AUDYOGIK NIDHI VISHWAST SANSTHA POONA,PUNE V. CIT EXEMPTION, PUNE, PMT BUILDING

ITA 2135/PUN/2024

AI Insights

The case revolves around the rejection of registration under section 12AB of the Income Tax Act, 1961, by the Commissioner of Income Tax (Exemptions), Pune, for the trust Audyogik Nidhi Vishwast Sanstha. The trust, established in 1905, aimed to generate employment and make India self-sufficient and industrialized. The CIT(E) rejected the application citing that the trust's activities were predominantly commercial in nature. However, the Tribunal, referencing various precedents, concluded that the trust's activities, including the advancement of funds to PF Glass Foundation for manufacturing toughened glass, were in furtherance of its charitable objectives and not primarily commercial.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312445 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Other Referred Cases: CIT (E) vs. AIC@36Ince, Aruva Foundation vs. CIT (E), Thamizh Thai Seva Trust vs. DIT (E), Gear Training and Research Foundation vs. CIT (E)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: NIKHIL S PATHAK
• Keywords: Set aside; Business income; Question of law; Charitable institution
• Section: 143(3); 11; 12AA; 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.2135/PUN/2024 Audyogik Nidhi Vishwast Sanstha Poona 366, Narayan Peth, Limaye Building, Laxmi Road, Pune – 411030 Vs. The CIT (Exemption), Pune PAN: AAATA1619H (Appellant) (Respondent) Assessee by : Shri Nikhil S Pathak Department by : Shri Amol Khairnar CIT-DR Date of hearing : 05-02-2025 Date of pronouncement : 30-04-2025 O R D E R PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 12.08.2024 of the Ld. CIT (Exemption), Pune rejecting the application for registration u/s 12AB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and cancelling the provisional registration granted earlier. 2. Facts of the case in brief, are that the assessee filed an application in Form No.10AB on 01.02.2024 for approval under clause (iii) of section 12A(1)(ac) of the Act. With a view to verify the genuineness of the activities of the assessee and compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects, a notice 2 ITA No.2135/PUN/2024 was issued through ITBA portal on 25.04.2024 requesting the assessee to upload certain information / clarification. The assessee in response to the same filed the various details. From the various documents submitted by the assessee, the Ld. CIT(E) noticed various discrepancies for which he issued another notice on 26.07.2024 communicating the discrepancies, in response to which the assessee responded to the same. 3. The Ld. CIT(E) noted that in response to the notice the assessee has given a note of activity of the trust which reads as under: “The intent to establish trust was to make India self-sufficient and industrialized. It also proposed to generate employment on a large scale and bring India at par with the developed Nations. As the time passed, the requirements for the products of the Trust lowered because of the stiff competition. To beat this, the Trust proposed to set up a Plant with state of the art, latest technology which shall generate Toughen Glass which can be used in the Solar Panels and can be used at various other premises. The Trust aims to achieve the following with this viz. a. Achieve sustainability b. Generate Employment on a large scale. c. Manufacture products that are import substitutes, d. Offer eco-friendly products to contribute for sustainable environment. e. Make itself vibrant with the changing economic avenues. The Trust propose that it shall commence an activity for the manufacture of glass which is its core competence because of its existence since 1972.\" 4. In view of the above, he raised a query asking the assessee regarding the nature of activity. The assessee in response to the same contended that the object of the trust is to run industry to generate employment “6.1 In view of the above, a query was raised to the assessee regarding the nature of the activity. In reply to the query, the assessee contended that object of trust is to run industry to generate employment and to carry research in same field. It also provides help to needy for education. Till year 2005-06, it was catering need of Indian Railway by providing them glasses for signal mechanism which after invention of plastic stopped. The trust is very much operating for 3 ITA No.2135/PUN/2024 charitable objectives of providing employment. Also, trust has rented sheds for the purpose of survival. The trust further claimed that it was not into activity of manufacturing glass and was providing glass to Railway as mentioned before.” 