RITHWIK FOUNDATION FOR PERFORMING ARTS ,MUMBAI V. THE COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

ITA 4527/MUM/2025

AI Insights

The case revolves around the Rithwik Foundation for Performing Arts, a non-profit organization, which sought registration under section 80G(5) of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemptions) initially rejected the application, citing concerns that the foundation's objects allowed for expenditures outside India, potentially violating section 11 of the Act. The Tribunal examined whether the Commissioner's interpretation was correct and whether the foundation's activities and objects indeed suggested an intention to apply income outside India. After detailed consideration, the Tribunal concluded that the foundation's primary activities were confined to India and that any incidental expenses outside India did not constitute a violation of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791009 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 16-07-2025
• Other Referred Cases: DDIT(E) v. The Associated Chambers of Commerce and Industry of India, M. K. Nambyar SAARC Law Charitable Trust v. Union of India, Dedhia Music Foundation v. CIT(E), N. N. Desai Charitable Trust, Orpat Charitable Trust v. CIT, Sila for Change Foundation v. CIT(E), Hemlata Charities v. CIT(E)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMA SHANKAR PRASAD
• Assessee Lawyers: TARANG MEHTA
• Keywords: Set aside; Opportunity of being heard; Charitable institution; Cancellation of registration
• Section: 11; 12AA; 12A; 12; 80G

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL“D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4527/MUM/2025 (A.Y. - N.A.) Rithwik Foundation for Performing Arts Plot No. 17, S.No. 77/2, Behind Ved Bhavan, Kothrud, Pune– 411038, Maharashtra Erstwhile Registered address-310, Floor-3, Plot 221, Maker Chamber V, Jamnalal Bajaj Marg, Nariman Point, Mumbai 400021 v/s. बनाम The Commissioner of Income Tax (Exemptions) Room No. 601, 6th Floor, MTNL Building, Peddar Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai – 400051, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAJCR5033J Appellant/अपीलार्थी .. Respondent/प्रतिवादी Appellant by : Mr. Tarang Mehta,AR Respondent by : Shri Umashankar Prasad,(CIT-DR) Date of Hearing 16.09.2025 Date of Pronouncement 10.11.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Exemptions), Mumbai [hereinafter referred to as “CIT(E)”] pertaining to order passed u/s. 80G of the Income-tax Act, 1961 [hereinafter referred to as “Act”]. Printed from counselvise.com P a g e | 2 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts 2. The grounds of appeal are as under: 1. The learned Commissioner of Income Tax (Exemption) [‘CIT(E)’] has erred in rejecting the application filed by the Appellant (in Form 10AB) for grant of approval under section 80G(5) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’]. 2. The learned CIT(E), based on various inferences and reasons as summarised in Annexure 8, has erred in holding that the Appellant intends to utilize funds/incur expenditure outside India and consequently, the Appellant violates the provisions of section 11 of the Act. 3. The learned CIT(E) has erred in passing the impugned order without granting effective opportunity of hearing to the Appellant. 3. Facts of the case are that the assessee company is registered as a Non-profit organization under section 8 of the Companies Act, 2013. The main objects of the assessee company are stated to be promotion western classical, semi classical music and classical dance in all formats and to carry on the social and economic development of musicians all over the country .The assessee was granted registration under section 12A of the Act on 17.02.2020. With the introduction of the new regime mandating re-registration of all charitable organizations, it duly applied for registration under section 12AB of the Act and the same was granted to it 31.08. 2021 is valid for the period A.Y. 2022-23 to A.Y. 2026-27. 4. According to the impugned order, the assessee company filed an application in Form no. 10AB seeking registration under section Printed from counselvise.com P a g e | 3 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts 80G(5) of the Act on 09.12.2024.The ld. CIT(E) denied the registration of the assessee company on the ground that the assessee company had certain objects in its memorandum, which enabled it to incur expenditure outside India and the same was stated to be in violation of section 11 of the Act. The referred two objects of memorandum of objects viz. i. clauses 3(b)(20) which empowers the assessee company to enter into arbitration in and outside India, and ii. clause 3(b)(27) which empowers the assessee company to enter into any arrangement with government or authority, Central, State, Municipal, local or otherwise. 