ITAT Nagpur Grants Relief to Charitable Trusts: Wrong Clause in Form 10AB Cannot Defeat Registration Under Section 12AB
In an important and highly practical ruling that may provide major relief to hundreds of charitable trusts facing rejection of registration applications on technical grounds, the Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) has held that merely quoting a wrong provision or filing application under an incorrect clause in Form 10AB cannot be a ground to deny registration under section 12AB of the Income Tax Act.
The ruling assumes significant importance because numerous appeals involving similar technical objections are presently pending before various benches of the ITAT as well as before Commissioners (Exemption) across the country. In many cases, trusts are facing rejection not because their activities are non-genuine, but merely because the online application was filed under an allegedly incorrect clause of section 12A(1)(ac).
The decision was rendered in the case of Gospel India Ministries vs. CIT(E), Pune [ITA No.563/Nag/2024, order dated 27.01.2025], where the Tribunal strongly emphasized that beneficial provisions relating to charitable institutions cannot be defeated merely because of technical or procedural mistakes in e-filing.
In the present case, the assessee trust had initially obtained provisional registration under section 12AB. Thereafter, while applying for final registration through Form 10AB, the Commissioner of Income Tax (Exemption) rejected the application primarily on the ground that the trust had filed application under section 12A(1)(ac)(vi)(B), whereas according to the department, the said clause was not applicable because the trust had already claimed exemption under section 11 in an earlier year.
The department treated this as a fatal defect and denied registration despite the fact that provisional registration had already been granted earlier and the trust was carrying on charitable activities. The CIT(E) further observed that the assessee had claimed exemption under section 11 in AY 2022-23 and therefore the application under the selected clause was allegedly not maintainable.
Before the Tribunal, the assessee pointed out that there was no dispute whatsoever regarding:
• genuineness of activities,
• charitable nature of objects,
• compliance with applicable laws, or
• maintenance of records and documents.
The assessee further demonstrated that:
• replies and supporting documents had already been furnished,
• provisional registration was validly granted earlier, and
• exemption under sections 11 and 12 was claimed only because the provisional registration itself permitted such claim.
The Revenue argued that filing application under a wrong clause constituted an incurable defect and therefore rejection of registration was justified.
However, the Nagpur ITAT rejected the departmental stand and delivered a very important finding in favour of charitable institutions. The Tribunal categorically observed that nowhere had the CIT(E) questioned the genuineness of objects or activities of the trust. It further held that taxability of income and eligibility of exemption are separate issues which cannot become grounds for mechanically rejecting registration itself.
Most importantly, the Tribunal held that:
“Quoting a wrong provision, if at all so, cannot be held to be fatal to militate against the well-deserved beneficial provision to be extended.”
The ITAT observed that beneficial provisions relating to charitable registration deserve liberal interpretation and technical mistakes in electronic filing cannot override substantive entitlement available under law.
Accordingly, the Tribunal set aside the order passed by the CIT(E) and directed the department to grant registration under section 12AB to the assessee trust.
This ruling is likely to have far-reaching implications because after the introduction of the new registration regime under sections 12A and 12AB, numerous trusts across India have faced rejection due to:
• wrong selection of clause in Form 10A/10AB,
• portal-related filing confusion,
• technical mismatches,
• procedural defects, or
• misunderstanding of newly introduced provisions.
In many practical cases, trusts have been denied registration despite carrying out genuine charitable activities merely because of technical interpretation of the filing process.
The judgment therefore provides substantial support in all pending litigation where registration has been rejected solely on procedural or technical grounds without doubting the genuineness of charitable activities.
The ruling also reinforces a larger principle increasingly recognized by courts and tribunals – that faceless and portal-driven tax administration cannot become excessively technical at the cost of substantive justice. Procedural defects and software-driven filing mistakes cannot be permitted to defeat genuine charitable entitlement under the Income Tax Act.
For charitable trusts presently facing similar objections before CIT(E), NFAC, or ITAT, this Nagpur ITAT decision may become an important judicial precedent supporting restoration or grant of registration under section 12AB.
The copy of the order is as under:
