PCIT/CIT cannot impose any conditions on the registration granted under Section 12AB(1)(a).

Facts and Issue of the case

The assessee is a Public Charitable Trust registered under Bombay Public Trust Act, bearing Registration No. E 25619 (Mumbai). The assessee trust has also been granted registration under section 12AA(1)(b)(i) of the Act vide order dated 30.10.2009 passed by the Director of Income Tax (Exemptions), Mumbai. The assessee trust made an application on 24.05.2021 in Form No. 10A for registration as per section 12A(1)(ac)(i) of the Act. The DIT (CPC) vide impugned order dated 28.05.2021 granted Provisional Registration in Form 10AC to the assessee trust subject to certain conditions. Being aggrieved, the assessee is in appeal before us.

During the course of hearing, learned Authorised Representative (“learned A.R.”) appearing for the assessee submitted that as the assessee trust was registered under section 12AA, application for registration was filed by the assessee as per provisions of section 12A(1)(ac)(i) of the Act. The learned A.R. further submitted that in cases where application is made under provisions of section 12A(1)(ac)(i) of the Act, the Principal Commissioner or Commissioner is required to pass an order registering the trust for a period of 5 years under section 12AB(1)(a) of the Act. However, Provisional Registration was granted in From 10 AC, which is granted to new charitable institutions who are yet to commence their activities. On the other hand, learned Departmental Representative vehemently relied upon the impugned order granting Provisional Registration.

Observation of the case

Court has considered the rival submissions and perused the material available on record. In order to decide the issue, it is relevant to analyse the relevant provisions of the Act applicable to the present case. Section 12A deals with conditions for applicability of section 11 and 12.

From the aforesaid provision, it is clear that for claiming the benefit under section 11 and section 12 of the Act, the trust or institution has to make an application for registration and such trust or institution should be registered under section 12AB of the Act. Section 12A(1)(ac)(i) of the Act specifically deals with the cases where trust or institution was registered under section 12A or under section 12AA. In the present case, it has not been disputed that the assessee trust was duly registered under section 12AA of the Act. Thus, the only provision applicable to the assessee trust for the purpose of applying for registration is section 12A(1)(ac)(i) of the Act. Further, section 12AB(1)(a) of the Act provides that where an application is made under section 12A(1)(ac)(i) the Principal Commissioner or Commissioner shall pass an order in writing registering the trust or institution for a period of 5 years. However, in the present case, the assessee trust being registered under section 12AA and thus rightly made an application under section 12A(1)(ac)(i) of the Act, was granted Provisional Registration in Form 10 AC subject to certain conditions. It is pertinent to note that section 12AB(1)(c) deals with granting of Provisional Registration to the trust or institution for a period of 3 years from the assessment year from which registration is sought. However, the said section is applicable in cases where application is made under section 12A(1)(ac)(iv) of the Act. It is also not disputed that the Provisional Registration would be granted for a period of 3 years to the charitable institutions which are yet to start their activities. However, in the present case, the assessee trust was already holding certificate dated 30.10.2009 issued under section 12AA of the Act. We noticed that section 12AB(1)(a) of the Act, which deals with grant of Regular Registration for a period of 5 years does not authorise the Principal Commissioner or Commissioner to impose any conditions for grant of such registration. We further noticed that though the impugned order granted Provisional Registration subject to certain conditions, however, same was granted for a period of 5 assessment years i.e. from assessment year 2022–23 to assessment year 2026–27. We also noticed that the impugned order for provisional registration in Form 10AC was issued under section 12A(1)(ac)(i) of the Act, which provision merely deals with making an application for registration.

Thus, in view of the above, we are of the considered opinion that application filed by the assessee trust under section 12A(1)(ac)(i) was not properly considered for grant of registration under section 12AB of the Act. Accordingly, we direct the designated authority under section 12AB to de novo consider the application of the assessee trust under section 12A(1)(ac)(i) of the Act and grant the registration as per law. As a result, grounds raised by the assessee are allowed for statistical purpose.