The Mumbai Income Tax Appellate Tribunal (ITAT) allowed the exemption claimed by the Tata Education Trust (appellant) under Section 10(34) and 10(35) of the Income Tax Act, clarifying that the order of cancellation of registration granted to the trust under Section 12A must be held to be effective from the date on which the hearing on first show-cause notice was concluded and was formally acquiesced by the trust.
The Tribunal emphasized that without disposing of a previous matter, the Commissioner, or his successors, could not have started other parallel proceedings for cancellation of registration obtained under section 12A. The registration, having been ‘obtained’ under section 12A, was in the nature of a benefit to a trust, and it was, therefore, entirely at the option of the trust.
The Tribunal reiterated that a charitable trust unwilling to avail the ‘benefit’ of registration obtained under section 12A of the Income Tax Act cannot be, directly or indirectly, and by actions or by inactions, compelled by the Revenue Authorities, to continue with the said registration, particularly when it pertained to the registration obtained in a period before the insertion of section 12AA. Reference was made to the decision of a Co-ordinate Bench in the case of DCIT vs. Jamsetji Tata Trust [ITA No. 2057 & 2058/Mum/2025].
The Division Bench comprising Saktijit Dey (Vice President) and Narendra Kumar Billaiya (Accountant Member) noted that the appellant had filed the ITR in the status of Association of Persons (AOP) and has not claimed any exemption under Section 11 of the Income Tax Act. The Bench also noted that the appellant had voluntarily surrendered the registration granted under Section 12A.
Thus, the Bench deprecated the action of the Departmental Authorities in proceeding against the appellant by treating it as a charitable trust registered under Section 12A and for alleged violation in conditions of Sections 13(1)(d) and 13(2)(h), have not only denied exemption under Section 11 but have also rejected appellant’s claim of exemption under Section 10(34) and 10(35) of the Income Tax Act.
Briefly, in this case, the appellant filed its original ITR declaring income of Rs. 4.04 lacs, which was subsequently revised to NIL income, and pleaded that since it has surrendered its registration under Section 12A, it has not claimed any exemption under Section 11. The AO, however, refused the reasoning and denied the claim of exemption under Section 10(34) & 10(35) of the Income Tax Act.
Case Relied On:
DCIT vs. Jamsetji Tata Trust – ITA No. 2057 & 2058/Mum/2025
Appearances:
Advocates P.J. Pardiwala, Sukhsagar Syal, and Atul Suraiya, for the Appellant/ Taxpayer
CIT Ritesh Mishra, for the Respondent/ Revenue
