The CIT(E) refused my Form 10AB because the memorandum says the objects may be carried out in India 'and elsewhere'. Is a possible application of funds outside India a ground to refuse registration?
No. What the Commissioner has to satisfy himself about at the registration stage under s.12AB(1)(b) is the objects of the trust, the genuineness of its activities and compliance with other laws material to achieving its objects. Whether income has actually been applied within or outside India is a question that arises only when exemption under s.11 is claimed, and refusing registration on that ground is premature.
Decided by the ITAT (Kavitha Rajagopal, Judicial Member and Renu Jauhri, Accountant Member — ITAT Mumbai "F" Bench) on 2025-11-17, reported as ITA No.2620/Mum/2025. It bears on section 12AB, section 12AB(1)(b), section 12A(1)(ac)(vi)(B), section 11, section 11(1), section 11(1)(a), section 11(1)(c), section 12AB(4) of the Income Tax Act 1961, in Charitable Trusts & Exemption and Capital Gains Exemptions matters.
This is the sharpest available answer to the wider question of what the Commissioner may examine at the registration stage. The CIT(E) here went further than most: he accepted that the offending clauses were ancillary and not the main objects, but held they were integral to attaining the main objects and that the trust ought to have amended them before applying. The Tribunal's answer is that a mere possibility recorded in the memorandum is not an application of income, that s.11(1)(c) itself contemplates application outside India with the Board's general or special order where the trust promotes international welfare in which India is interested, so there is no blanket bar, and that the point belongs to the assessment of the exemption claim. Note the limit: the Tribunal did not grant registration. It directed the CIT(E) to consider the application on the merits, so an adverse finding on objects or genuineness remains open to him. The same reasoning was applied by a Mumbai bench to a s.80G(5) refusal in K.M. & S.K. Trivedi Charitable Trust (ITA No.409/Mum/2025).
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The appellant was incorporated on 24 June 2017 as a company limited by guarantee without share capital under the Companies Act 2013. Its objects are the building and support of an innovation-driven entrepreneurial ecosystem, social and economic development through wealth, business and job creation, and the provision of incubation services to accelerate the growth of startups. It filed Form 10AB on 27 August 2024 under s.12A(1)(ac)(vi)(B) for registration under s.12AB. The CIT(E) rejected the application because clauses 3(b)(18), 3(b)(35), 3(b)(46) and 3(b)(55) of the memorandum stated that those objects would apply 'in India and elsewhere', which he held meant the company intended to apply funds outside India in violation of s.11(1). He rejected the company's contention that clause 3(b) contained only objects incidental to and in furtherance of the main objects in clause 3(a), holding that although not main objects they were integral to attaining them; and he held that the company ought to have amended the offending clauses, and had produced no evidence of any amendment or of having initiated one before the competent authority.
Appeal allowed. The CIT(E) was not right to reject the application for registration under s.12AB on the ground that the memorandum contemplates carrying out objects outside India. It is not necessary that in every case there will be application of funds outside India merely because the memorandum says so; unless there is actual application of income outside India, in which case exemption may be denied if s.11 is violated, the point should not be a hindrance at the initial stage of registration and is premature for consideration. Section 11(1)(c) in any event permits application of income outside India on the conditions there stated, so there is no blanket bar. The CIT(E) was directed to consider the application for registration on the merits and in accordance with law after giving a sufficient opportunity of hearing (paras 10 and 11).
The Tribunal set out the scheme of s.12AB at paragraph 8: on an application the Commissioner calls for documents or information or makes inquiry as to the genuineness of the activities and compliance with the requirements of any other law material to achieving the objects, and only after satisfying himself about the objects and the genuineness does he register or reject after a reasonable opportunity of hearing; it noted separately that the Commissioner is empowered to cancel registration for a subsequent violation after inquiry and hearing. It then set s.11 alongside: s.11(1)(a) confines exemption to income applied to charitable purposes in India, while s.11(1)(c) permits application outside India for charitable purposes promoting international welfare in which India is interested where the Board so directs by general or special order. From that juxtaposition it concluded at paragraph 9 that the question whether income has been applied within or outside India arises only when the benefit of s.11 is claimed, and reproduced the Delhi High Court's decision in M.K. Nambyar SAARF Law Charitable Trust, which had quashed a rejection resting on the same irrelevant criterion under the corresponding s.12AA procedure. At paragraph 10 it applied that to the facts: the clauses complained of were ancillary or incidental, a statement in the memorandum is not an application of income, and s.11(1)(c) shows there is no absolute prohibition.
