch a pr o visio nal r egist r at ion w as gra nted to the assessee f r o m asse s sment year 2 02 4-2 5 to assessm ent y ear 202 6-2 7. Thi s pr ovi sio na l regi str at ion w as gra nted s ub ject to t h e f ol low ing condit i ons :
a. Any income derived from property held under trust, wholly or in part for charitable or religious purposes, shall not be applied, other than for the objects of the trust or institution.
b. The trust or institution shall not have income from profits and gains of business which is not incidental to the attainment of its objectives. c. Separate books of account shall be maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives.
d. The trust or institution shall not apply any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public.
e. The trust or institution established for charitable purpose created or established after the commencement of this Act, shall not apply any part ITA No.555 & 556/CHD/2025 A.Y.2025-26 3 of its income for the benefit of any particular religious community or caste.
f. No non-genuine activity shall be earned out by the trust or institution. g. No such activity shall be carried on by the trust or institution which is not in accordance with all or any of the conditions subject to which it was registered.
h. The trust or institution shall comply with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub- section (1) of section 12AB.
i. The form for registration in form No 1 OA has been duly filled in by providing all the information or documents and no false or incorrect information or documents have been provided. j. The trust or institution shall apply for registration within 6 months of commencement of the, activities or at least 6 months prior to the expiry of period of provisional registration, whichever is earlier.
k. Where the trustor institution has. adopted or undertaken modifications of the objects which do not conform to the conditions of registration, the trust or institution shall make an application in the prescribed form and manner to- the Principal Commissioner or Commissioner, for registration of the trust or institution, within a period of thirty days from the date of the said adoption or modification.
Name and Designation of the Principal Commissioner Registration Granting Authority of Income Tax (Digitally signed)
4. A peru sal of Schem e to grant r egis t ratio n, it w ould reve al t h at if a T r ust o r a So c ie t y cam e int o ex i s tence af ter the n ew S ch em e i nt r o d uced b y Fi nanc e Act , 20 20 w .e. f .
01 .04 .2 02 1, t hen such I nst it ut io n wo u l d be r e qui r ed to ob ta in p ro visi onal re g istr atio n as co ntem pl ate d in S ect ion 12 A (1 )( ac). Af t er getti ng the pr ovi sio na l r egis t r ation, the Tr ust h as to a p ply f or gr ant of a re gu lar r egistr ation as p er Sect i on 1 2 A(1)(a c) sub - clau se ( ii i) w hi c h c ont em p lates t ha t ITA No.555 & 556/CHD/2025 A.Y.2025-26 4 wher e t h e T rust or I nst itut i o n has b een p r ovisi ona ll y regi st er ed u/ s 12AB atl east s i x m ont hs pr ior to exp ir y of per io d of t he provi sio nal r egist r atio n or wit hi n six months of co mm encem ent o f its ac ti v it i es, wh i c hev er is ear lier , in oth er w ord s, on f ulf il me nt o f t he abo v e t w o inc id e nts, assessee ha s t o app ly fo r gr ant o f r eg ul ar r egist r ation. The assessee ha s f il ed an ap pl ic at i on for gr ant of r egis t rat ion u/s 1 2A (1) (ac)( i ii ). S u ch ap p li c ation ha s be en p lace d on reco r d o n page 17 of the Pap er B oo k. It has b een e xamined by th e l d. CI T (E) and t h ere af te r r eject ed b y way of the im pu gn ed or der.
