SHRI SHITALNATH FOUNDATION,MUMBAI V. CIT (EXEMPTION) MUMBAI, MAHARASHTRA

ITA 274/MUM/2025

AI Insights

The case involves the Shri Shitalnath Foundation, a charitable religious trust, which appealed against the order of the CIT (Exemption) rejecting its application for permanent registration under section 12A of the Income-tax Act, 1961. The rejection was based on the trust's intention to utilize funds outside India, which was seen as a violation of section 11 of the Act. The trust argued that it had confined all its activities to India and was in the process of amending the trust deed to remove the contentious clause. The Tribunal noted the trust's proactive steps to amend the deed and decided to remand the case for a fresh evaluation after the submission of the amended deed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712191 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2024-2025
• Other Referred Cases: Dedhia Music Foundation, ITA Nos. 743 & 744/Mum/2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL CHOUDHARY
• Assessee Lawyers: BHUPENDRA SHAH
• Keywords: Set aside; Opportunity of being heard; Competent authority
• Section: 11; 12AA; 12A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.274/Mum/2025 (Assessment Year: 2024-25) Shri Shitalnath Foundation D-Wing, Shubh Kamna, Dhankar Wadi, Mahavir Nagar, Kandivali West, Mumbai-400 067 PAN: AASTS5903Q vs CIT (EXEMPTION), MUMBAI Room No.601, 6th Floor, Cumballa Hill, MTNL TE Building, Peddar Road, Mumbai-400 026 APPELLANT RESPONDENT Assessee by : Shri Bhupendra Shah Respondent by : Shri Swapnil Choudhary – Sr Ar. Date of hearing : 21/07/2025 Date of pronouncement : /07/2025 O R D E R Per Anikesh Banerjee (JM): Instant appeal of the assesse was filed against the order of the Learned Commissioner of Income-tax (Exemption), Mumbai [in short, ‘Ld.CIT(E)] passed under section 12AA of the Income-tax Act, 1961 (in short, ‘the Act’), date of order 30/12/2024. Printed from counselvise.com 2 ITA 274/Mum /2025 Shri Shitalnath Foundation 2. The assesse is a charitable religious Trust filed an application in Form 10AB U/s 12A(1)(ac)(ii) seeking registration 12AB of the Act. The assessee-trust is formed on 03/08/2016 and provisionally registered U/s 12Aw.e.ef. 31/05/2021. The Ld.CIT(E) has rejected the application on the ground that the assessee has taken the clause in the trust deed related to the foreign expenses. For violation of section 11 of the Act, the registration under section 12AA was duly rejected. The relevant paragraph 3.2 of the impugned order is extracted below:- “3.2 In response, the applicant made online submission on 27.12.2024. The applicant's reply with respect to violation of section 11 of the Act is reproduced in summarized as below: \"Both the above ancillary objects intension is to spread awareness on the objects of the trust from India only and also to interact with any government and non-government agencies also from India only as the clause no. 4 of the trust deed specifically states about the area of Operation of the Trusts as All objects of the trust and its activities will be confined to India. Hence the trust can not operate from outside India and can not apply funds outside India.\" Applicant's reply is neither satisfactory nor conclusive. The applicant has stated that the clause no. 4 of the trust specifies that All objects of the trust and its activities will be confined to India. However, the words in the object, like \"Interact with national/international governments and non-government agencies\" clearly conveys that the applicant intends to utilise the funds outside India. Such objects leave room for any potential future endeavour that may be undertaken by the applicant trust which would require expenditure outside India. The applicant trust ought to have amended the clauses of the objects mentioned above which are in violation of the Act as discussed above. however, the applicant has not considered it. The applicant has not presented/submitted any documentary evidence/proof of passing the resolution regarding amendment in trust deed nor has it provided any proof that it has initiated the process for amendment in trust deed/MoA before the competent authority.” Printed from counselvise.com 3 ITA 274/Mum /2025 Shri Shitalnath Foundation 3. The Ld. AR submitted that the alleged contravention of the provisions of section 11 of the Act cannot be a ground for rejection of the application for permanent registration under section 12A of the Act. It was further submitted that the assessee has filed an appeal before this Bench and has initiated steps to amend the specific clause in the trust deed which formed the basis of objection by the Ld. CIT(E). An affidavit in this regard, executed by the trustee, Shri Rajesh M. Parekh, on 07/05/2025 and duly notarised on 09/05/2025, is placed on record at pages 1 and 2 of the paper book. It is further submitted that an application for amendment of the said clause has already been filed before the Hon’ble Assistant Charity Commissioner, Greater Mumbai Region, Worli, Mumbai. The Ld. AR placed reliance on the decision of the Co-ordinate Bench of the ITAT, Mumbai Bench “D”, in the case of Dedhia Music Foundation, ITA Nos. 743 & 744/Mum/2025, order dated 02/04/2025, wherein it was held that violation of section 11 of the Act cannot be a basis for denial of registration under section 12A. 4. The Ld. DR argued and relied on order of the Ld. CIT(E). But he had not made any objection against the documents filed by the Ld. AR. 5. We heard the rival submission and consider the documents available in record. On perusal of the material available on record, we note that the assessee has already undertaken steps to remove the impugned clause from the trust deed. In the interest of justice, we are of the considered view that the assessee deserves an opportunity to present the amended clause before the Ld. CIT(E), which formed the basis of rejection of its application. Accordingly, we set aside the impugned order and remand the matter to the file of the Ld. CIT(E) for de novo adjudication, Printed from counselvise.com 4 ITA 274/Mum /2025 Shri Shitalnath Foundation after granting the assessee an opportunity to submit the amended trust deed. Needless to mention, the assessee shall be afforded a reasonable opportunity of being heard before the final order is passed. In the result, the appeal filed by the assessee stands allowed. 6. In the result, the appeal of the assessee bearing ITA No.274/Mum/2025 is allowed for statistical purpose. Order pronounced in the open court on 24th day of July 2025. Sd/- sd/- (NARENDRA KUMAR BILLAIYA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, िदनांक/Dated: 24/07/2025 Pavanan Copy of the Order forwarded to: 1. अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकर आयु\u0014 CIT 4. िवभागीय ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 5. गाड फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai Printed from counselvise.com "