5. However, the Ld. CIT(E) was not satisfied with the arguments advanced by the assessee and held that the activities of the trust are not charitable in nature for which he rejected the application for grant of registration u/s 12A and also cancelled the provisional registration granted earlier u/s 12AB of the Act by observing as under: “7. The contention of the assessee is duly considered. On examination of the trust's activities and considering the inconsistencies in its statements, it is evident that the trust's claim to be a charitable organization is not supported by the facts on record. Initially, in its first note on activity, the trust stated that it was in the process of setting up a plant for the manufacturing of toughened glass with the intention to make India self-sufficient and to contribute to the economy by generating employment and offering eco-friendly products. This activity clearly aligns with commercial objectives rather than charitable purposes However, in its subsequent response to the query, the trust claimed that it had previously provided glass products to Indian Railways for signal mechanisms and is not into activity of manufacturing glass. This inconsistency in the trust's statements raises significant questions about the reliability of its claims. The trust's shifting narrative appears to be an attempt to deviate its true operational focus, which is evidently more aligned with business activities than with charitable work. 8. Further, the trust's claim of the educational fund purportedly set aside also casts doubt on its commitment to its stated charitable objectives. The trust claimed that a sum of Rs 11.45 Lakhs was allocated to facilitate education for poor and deprived children. However, there is no evidence provided to substantiate this claim The trust failed to furnish any details of beneficiary children, information on how these beneficiaries were identified, or any proof of actual relief provided to them. It is pertinent to note that these funds have been lying idle for at least the past three years, without being utilized for the intended charitable purpose. This inactivity suggests a lack of genuine intent to pursue the educational objectives stated by the trust. 9. In conclusion, the trust's activities, as currently conducted, appear to be predominantly commercial in nature and are not aligned with the requirements for registration as a charitable organization under the Income Tax Act. Therefore, the undersigned is not satisfied about the charitable nature and the genuineness of activities of the assessee and compliance of requirements of any other law for the time being in force by the assessee as are material for the purpose of achieving its objects 4 ITA No.2135/PUN/2024 10. In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 24/09/2021 under section 12AB read with section 12A(1)(ac)(vi) of the Income Tax Act 1961 is hereby cancelled.” 6. Aggrieved with such order of Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds: The following grounds are taken without prejudice to each other On facts and in law, 1] The learned CIT erred in not granting the registration to the appellant trust u/s 12AB and in cancelling the provisional registration already granted on the ground that the activities of the appellant are not charitable but are predominantly commercial in nature. 2] The learned CIT was not justified in holding that- a. The appellant's activities are business activities and not charitable activities. b. Employment generation is an outcome of the commercial activities and cannot be considered to be a charitable purpose. c. There is a lack of genuine intent to pursue educational objectives of the trust as no funds are utilized for educational purposes. 3] The learned CIT failed to appreciate that- a. The appellant's object was employment generation and for that purpose, the appellant had rented out its properties to various industries. b. The appellant was not having any business activity on its own. Accordingly, it is not correct to hold that the appellant was carrying out a business and not charitable activities. c. The intention behind providing its glass plant to P F Glass Foundation was to generate employment which was the object of the appellant and not to carry out any business and thin, the appellant had not violated any of the conditions u/s 11 to 13 and the appellant was entitled to registration. d. In the course of achieving its object of generating employment for the workers, if the appellant had given its properties to various industries, the appellant had not violated the provisions of section 2(15) nor u/s 11 to 13 and hence, the registration could not be refused. 5 ITA No.2135/PUN/2024 4] The learned CIT failed to appreciate that if in future, the appellant generates any business income, the same may be taxable as per law but that does not imply that the objects of the appellant are not charitable in nature. 5] The appellant requests for grant of registration u/s 12AB us its objects activities of providing employment and training to number of workers are charitable in nature. 6] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 7. The Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(E) in rejecting the application filed by the assessee for grant of registration u/s. 12A and in cancelling the provisional registration granted earlier u/s 12AB. He submitted that the assessee is a charitable trust created in the year 1905 by the great freedom fighter late Shri Bal Gangadhar Tilak and other patriots. The main objective of the trust was to generate employment and to make India self sufficient and industrialized. At that time the trust was also named as Audyogik Nidhi alias Paisa Fund. The trustees had literally collected one paisa each from the public at large and thereafter had set up a factory for manufacturing glass at Talegaon, Pune which started manufacturing in 1908. The said factory was in operation till 2007. Subsequently due to competition and new technologies being introduced, the operations of the glass manufacturing unit ran into losses and therefore, in the year 2007 the assessee trust had to shut down its glass manufacturing factory. Subsequently, the assessee had rented out its factory sheds and was earning meager rental income which was barely sufficient to cover its cost. 8. He submitted that though the trust was registered in the year 1905 the assessee do not have any documentary evidence to prove that it had received the 6 ITA No.2135/PUN/2024 approval for registration u/s 12A of the Act. However, for assessment year 2008- 09 the assessment was completed u/s 143(3) of the Act, copy of which is placed at pages 13 to 36 of the paper book wherein the Assessing Officer has mentioned that the assessee trust was registered u/s 12A of the Act. He submitted that subsequent to the amendment in section 12A the assessee applied for provisional registration which was granted on 24.09.2021, copy of which is placed at pages 37 to 41 of the paper book. Subsequently, when the assessee applied for final approval vide application 01.02.2024, the Ld. CIT(E) rejected the claim of the assessee and also cancelled the provisional registration granted on 24.09.2021 on the ground that (a) the activities of the assessee was predominantly commercial in nature and it had failed to satisfy the genuineness and charitable nature of its activities; (b) the assessee had created educational fund but no evidences were furnished for the utilization of the same. The funds are lying idle for the last 3 years and the inactivity suggests a lack of genuine intent to pursue the educational objectives. 9. The Ld. Counsel for the assessee submitted that the primary objective of the trust is to promote and revive the agricultural activities, trade, arts and skills in India. Further, the trust deed also provides that the funds so collected shall be utilized exclusively for the above mentioned purposes. The trust deed also provides that the trust shall carry out activities for development of industries and also related education thereof. Apart from the above objectives, the trust deed also provides for educational, medical and social welfare objects. He submitted that since the trust was running a glass manufacturing factory which went into losses, therefore, the said factory was shut down in the year 2007 and subsequently the 7 ITA No.2135/PUN/2024 trust had rented out its factory shed and was earning meager income and in most of the years there was deficit as per the income expenditure account. The trust was incurring expenditure on maintenance of the factory shed and also making payment to the employees. Since the assessee was having deficit in most of the years it did not have the funds for incurring expenditure on educational and social welfare objects. 10. So far as the observations of the Ld. CIT(E) that the assessee had set up educational fund and an amount of Rs.11.45 lakh was provided for the said fund but the assessee had not provided any evidence of the beneficiaries to whom the payments were made is concerned, the Ld. Counsel for the assessee submitted that since the assessee was not having any surplus funds, the amount earmarked as educational fund could not be utilized and therefore providing the details of beneficiaries does not arise. 11. So far as the observations of the Ld. CIT(E) that the assessee was carrying out commercial activities is concerned, he submitted that this observation of the ld. CIT(E) is not correct. The assessee trust was basically earning rental income and therefore, it cannot be classified as commercial activity. He submitted that the trust has never operated with an intention of making profits. 12. So far as the observations of the Ld. CIT(E) that the assessee had also stated that it proposed to set up a plant for manufacturing of toughened glass and that there are inconsistencies in the replies of the assessee are concerned, he submitted 8 ITA No.2135/PUN/2024 that after shutting down of the said glass factory the assessee has advanced funds to PF Glass Foundation which is a section 8 Company which has undertaken manufacture of toughened glass. He submitted that the assessee is a separate charitable trust and the assessee has only lent funds to PF Glass Foundation. It is not a case that the assessee is carrying out any manufacturing activity. He submitted that the balance sheet of the assessee trust would show that the assessee it is not carrying out any commercial activity. Since the assessee did not have the funds it was unable to use any money for charitable objects. However, when the funds are generated and available, the assessee would apply the funds for charitable purposes. He submitted that the funds advanced to PF Glass Foundation are in furtherance of the objects of the trust. 