5. T he ld . coun sel f or th e ass esse e w hil e im pu gni ng the or d er of ld. C IT (E) su bm it t e d that ld . CI T ( E ) d id not ap pr eci at e the aim s and o bject s o f the ass ess e e societ y in ri ght per s pective, rat her re je cte d the pr ayer of the ass es see in a s um m ar y m anner w itho ut ass i g ni ng a ny s p ec if ic rea so n. The find ing of the l d. CIT (E ) is that t h is soc ie ty is an ex ten si o n of ex is ting Char i table Inst i tution and ther efo r e, it is no t entit led f o r f re sh registr at ion. H e dr e w ou r a tt entio n t o war ds t he Tr ustee D eed wher e Aims and ITA No.555 & 556/CHD/2025 A.Y.2025-26 5 Obj ects a re being pr o vide d. He also t o ok us through the reco r d and sub m itt ed t hat ass es se e T r u st has p ur cha sed bo o ks w hich w er e d istri b ut e d am o ngst the st ud ent s. The Invo i c es o f such p ur chas e o f b o ok s ar e avail able on p age No . 4 6 t o 4 9. On pa ge N o. 50 to 5 6, p hot o c op ie s of the pho to s ta k en at th e t i me o f di st r ib ut io n of b ooks ar e b eing placed o n t he reco rd . The reaf ter, l d. counse l for the assessee ha s p l aced o n r eco r d a num ber of ju dgem ents, na mel y;
i) DI T (E ) Vs M ee nak shi Am m a End owm ent Tr ust 3 29 CT R 594
ii) CI T Vs II LM Fo un dat io n Acad e m y 29 0 C TR 5 83 (P & H HC ) iii ) CI T Vs B KK M emo r ial Tr ust 2 56 C TR 4 24 (P & H HC)
iv) CI T Vs Baba Kart ar Sing h Duk ki E d ucat io nal Tr ust 221 Taxm an 4 93 (P& H) 5.1 On the st rength of the s e ju d gem e nt s, it w as dem onst r ated b y the ld . co unse l f o r the assesse e tha t sati sf act ion reg ar di ng t he genu ineness of act iv it ie s of the Tr ust is to b e seen at t he stag e for ap pl icati on of i ncome whi ch is yet to arr ive. A t t his s t age , on ly obj e c tiv e s ar e ye t to be seen .
ITA No.555 & 556/CHD/2025 A.Y.2025-26 6
6. On t he oth er hand , ld . CI T DR took us through paragr aph N o . 3 . 2 of the i mp ug ned order and sub mi t ted tha t a ssess ee f ail ed t o demo nst r ate any acti vit y carr ie d out by it i ndepend ent ly ex cep t di st r ib utio n of books. Such bo o ks h av e bee n all eged to hav e bee n di str ib ut ed at t he pr em ises o f Rayat B ahr a U niv er sity. Ther ef or e, ld .C IT (E) ha s ri g htl y inf er red that it is ju st an e x te ns ion of exi stin g Tr ust, na mel y R ayat Bahra Uni v er sity.
7. We ha ve duly co ns i d ere d th e r iv al conte nt io ns and gon e t h r oug h t he reco rd car ef ul ly. S ect ion 1 2 A(1 )(a c) and Sect i on 12 AB (1 ) h av e d ir e ct be ar ing on th e controve r sy, ther efo r e, w e deem it appr o pr iate to take note of these t wo pr o vision s, wh ich r ead as under :
1 2A (1 ) T h e pr o vi s ion o f Se ct i on 11 a nd 1 2 s h all not a pp ly i n r el at i o n t o t h e i n co me o f an y T r us t o r Ins t it ut ion u nl es s t h e f o ll o wi n g co nd i t i o ns a r e f u lf i ll ed :
a) x x x
a a) x x x
ab ) x x x
