Rejection of 80G Approval Solely Due to Fee Receipt by 12A Registered Trust Not Valid: ITAT

Case: Anugraha Education Trust v. Commissioner of Income-tax (Exemptions)

ITAT: Bangalore

ITA No: 23 (BANG) OF 2025

Assessment Year: 2024-25

Date of Order: April 21, 2025

Brief Facts:

• The assessee was registered under Section 12A, and had applied for approval under Section 80G of the Income-tax Act.

• The trust was established for charitable purposes, and received school bus fees, tuition fees, and exam fees as part of its activities.

• However, the Commissioner (Exemptions) rejected the application, stating that these receipts did not qualify as "donations" under Section 80G, and hence the trust was ineligible for approval.

• The assessee appealed the rejection before the ITAT.

Observations of the Court:

• The Tribunal held that registration under Section 12A implies that the activities of the trust had already been deemed genuine and charitable by the tax authorities.

• The Commissioner (Exemptions) had wrongly interpreted Section 80G by focusing on the donor’s perspective, i.e., the eligibility of deductions for donations, instead of evaluating the genuineness of the trust's activities as required under Section 80G (5).

• Further, it was emphasized that receipts such as school fees collected in the course of fulfilling educational objectives do not automatically disqualify a trust from receiving 80G approval, particularly when the trust’s primary purpose is charitable within the meaning of Section 2(15).

• Consequently, it was noted that, the application of funds and scrutiny under Sections 11, 12, and 13 should be evaluated during the assessment proceedings and not at the time of granting 80G approval.

Hence, the ITAT held that the Commissioner (Exemptions) had misapplied the provisions of Section 80G. It directed the Commissioner to grant 80G approval to the assessee, holding that the mere receipt of fees does not invalidate the trust’s charitable status or bar it from approval. The appeal was allowed in favour of the assessee.