13. The Ld. Counsel for the assessee referring to the decision of the Hon’ble Chhattisgarh High Court in the case of CIT (E) vs. AIC@36Ince reported in (2025) 170 taxmann.com 496 (Chhattisgarh) submitted that the Hon’ble High Court in the said decision has held that where main activities of assessee-society were to implement State Policy, to establish technology business incubators in State and to raise funds for start-ups from venture capitalists, financial institutions and angel investors, activities of assessee-society were for charitable purpose for public at large and finding recorded by Commissioner that activities of assessee Society were in nature of trade, commerce or business and covered by proviso to section 2(15) was not correct finding, thus, Tribunal was justified in directing Commissioner to grant registration under section 12AA. 9 ITA No.2135/PUN/2024 14. Referring to the decision of the Indore Bench of the Tribunal in the case of Aruva Foundation vs. CIT (E) (2025) 170 taxmann.com 198 (Indore – Trib.), he submitted that the Tribunal in the said decision has held that even if any object or activity of a trust, out of various multiple objects and activities, has element of commerciality, that would result in denial of exemption under section 11/12 to that extent and in that particular previous year only, but CIT(E) in exercise of power under section 12AB, cannot deny registration to said trust. 15. Referring to the decision of the Chennai Bench of the Tribunal in the case of Thamizh Thai Seva Trust vs. DIT (E) (2015) 53 taxmann.com 215 (Chennai – Trib.), he submitted that the Tribunal in the said decision has held that where assessee-trust contemplates to help rural poor women to set up milk societies and factories for giving fruitful employment to such rural women-folk, carrying on of economic activities for generating income for poor people in villages could not be treated as activities in nature of trade, commerce or business as contemplated in section 2(15). 16. Referring to the decision of the Jaipur Bench of the Tribunal in the case of Gear Training and Research Foundation vs. CIT (E) (2022) 134 taxmann.com 89 (Jaipur – Trib.), he submitted that the Tribunal in the said decision has held that where assessee-company was established with main object to develop training and research centre to facilitate skill development to entire chain of work force engaged at various levels in garment and textile industry, since said object was in field of general public utility as per section 2(15) and it was further manifested 10 ITA No.2135/PUN/2024 through specific clause in assessee's MoA that objects of trust were not to be carried out on any commercial basis but to promote garment industry in general, assessee was to be allowed registration under section 12AA. 17. The Ld. DR on the other hand heavily relied on the order of the Ld. CIE(E). 18. We have heard the rival arguments made by both the sides, perused the order of the Ld. CIT(E) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee trust in the instant case was created in the year 1905. Although the copy of the registration u/s 12A of the Act granted for the first time is not available on record but it is a matter of fact that for assessment year 2008-09 the Assessing Officer in the order passed u/s 143(3) of the Act has mentioned that the assessee trust is registered u/s 12A of the Act with the income tax department which reads as under: “The assessee trust duly registered under the Societies Registration Act, 1860 & under the Bombay Public Trust Act, 1950 as well as u/s 12A with the Income Tax Dept. On verification and after discussion with the A R of the assessee trust, the Total Income is assessed as under:- Total Income Rs.Nil” 19. Similarly, there is no dispute to the fact that the assessee trust was granted registration u/s 12A of the Act by the Ld. CIT(E) vide order dated 24.09.2021 as per Form No.10AC, copy of which is placed in the paper book. We find when the assessee applied for final approval vide application dated 01.02.2024, the Ld. CIT(E) rejected the claim of the assessee and also cancelled the provisional registration granted earlier u/s 12AB on 24.09.2021 on the ground that the 11 ITA No.2135/PUN/2024 activities of the assessee are predominantly commercial in nature and it had failed to satisfy the genuineness and charitable nature of its activities. According to the Ld. CIT(E) the trust was set up for manufacturing toughen glass which activity is clearly commercial