ac) no tw i t h s t an d i n g a ny t h ing co nt a i ned in cl a u se s (a ) to ( ab ), th e pe rs o n i n r ecei pt of t he i nco me has ma d e a n a pp li ca t i o n in th e p r es c r i be d f o r m a nd ma n ner t o t he Pr i n ci p a l Co mmi s s io ne r or C omm is s io ne r , f o r r egi s t r a ti o n of t h e tr u s t o r i n s t it u t i o n ,
-- ( i )w her e t h e t r u s t or in s t i t ut i on is r eg i s t e r ed u n d e r s e ct io n 12 A [ a s it s t o o d i mmedi a tel y b ef or e it s am en d m en t b y t h e Fi na nc e ( N o . 2 ) Act , 1 99 6 (3 3 o f 19 96 ) ] o r u n d er s ect io n 12 A A [as i t s t o od im m e di a t e l y bef or e i t s am en d m en t b y t h e ITA No.555 & 556/CHD/2025 A.Y.2025-26 7 T a xat io n a n d Ot h er L aw s (Re l a xa ti o n a n d A mend m en t o f C er t a in P r o vi s i on s ) A ct , 20 20 (38 o f 2 0 2 0 )] , wi t hi n t h r ee mo nt h s fr o m t h e f i r st d ay of A pr i l , 20 21 ;
(i i )w h er e t he t r u s t or i ns ti t ut i on i s regi st er ed u nd er s e c ti o n 12 A B a n d t he per i od of t h e s a id r eg i s tr a t i on i s d u e t o ex pi r e , a t l ea s t s i x mon t h s pr i or t o e xp i r y o f t h e s a i d per i o d;
(i i i )w he re t h e t r us t o r i ns t i tut i on h as b een pr o vis i o n a l ly r egi s t e r ed u nd e r se c t i on 1 2AB , a t l ea s t s ix mo n t h s pr i o r t o ex pi r y o f per i o d o f t he pr o vi si ona l r egi s t r a ti o n o r w i t h i n s i x mon t hs o f co m mencem ent of i t s a ct ivit i es , wh i ch ever i s ea r l i e r ;
(i v)w h er e r eg i s t rat i on o f t he t ru s t or i ns t i t u t i o n h a s b ecome i no per a ti ve d ue t o t he fi r s t p r ov i s o t o s u b -s ec t io n ( 7 ) o f s ect io n 1 1, a t l ea s t s ix mo nt h s p r i or t o t h e co mmenc emen t of t he as s e s s me nt ye a r fr om wh i c h the sa i d r eg is tr a t i o n i s s o ug ht t o b e m ad e o per at ive;
(v)w her e t he t r us t or i ns t it u t io n has ad op te d o r u nd er t a k e n mo di f ica t io ns of t h e obj ect s w h i ch do n o t co n f or m t o t h e co nd i t i o ns o f r eg i s t r at i on , wi t hi n a p er i o d o f t h ir t y d a ys f r o m th e d at e o f t h e s ai d a do pt i on or mod i f i ca ti o n ;
(vi )i n a n y o t her ca s e , w her e a ct i vi t i es of t he t r us t o r i n s t it u ti o n ha ve -
( A) n ot co mmenc ed , a t l eas t o ne mo n t h p ri o r t o t he co mmen cem en t o f t he pr evi ou s ye ar r el ev an t t o t h e a s s es s men t ye ar f r om w hi ch t he s a i d r eg i s t r a t io n i s s o ug ht ;
(B) com men ced a nd no i nc ome o r p a r t th ereo f o f t he s a i d t r u s tor i ns ti t u t io n has bee n e xclu d e d f r o m t h e t ot al i n co me on a cco unt of ap pl i c ab il i t y o f su b -c l a u s e (i v) or s u b- cl a u s e ( v) or s u b- cla us e (vi ) or s u b -cl a u s e ( vi a) o f cl au s e (2 3C ) o f S ect i on 1 0, or Sec t i on 11 o r S ect i o n 1 2, f o r a ny pr ev i ou s y e ar e ndi ng on or b e f or e t he d a t e of s u ch a pp l ica ti o n, a t an y t i me a f t e r t he c o m men c emen t o f s u ch a ct i vi t ies an d s u ch t r us t o r i ns t i t ut i on i s r egi s t e red u n d er Se cti o n 12 AB ;] x x x 12AB. [ Proce d ure f o r fresh re gist rat i o n.