the same should not be a hindrance for the purpose of the initial stage of registration of the trust which in our opinion is pre-mature for consideration
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Handle my notice → Ask a CA on WhatsAppNo. What the Commissioner has to satisfy himself about at the registration stage under s.12AB(1)(b) is the objects of the trust, the genuineness of its activities and compliance with other laws material to achieving its objects. Whether income has actually been applied within or outside India is a question that arises only when exemption under s.11 is claimed, and refusing registration on that ground is premature. This was decided by the ITAT (Kavitha Rajagopal, Judicial Member and Renu Jauhri, Accountant Member — ITAT Mumbai "F" Bench) and bears on section 12AB, section 12AB(1)(b), section 12A(1)(ac)(vi)(B), section 11, section 11(1), section 11(1)(a), section 11(1)(c), section 12AB(4) of the Income Tax Act 1961. It is reported as ITA No.2620/Mum/2025. This is the sharpest available answer to the wider question of what the Commissioner may examine at the registration stage. The CIT(E) here went further than most: he accepted that the offending clauses were ancillary and not the main objects, but held they were integral to attaining the main objects and that the trust ought to have amended them before applying. The Tribunal's answer is that a mere possibility recorded in the memorandum is not an application of income, that s.11(1)(c) itself contemplates application outside India with the Board's general or special order where the trust promotes international welfare in which India is interested, so there is no blanket bar, and that the point belongs to the assessment of the exemption claim. Note the limit: the Tribunal did not grant registration. It directed the CIT(E) to consider the application on the merits, so an adverse finding on objects or genuineness remains open to him. The same reasoning was applied by a Mumbai bench to a s.80G(5) refusal in K.M. & S.K. Trivedi Charitable Trust (ITA No.409/Mum/2025). If it applies to you, the first step is this: Separate the two questions in your reply to the show-cause notice: what s.12AB(1)(b) requires the Commissioner to be satisfied about, and what s.11 requires when exemption is claimed. Do not argue the merits of foreign application at the registration stage.
The appellant was incorporated on 24 June 2017 as a company limited by guarantee without share capital under the Companies Act 2013. Its objects are the building and support of an innovation-driven entrepreneurial ecosystem, social and economic development through wealth, business and job creation, and the provision of incubation services to accelerate the growth of startups. It filed Form 10AB on 27 August 2024 under s.12A(1)(ac)(vi)(B) for registration under s.12AB. The CIT(E) rejected the application because clauses 3(b)(18), 3(b)(35), 3(b)(46) and 3(b)(55) of the memorandum stated that those objects would apply 'in India and elsewhere', which he held meant the company intended to apply funds outside India in violation of s.11(1). He rejected the company's contention that clause 3(b) contained only objects incidental to and in furtherance of the main objects in clause 3(a), holding that although not main objects they were integral to attaining them; and he held that the company ought to have amended the offending clauses, and had produced no evidence of any amendment or of having initiated one before the competent authority. The matter was decided on 2025-11-17 by the ITAT (Kavitha Rajagopal, Judicial Member and Renu Jauhri, Accountant Member — ITAT Mumbai "F" Bench). On those facts the ITAT held as follows. Appeal allowed. The CIT(E) was not right to reject the application for registration under s.12AB on the ground that the memorandum contemplates carrying out objects outside India. It is not necessary that in every case there will be application of funds outside India merely because the memorandum says so; unless there is actual application of income outside India, in which case exemption may be denied if s.11 is violated, the point should not be a hindrance at the initial stage of registration and is premature for consideration. Section 11(1)(c) in any event permits application of income outside India on the conditions there stated, so there is no blanket bar. The CIT(E) was directed to consider the application for registration on the merits and in accordance with law after giving a sufficient opportunity of hearing (paras 10 and 11).