5. Aggrieved, the present appeal has been filed challenging the denial of registration under section 80G(5) of the Act. Before us, the ld.AR has made detailed oral and written submissions contending that the object of the assessee nowhere suggests any intention to apply its income outside India. On the contrary, clause 4 of the memorandum of objects clearly states that the objects of the company extend to the whole of Indiawhichimplies that even if the assessee incurs any expenditure outside India, the charitable activity would be restricted in India by virtue of the said clause. In respect of the clause 3(b)(20) regarding arbitration in or any place outside India, it is submitted that merely because the assessee is empowered to refer arbitration matter outside Printed from counselvise.com P a g e | 4 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts India, for the purpose of settling any legal dispute, it cannot be inferred that the assessee intends to apply its income outside India. The assessee is engaged in charitable activities relating to art, music, and dance, where risks of copyright disputes and intellectual property rights infringements are always present. Thus, as a matter of prudence and in some sense a compulsion, the assessee has been empowered to refer dispute to arbitration. It is submitted that in a given case, reference to arbitration may not lead to expenditure outside India or at best, the expenditure can be classified as incidental expenditure outside India for the purpose achieving the main objectives of the assessee in India. In the present era of globalization, incidental expenses incurred outside India for protecting and furthering the primary charitable purposes in India cannot, in law and in practice, be treated as application of income outside India within the meaning of section 11 of the Act. In this regard, reliance is placed on the decision of the Delhi Bench of the Hon’ble Tribunal in the case of DDIT(E) v. The Associated Chambers of Commerce and Industry of India (ITA no. 6525/Mum/2013), wherein, it has been held that foreign travel expenditure incurred for the promotion of the trade and industry in India cannot be held to be violative of section 11 of the Act. Printed from counselvise.com P a g e | 5 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts 5.1 With regard to the Clause 3(b)(27), whereby, according to CIT(E), assessee may utilize funds outside India by entering into arrangements with governments outside India. It is submitted that the term ‘otherwise’ as used in the above clause cannot be stretched to such an extent as to interpret that the assessee intends to engage with any government or authority outside India or apply its funds outside India. The real intention behind the clause is simply to provide the assessee with a flexibility to engage with agencies or bodies which, while not expressly falling within the categories of Central, State, Municipal, or Local Government, nevertheless function as governmental or quasi- governmental authorities within India. 5.2 The ld.AR has further pleaded that the assessee has not incurred any expenditure outside India. The financial statements of the assessee clearly demonstrate that all income has been applied in India towards its charitable objects. Therefore, the apprehension of the CIT(E) is purely hypothetical and not supported by any actual conduct of the assessee. Moreover,incurring of merely incidental expenditure outside Indiadoes not violate provision of section 11(1) of the Act and what is intended to beprohibited is carrying on of charitable activity outside India. In the present case, admittedly, the charitable activities are carried out in India. Printed from counselvise.com P a g e | 6 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts 5.3 Without prejudice to the above and in the alternate, it is submitted that section 11 of the Act does not absolutely bar the assessee to incur any expenditure outside India. In this regard, reliance is placed on the decision of the Hon’ble Delhi High Court in the case of M. K. Nambyar SAARC Law Charitable Trust v. Union of India (269 ITR 556) (PBP 73), wherein, it has been held that (i) for the purpose of registration under section 12A of the Act, section 11 is not a valid criteria to deny registration and (ii) even otherwise, section 11 allows the assessee to incur expenditure outside India after obtaining necessary approval from the Board. 6. The ld.CIT(DR) on the other hand, placed reliance on the impugned order claiming inter alia that in view of drastic changes brought about in the provisions relating to trust vide Finance Act 2022 and more specifically the concept of ‘specified violation’ under section 12AB (4) and (5) of the Act, the authority concerned by virtue of explanation (g), the CIT(E) is empowered not only to scrutinize the genuineness of activities but also to examine whether the very objects of the assessee are in consonance with provisions of the Act ie. section 11 of the Act. Thus, according to him utilization of funds outside India shall fall in the definition of ‘specified violation’. In this regard, he placed reliance on the order of Mumbai Bench of the Hon’ble Tribunal in the Printed from counselvise.com P a g e | 7 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts case of Sila for Change Foundation v. CIT(E) (ITA no. 4274- 75/Mum/2024 and Hemlata Charities v. CIT(E) inITA no. 6344/Mum/2024. 