ITA No.555 & 556/CHD/2025 A.Y.2025-26 8 12 AB .(1) T he P r i nci pa l C om mi s s i o ner or C o mmi s s io ne r , on r ec ei p t of an a pp li cat i o n ma de u n d e r cl a u s e (a c) o f s u b-s ect i on (1 ) of s e c t i on 12 A, s h al l , --
(a)w her e th e a ppl ic a t io n i s mad e u nd er s ub -c l a u s e (i ) o f th e s a i d cla us e, p as s an o r d er i n wr i t i n g r eg i s t e r i ng t he tr u s t o r i n s t it u t i on fo r a pe ri od o f fi ve y ear s ;
(b)w her e t he a pp li c at i o n i s ma de u nd e r su b -c l au s e ( ii ) o r s u b-cl a u se (i i i ) o r s ub -cl a us e (i v) or s u b -cl a u s e (v) o r it em (B ) o f s u b-cl au s e ( vi) of t he s a i d cl au s e, -
(i )c al l f o r s uch do cu ment s o r i nf or ma ti on f r o m t h e t r u st or in s t i tu t i on o r make s u ch i n qui r i e s a s h e t h i n ks neces s a r y i n or de r t o s a t is fy h im s e lf a bo u t --
(A )t h e g enui nenes s of a ct i vi ti es of the t r us t or i n s t i t ut i on ; an d (B )t h e c om pl i an ce of s uc h r eq ui r emen ts of a n y o t he r l a w f or t he t i me bei n g i n f o r ce b y t he t r us t o r i n s t i t ut i on as a r e ma te r i a l f or th e p ur p os e o f a c hi e vi n g i t s o bj ec t s ;
(i i )a f t er s at i s f yi n g hi ms el f abou t t he ob jec t s o f t h e t r us t or i n s t i t ut i on and th e g enu ine ne ss o f i t s a ct i vi t i es un de r it em (A ) a n d compl i a nce of t h e re q ui r e me nt s u n d er it e m (B), of s ub -c l au s e (i ), --
(A )p as s an or d er i n w r i t i n g r egi s t er i n g t h e t r u s t or in s t i t u t io n f o r a p e r i od of f ive y ear s; o r (B )i f he i s n ot s o s at i s f ie d, pa s s an o r de r i n w r i t i n g-
(I) in a cas e r efer r ed t o in s u b- cl au s e (i i ) o r su b - cl au s e (i i i) or s ub -c l au s e (v) of cl a u s e (a c) o f su b - s ect i o n (1 ) o f Se ct i on 12 A r ej e ct i n g s u c h ap pl i c at i on a nd a l s o ca nce l li ng i t s r e gi s t r a t i o n ;
(II) i n a cas e r ef e rr e d t o in s u b- cl au s e (i v) o r i n i t em ( B ) of s ub - cla us e ( vi) of s u b -s ect i o n (1 ) o f Sect i on 1 2A, r ej ec t i n g s uc h a pp l i ca ti o n, a ft er a ff o r d i n g a r eas on ab le o p p o r t u ni ty o f b ei n g h ea r d ;
(c) w he re th e ap pl i ca t i on i s ma de u n der i t em (A ) o f s u b-cl a u se (v i ) of t h e s ai d c la us e o r t h e a pp l i ca ti o n i s mad e un de r s u b-c la us e ( vi ) of t he s a i d cl au s e, a s i t st oo d im medi a t el y bef or e i t s am e nd men t vi d e t he F i n a n ce Act, ITA No.555 & 556/CHD/2025 A.Y.2025-26 9 20 23 , pa s s an o r d er i n w r i t i ng p r o vi s i on al l y re g i s t er i n g th e t r us t or in s t i tut i on f or a p er i od o f th r ee y e ar s fr o m th e a s s e s sme nt y ear f r o m w hi ch t he re g i s tr at i o n i s s o u g ht , an d s en d a co p y o f s u ch o r d er t o th e t r us t or i n s t i tu t io n.
x x x
8. A p er usa l of t he abo ve clauses w o uld i ndi cat e t hat b y wa y o f Fin an ce Act, 2 02 0 w .e. f. 01 .04.202 1, a ne w Sc hem e of Re gis tr a tio n has be en pro vide d. It is e vid e nt f rom rea d ing of S ect i on 12A (1 )(ac )( i) to ( vi) of the Act t hat in or d er to cla im benefi t o f Se cti o n 11 and 1 2, if any T r ust or Inst it ut io n is in receip t of inco m e, it has to f ile an ap pli ca tio n i n t he pr esc r ibed f or m an d m anne r to t he P r.
Co m m issio n er o r C o mm is sio ne r fo r regi str at ion of t he T rus t or I nstit ut io n . Sub - clau se ( i) to (v i) of Se ction 12 A(1) (ac) fur t her p ro vi de d diff erent co nd itio ns o n whose f ulfi lm ent, ap pli ca tio n is t o be made. In t h e p res e nt c ase, app li cation ha s be en f il ed u nder S ect io n 12 A(1 )(a c)( ii i). I t i s p ert ine nt to not e tha t i f a Tr ust wa s in ex i ste nc e p r ior t o this ne w Sch em e of r egi str atio n, the n i t has to ap ply und er sub -
clau se (1 ) w it hin thr ee m o nths f rom t he 1 s t day of Apr il, 20 21. I f t he Tr ust o r Insti tut i o n has b ee n r e gis t ere d u/s 12 AB, t he n a tle ast six m o nths pr ior to t he expi ry of the said per io d . R egi st rat ion u/s 12 A B h as b ee n contem p lated ITA No.555 & 556/CHD/2025 A.Y.2025-26 10 und er t he n ew Schem e w. e. f. 01.04. 2021 . Sim ilarly, a ne w Tr ust wh ic h has co me into ex ist enc e aft e r 0 1.04 . 202 1 and ha s a pp li ed fo r regi str at io n, whic h wa s gr anted pr o visiona ll y regist r at ion, wou ld r equir e to ap ply for a regu l a r r eg istrat ion whic h w il l b e gr anted u/ s 1 2A(1 )( ac) (i ii ) fo r a pe r iod o f f ive years . T her e is no dis p ut e i n the pr es ent case tha t as sessee has ap p lie d for grant of re gula r regi str at io n u/s 12 A(1 )(a c)( ii i) o f the Act .
9. Sect ion 12 AB of the Act fur t her pr o vid es t he pr oced ure fo r gr a nt of the fresh r egist ration . A per usal of the above pr o vision w o ul d indicat e that if an app licatio n is b ein g ma de und er sub- cla us e ( 1) o f Sect io n 12 A(1 )( ac ), t he n ld.
Pr . C om m issi o ner o r the Com mi ssion er wou ld p ass an ord er in wri t in g r egist erin g t he T r us t o r I nsti tut ion f or a p er iod of fiv e ye ar s but w her e app li cat io n is bein g m ad e for gr ant of r egi str ati o n u/s 12A( 1) (ac) su b-cl a us e (i i) to (vi), the n ld.
Co m m issio n er wo ul d call fo r such d oc um ents or inf o rm at io n fr om the Tr ust o r I nstit ut ion or m ake such enqu ir y a s he t hi nks n ec essar y i n or der to s at i sfy hi ms elf ab o ut ;
a) The genuin eness of activit ie s o f the Tr ust or Inst it ut io n, ITA No.555 & 556/CHD/2025 A.Y.2025-26 11
b) The com pl ia nc e of such r equi re m ent s of any oth er law f o r the ti me b ei ng in f or ce by t he Tr ust o r Ins tit u tio n as ar e mat er ial for t he pur po se o f achie vi ng it s obj e cti ve s.
Thu s, p ri ma r y r equir em e n t wo ul d be t o f ind out whe ther acti vit ies o f the Trust ar e ge nuine and it has fulf i ll ed the req ui re ments o f any o t her la w f o r t he tim e b ei ng in f or ce.
In o t her wo r ds, o bject i ve s of the as ses see T rus t should b e gen u ine and that it is n ot en gage d i n any unlaw f ul ac t ivi t ie s or fa il ed to comply w ith oth er l aw s o f the countr y.
9.1 On sa tisf act io n of abo ve condit ions, l d. P r.
Co m m issio n er or Co m mi ssion er would pas s an ord er in wr it i ng reg i st er i ng th e T r ust or I ns tit ut ion f or a p er iod of fiv e ye ar s an d if not sati sfi ed, th en pas s an or der in w ri ting rej ect i ng such appli cati o n. B efor e r ejecting the app li cat ion, a r ea so na ble opp or t uni ty o f bei ng hear d is to be pr ovi ded .
