ITAT Bangalore Directs CIT(E) to Grant Section 12AB Registration and Section 80G Approval to CSR Trust — S.J.S Foundation Vs CIT (Exemptions)
Case Overview
The Income Tax Appellate Tribunal, Bangalore, in the matter of S.J.S Foundation Vs CIT (Exemptions), adjudicated twin appeals bearing ITA No. 2747/Bang/2025 and ITA No. 2748/Bang/2025, both directed against a common order dated 30.09.2025 passed by the Commissioner of Income Tax (Exemptions) [CIT(E)]. The central question before the Tribunal was whether the CIT(E) committed an error in rejecting the assessee trust's application for registration under Section 12AB of the Income Tax Act, 1961, and consequential approval under Section 80G.
The Tribunal, after carefully evaluating the submissions and documentary evidence on record, ruled decisively in favour of the assessee and directed the CIT(E) to grant both registrations. The order was pronounced in open court on 17th April, 2026.
Background and Facts of the Case
The assessee, S.J.S Foundation, is a charitable trust incorporated in the year 2024 by SJS Enterprises Limited, a corporate entity, for the purpose of undertaking Corporate Social Responsibility (CSR) activities. In furtherance of its objectives, the assessee trust filed an application in Form No. 10AB on 04.02.2025 seeking regular registration under Section 12AB of the Income Tax Act, 1961.
During the course of proceedings before the CIT(E), certain observations emerged that led to the rejection of the registration application. These observations broadly fell into three categories:
Objection 1: Donation to Another Trust Without Trust Deed
The CIT(E) noted that the assessee had made a donation of ₹25,00,000/- to a third-party entity, Varchass National Seva Trust. Since the Trust Deed of the recipient trust was not placed on record during verification, the CIT(E) expressed reservations regarding the genuineness of this transaction and declined to accept it as a bonafide charitable application of funds.
Objection 2: Alleged Violation of CSR Rules Due to Common Directors and Trustees
The CIT(E) further observed that the assessee trust was funded by SJS Enterprises Limited — its founding corporate body — and that the trustees of the assessee trust and the directors of the said company happened to be common individuals. On this basis, the CIT(E) proceeded to hold that the funding arrangement was in contravention of the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Objection 3: Absence of a Three-Year Track Record
An additional ground cited by the CIT(E) was that the assessee trust, having been set up only in 2024, did not possess a track record of at least three years of undertaking similar charitable activities, which the CIT(E) viewed as a prerequisite under the CSR framework for receiving contributions from a corporate entity.
Cumulatively, on account of these observations, the CIT(E) concluded that the genuineness of the activities of the assessee trust was not established to his satisfaction, and accordingly rejected the application for registration under Section 12AB of the Income Tax Act, 1961 vide order dated 30.09.2025.