The Tribunal set out the scheme of s.12AB at paragraph 8: on an application the Commissioner calls for documents or information or makes inquiry as to the genuineness of the activities and compliance with the requirements of any other law material to achieving the objects, and only after satisfying himself about the objects and the genuineness does he register or reject after a reasonable opportunity of hearing; it noted separately that the Commissioner is empowered to cancel registration for a subsequent violation after inquiry and hearing. It then set s.11 alongside: s.11(1)(a) confines exemption to income applied to charitable purposes in India, while s.11(1)(c) permits application outside India for charitable purposes promoting international welfare in which India is interested where the Board so directs by general or special order. From that juxtaposition it concluded at paragraph 9 that the question whether income has been applied within or outside India arises only when the benefit of s.11 is claimed, and reproduced the Delhi High Court's decision in M.K. Nambyar SAARF Law Charitable Trust, which had quashed a rejection resting on the same irrelevant criterion under the corresponding s.12AA procedure. At paragraph 10 it applied that to the facts: the clauses complained of were ancillary or incidental, a statement in the memorandum is not an application of income, and s.11(1)(c) shows there is no absolute prohibition. In the words reproduced by the source cited on this page: "the same should not be a hindrance for the purpose of the initial stage of registration of the trust which in our opinion is pre-mature for consideration" The decision followed or applied M.K. Nambyar SAARF Law Charitable Trust [2004] 140 Taxman 616 (Delhi) — reproduced and relied on at para 9.
It was decided by the ITAT on 2025-11-17 and is reported as ITA No.2620/Mum/2025. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 12AB, section 12AB(1)(b), section 12A(1)(ac)(vi)(B), section 11, section 11(1), section 11(1)(a), section 11(1)(c), section 12AB(4), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. Appeal allowed. The CIT(E) was not right to reject the application for registration under s.12AB on the ground that the memorandum contemplates carrying out objects outside India. It is not necessary that in every case there will be application of funds outside India merely because the memorandum says so; unless there is actual application of income outside India, in which case exemption may be denied if s.11 is violated, the point should not be a hindrance at the initial stage of registration and is premature for consideration. Section 11(1)(c) in any event permits application of income outside India on the conditions there stated, so there is no blanket bar. The CIT(E) was directed to consider the application for registration on the merits and in accordance with law after giving a sufficient opportunity of hearing (paras 10 and 11). It arises in Charitable Trusts & Exemption and Capital Gains Exemptions matters, on section 12AB, section 12AB(1)(b), section 12A(1)(ac)(vi)(B), section 11, section 11(1), section 11(1)(a), section 11(1)(c), section 12AB(4) of the Income Tax Act 1961, and was decided by Kavitha Rajagopal, Judicial Member and Renu Jauhri, Accountant Member — ITAT Mumbai "F" Bench. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show that no income has in fact been applied outside India, by accounts and by an affidavit if necessary; the argument is strongest where the clause is a latent possibility rather than a live practice. Point to s.11(1)(c) to defeat the assumption of a blanket bar, and to the fact that the offending words are in ancillary or incidental object clauses rather than the main objects. Resist any direction to amend the trust deed or memorandum as a precondition of registration — that was the CIT(E)'s demand here and it did not survive; but weigh whether amending is nonetheless the cheaper course if the clause serves no purpose. Cite the Delhi High Court in M.K. Nambyar SAARF Law Charitable Trust, which the Tribunal reproduces, for the proposition that income applied outside India is not a relevant criterion for rejecting a registration application.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision citing this order has been found, and no appeal to a High Court against it is on record here; a search restricted to High Court judgments turns up nothing on the name, so no proceeding under section 260A against this registration-stage ruling has been traced. Nothing overruling, doubting or distinguishing it has been found. Weigh it for what it is. This is a Tribunal order on section 12AB registration, decided on 17 November 2025, and a Tribunal order persuades other Benches without binding them. Its persuasive weight comes less from itself than from what it applies: the Delhi High Court's judgment in M.K. Nambyar SAARF Law Charitable Trust, which quashed a rejection resting on the same irrelevant criterion under the