9.2 In th e pr esent case, as ob ser ved ear l ier , app li cation is b ein g m ad e u/s 12A (1 )( ac ) su b-c la us e (ii i) . Th e ob je ct iv es of t he Tr ust are bei ng no t iced by the l d. C IT (E) in the im pu gn ed o rd er and we w ou ld al so like to tak e note of these ob jec t ive s fr o m the Tr u st D e ed as un der :
ITA No.555 & 556/CHD/2025 A.Y.2025-26 12 ARTICLE 2: AIMS & OBJECTS OF THE TRUST
2. The objectives of the Trust shall be as follows:-
2.1 To establish, promote or to render aid to schools, colleges.
Educational institutes. Technical institutions. Training Institutions, Training Institutions in one or all fields of Engineering, research, Medical & Hospitals. Dental. Nursing. Paramedical, Hospitals. Commerce, Arts, Skilled or any other system of education.
2.2 To do all charitable work Projects & Activities. 2-3 To promote education, vocational, technical & otherwise the diffusion or useful Knowledge medical relief, industrial training including all aspects or rural reconstruction and social welfare projects. 2.4 To engage in social welfare activities aimed at improving living conditions & general welfare of the poor and indigent persons of whatsoever occupation irrespective of race, caste ,community or creed 2.5 To promote deeper spiritual values in personal and Community life. 2.6 To diffuse such useful secular, social & religious knowledge. 2.7 To print & publish any newspaper, periodical, books & to utilize oilier mass Communication, radio, film & television for spread of knowledge.
2.8 To train to maintain the personnel to be in charge of different schools and institutions of the society or hospital or medical education. 2.9 To establish building for such objects, libraries, reading rooms equipped with the necessary supply of books, papers, periodicals, furniture & audio - visual aids.
2.10 To receive gifts or money or other properties, both moveable and immoveable or any requests for any one or more objects of the society. 2.11 To acquire by purchase, lease, grants or likewise from any person, company, society, Govt. Organizations moveable or immoveable properties of all descriptions deemed necessary or useful for any purpose of the society & administer the same. 2.12 To alienate by way of sale, lease, mortgage, pledge, exchange, gifts or otherwise the properties or funds of the society or any portions ITA No.555 & 556/CHD/2025 A.Y.2025-26 13 thereof including giving subscriptions, bodies or persons as seen necessary or appropriate from time to lime. 2.13 To invest, lay asides, deposit in banks or post offices otherwise deal with money or funds with society not immediately required for the objects of the trust.
2.14 To borrow or raise funds from banks and other financial institutions or private parties for the purpose and objects of the trust with or without security in any manner as the trust may deem fit and repay the same.
2.15 To use all the incomes from students by way of fees , boarding & lodging and from other institutions, hospitals & from moveable or immoveable property or from the works of the trust or from staff of the schools or the institutions or from the rent from the building wherever derived from the pursuit of the objects of the trust as set forth in memorandum provided that no portion thereof be distributed among its trustees by way of profits or dividend or bonus except where payment or usage is allowed to employees, members, office bearers or any other person in lieu of service rendered or agreed to by the trust/institution setup by the trust.
2.16 To collect donations, membership fee & other contribution from the members & others.
2-17 To frame bye-laws, rules and regulations for the smooth working of the institutions and to alter or amend or reconstitute new rules & regulations as the trustees may deem fit from time to time. 2.18 To sell, mortgage, property of the trust for the upliftment of the trust.
2.19 To promote or to encourage social, cultural and intellectual activities amongst its trustees on the lines of the community centre.
2.20 To establish, maintain and conduct social and cultural centre and to afford members, privileges, advantages, conveniences and accommodation in the trust.
2.21 To provided free education to poor children. 2.22 To organize free medical camps.
ITA No.555 & 556/CHD/2025 A.Y.2025-26 14 2.23 In case the society is dissolved, its moveable & immoveable assets will be transferred to the organization having similar aims & objects.
