Kogta Foundation Vs CIT (Exemption) – ITAT Jaipur: Trust Deed Scope, Road Safety Expenditure and Related-Party Funding in Section 12AB Registration Proceedings

Overview of the Dispute

The Jaipur Bench of the Income Tax Appellate Tribunal, in ITA Nos. 1095 & 1228/JPR/2026, examined a situation where a charitable trust's application for registration under Section 12AB of the Income Tax Act, 1961 was twice rejected by the Commissioner of Income Tax (Exemption) [CIT(E)]. The order dated 08.10.2026 addressed three critical legal questions: whether road safety activities fall within a trust deed's stated objects, whether receiving donations from a trustee-linked company can independently justify rejection, and whether the genuineness of expenditure had been adequately established. Ultimately, the Tribunal remanded both registration applications to the CIT(E) for fresh examination, while recording binding findings on the legal issues.

Background Facts

Kogta Foundation is a public charitable trust established under a trust deed dated 30 December 2020. Provisional registration under the Income Tax Act, 1961 was granted on 28 May 2021, valid through Assessment Year 2024-25.

On 29 September 2023, the Foundation filed an application in Form No. 10AB under Section 12A(1)(ac)(iii) seeking regular registration. The CIT(E) rejected it on 19 February 2024 citing insufficient documentary evidence. The Tribunal, in ITA Nos. 288 and 289/JPR/2024, by order dated 27 September 2024, restored the matter for fresh adjudication.

In the remanded proceedings, the CIT(E) issued a detailed questionnaire seeking ledgers, vouchers, bills, beneficiary details, bank statements and activity proofs. The Foundation submitted its reply dated 06 December 2025, but the CIT(E) again rejected the application on 06 March 2026. A concurrent application filed on 29 September 2025 under Section 12A(1)(ac)(ii) was also rejected on the same date.

Five Grounds of Rejection by CIT(E)

The CIT(E) cited the following grounds in the impugned order for rejecting the application under Section 12AB(1)(b)(ii)(B):

  1. Non-production of bills and vouchers – Invoices, agreements, dated photographs, beneficiary confirmations and work completion proofs were absent for major expenditure items; only selective ledger extracts and a few photographs were filed.

  2. Unverifiable road safety expenditure – For road safety campaigns and helmet distribution amounting to ₹30,70,000 (comprising ₹20,60,000 and ₹10,10,000) for the year ended March 2024, no venue details, implementation records, beneficiary lists, permissions or third-party confirmations were produced.

  3. Activities outside the trust deed's objects – Road safety campaigns and helmet distribution were not expressly mentioned in the core objects clause of the trust deed.

  4. Related-party funding concerns – A predominant share of donations originated from Kogta Financial India Limited, an entity connected with the trustees; while receipt was acknowledged as not prohibited per se, utilisation remained unsubstantiated.

  5. Absence of verifiable beneficiary details – Only generalised narrative descriptions were submitted rather than specific beneficiary records.

The Tribunal's Analysis

Charitable Objects vs. Individual Activities

The Tribunal observed that the CIT(E) had himself recorded in paragraph 5.3.1 of the impugned order that the Foundation's primary objects "relate to relief of the poor, education, preservation of environment and advancement of general public utility." The objection was limited solely to the fact that road safety activities "do not find specific or explicit mention" in the deed.

The primary object clause of the trust deed, as extracted in the order, reads:

"b. The primary object of the Trust shall be to carry Public Charitable work under Corporate Social Responsibility (CSR activities) as prescribed in Schedule VII of the Companies Act, on behalf of Settlor and other contributories to the Trust. … i. Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care, and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water."

The Bench drew on the Supreme Court's landmark ruling in CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC), which held:

"The expression 'object of general public utility' in section 4(3) would prima facie include all objects which promote the welfare of the general public."