The Delhi bench of the Income Tax Appellate Tribunal set aside the Commissioner’s order rejecting a charitable trust’s application for exemption under Section 12A on the ground that its trust deed was not registered, and remitted the matter for fresh consideration, underscoring that registration is not a statutory prerequisite.
Background & Facts
The Dispute
The appellant, Ramji Dass Darshan Kumar Charitable Trust, applied for exemption under Section 12A of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemptions) rejected the application on 21 March 2026, holding that the trust deed was not registered with the Sub-Registrar and therefore could not be treated as genuine.
Key Facts
- The trust is located at 100/28 Rajapur, Shiva Tower, Delhi, Sector-9, Rohini.
- PAN/GIR No.: AAATR0526Q.
- The appellant contended that the law does not require registration of a trust deed for Section 12A eligibility.
- The appellant relied on prior ITAT decisions: Malli Ram Charitable Trust v. CIT (2002) and Sacred Heart Church v. CIT(E) (19 November 2015).
- The respondent argued that the original or a certified copy of the trust deed was necessary and that registration was essential for authenticity.
Procedural History
- 21 March 2026: CIT(E) order rejecting the Section 12A application.
- 24 June 2026: Hearing before ITAT Delhi Bench.
- 28 July 2026: Pronouncement of the present order.
- Earlier precedents cited: Malli Ram Charitable Trust v. CIT (18 December 2002) and Sacred Heart Church v. CIT(E) (19 November 2015).
Parties' Positions
- Appellant: Asserted no statutory requirement for registration; offered to produce the original deed; cited Allahabad High Court and ITAT precedents supporting non-registration.
- Respondent: Maintained that without a registered deed the trust could not be deemed genuine; insisted on original documentation.
Relief Sought
The appellant sought quashing of the 21 March 2026 order and restoration of its Section 12A application, requesting the Commissioner to consider the trust deed and grant exemption.
The Legal Issue
Whether the absence of registration of a charitable trust deed with the Sub-Registrar constitutes a valid ground for the Commissioner of Income Tax (Exemptions) to reject an application for exemption under Section 12A of the Income Tax Act, 1961.
Arguments Presented
For the Appellant
- Contended that the Income Tax Act does not prescribe registration of a trust deed as a condition for Section 12A eligibility.
- Relied on Malli Ram Charitable Trust v. CIT (2002) and Sacred Heart Church v. CIT(E) (2015) which held that registration is not mandatory.
- Cited Allahabad High Court decision in CIT v. Krishi Utpadan Mandi Samiti stating that institutions of public utility need not be registered as trusts.
- Offered to produce the original deed and requested a fair hearing.
For the Respondent
- Argued that without a registered deed the trust could not be verified as genuine.
- Emphasised the need for an original or certified copy of the deed to satisfy evidentiary requirements.
- Maintained that the Commissioner’s discretion includes ensuring authenticity through registration.
The Court's Analysis
The Tribunal examined two pivotal questions raised by the appeal: (1) whether the appellant must file the original or a copy of the trust deed evidencing its creation, and (2) whether the trust deed must be registered with the Sub-Registrar or any other statutory authority.
"There are two-fold questions in the appeals as under: The first question is whether the assessee has filed the instrument in original or copy thereof evidencing the creation of the Trust. Secondly, whether the Trust should be a registered Trust, i.e., the Trust Deed should be registered or not."
The Tribunal noted that Sacred Heart Church v. CIT(E) (ITA No. 292/Coch/2015) had expressly held that the requirement of registration is not a condition for granting exemption under Section 12A. Paragraphs 4-9 of that judgment were applied verbatim, establishing that the statutory scheme focuses on the existence of a valid trust, not on its registration status.
Further, the Tribunal relied on the Allahabad High Court’s pronouncement in CIT v. Krishi Utpadan Mandi Samiti, which clarified that the Act does not impose a registration requirement on institutions established for public utility. The Amritsar Bench of the ITAT in Malli Ram Charitable Trust v. CIT reinforced this view, observing that refusal of registration solely on the ground of non-registration with the Registrar of Societies or Documents is untenable.
The Tribunal distinguished the respondent’s contention that registration is essential for authenticity. It held that authenticity can be ascertained by examining the original deed, which the appellant was prepared to produce. Consequently, the Tribunal directed that the matter be remitted to the Commissioner for examination of the original deed and for granting the appellant a fair opportunity to rectify any deficiencies.
In light of the foregoing, the Tribunal concluded that the rejection of the Section 12A application on the basis of non-registration was prima facie incorrect. The order dated 21 March 2026 was therefore set aside, and the case was restored to the Commissioner for fresh consideration in accordance with law.
The Verdict
The appeal was allowed. The Tribunal set aside the Commissioner’s order dated 21 March 2026 rejecting the Section 12A application on the ground of non-registration of the trust deed. The matter was remitted to the Commissioner of Income Tax (Exemptions) to examine the original trust deed, provide the appellant an opportunity to rectify any defects, and decide the exemption claim afresh, in compliance with statutory requirements and principles of natural justice.
What This Means For Similar Cases
Registration Not a Condition for Exemption
- Practitioners can advise charitable trusts that registration of the trust deed with the Sub-Registrar is not a statutory prerequisite for Section 12A exemption.
- Focus should be on producing the original deed and demonstrating the trust’s genuine existence.
Procedural Fairness Is Mandatory
- The Commissioner must afford a fair hearing and an opportunity to correct any documentary shortcomings before rejecting an exemption claim.
- Reliance on prior ITAT and High Court precedents strengthens arguments against dismissal on registration grounds.
Evidence Strategy
- Ensure the original trust deed is readily available for inspection.
- Prepare to submit certified copies if the original cannot be produced immediately, citing the Tribunal’s direction that the matter be remitted for examination.
