Section 12A

Section 12A — the law in short

What the courts have decided on section 12A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• ACIT v Ahmedabad Urban Development Authority Supreme CourtCuts both ways
  We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
  Only if the fees are pitched above cost. Charging on a cost or nominal mark-up basis is not trade, commerce or business; charges noticeably higher than cost are. Even permissible commercial activity must be carried on in the actual course of achieving the general public utility object, and receipts from it must stay within 20 per cent of total receipts.
• Ananda Social and Educational Trust v CIT Supreme CourtHelps taxpayerNo later treatment found
  Our trust was formed weeks ago and has done nothing yet. Can registration be refused for that?
  No. Registration cannot be refused merely because a newly formed trust has not started activities. 'Activities' includes proposed activities, so at the registration stage the Commissioner looks at whether the objects are genuinely charitable and whether the proposed activities are genuine.
• CIT v Rajasthan and Gujarati Charitable Foundation Supreme CourtHelps taxpayerSuperseded by amendment
  We treated a building's full cost as application of income. Can we also claim depreciation on it?
  Yes on the law as it stood, but read the editor's note before using this for a current year. The Court held that treating the whole acquisition cost as application under s.11(1)(a) does not bar a s.32 depreciation claim on the same asset, rejected the double benefit objection, and allowed the depreciation to be carried forward.
• CIT v Dawoodi Bohara Jamat Supreme CourtCuts both ways
  The Commissioner has refused my trust registration under section 12AA because our objects are tied to one religious community — can he refuse registration on that ground?
  No, not at the registration stage on this reasoning. The Supreme Court held on 20 February 2014 that section 13 is an exception to sections 11 and 12, so whether it bites is examined when exemption is claimed, not when registration is decided. On the merits the Court corrected both sides. Section 13(1)(b) is not confined to trusts that are purely charitable; a composite religious and charitable trust is not outside it merely because it is composite. But on these objects — food served on community occasions, a madarsa, help to the needy — the benefit was not channelled to the Dawoodi Bohra community alone, so section 13(1)(b) was not attracted and the appeals were dismissed.
• ACIT v Saurashtra Kutch Stock Exchange Ltd Supreme CourtHelps taxpayer
  A binding decision that covers my point was never considered when my order was passed. Is that a mistake apparent from the record?
  Yes. The Supreme Court held that non-consideration of a decision of the jurisdictional High Court or of the Supreme Court can be a mistake apparent from the record, and upheld the Tribunal recalling its own order on that ground. The section actually applied was s.254(2); the same test - patent, manifest and self-evident - is the one used under s.154.
• ACIT v Surat City Gymkhana Supreme CourtHelps taxpayer
  My trust already has registration under section 12A. Can the Assessing Officer go behind it and re-examine whether the objects are charitable?
  The Supreme Court dismissed the Revenue's appeals against a Gujarat High Court order that answered no, but it did so on a narrow ground. The Tribunal had held that the club's objects fell within general public utility under section 2(15) and that registration under section 12A was a fait accompli preventing the Assessing Officer from probing the objects further. The High Court dismissed the Revenue's appeals in limine as covered by Hiralal Bhagwati v. CIT. The Supreme Court found that both questions were concluded by that decision, which the Revenue had never challenged and which had attained finality. The appeals were therefore dismissed with no costs.
• CIT v Gujarat Maritime Board Supreme CourtHelps taxpayer
  My body is a statutory authority, not a trust under any public trust law. Can it still be registered as a charitable institution under section 12A?
  Yes. The Supreme Court dismissed the Revenue's appeal and held that the Gujarat Maritime Board was entitled to registration under section 12A. Its predominant purpose is the development of minor ports in Gujarat, its management and control lie essentially with the State Government, and sections 73 to 75 of its own statute show it has no profit motive and must apply its income to that purpose. That is an object of general public utility within section 2(15). Section 10(20) and section 11 operate in different spheres, so ceasing to be a local authority after the 2002 amendment did not preclude the claim. The Court was concerned with registration, not application of income.