in nature. Further, he has also made an observation that the assessee had created educational fund but no evidences were furnished for the utilization of the same. It is the submission of the Ld. Counsel for the assessee that the trust was running glass manufacturing factory since 1908 which went into losses, for which the factory was shut down in the year 2007 and subsequently the trust had rented out its factory shed and was earning meager income and in most of the years there was deficit as per the income expenditure account. Since the assessee was having deficit in most of the years it did not have the funds for incurring expenditure on educational and social welfare objects. Due to lack of adequate funds the assessee could not utilize any money for charitable objects. It is also his submission that after the factory was shut down in the year 2007 the assessee has advanced funds to PF Glass Foundation which is a section 8 Company which has undertaken manufacture of toughened glass and that the funds advanced to PF Glass Foundation are in furtherance of the objects of the trust. 20. We find some force in the above arguments of the Ld. Counsel for the assessee. It is an admitted fact that the trust was granted registration earlier and the objects have never been held to be non-charitable in nature and there is no change in the objects of the trust. Further, a perusal of the Balance Sheet of the assessee trust would show that the assessee trust is not carrying out any commercial activity 12 ITA No.2135/PUN/2024 except getting rental income and meager bank interest. Getting rental income from a property held under trust in our opinion cannot be said to be of commercial activity. Further, when the assessee trust is not having sufficient liquidity, therefore, the assessee trust has not utilized or spent any fund towards education against the grant of Rs.11.45 lakhs that was allocated to facilitate education for poor and deprived children. Once nothing has been spent, giving the names of the beneficiaries does not arise. Therefore, when the assessee applied for final approval for registration of the trust, the Ld. CIT(E) in our opinion should not have rejected the same. In our opinion, at the time of granting registration u/s 12A of the Act, the Ld. CIT(E) has to consider the objects of the trust. In our opinion, the provisions of section 12AB of the Act do not empower the Ld. CIT(E) to assess the objects vis-à-vis the books of account of the trust. 21. We find the Hon’ble High Court of Chhattisgarh in the case of CIT (E) vs. AIC@36Ince (2025) 170 taxmann.com 496 (Chhattisgarh) has held that where main activities of assessee-society were to implement State Policy, to establish technology business incubators in State and to raise funds for start-ups from venture capitalists, financial institutions and angel investors, activities of assessee- society were for charitable purpose for public at large and finding recorded by Commissioner that activities of assessee Society were in nature of trade, commerce or business and covered by proviso to section 2(15) was not correct finding, thus, Tribunal was justified in directing Commissioner to grant registration under section 12AA. The relevant observations of the Hon’ble High Court read as under: 13 ITA No.2135/PUN/2024 “5. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the material available on record minutely and thoroughly as well. 6. Section 12AA(1)(6)(i) of the IT Act states as under: - \"12AA. Procedure for registration (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub- section (1) of section 12A, shall- (a) xxx xxx xxx (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, he- (i) shall pass an order in writing registering the trust or institution; (ii) xxx xxx xxx and a copy of such order shall be sent to the applicant:\" 7. A careful perusal of the aforesaid provision would show that the Principal Commissioner or the Commissioner has to satisfy himself about the objects of the trust or institution and the genuineness of its activities as required under sub- clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, and has to pass an order in writing registering the trust or institution and a copy of the order so passed will be sent to the applicant. 8. In the matter of Commissioner of Income Tax v. Chhattisgarh Urology Society, a coordinate Bench of this Court has considered the issue and held that the said provision nowhere empowers the Commissioner of Income Tax to assess the objects vis-a-vis the books of accounts and even otherwise, it is not to be seen at this stage as to whether the fulfillment of the charitable trust would eventually benefit the members of the society, and observed in paragraphs 10, 11, 12 and 13 as under: - \"10. The provision contained under Section 12A nowhere empowers the CIT to assess the objects vis-a-vis the books of accounts. Even otherwise, it is not to be seen at this stage as to whether the falfillment of the charitable trust would eventually benefit the members of the society. If the constituent of the trust engage in some genuine charitable activity which may benefit them in some other aspect of their personality which may include their vocation in life, it would not affect the genuineness of the objects of the trust. A person does not engage in charity for not doing anything in the other walks of life. A charity for one particular object is not for destroying the career for an individual which he is otherwise entitled to profess. If this ground is considered to be affecting the genuineness of the trust, people successful in different walks of life would never engage in charitable activity. 