2.24 To provide Scholarships or aid to deserving candidates and to disburse funds in this regards in any manner they choose including the payment of fees and other demands or charges demanded by educational institutions. This objective shall include the meeting of all expenses connected to the education of a deserving candidate who shall be chosen at the sole discretion of the Trustees But this is not binding because the objective is education with the purpose of enabling a deserving person to make a living and become a good citizen. The decision of the Trustees as regards the candidates and the amount of assistance or manner of assistance shall be final. In case funds are collected or donated by other individuals for this purpose special attempts will be made to communicate the use of funds donated or gifted by them. However, the decision of the Trustees will be final in all ways. 2.25 To provide and promote better health facilities for human beings.
This would include the setting up of hospitals, nursing home's, old peoples care facilities and homes, laboratories and the setting up of medical, dental and nursing colleges. The Trustees shall have discretion to expand their activity as the circumstances demand. 2.26 To accept, receive subscriptions, donations, grants and gifts from the Central or State Government, any individual, firms and corporate etc. promote the activities of the trust. 2.27 To render medical help and meet the surgical expenses of operations of sick persons who are unable to meet expenses themselves. Decision as to deserving 'persons and manner as well as quantum of help and assistance shall be at the discretion of the Trustees and their decision shall be final.
2.28 To grant relief on the occasion of earthquakes, floods, tempest and other occasions due to calamities of similar nature, and/ or to give donations to other institutions doing such relief work. 2.29 To purchase, take on lease, hire or otherwise acquire any movable or immovable properly, rights or privileges necessary or convenient for the purpose of carrying out the objects of the Trust. To sell, mortgage, exchange, dispose off or otherwise deal with all or any part of the property or funds of the trust.
ITA No.555 & 556/CHD/2025 A.Y.2025-26 15 2.30 To engage in and promote any other object of general public utility and service for the good of society and works of public charity.
10 . L et us eval uat e the f i ndi ng of ld . C IT (E) ap p ri sin g her self wi th t he abov e obje ct iv es. A p erusal of the im pu gn ed or d er w ould i nd icat e that ld . CI T (E) has no t speci fica l ly deal t w it h any of the o bj ect i ve s. T hou gh her or d er is run nin g int o 13 p ages b ut m axi mu m p art contains rep rod uct ion of Show Caus e N ot ice or T r us t Dee d . The fin di ng o f ld . CI T (E) star t s fr om par agr aph N o. 3. 2 , which rea d s a s un d er :
" 3.2 As per the reply furnished by the applicant, it is observed that the applicant is associated with individuals who are already operating Rayat Bahra group of educational institutions that has been granted tax exemption. The formation of new entity raises concern about intent of creating separate entity. Further the applicant claimed to have performed charitable activity in the form of distribution of books to the underprivileged students. It is seen that the said bill of purchase of books is delivered at the Central Library of Rayat Bahra University, so it is difficult to verify that they were distributed to underprivileged students. More so because the books relate to university curriculum. The claimed charitable activities primarily support the students enrolled in Rayat Bahra group of Institutions. As per provisions the objective of 12AB registration is to facilitate tax exemptions to entities engaged in charitable activities benefitting the public at large which is not revealed in the instant case.
Further, the expenditure incurred by the applicant towards charitable activity is also not reflected in the submitted -bank statement which means that claimed charitable activity performed by the applicant is exclusively in cash which is contrary to the requirement of Income Tax Act.
On review of the bank statement, it is seen that-most of the fund is diverted to already established institution which is under control of ITA No.555 & 556/CHD/2025 A.Y.2025-26 16 individuals associated with the applicant. For example, there are multiple instances of consideration received by the applicant from Rayat Bahra Group of Institutions on 29.11.2023, 21.12.2023, 6.01.2024 and 12.01.2024 and later on diverted to one of his own entities i.e on 05.03.2024 to Nirmal Singh Rayat, on 19.03.2024 to Rayat Bahra Dental CO and on 19.03.2024 & 29.03.2024 to Bahra University. The relevant extract of the Bank statement is reproduced as under:-
x x x The formation of new entity appears to be an extension of existing institution rather than serving as a distinct charitable purpose benefiting the public at large. The suspicious transactions suggest that new entity may be used as mechanism for ta; avoidance rather than carrying out independent genuine charitable activities which raises concern over the financial integrity of institution.