6.1 The ld.AR in the rejoinder, has contested the contentions of the ld.CIT(DR) stating that the provisions of section 12AB govern the registration of trusts and institutions for the purpose of claiming exemption under section 11 and 12 of the Act. In the present case, however, the assessee has not applied for registration under section 12AB, but applied for approval under section 80G(5) of the Act. The two provisions operate in distinct fields, and therefore, the conditions prescribed under section 80G(5) alone are relevant for consideration of the assessee’s present application. The assessee enjoys registration under section 12AB of the Act. The CIT(E) has not raised any objection nor initiated any proceedings for cancellation of such registration till date. This clearly implies that there is no specified violation as contemplated under section 12AB (4) and (5) of the Act. It is further submitted that the cited decision of Sila for Change Foundation (supra)is not applicable to the facts of the case as the main activity of the assessee was development services to another organisation in India and outside India. In the present case, the main activity of the assessee is confined to India only. It is only in a situation where some litigation is Printed from counselvise.com P a g e | 8 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts faced by the assessee, it has to be pursued. In the process, the cost may or may not be incurred outside India. Therefore, there is no specified violation. The assessee relies upon the order of Mumbai Bench of the Hon’ble Tribunal in the case of Dedhia Music Foundation v. CIT(E) (ITA nо. 743-744/Mum/2025 in whichthe Hon’ble Tribunal has considered the above issue specifically. It is also contended that the Hon’ble Gujarat High Court in the case of N. N. Desai Charitable Trust (246 ITR 452) (PBP 83) has held that the compliance to section 11 and 12 are not the subject-matter of examination while considering the application for registration under section 80G(5) of the Act in spite of the fact that section 80G(5)(i) of the Act talks about the eligibility of income of the institution under section 11 of the Act. The said decision (supra) has been subsequently followed by the Hon’ble Gujarat High Court in the case of Orpat Charitable Trust v. CIT (256 ITR 690). 7. We have carefully considered all relevant facts of the case as also rival contentions.Having gone through the contents of the order of the coordinate bench in Dedhia Music Foundation (supra), we find that in the impugned order as well the ld.CIT(E) rejected the application for registration u/s 12AB on similar object clause in existence in the application.Relevant parts of the order are extracted as under for the sake of clarity and brevity: Printed from counselvise.com P a g e | 9 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts “11. As is evident from the above, the section lists various activities which qualify as charitable purpose but there is no restriction to the scope of such activities within the geographical boundary of India. It is only section 11, as reproduced above, which places a geographical restriction allowing exemption only to incomes applied to charitable purposes in India. But even the said section does not completely rule out exemption to incomes applied outside India for charitable purposes, granting exemption to certain such applications, as mentioned in section 11(1)(c), subject to being approved by the Board. 12. As is evident from the above, in the scheme of the Act, incomes applied outside India for charitable purposes are not completely and categorically ruled out from being eligible for grant exemption. 13. The Ld. Pr. CIT's order ,in the present case, therefore denying registration to the applicant assessee merely for the reason that its objects included application of income outside India, we hold, is not in accordance with law. More particularly when, admittedly, this was not the sole and main object of the applicant assessee, but only its ancillary and incidental object. It is not the case therefore that there is to be no application of income within India at all as per the objects. In fact the main object of the applicant assessee involves carrying out charitable activities in India. In this factual situation, denying registration u/s 12AA of the Act, for the reason that its incidental object entailed application of income outside India, we find, would result in the assessee being denied exemption to income applied in India, which it would otherwise be entitled to under law. 14. Further as rightly pointed out by the Ld. Counsel for the assessee, the provisions of section 11(1)(c) of the Act, which the Ld.CIT(E) has relied upon for holding that only activities carried out in India will qualify as charitable for grant of registration, is only for the purpose of determining the income which qualifies for exemption u/s 11 of the Act. The said section comes into operation only once registration is granted u/s 12A of the Act and therefore cannot be relevant for the purposes of granting registration u/s 12A of the Act. The scheme of the Act is that all entities carrying out charitable activities, as defined in section 2(15) of the Act, qualify to be registered as charitable entities subject to satisfaction of the concerned officer vis-a-vis their objects and activities, but the exemption is provided/restricted only to the extent of income which is applied for charitable purpose in India. 15. The issue we find, is squarely covered in favour of the assessee by the decisions relied upon by the Ld. Counsel for the assessee before us. In the case of MK Nambyar SAARC Law Charitable Trust (supra), we find, the application for grant of registration was rejected on the ground that the applicant itself had admitted that the scholarship could be paid to members even outside India. The Hon'ble High Court held that the application of income outside India is not a relevant criteria for rejecting the application for grant of registration u/s 12AA of the Act and the officer has to only restrict himself to the satisfaction about the objects and genuineness of the activities of the trust while granting registration with no restriction on the activities being carried out inside or outside India. The relevant findings of the Hon'ble High Court is as under: 'The judgment of the court was delivered by B.C. Patel C.J. - M.K. Nambyar SAARC Law Charitable Trust has filed this petition against the order made by the Director of Income-tax (Exemptions) New Delhi, on February 24, 2004. The aforesaid trust submitted two applications in Form No. 10A for registration under section 12A and recognition under section 80G of the Income-tax Act, 1961 (hereinafter referred to as \"the Act\"). The application was rejected on the ground that the applicant itself has admitted that the scholarships can be paid to the members even outside India. It is in view of this admission that the activities will be extended outside India as per the objects laid down, it was held that the registration cannot be Printed from counselvise.com P a g e | 10 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts granted under section 12A of the Act and the approval of exemption under section 80G also cannot be granted. Section 11 of the Act refers to income from property held for charitable or religious purposes. The relevant provisions are reproduced hereunder: \"11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent, of the income from such property; . .. (b)****** (c )income derived from property held under trust-- ( i)created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii )for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India ; Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income; (d)****** 3. So far as the benefit of section 11(1)(a) is concerned, it can be extended only to the extent to which such income is applied to such purposes in India. However, if the income is applied to the purposes outside India, then clause (c) will be applicable and if the permission is granted by the Board either by general or special order then, benefit can be extended. Section 12AA prescribes the procedure for registration. Reading the section, it becomes clear that after the application is made, the officer has to call for documents or information from the Trust to satisfy himself about the genuineness of the activities of the Trust. He can make further enquiry as he may deem necessary. It is only after satisfying himself about the objects of the Trust and the genuineness of its activities that he has to pass an order in writing registering the Trust or institution. And if he is not satisfied, he can reject the same. This section does not refer to the activities in India or outside India. It refers to application of income for charitable or religious purposes in India as also with direction or order of the Board for application of income as aforesaid outside India. Reading the order dated 24-2-2004, it is very clear that there is non-application of mind. It was necessary for the Commissioner to examine the purpose for satisfying himself that the activities are genuine. It was open for him to make necessary enquiries in this behalf and to pass an order as per the procedure laid down under section 12AA of the said Act. So far as income which is applied outside India is concerned, is not a relevant criteria for rejecting the application. In absence of order under section 11(1)(a)( c), one cannot seek benefit for application of income for charitable or religious purposes, outside India. Therefore, the order dated 24-2-2004 made by the Director of Income-tax (Exemptions), Annexed at page 32 which is based on irrelevant criteria is quashed and set aside with a direction to consider the application strictly in accordance with law. It is made that even application under section 80G is required to be considered afresh. It is directed that the application shall be disposed of within a period of four weeks by the Commissioner. Printed from counselvise.com P a g e | 11 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts 16. The aforesaid decision of the Hon'ble Delhi High Court has been followed by the Coordinate Benches of the Tribunal in the case of National Informatics Centre Services Inc. (supra) ( [2017] 88 taxmann.com 878 (Delhi)) 17. In view of the above, the order passed by the Ld. CIT(E) denying registration u/s 12A of the Act is set aside and the Ld.CIT(E) is directed to grant registration as applied for by the assessee. 18. In the result, the appeal of the assessee is allowed.\" 6. We may examine whether the ratio of above said decision would also apply to the applications processed by Ld CIT(E) under new provisions of sec.12AB of the Act. Under the provisions of sec.11 to 13 of the Act, which are applicable to charitable trusts or institution, two authorities are involved, viz., (a) the Ld PCIT or CIT is empowered to grant or cancel registration u/s 12A, 12AA or 12AB as the case may be. (b) the assessing officer is the authority who assesses the total income of the charitable trust or institution for every assessment year. 7. We shall examine the provisions of sec.12AB of the Act. The authority to grant registration u/s 12AB is the Ld PCIT or CIT. Under sec, 12AB of the Act, the three steps have been prescribed for the process of registration or cancellation of charitable trusts or institution. (a) For new charitable trusts or institutions, provisional registration is granted u/s 12AB(1)(c) of the Act for a period of 3 years from the assessment year for which the registration is sought. (b) Permanent registration shall be granted u/s 12AB(1)(a)/12AB(1)(b) of the Act for a period of five years, when the charitable trusts or institutions apply for the same. (c) Where a provisional registration or permanent registration is granted u/s12AB(1) of the Act, the Ld PCIT/CIT is empowered u/s 12AB(4) of the Act to cancel the registration in accordance with that provisions. 8. As noticed earlier, the assessing officer is the authority who is empowered to determine the income of a charitable trust or institution and granting of exemption u/s 11 of the Act. As per sec.11(1), exemption u/s 11 is restricted \"to the extent to which such income is applied to charitable purposes in India\". Thus the recognition of geographical jurisdiction wherein the income was applied needs to be recognised or examined while computing total income of the charitable trust or institution. We also noticed that the income applied for non- charitable purposes or applied outside India will not be exempt u/s 11 of the Act, i.e., such income shall be taxable in India. 9. We shall compare the provisions of sec.12AA and sec. 12AB of the Act which prescribe the conditions for granting registration. (A) SECTION 12AA:- Printed from counselvise.com P a g e | 12 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts \"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)[call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about,-- (i)the genuineness of activities of the trust or institution; and (ii)the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects, and may also make such inquiries as he may deem necessary in this behalf; and] (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)shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant.\" (B) SECTION12AB 12AB. [Procedure for fresh registration.] [Ins. by the Act No. 38 of 2020, w.e.f. 1- 4-2021.] (1)The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,-- (a)where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b)where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of the said clause,-- (i)call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about-- (A)the genuineness of activities of the trust or institution; and (B)the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii)after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),- (A) pass an order in writing registering the trust or institution for a period of five years; or (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard; (c) where the application is made under sub-clause (vi) of the said clause, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the trust or institution. Printed from counselvise.com P a g e | 13 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts 9.1. We notice that the provisions of sec.12AA(3) and 12AA(4) of the Act describes the power of Ld CIT(E) to cancel the registration. Similarly, the provisions of sec.12AB(4) empowers the Ld CIT(E) to cancel the registration already granted either provisionally or permanently. It can be noticed that the provisions relating to cancellation of registration granted under sec.12AA and sec.12AB are identically worded under the respective provisions. Hence, in our view, the ratio of the decision rendered in the context of sec.12AA can be conveniently applied to the applications processed by Ld CIT(E) u/s 12AB of the Act. 10. However, it is noticed that the provisions of sec.12AB(4) is elaborate vis-a- vis sec.12AA(3) & (4). Even though, in the instant case, the Ld CIT(E) has not specifically invoked the provisions of sec.12AB(4) of the Act, we may examine the applicability of the said provision to the facts of the present case. The provisions of sec.12AB(4) reads as under:- \"(4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,-- (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or (c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall-- (i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.--For the purposes of this sub-section, the following shall mean \"specified violation\",-- (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public; or Printed from counselvise.com P a g e | 14 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts (d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) any activity being carried out by the trust or institution-- (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality.\" 11. It can be noticed from the provisions of sec.12AB(4) of the Act, the registration already granted either provisionally or permanently may be cancelled by Ld CIT(E), if he is satisfied that one or more specified violations have taken place. If he is not satisfied so, he may refuse to cancel the registration granted u/s 12AB of the Act. The expression „specified violation‟ is defined in the Explanation. It can be noticed that the said definition is not an \"inclusive definition\", since it starts the expression \"For the purposes of this sub-section, the following shall mean \"specified violation\"\". Hence, it is an exhaustive definition. Consequently, if there is any violation other than those stated in the Explanation, then the Ld CIT(E) shall not get power to cancel the registration. 12. In the present case, according to Ld CIT(E), the objects clause enables the assessee to apply its income outside India. According to Ld CIT(E), the same is not permitted under the Act and hence the registration provisionally granted to the assessee may be cancelled. We shall now examine as to whether the existence of objects for carrying out activities outside India or actual application of income outside India in accordance with its objects, would fall under any of the categories of \"specified violations\" listed out in the Explanation to sec. 12AB(4) of the Act or not. (i) Clause (a) would be attracted only if any income derived from the property held for charitable purpose is applied other than for the objects of the charitable trust or institution. Hence, so long as any income is applied for the objects of the charitable trust or institution, the clause (a) would not get attracted. Thus, if the objects clause of a charitable Trust or Institution permits carrying on objects outside India and if any income is applied for such objects, then it cannot be considered as application of income \"for objects other than the objects of the charitable trust or institution\" falling within the meaning of clause (a). Consequently, the clause (a) would not be attracted. (ii) Clause (b) would be attracted only if any business or profession is carried on and there is violation as mentioned therein. This clause will not be attracted for application of income for permitted objects outside India. (iii) Clause (c) would be attracted when income of trust held for private religious purposes is applied for those purposes, which does not ensure for the benefit of public. The assessee herein is not a trust held for private religious purposes and hence this clause will not apply to the assessee herein. Printed from counselvise.com P a g e | 15 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts (iv) Clause (d) would be attracted when income of the trust is applied for particular religious community or caste. This clause will also not apply to the assessee herein. (v) Clause (e) would be attracted when any activity being carried out by the trust or institution- (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered. This clause would be attracted when the activities of the charitable trust or institution is not genuine or in violation of any of the conditions subject to which the registration u/s 12AB was granted. In the instant case, the Ld CIT(E) has stated the activities claimed to have been carried on is not supported by the expenses incurred. According to Ld A.R, the above said observations are against the facts available on record. Hence the above said observations of Ld CIT(E) is dealt with separately infra. (vi) Clause (f) would be attracted when there is failure to comply with the requirements of \"any other law\". Under this clause \"any other law\" would mean any law other than Income tax Act. This meaning can be understood from the Sub-clause (B) of clause (i) of sec.12AB(1)(b) of the Act, which reads as under:- \"(B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects\". The Ld CIT(E) has to ensure that the charitable trust or institution has complied with the requirement of „any other law for the time being in force‟, as are material for the purpose of achieving its objects. Here, it is pertinent to note that the verification by Ld CIT(E) should be restricted to compliance of those laws as are material for the purpose of achieving its objects. 12.1. It may be noticed that clauses (a),(c),(d) and (e) would be attracted only when there is application of income as mentioned in those clauses. Hence \"actual application of income\" is the condition to be satisfied for attracting the above said four clauses. 13. In our view, the provisions of sec.11(1) would not fall under the category of \"any other law\", since it is only a computation provision. The provisions of sec.11(1) do not require the charitable trust or institution to comply with any requirements, which are essential to achieve the objects of the trust. Further provisions of sec.11(1) do not state that the application of income derived from property held under trust for activities carried outside India results in violation of any law. Sec.11 only states that the exemption under that section is restricted to income applied for charitable purposes in India, i.e., it does not permit exemption of income applied outside India. Hence income, if any, applied for objects outside India cannot be construed to be violation of ‘any other law’ falling within the meaning of clause (f) of Explanation to sec.12AB(4) of the Act. 14. The foregoing discussions would show that the application of income of a charitable trust or institution outside India for carrying out its objects will not fall under any of the categories of \"specified violation\" as mentioned in the Explanation to sec.12AB(4) of the Act. Hence, the decision rendered by Hon’ble Delhi High Court in the case of M.K. Nambyar Saarf Law Charitable Trust (supra) will apply to the provisions of sec.12AB of the Act also, since the provisions of sec.12AB also do not refer to the activities carried in India or outside India. 15. In view of the foregoing discussions, it can be concluded that existence of any object for carrying out any activity outside India will not enable the Ld CIT(E) to deny registration u/s Printed from counselvise.com P a g e | 16 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts 12AB of the Act. As observed earlier, such kind of application of income outside India (unless it is permitted by the CBDT) will not be exempted u/s 11 of the Act. 16. Hence, the first reasoning given by Ld CIT(E) is liable to be quashed. On merits of the case, we are unable to agree with the interpretation given by the Ld CIT(E) to the objects clause of the assessee, which reads as under:- \"Promote Indian heritage art such as Indian Classical music, Organize regular concerts and performances by renowned and emerging Indian classical musicians, Establish or support training school or institute to teach Indian classical music to students of all ages and skill levels, to Indian classical musicians to cover the costs of performance, travel, and recording, Organize festivals and conferences that bring together Indian classical musicians and scholars from around the world.\" A careful perusal of the above cited object clause talks about the organizing festivals and conferences that bring together Indian Classical musicians and scholars from around the world, i.e., it talks about mobilizing the Indian classical musicians and scholars, wherever they are located. It nowhere states that the income of the charitable trust or institution shall be applied outside India. Even if it is applied outside India, then the assessee, subject to sec. 11(c) of the Act, would not get exemption of the income so applied u/s 11 of the Act. Hence the Ld CIT(E) was not justified in rejecting the application of the on apprehension entertained by him. 18. Accordingly, we set aside the impugned order passed by Ld CIT(E) rejecting the application filed by the assessee seeking permanent registration u/s 12AB of the Act and restore all the issues to his file with the direction to process the application of the assessee again afresh in the light of discussions made supra..” 8. We find that the above decision is squarely applicable to the facts of the case as here also the ld.CIT(E) has rejected the application for registration of the Act, solely on account of intended activity outside the country. In so far as the reliance placed by the ld.DR on the coordinate bench in Sila for Change Foundation(supra) is concerned, we find that the decision is distinguishable in the sense that as per the Trust deed one of the object clauses categorically stated “To provide support and other such developmental services to other organisations in India and outside India in the social sector” which clearly showed its intentions to carry on activities outside the country which is not the case Printed from counselvise.com P a g e | 17 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts here. Besides, the applicant therein was amenable to modifying the Trust deed on the issue of activities outside the country for which the tribunal accorded liberty in this regard. 8.1 Moreover, as rightly pointed out by the ld.AR the ld.CIT has already allowed registration u/s 12AB of the Act, finding no violation in this regard. In our considered opinion, once the ld.CIT(E) is satisfied with the objects of the trust and has granted registration u/s 12AB of the Act, and the objects are the same, we do not find any reason as to why the registration u/s 80G of the Act should not be granted.A careful perusal of the object clause clearly demonstratesthat the income of the company shall not be applied outside India. Even if it is applied outside India, then the assessee, subject to sec. 11(c) of the Act, would not get exemption of the income so applied u/s 11 of the Act. 9. Respectfully following the above decision, we set aside the order passed by the ld.CIT(E) and direct him to allow registration u/s 80G of the Act to the assessee company. As a result, the grounds raised by it are allowed. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 10/11/2025. Printed from counselvise.com P a g e | 18 ITA No. 4527/Mum/2025 Rithwik Foundation for performing Arts Sd/- Sd/- SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai ददनाुंक /Date 10.11.2025 Lubhna Shaikh / Steno आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयिकरण/ ITAT, Bench, Mumbai. Printed from counselvise.com "