corresponding section 12AA procedure, and which is the authority to cite first. The same reasoning has been applied by a Mumbai Bench to a refusal of approval under section 80G(5) in K.M. & S.K. Trivedi Charitable Trust (ITA No.409/Mum/2025), so the point is not confined to registration. Two qualifications on the reach of the entry. The order does not decide that a trust may apply income outside India; it decides that the possibility recorded in a memorandum is not a ground to refuse registration, and section 11(1)(c) still requires the Board's general or special order before income may actually be applied abroad for the promotion of international welfare in which India is interested. And the Commissioner (Exemptions) retains his power under section 12AB(4) to cancel a registration for a specified violation after inquiry and hearing, which the Tribunal itself noted, so a trust that obtains registration on this reasoning and then spends abroad has gained a postponement of the argument rather than an answer to it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to eleven numbered paragraphs, continuous. Paragraph 9 reproduces the Delhi High Court's judgment in M.K. Nambyar SAARF Law Charitable Trust; the '3.' appearing inside that extract is that judgment's paragraph number and not a paragraph of this order, and citing it as such would be a fabricated locator. At paragraph 8 the order refers to 'Section 12AB(iv)' where sub-section (4) is plainly meant. In some copies of paragraph 10 the running header 'JITO Incubation and Innovation Foundation' appears inserted in the middle of a sentence; the quotation used here is taken from a stretch that does not cross that point, and anyone quoting a longer passage should check it for the same intrusion. The order also records an assessment year of 2024-25 although a registration application carries none; that is a form entry, not a finding. Where the reasoning sits: paragraph 8 sets out the scheme of section 12AB — the Commissioner calls for documents or information or makes inquiry as to the genuineness of the activities and compliance with any other law material to achieving the objects, and registers or rejects only after satisfying himself and giving a hearing — paragraph 9 places section 11(1)(a) and section 11(1)(c) alongside it, and paragraphs 10 and 11 carry the conclusion and the direction. Two limits on the order matter in practice. The Tribunal did NOT grant registration. It held that the Commissioner (Exemptions) was wrong to reject the application on the ground that the memorandum contemplates carrying out objects 'in India and elsewhere', and directed him to consider the application on the merits and in accordance with law after a sufficient opportunity of hearing. An adverse finding on the objects or on genuineness therefore remains open to him, and the order is not a clearance. And the reasoning turns on the difference between a statement of possibility and an actual application of income: clauses 3(b)(18), 3(b)(35), 3(b)(46) and 3(b)(55) said the objects would apply in India and elsewhere, and the Tribunal's answer is that a statement in the memorandum is not an application of income and that section 11(1)(c) in any event permits application outside India on the conditions it states. Where funds have actually gone abroad without the Board's order, this order does not help. One further limit worth naming: the Commissioner (Exemptions) had also held that the company ought to have amended the offending clauses and had produced no evidence of any amendment or of having initiated one. The Tribunal did not hold that a Commissioner may never ask for an amendment of objects; it held that this particular ground was premature, so an applicant met with a demand to amend should answer it on the facts rather than assume the point is closed. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Appeal allowed. The CIT(E) was not right to reject the application for registration under s.12AB on the ground that the memorandum contemplates carrying out objects outside India. It is not necessary that in every case there will be application of funds outside India merely because the memorandum says so; unless there is actual application of income outside India, in which case exemption may be denied if s.11 is violated, the point should not be a hindrance at the initial stage of registration and is premature for consideration. Section 11(1)(c) in any event permits application of income outside India on the conditions there stated, so there is no blanket bar. The CIT(E) was directed to consider the application for registration on the merits and in accordance with law after giving a sufficient opportunity of hearing (paras 10 and 11).
TaxSphere, “JITO Incubation and Innovation Foundation v CIT (Exemption), Mumbai”, https://taxnotice.vittsphere.com/caselaw/case/jito-incubation-objects-outside-india-not-registration-stage-ground/ (validity last checked 2026-09-08)
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