RAIKA REBARI DEWASI SAMAJ UTTHAN TURST,BIKANER vs. CIT (E), JAIPUR

In support of the above conclusion, the learned CIT(E) reproduced the provisions of section 13(1)(b), Explanation to section 12AB(4), and relied upon the decisions of the Hon'ble Supreme Court in Commissioner of Income-tax v. Palghat Shadi Mahal Trust (254 ITR 212) and CIT, Ujjain v. Dawoodi Bohra Jamat (Civil Appeal No. 2492 of 2014). After extracting portions of the aforesaid judgments, the learned CIT(E) concluded that any charitable institution making distinction on the basis of caste or religion would not be entitled to registration under section 12AB.

Secondly, the learned CIT(E) doubted the genuineness of the activities carried on by the assessee. During the proceedings, the assessee was called upon to furnish year-wise details of bank transactions exceeding Rs. 10,000/-, copies of vouchers, ledger accounts, bills, final accounts for financial year 2022-23, details regarding amendment of the trust deed and activities carried on thereafter. The learned CIT(E) observed that although replies were submitted, certain payments aggregating to Rs. 20,000/-, Rs. 10,600/- and Rs. 20,000/- had

The second appeal arises from the order of the learned CIT(E) rejecting the assessee's application seeking approval under section 80G(5) of the Act. The assessee had filed Form No. 10AB electronically on 21.03.2023 seeking regular approval under section 80G. Notices dated 21.07.2023 and 08.09.2023 were issued calling for various explanations and documents. The assessee submitted replies which, according to the learned CIT(E), were not satisfactory.

Secondly, the learned CIT(E) held that the present application filed in Form No. 10AB was barred by limitation prescribed under clause (iii) of the first proviso to section 80G(5) of the Act. According to the learned CIT(E), the assessee itself admitted that its activities had commenced in October, 2020, whereas provisional approval had been granted on 23.09.2021. The learned CIT(E) observed that the present application filed on 21.03.2023 ought to have been filed within six months of commencement of activities or six months before expiry of provisional approval, whichever was earlier. After discussing the provisions of section 80G(5), various CBDT Circulars and the decisions relied upon in the impugned order, including the decision of the Kolkata Bench of the Tribunal in Bishnupur Public Education Institute (139 taxmann.com 121), the learned CIT(E) concluded that the statutory time limit was

Aggrieved by the aforesaid orders, the assessee has preferred the present appeals raising the following grounds:

With regard to the alleged violation of section 13(1)(b), the learned AR submitted that the learned CIT(E) proceeded on an erroneous

It was further submitted that section 13(1)(b) is attracted only where a trust is created or established exclusively for the benefit of a particular religious community or caste. The provision does not depend upon the numerical ratio of beneficiaries from different communities. According to the learned AR, there is no clause in the trust deed prohibiting extension of benefits to persons belonging to other communities, nor has the learned CIT(E) recorded any finding that any eligible person was denied benefits solely because he or she did not

The learned AR further submitted that the learned CIT(E) had read clauses 3.1 and 3.6 of the trust deed in isolation. The trust deed has to be read as a whole and merely because some of the objects seek to promote the welfare or educational advancement of a particular section of society, it cannot be concluded that the trust exists exclusively for the benefit of a particular caste. Even if, during the initial years, a substantial number of beneficiaries happened to belong to the Raika Rebari community, such factual circumstance by itself could not alter the charitable character of the trust or justify refusal of registration.

It was argued that the reliance placed by the learned CIT(E) upon the decisions of the Hon'ble Supreme Court in CIT v. Palghat Shadi Mahal Trust and CIT v. Dawoodi Bohra Jamat was misconceived. According to the learned AR, those decisions lay down that the applicability of section 13(1)(b) depends upon the true nature of the objects of the trust and whether its charitable activities are confined

Reliance was also placed upon the decisions of the Hon'ble Gujarat High Court in CIT (Exemption) v. Bhojaram Louva Patel Seva Samaj Trust ( 178 taxmann.com 572) and Bayath Kutchhi Dasha Oswal Jain Mahajan Trust (74 taxmann.com 199), wherein it has been held that at the stage of grant of registration, the Commissioner is required to examine only the charitable nature of the objects and the genuineness of the activities, whereas the applicability of section 13 is a matter to be examined by the Assessing Officer during assessment proceedings on the basis of actual application of income. Further reliance was placed upon the decisions of the Hon'ble Supreme Court in Ahmedabad Rana Caste Association v. CIT (140 ITR 1), CIT v. Dawoodi Bohra Jamat ( 364 ITR 31) and Ananda Social and Educational Trust v. CIT ( 426 ITR 340 ) in support of the proposition that the mere fact that a substantial number of beneficiaries belong to one identifiable section of the public does not render the institution non-charitable and that, while

The learned AR further submitted that the observation that the trust had organised only one Samman Samaroh while claiming expenditure under the heads of salary, travelling and administrative expenses is factually and legally unsustainable. Every charitable institution necessarily incurs administrative and incidental expenditure

Insofar as the appeal relating to approval under section 80G is concerned, the learned AR submitted that the rejection is merely consequential to the rejection of registration under section 12AB. It was further contended that the finding regarding delay in filing Form No. 10AB is also erroneous since the assessee had originally filed the application within the prescribed period and the present application was necessitated only because the earlier application had been rejected for non-compliance. It was, therefore, submitted that the learned CIT(E) was not justified in treating the application as non-maintainable.