• Chamber of Tax Consultants v CIT (Exemptions) High CourtHelps taxpayer
  The CIT (Exemptions) refused our trust's registration under s.12AB because the trust deed has no irrevocability or dissolution clause, and treated our 'Yes' in Row 6 of Form 10AB as false information. Is that a lawful ground of refusal?
  No, on both counts. Section 12AB tells the Commissioner what to satisfy himself about — the objects, the genuineness of the activities, and compliance with other laws material to achieving the objects — and an express irrevocability clause is not among them and cannot be implied. A public charitable trust is irrevocable by operation of law unless the deed itself reserves a power of revocation. And an answer the Department's own e-filing utility compelled the applicant to give cannot be turned against it as 'false or incorrect information'. The Bombay High Court quashed the rejections before it and also quashed every other order rejecting renewal on the same grounds.
• Swasth Foundation v CIT (Exemptions) High CourtHelps taxpayerNo later treatment found
  The Commissioner rejected my condonation application for late Form 9A for an old year. Was Form 9A even required then?
  Not before AY 2016-17. The Bombay High Court held that the requirement to file Form No. 9A to exercise the option under clause (2) of the Explanation to s.11(1) was introduced by the Finance Act 2015 with effect from 1 April 2016, so for AY 2015-16 there was no prescribed format and no delay capable of being condoned. Where the option had been exercised in time by stating it in the Form 10B audit report and in the return, the substantive requirement was met and the s.119(2)(b) rejection was quashed.
• Andhra Pradesh State Civil Supplies Corporation Ltd v ITO High CourtHelps taxpayer
  The trust held an investment that breaches s.11(5) read with s.13(1)(d). Does that cost us exemption on everything, or only on the income from that investment?
  Only on the income from that investment. The Telangana High Court read ss.11 and 13 together and held that the legislature did not intend the denial of s.11 to extend to the entire income; only the income from the investment made in violation of s.13(1)(d) is liable to tax. It agreed with the Bombay, Delhi and Karnataka High Courts, which had all taken that view.
• CIT (Exemptions) v Shree Sai Baba Sansthan Trust High CourtHelps taxpayer
  Our trust is religious and charitable and holds 80G approval. Can the officer tax our hundi collections under s.115BBC?
  No. Section 115BBC(2)(b) takes a trust created or established wholly for religious and charitable purposes out of the charge, except for a donation given with a specific direction that it is for a university or other educational institution or a hospital or other medical institution run by the trust. The Court held that whether the trust is religious and charitable is determined from the trust deed, and that s.80G registration is a separate and independent question which cannot be used to deny that character. Rs 159.12 crores of hundi collections out of Rs 228.25 crores of donations stayed outside s.115BBC(1).
• CIT (Exemptions), Kolkata v West Bengal Welfare Society High CourtHelps taxpayerNo later treatment found
  My Form 10AB was rejected before April 2024 because it was late or filed under the wrong section code. Is that rejection the end of the matter?
  No. The Calcutta High Court, dismissing the Revenue's appeal, recorded that clause 4.1 of CBDT Circular No. 7 of 2024 dated 25 April 2024 allows a trust whose Form 10AB was rejected on or before the issue of that circular solely because it was furnished after the due date or under the wrong section code to furnish a fresh Form 10AB within the extended time in paragraph 3(ii), namely 30 June 2024. The Court also approved the Tribunal's construction that a trust becomes eligible to apply for final registration only after the grant of provisional approval, so the clause (iii) time limit must be read in that light.
• Bar Council of India v CIT (Exemption) High CourtHelps taxpayerNo later treatment found
  Our professional body has always claimed s.10(23A). We realised mid-assessment that we needed s.11 and filed Form 10 late. Can the Commissioner refuse to condone the delay?
  Not on the reasoning used here. The Delhi High Court set aside the Commissioner's refusal, holding that the explanation offered — that the body's officials had not noticed the amendments to ss.11 and 13 made by the Finance Act 2015 with effect from 1 April 2016 — was not one there was reason to disbelieve, and that no benefit could accrue to the body from delaying. The failure to claim accumulation in the return cannot itself be read as showing an intention not to file Form 10.
• Chotanagpur Diocesan Trust v Union of India High CourtHelps taxpayerNo later treatment found
  My 148A(b) notice describes an enquiry but nothing was attached. Can I insist on the material?
  Yes. The Jharkhand High Court held the Department is duty-bound and mandatorily required to supply all material information, the enquiry conducted and the supporting documents along with the s.148A(b) notice; a three-page narration with no enclosures does not discharge that obligation.
• Trust for Reaching the Unreached v CIT High CourtHelps taxpayer
  Our audit report was not e-filed with the return and exemption was denied. Can the delay be condoned?
  Yes. The requirement to furnish the audit report with the return is procedural and directory, so exemption under ss.11 and 12 cannot be refused merely for late filing. The Commissioner's refusal to condone was set aside because the s.119(2)(b) discretion must be exercised equitably and judiciously, not on an exclusively pro-revenue view.
• DIT (Exemption) v Charanjiv Charitable Trust High CourtHelps departmentSuperseded by amendment
  My trust paid an advance to a company in which the trustees are interested, under an agreement to buy land, and the deal was later cancelled. Is that a s.13(1)(c) violation even though no money went out in the year in question?
  Yes, on these facts. The Delhi High Court held that where trust funds remain with a s.13(3) person without interest or security, that is a direct use of the funds for the benefit of a prohibited person, and s.13(2)(a) makes clear that it is enough that the money continues to be lent during the previous year — no fresh advance in that year is needed. The agreements to sell were treated as a device to take the payments out of the word 'lent', and exemption under s.11 was denied for both years.
• DIT (Exemption) v Keshav Social & Charitable Foundation High CourtHelps taxpayer
  My trust could not produce all its donors. Can the Assessing Officer treat the donations as cash credits under section 68 and deny exemption under section 11?
  No, on these facts. The Delhi High Court dismissed the Revenue's appeal, holding that no substantial question of law arose. Section 68 had no application because the trust had itself disclosed the Rs.18,24,200 of donations as its income, and every receipt other than a corpus donation is income in a trust's hands. There was therefore full disclosure. The trust had filed a list of donors, and the failure to file a complete list or to produce the donors does not by itself support an inference that unaccounted money was being introduced as donations - particularly where more than 75% of the donations had admittedly been applied to charitable purposes and the trust was registered under section 12A.
• CIT v Rai Bahadur Bissesswarlal Motilal High CourtHelps taxpayer
  Is the list of defects in the Explanation to s.139(9) a closed list, so that the officer cannot call anything else a defect?
  No. The Calcutta High Court held that the defects specified in s.139(9) are illustrative and not exhaustive. The corollary is the one that helps the taxpayer: because the provision is a curative one, an omission such as the audit report of a trust not being filed with the return can be made good during the assessment proceedings, and the officer cannot then ignore the report or the return.
• Society for Human Transformation and Research v ITO (Exemptions) ITATHelps taxpayerNo later treatment found
  My trust gave interest-free or low-interest advances to entities connected with its trustees. The Assessing Officer has treated the interest not charged as a benefit to specified persons, disallowed it under s.40A(2)(a) and denied exemption on the whole income. Can he do that?
  Not on this record. Where the counterparties are themselves institutions registered under s.12A and s.80G and there is no material showing that any specified person derived a personal benefit, the transactions do not establish diversion of charitable funds for private benefit, and s.13(1)(c) is not attracted. Section 40A(2)(a) cannot be used at all: it disallows excessive or unreasonable expenditure paid to a related party in the course of business or profession, and does not authorise an addition for interest the trust failed to charge.
• Humanitarian Hands v ITO (Exemptions) Ward-1, Bengaluru ITATCuts both waysNo later treatment found
  Our auditor filed Form 10BB when Form 10B was required for AY 2023-24, and CPC has taxed us under s.13(10). We filed the right form only in 2025 and the condonation application is still pending. What can the Tribunal do?
  The Tribunal remitted the matter to the Assessing Officer to pass an order in accordance with the outcome of the pending s.119(2)(b) condonation application before the CIT (Exemptions). It recorded that this was not a case of no audit report at all but of a report filed both belatedly and in the incorrect form, and that CBDT Circular No. 2/2024 did not rescue the trust because that circular only covered wrong-form reports furnished on or before 31 October 2023.
• DCIT (Exemptions) v Society of the Servants of the Holy Spirit ITATHelps taxpayerNo later treatment found
  CPC has taxed our AY 2017-18 accumulation in AY 2023-24 saying the Finance Act 2022 took away the sixth year. We spent the money in FY 2022-23. Is the amendment good against an old accumulation?
  No, on this Tribunal's view. Where the accumulation was made in AY 2017-18 under a law that allowed utilisation within five years and also in the immediately following year, the Finance Act 2022 amendment to s.11(3) — though applicable from AY 2023-24 — cannot be read so as to take away the vested right accrued at the time of accumulation. The addition of Rs.29,04,39,083 made in the s.143(1) intimation was deleted and the Revenue's appeal dismissed.
• IMC Trust v ITO (Exemption) Ward 1(3), Mumbai ITATCuts both waysNo later treatment found
  My Form 10 described the purpose of accumulation in the words of the trust's objects. The Assessing Officer says that is not a 'specific purpose'. Is he right?
  On these facts the Tribunal agreed with him: a purpose stated as 'hold seminars/workshops/conferences/buyers sellers meets/etc. to promote trade and develop knowledge' was not specified with the required clarity and precision, and the trust had not demonstrated the specific purpose for which the accumulated funds were to be used. But the Tribunal did not tax the accumulation — following the Gujarat High Court in Bochasanwasi Shri Akshar Purushottam it restored the matter to the Assessing Officer to verify how the money was actually spent within the five years.
• Jhaverbhai Patel Research Centre v CIT (Exemptions) ITATHelps taxpayer
  Our Form 10AB went in 38 days after the Charity Commissioner's order instead of 30, and the CIT (Exemptions) rejected it on that ground and on how we had spent our money. Is there a way back?
  Yes, though what you get is a remand and not registration. The Mumbai Tribunal held that the delay should not be visited on the trust — the Charity Commissioner's order had reached it late, and measured from receipt the application was within thirty days — and that the authority must adopt a liberal and justice-oriented approach. It also rejected the second ground, holding that a scholarship paid in India, in rupees, to an Indian student who then studies abroad is not an application of income outside India. It did not itself pass an order condoning the delay: it set aside the CIT (Exemptions)'s order, restored the application to him to be decided on its merits, and allowed the appeal for statistical purposes.
• Haji Pir Mohmad Yusuf Waqf v CIT (Exemption), Ahmedabad ITATHelps departmentNo later treatment found
  The CIT(E) has rejected my Form 10AB and cancelled my provisional registration on the ground that my objects benefit only one religious community. What is the Revenue's case and how does it succeed?
  It succeeds where the objects on their face are confined to one community and the trust files no evidence that it has not incurred expenditure on those objects. The Tribunal dismissed the appeal, finding no infirmity in an order which rejected the Form 10AB application under s.12A(1)(ac)(iii) and cancelled the provisional registration on the footing of a specified violation under clause (d) of the Explanation to s.12AB(4).
• Lakulish Sanatan Sanskriti Prabodhan Abhiyan v CIT (Exemption), Ahmedabad ITATHelps taxpayerNo later treatment found
  I did not file the Rule 17A documents in time and the CIT(E) rejected my Form 10AB, cancelled the provisional registration and directed computation of tax under s.115TD. Can a rejection for non-filing carry all that?
  Not without an inquiry into the merits. The Tribunal set the order aside and restored the matter for de novo consideration, holding that the CIT(E) had rejected the application solely for non-filing of documents, after only two notices at very short intervals, without any verification or inquiry, and that procedural lapses alone should not result in denial of substantial justice. It did not decide the s.115TD point, which was raised only in argument.
• Hemkunt Foundations v PCIT ITATHelps taxpayerNo later treatment found
  The PCIT cancelled our 12A registration after a survey. Was he even allowed to do that?
  No, on both counts here. Authority to grant or cancel registration under s.12AB lies with the CIT (Exemption), not the Principal Commissioner, and the 'specified violation' clause in s.12AB(4) took effect on 1 April 2022, so it cannot be applied to conduct in financial year 2020-21 or 2021-22.
• Lala Sher Singh Memorial Jeevan Vigyan Trust Society v PCIT (Central) ITATHelps taxpayer
  The PCIT has cancelled our registration under s.12AB(4) for 'specified violations' said to have occurred in years going back to 2015-16. Can s.12AB(4) reach back that far?
  The Delhi Tribunal held it cannot. The concept of a 'specified violation' in the Explanation to s.12AB(4) was brought in with effect from 1 April 2022, so it cannot be applied to alleged violations of assessment years 2015-16 to 2021-22. The Tribunal also held that the cancellation was passed by the wrong officer: under the CBDT notifications constituting the Commissioner (Exemptions), it is that Commissioner and not the PCIT (Central) to whom the Assessing Officer is subordinate who deals with a trust's registration. The cancellation orders were quashed.
• Shree Maheshwari Vidyalaya v ITO ITATHelps taxpayerNo later treatment found
  The CPC adjusted your return under s.143(1)(a) without warning. Can it do that?
  No. An adjustment under s.143(1)(a) requires a prior show cause notice. Made without one, a Rs 4.20 crore disallowance was deleted — and on the facts the audit report had in any event been filed on time.
• Sarvajanik Seva Trust v DCIT ITATHelps taxpayer
  The CPC has processed my trust's return at the maximum marginal rate, saying s.115TD applies. But the trust gave up its registration back in March 2015. Can s.115TD reach it at all?
  Not on those facts. Section 115TD was inserted by the Finance Act 2016; the order records it as taking effect from 1 June 2016 in one place and from assessment year 2016-17 in another. On either date, where the trust's registration had already ceased with effect from 20 March 2015 there was no registered trust for the section to bite on, and the total income had to be charged at the slab rates and not at the maximum marginal rate.
• Grow Foundation v CIT (Exemption) ITATHelps taxpayerNo later treatment found
  My trust's application in Form 10AB for final approval under s.80G(5) was rejected as time-barred. Do the CBDT circulars extending the date save it?
  Yes, on this decision. The Tribunal held that the application could not be rejected merely because it was not filed by 30 September 2023, that date having been arrived at through CBDT Circular No.6/2023 and then further extended to 30 June 2024 by CBDT Circular No.7/2024. The rejection was set aside and the matter restored to the CIT (Exemption) for de novo consideration on merits.
• ACIT v Shri Dadasaheb Gawai Charitable Trust ITATHelps taxpayer
  The Assessing Officer has taxed all our donations under s.115BBC because some donors did not turn up when summoned. What does the section actually require us to keep?
  A record of the identity of the donor showing name and address, and such other particulars as may be prescribed. The Nagpur Tribunal held that a trust which maintains names, addresses, PAN and Aadhaar details of its donors has discharged its burden, and that s.115BBC cannot be invoked merely because the Assessing Officer doubts the donors. Where summonses went unanswered or came back unserved, it was for the Assessing Officer to ask the trust to produce those donors before treating the whole of the donations as anonymous.
• Versova Kokni Sunni Jamat Trust v CPC ITATHelps taxpayerJudgment not reachable
  We have no 12A registration. Is a corpus donation given for buying property taxable in our hands?
  No. A voluntary contribution made with a specific direction that it form part of the corpus is a capital receipt, and that character does not depend on the trust holding registration under s.12A or s.12AA. The addition of Rs 8,99,811 was deleted.
• Gram Sewa and Viklang Shayta Sanstha v DCIT ITATHelps taxpayerNo later treatment found
  The trust's Form 10B did not go with the return and the exemption has been refused. Does filing it in answer to the s.139(9) notice save the claim?
  Yes. The Tribunal held that the authorities were not justified in refusing the exemption under s.11 where the assessee had filed the audit report in answer to the defect notice under s.139(9) and before the assessment proceedings were completed. A highly technical view of the timing defeats the purpose of the requirement where substantive compliance has been made.