14 ITA No.2135/PUN/2024 11. In the matters of Commissioner of Income Tax v. Vijay Vargiya Vani Charitable Trust (2014) 271 CTR 0698 (Raj) and Fifth Generation Education v. Commissioner Income Tax [1991] 54 Taxman 237/185 ITR 634 (Allahabad) All, it is held that at the stage of Section 12A, the Commissioner is not to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of Section 12A read with Rule 17A and whether Form No.10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At this Stage, it is not proper to examine the application of income. 12. In the case at hand, the order passed by the CIT does not say in definite terms, that the objects of the society are not charitable in nature. Merely because the trust consists of Urologist Doctors and the charitable activity may mutually benefit those members, the object itself would not cease to be charitable in nature. 13. For the foregoing, we are satisfied that the Appellate Tribunal has rightly interfered with the order passed by the CIT. No substantial question of law arises in this appeal for determination in view of the plain language of Section 12A of the Act, 1961. The appeal being sans substance, it deserves to be and is hereby dismissed.\" 9. A careful perusal of the order impugned would show that the learned ITAT has clearly recorded a finding in paragraph 12 that the activity of respondent / assessee Society is charitable in nature, and recorded the following finding: - \"12. On careful consideration of the material placed before us by the assessee, we are of the considered view that the reasons placed by CIT(E) while rejecting approval u/s. 12AA of the Act are not sufficient to deny the recognition considering the facts on record. The assessee is Special Purpose Vehicle (SPV) and runs from the grants and support of the statement government. Except the points observed by him on all the other sphere the assessee trust is fulfilling all the conditions for registration under section 12AA of the Act. The reasons based on which the recognition denied are not in accordance with the law when this special purpose vehicle created in the name of the society and funded it by way of grant to develop and improve the economic activities by the state government and it helps start-up entrepreneurship. This is an activity of charitable in nature merely the trust activity has scope outside India is and memorandum of the assessee trust does not include the investment and dissolution clause and utilization of fund, when this trust is promoted by the state Government how it can be termed as commercial in nature. The observation of Id. CIT(E) considering the object for which the society is created is not tenable while granting the registration. In our considered view the society fulfill all the condition to grant the registration and in our view the reasons presented while taking the decision Id. CIT(E) is not in accordance with the law and the assessee should be considered for registration u/s. 12AA of the Act. Accordingly, the grounds of appeal raised by the assessee is allowed.\" 15 ITA No.2135/PUN/2024 10. Reverting to the facts of the present case in light of the order passed by this Court in Chhattisgarh Urology Society's case (supra) and in view of the finding of the learned ITAT, it is quite vivid that the activities of the assessee Society are for charitable purpose for public at large and in that view of the matter, the learned ITAT is absolutely justified in directing the CIT(E) to grant registration under Section 12AA of the IT Act by setting aside the order of the CIT(E), as such, the order impugned passed by the ITAT is in accordance with law. Accordingly, the finding recorded by the CIT(E) that the activities of the respondent assessee Society is in the nature of trade, commerce or business and covered by proviso to Section 2(15) of the IT Act was not the correct finding. The substantial question of law is answered in favour of the assessee and against the Revenue. Consequently, the tax appeal stands dismissed leaving the parties to bear their own cost(s).” 22. We find the Indore Bench of the Tribunal in the case of Aruva Foundation vs. CIT (E) (2025) 170 taxmann.com 198 (Indore – Trib.) has held that even if any object or activity of a trust, out of various multiple objects and activities, has element of commerciality, that would result in denial of exemption under section 11/12 to that extent and in that particular previous year only, but CIT(E) in exercise of power under section 12AB, cannot deny registration to said trust. The relevant observations of the Tribunal read as under: “7. We have considered rival contentions of both sides and perused the impugned order as well as the material held on record to which our attention has been drawn. Admittedly, the CIT(E) has analysed object No. 2 & 3 of assessee and observed “The above referred objects clearly show that the intention of the assessee is to carry out various commercial activities and also to engage in trading of various products as mentioned in the objects of the assessee”. On this limited basis, the CIT(E) has denied registration to assessee. Here, we find a strong merit in the contention raised by Ld. AR that proviso to section 2(15) of the Act defining „charitable purpose‟ itself allows commerciality in the activities of assessee but upto a ceiling limit of 20%. Further, section 11(4A) of the Act grants exemption to commercial or business activity on fulfillment of certain requirements. It is also important to note that the section 13(8) also provides that the exemption u/s 11/12 shall be denied in that previous year only in which the proviso to section 2(15) is violated. Therefore, these provisions of law clearly show that even if any object or activity of assessee, out of various multiple objects and activities, has element of commerciality, that would result in denial of exemption u/s 11/12 to that extent and in that particular previous year only but the CIT(E) in exercise of power u/s 12AB, cannot deny registration to assessee. The decisions in East India Industries (Madras) Pvt. Ltd. Vs. CIT (1967) 65 ITR 611 (SC) and Yogiraj Charity Trust Vs. CIT (1976) 103 ITR 777 (SC) relied by Ld. CIT(E) are not related to grant of registration but are for computation of total 16 ITA No.2135/PUN/2024 income by Assessing Authority. In present case, we are concerned with grant of registration by CIT(E), therefore those decisions are not relevant. It also remains a fact, as shown by Ld. AR with reference to the documents in Paper-Book, that the assessee has done only charitable activities till now and not undertaken any activity contemplated by object No. 2 & 3. Therefore, as and when the activity of Object No. 2 & 3 is actually undertaken by assessee in future, it would be a prerogative of Assessing Authority in that particular year, to ascertain the quantum of exemption u/s 11/12 available to assessee. Being so, we are inclined to hold that the CIT(E) is not justified in denying registration to assessee on the footing that by means of object No. 2 & 3, the assessee had intention to carry out commercial activity. Consequently, we direct the CIT(E) to grant registration u/s 12AB to assessee as applied. The assessee succeeds in this appeal.” 23. We find the Jaipur Bench of the Tribunal in the case of Gear Training and Research Foundation vs. CIT (E) (2022) 134 taxmann.com 89 (Jaipur – Trib.) has held that where assessee-company was established with main object to develop training and research centre to facilitate skill development to entire chain of work force engaged at various levels in garment and textile industry, since said object was in field of general public utility as per section 2(15) and it was further manifested through specific clause in assessee's MoA that objects of trust were not to be carried out on any commercial basis but to promote garment industry in general, assessee was to be allowed registration under section 12AA. 24. Since in the instant case the objects of the assessee trust have not been held to be non-charitable in nature and since a perusal of the Balance Sheet of the assessee trust shows that the assessee is not carrying out any commercial activity and since due to insufficient funds available at its disposal, the assessee was not able to utilize the funds allocated to facilitate education of the poor and deprived children and considering the fact that the funds advanced to PF Glass Foundation are in furtherance of the objects of the trust, therefore, in view of our above 17 ITA No.2135/PUN/2024 discussion and following the judicial precedents cited (supra), we are of the considered opinion that the Ld. CIT(E) is not justified in rejecting the application for grant of registration u/s 12A and cancelling the provisional registration granted earlier u/s 12AB. We, therefore, set aside the order of the Ld. CIT(E) and direct him to grant registration u/s 12A/12AB to the assessee trust. The grounds raised by the assessee are accordingly allowed. 25. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 30th April, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 30th April, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 18 ITA No.2135/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on 28.04.2025 Sr. PS/PS 2 Draft placed before author 28.04.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "