Overview: The Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, has held that a charitable society’s failure to begin full-scale operations cannot, by itself, justify refusal of registration under Section 12AB of the Income-tax Act, 1961. In AS Ascent Welfare Society v. CIT (Exemption), Jaipur, the tribunal directed the authority to grant registration and consequential approval under Section 80G. The decision is relevant to charitable organisations still building the infrastructure needed to deliver their services.
A new charitable organisation may need months or years to establish a hospital, school or other facility before it can begin serving beneficiaries. During this period, it may already have acquired premises, arranged funding or started construction.
A recent Income Tax Appellate Tribunal (ITAT) ruling clarifies that the absence of full-scale operations should not automatically defeat a registration application. It also highlights why applicants must demonstrate that their proposed activities are genuine and consistent with their charitable objectives.
What Did the ITAT Decide?
The Jodhpur Bench considered appeals filed by AS Ascent Welfare Society and Navkar Society after the Commissioner of Income Tax (Exemption), Jaipur, rejected their applications for registration under Section 12AB and approval under Section 80G.
AS Ascent Welfare Society proposed to establish a hospital providing medical relief, particularly to economically weaker sections. The authority rejected its application because the main activities had not commenced and the proposed work could not be adequately verified.
The tribunal noted that the society had acquired land and that hospital construction was underway. Its proposed activities were consistent with its charitable objectives, and the department had not found those objectives to be non-charitable.
Relying on the Supreme Court’s decision in Ananda Social and Educational Trust v. CIT (2020), the ITAT held that non-commencement of hospital operations was not, by itself, sufficient to refuse registration in the circumstances of the case. It directed the authority to grant Section 12AB registration and consequential Section 80G approval. The tribunal applied the same reasoning to Navkar Society, which proposed educational activities.
Does Every New NGO Qualify for Registration?
No. The ruling does not guarantee registration to every newly formed trust or NGO. The authority can still examine whether the organisation’s objectives are charitable and whether its activities, where commenced, are genuine and consistent with those objectives.
The Supreme Court’s decision in Ananda Social and Educational Trust supports consideration of proposed activities at the registration stage. The ITAT applied that principle to societies that were still establishing the infrastructure needed to fulfil their charitable purposes.
Organisations preparing to apply should keep their governing documents, premises or land records, construction documents, relevant permissions and other evidence of preparatory work. The documents required will depend on the organisation’s structure and proposed activities.
What Is the Current Registration Process?
The ITAT decided the case under the Income-tax Act, 1961, which governed the registration applications before it. The Income-tax Act, 2025, came into force on 1st April 2026. Accordingly, fresh applications filed on or after that date must follow the new Act, while applications filed earlier and pending at the transition date are dealt with under the savings provisions.
A new charitable or religious organisation that has not started activities and has never held the specified registration can apply for provisional registration under Section 332, using Form 104. The corresponding provisional approval for eligible donor deductions is covered by Section 354.
Provisional registration or approval is valid for three tax years, or up to six months from commencement of activities, whichever is earlier. The organisation must then apply for regular registration or approval as applicable. Organisations whose activities have already commenced must follow the relevant application route under the new Act.
Setindiabiz Support
Before applying, trustees should ensure that their governing documents, charitable objectives and supporting records meet the applicable requirements. Setindiabiz professionals support organisations with Section 12A/12AB and Section 80G registration. Promoters considering a non-profit company structure may also explore Section 8 company registration.
FAQs
Yes. Non-commencement does not automatically prevent an eligible organisation from applying. The authority must consider the facts and applicable statutory requirements.
It held that the hospital’s non-commencement alone could not justify refusal of registration on the facts before it and directed the authority to grant registration and consequential Section 80G approval.
An eligible organisation that has not started activities and has never held the specified registration can apply for provisional registration using Form 104 under Section 332 of the Income-tax Act, 2025. The relevant requirements should be checked before filing.