4. In view of the above discussions, it is evident that the evidences submitted by the applicant are not sufficient and justifiable and are found to be unsatisfactory in respect of genuineness of the activities as per the objects mentioned in the Trust Deed. Accordingly, the application filed by the applicant for registration u/s 12A(1)(ac)(iii) of the Act is hereby rejected, which also supersede any registration granted u/s 12AB of the Act by any authority at any earlier time."
11 . T he co n tenti o n of t he as ses see is that ld. CI T (E) was req ui re d to a pp r eciat e o bj e ctiv es of the T r us t , whe t her the y ar e gen ui ne and char itab l e. T he l d. C IT(E) has now here po in t ed out tha t assess ee f ail ed to f ulf il ot he r law s. It is the i n iti a l year o f the So ci ety and it has d is tr ibut e d the bo o ks in o rder to f ulf il so me o f the ob je c t ive s. I t is per tin ent to no te t hat in o rder to di stri b ut e the b ooks, assessee ha s t o id ent if y st ud e nt s to who m s uc h books c ou ld be d ist r ib uted . Ther efo r e , it has id ent i fied Rayat B ahr a Uni ver sity w hich i s also engag ed in im p ar tin g ed ucat ion, ITA No.555 & 556/CHD/2025 A.Y.2025-26 17 on e of t he cha r itabl e o bj ect i v es co nt em plat e d in Sect ion 2(15 ) o f the Income Ta x Act. We f ail t o app reci ate as to how ld . C IT(E ) ha s i nf err ed t hat ass esse e wi ll not c ar r y out its ob jec t ive s in f ut ur e and i t i s me r e ex tens ion of a s im il ar l y sit uated Tr us t. S uch a f indin g is m is plac ed w it hout supp o rt o f an y mat er ial . It is equi valent t o deni al o f ex isten c e o f a Tr ust whi ch has been cr eat ed f or im par ting edu ca ti on a nd f ulf il men t o f o ther o bject iv es. I f a Tr ust o r Inst it ut io n ha s been c r eat ed f or i mp arti ng ed uc ation, the n thi s a cti vity w il l fal l wit hi n t he f irst lim b of Sec tion 2 (1 5) an d w o uld b e per-se charitab l e . The ld . C IT (E) ought to ha ve exam in ed as to ho w it s ac tivi ti e s w il l not be ge n uine whi ch h as not b een do ne. Ac c or d ingl y, w e s e t as id e t he im pu gn ed or der and dir ect the l d. CI T( E) to gr ant regi str at io n t o the asse sse e u/s 12 A(1 )(a c )( iii ) o f t he Act for the per io d co ntem pl ated in t he Act sub je ct to the c ondi tions req ui re d to be p ut on b y the De partm e nt w hi le gr ant in g regi str at io n.
12 . Si nce w e have held that ass esse e Tr u st ha s b een creat ed fo r im par ting ed uc atio n and a ll ied ac t ivit i e s w hich ar e charita bl e i n natur e, we ha ve di rec te d t hat asse ss ee be ITA No.555 & 556/CHD/2025 A.Y.2025-26 18 regi st er ed u/s 12A(1) (ac) (i ii ) o f the Act, ac cor dingly, we dir ec t t he ld. C I T(E) to gr an t app rova l u/s 80 G of the Inco m e T ax Act also.
13 . In t he result, b o th the app e als ar e a llowe d.
Or d er pr o nounced o n 23 .03. 20 2 6 .
Sd/- Sd/-
(KRINWANT SAHAY) (RAJPAL YADAV)
ACCOUNTANT MEMBER VICE PRESIDENT
"Poonam"
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar