Dedhia Music Foundation v. CIT(E)

Case snapshot

Sections / provisions: 12AB

Questions before the Court / Tribunal

• Charitable registration where objects include broad enabling clauses: The reported order concerns renewal/fresh registration of an organisation promoting Indian classical music and says registration cannot be refused merely because objects contain broad enabling clauses if the actual charitable character is otherwise established.

Material facts and background

The assessee was initially granted provisional registration u/s. 12AB as well as u/s 80G of the Act on 29-01-2024 from AYs. 2024-25 to 2026-27. Thereafter, the assessee filed prescribed applications seeking permanent registration u/s.12AB and 80G of the Act. Both the applications filed by the assessee were rejected by the Ld. CIT(E). Hence, the assessee has filed these appeals before the Tribunal. 4.

performance, travel and recording, Organize festivals and conferences that bring together Indian Classical musicians and scholars from around the world.” means the assessee intends to utilise the funds outside India while bringing musicians and scholars from outside India to participate in conferences and festivals organized by the assessee. Such objects leave room for any potential future endeavour may be undertaken by the assessee trust which would require expenditure outside India. Further, the assessee 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. Additionally, proof of activities submitted by the assessee are not justified by the proof of expenses submitted by it. The assessee has submitted expenses of advertisement in newspaper which do not reflect that the activities undertaken by the assessee are charitable in nature. Further, the assessee has submitted any documentary evidence which establishes that the music concerts organized by the assessee are a work of charity or in the...

Appellant / assessee submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

extract below the relevant portion of the decision rendered by the coordinate bench in the above cited case:“6. We have heard both the parties. The issue before us relates to grant of registration u/s 12AA of the Act, for the purposes of claiming exemption u/s 11 & 12 of the Act of incomes applied for charitable purposes. 7. The applicant assessee in the present case has been denied registration for the reason that its incidental and ancillary objects included carrying out the activities outside the India. The Ld.CIT(E) has held that for the aforesaid reason the assessee cannot be said to be indulging in charitable activities. And for holding so he has referred to the provisions of section 11(1)(c) of the Act. 8. The primary argument of the assessee against the order of the Ld.CIT(E) is that for the purposes of granting registration only the conditions mentioned in section 12AA need to be fulfilled and the provisions of section 11(1)(c) are not relevant for the said purpose, being applicable only while determining the income entitled to exemption u/s 11 of the Act. That in any case carrying out charitable activities outside India was not the sole or main object but only...

"S. 2(15) (15) Charitable purpose includes relief of the poor, education, [yoga,] medical relief, [preservation of environment (including water-sheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility. [Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, of any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use of application, or retention, of the income from such activity, unless— (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;]" 11. As is evident from the above, the section lists...

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...

(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...

Operative decision and relief

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. 17. The second reasoning given by the assessee is that the expenses incurred by the assessee do not prove the activities carried on by it. In this regard, the Ld A.R submitted that the assessee has filed required documents before Ld CIT(E). He further submitted that the assessee has also furnished additional evidences relating to the activities carried on by the assessee.

evidences may be admitted and the assessee may be provided with an opportunity to present all the details before Ld CIT(E) to prove the activities carried on by it. 17.1. We find merit in the prayer of the assessee. We notice that the observations made by Ld CIT(E) with regard to activities is general in nature, i.e., the Ld CIT(E) did not state the deficiencies noticed by him in the documents furnished by the assessee. Further, the assessee has furnished additional evidences in order to satisfy Ld CIT(E) with regard to the genuineness of activities. Accordingly, in the interest of natural justice, we admit the additional evidences furnished by the assessee. 18. Accordingly, we set aside the impugned order passed by Ld CIT(E) rejecting the application filed by the assessee seeking

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.

Authorities and precedents appearing in the judgment

• Sarbat The Bhala Gurmat Mission Charitable Trust v. CIT(E)

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Charitable registration where objects include broad enabling clauses. The operative result is classified as Quashed Or Set Aside. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Charitable registration where objects include broad enabling clauses. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Keep registration, audit-report, Form 10/10B/10BB and filing timestamps together; many exemption disputes are procedural and depend on when the form existed versus when it was uploaded.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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