• ACIT v Armee Infotech ITATHelps taxpayer
  The Assessing Officer says my s.80GGC deduction fails because he cannot trace what the party did with the money, and because the party did not file its return. Does the section require me to answer for that?
  No. Section 80GGC requires a contribution, otherwise than in cash, to a political party registered under s.29A of the Representation of the People Act 1951, by an assessee who is not a local authority or a Government-funded artificial juridical person. Nothing in the Act puts the donor under an obligation to ensure how the donee uses the funds, and an enquiry directed at that is misdirected.
• Statutory position — s.12AB registration periods, the Finance Act 2025 ten-year proviso for small trusts, and the Finance (No. 2) Act 2024 power to condone a late application CBDT Circulars & InstructionsCuts both ways
  How long does registration under s.12AB now run, is the ten-year period for small trusts real, and is there still any way to save a late Form 10A or Form 10AB?
  Registration under s.12AB(1)(a) and under s.12AB(1)(b)(ii)(A) runs five years; provisional registration under s.12AB(1)(c) runs three years from the assessment year for which registration is sought. The ten-year period is real but narrower than it is usually described: a proviso to s.12AB(1) inserted by the Finance Act 2025 (Act No. 7 of 2025) with effect from 1 April 2025 substitutes ten years for five where the application is under sub-clauses (i) to (v) of s.12A(1)(ac) and the total income of the trust, without giving effect to ss.11 and 12, did not exceed rupees five crores in each of the two previous years preceding the previous year in which the application is made — it does not lengthen the three-year provisional registration under clause (c). Separately, a proviso to s.12A(1)(ac) inserted by Act No. 15 of 2024 with effect from 1 October 2024 empowers the Principal Commissioner or Commissioner to condone a delay in filing where he considers there is a reasonable cause, and the application is then deemed to have been filed within time.
• CBDT Circular 7/2024 CBDT Circulars & InstructionsHelps taxpayer
  Our Form 10AB was rejected for late filing. Does the CBDT let us apply again?
  Yes, but only within the window this circular opened. The due date for Form 10A and Form 10AB was extended to 30 June 2024, and entities whose Form 10AB was rejected solely for late filing or for filing under the wrong section code could file fresh applications within that extended time.
• CBDT Circular No. 2/2024 — audit report filed in the wrong form CBDT Circulars & InstructionsHelps taxpayerNo later treatment found
  For AY 2023-24 my trust filed Form 10B when Form 10BB was the right form. Is there a CBDT relaxation, and what exactly does it cover?
  Yes, but it is narrow. By Circular No. 2/2024 dated 5 March 2024 the CBDT allowed trusts and institutions that had furnished an audit report on or before 31 October 2023 in Form No. 10B where Form No. 10BB was applicable, and vice versa, to furnish the audit report in the applicable form for AY 2023-24 on or before 31 March 2024. It covers only AY 2023-24, only a wrong-form filing that was itself made by 31 October 2023, and the window it gave has closed.
• Statutory position — s.115BBDA: the ten per cent charge on a resident shareholder receiving dividend above ten lakh rupees, and why it sat on top of DDT rather than instead of it CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  My client got a notice charging ten per cent on his dividend income under s.115BBDA even though the companies had already paid DDT. Is that double taxation, and for which years does it apply?
  Section 115BBDA charges a specified assessee resident in India, whose total income includes dividend in aggregate exceeding ten lakh rupees declared, distributed or paid by a domestic company or companies on or before 31 March 2020, to income-tax at ten per cent on the amount of such dividend in aggregate exceeding ten lakh rupees, plus the tax on the rest of his income computed as if the dividend were excluded. Sub-section (2) bars any deduction for expenditure or allowance and any set off of loss in computing that dividend income, and the Explanation excludes a s.2(22)(e) deemed dividend and takes a domestic company, a s.10(23C)(iv)/(v)/(vi)/(via) fund, institution, trust, university or hospital, and a trust or institution registered under s.12A, s.12AA or s.12AB out of 'specified assessee'.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.