On the strength of the aforesaid submissions and the judicial precedents relied upon, the learned AR prayed that the impugned orders passed by the learned CIT(E) rejecting registration under section

Per contra, the learned Departmental Representative (DR) strongly relied upon the findings recorded by the learned CIT(E) in the impugned orders. It was submitted that the learned CIT(E), after examining the trust deed, the material placed on record and the details of beneficiaries furnished by the assessee, had rightly concluded that the assessee was extending its benefits predominantly to members of the Raika Rebari community. According to the learned DR, the objects of the trust as well as its activities clearly demonstrated that the benefits were intended to be restricted to a particular community, thereby attracting the provisions of section 13(1)(b) of the Act. It was further submitted that the learned CIT(E) had also recorded cogent findings regarding the failure of the assessee to establish the genuineness of its activities by furnishing complete and satisfactory details called for during the course of proceedings. Insofar as the application under section 80G is concerned, the learned DR supported the impugned orders and prayed that the orders of learned CIT(E) be upheld.

The principal foundation of the impugned order is that the beneficiaries of the trust predominantly belong to the Raika Rebari community and, therefore, the provisions of section 13(1)(b) become applicable. In our considered opinion, the entire approach adopted by the learned CIT(E) proceeds on an erroneous understanding of the scope of enquiry contemplated under section 12AB of the Act.

At the stage of granting registration under section 12AB, the Commissioner is required to satisfy himself only regarding the charitable nature of the objects and the genuineness of the activities of the trust. The enquiry is not intended to determine the ultimate

The issue is no longer res integra. The Hon'ble Supreme Court in CIT v. Dawoodi Bohara Jamat has categorically held that section 13(1)(b) cannot be invoked merely because certain activities are associated with a particular community. The real test is whether the trust is created or established exclusively for the benefit of a particular religious community or caste. The Supreme Court further held that section 13 has to be read in conjunction with sections 11 and 12 while examining the allowability of exemption and that registration under section 12AA is only a condition precedent for claiming such exemption.

We find that the learned CIT(E) has proceeded substantially on the basis that a larger number of beneficiaries belong to the Raika Rebari community. Mere predominance of beneficiaries from one community,

The learned DR emphasised that the trust distinguishes beneficiaries on the basis of caste and that the benefits are restricted to a particular community. We are unable to accept the said contention. Such an assertion is not supported either by any restrictive clause contained in the trust deed or by any concrete material demonstrating that the trust excludes members of other communities. The impugned order merely records statistical predominance of beneficiaries belonging to one community. Such predominance, by itself, is not the statutory test prescribed under section 13(1)(b).z

The reliance placed by the learned CIT(E) upon the judgment of the Hon'ble Supreme Court in Palghat Shadi Mahal Trust is, in our

The view which we have taken also receives complete support from the judgments of the Hon'ble Gujarat High Court. In Bayath Kutchhi Dasha Oswal Jain Mahajan Trust, the High Court held that the Commissioner had erred in isolating one clause of the trust deed while ignoring several other objects meant for the benefit of the general public. The Court further held that any enquiry regarding applicability of

More importantly, in Bhojaram Leuva Patel Seva Samaj Trust, the Ahmedabad Bench of the Tribunal restored the matter with a direction that registration could not be denied merely by invoking section 13(1)(b). The Revenue carried the matter before the Hon'ble Gujarat High Court. The High Court dismissed the Revenue's appeal and expressly approved the Tribunal's view that section 13 could be examined only during assessment proceedings and not while deciding an application for registration under section 12AB.

The aforesaid principle has once again been reiterated by the Hon'ble Gujarat High Court in Principal CIT (Exemption) v. Shree Naminath Shwetamber Murtipujak Tapagachh Jain Religious Trust (R/Tax Appeal No. 257 of 2025, order dated 06.07.2026), wherein the Revenue's appeal was dismissed by holding that section 13(1)(b) can be invoked only while examining exemption during assessment and not at the stage of grant of registration. The questions proposed by the Revenue specifically raised the effect of the amendment made by the Finance Act, 2022 with effect from 01.04.2022, whereby section 12AB(4)

We may further observe that the Hon’ble Supreme Court in Ananda Social and Educational Trust v. CIT explained that the Commissioner, at the stage of registration, is required to examine whether the objects are genuinely charitable and whether the activities are in furtherance of those objects. The registration proceedings are not intended to constitute an assessment of the ultimate availability of exemption. Thus, unless the objects themselves or the admitted activities unmistakably establish inherent ineligibility, the registration cannot be refused on an assumption that section 13 may become applicable in assessment proceedings.

In the present case, the learned CIT(E) has not recorded any finding that the trust deed expressly confines its benefits to the Raika Rebari community to the exclusion of all others. There is also no finding that any person was denied assistance merely because such person did

The subsequent findings regarding genuineness of activities must also be examined in the light of the aforesaid legal position. The learned CIT(E) has not found the assessee to be a fictitious entity, nor has he demonstrated that its activities were contrary to its objects. The payments referred to in the impugned order have not been shown to constitute prohibited personal benefits or diversion of funds. Likewise, administrative expenditure incurred towards salary, travelling and other incidental heads cannot, without further material, establish that the activities were not genuine. The conclusion regarding siphoning of funds is therefore founded on suspicion rather than demonstrable evidence.

We shall now deal with the independent objection of the learned CIT(E) that the application in Form No. 10AB seeking approval under section 80G was filed beyond the period prescribed under clause (iii) of the first proviso to section 80G(5). The learned CIT(E) proceeded on the basis that the assessee had commenced its activities in October 2020, had obtained provisional approval on 23.09.2021 and had filed the present Form No. 10AB only on 21.03.2023.

The aforesaid conclusion, however, overlooks the undisputed explanation of the assessee that it had initially filed Form No. 10AB on

In these peculiar facts, the subsequent application could not have been examined in isolation by ignoring the timely application filed on 25.03.2022. The learned CIT(E) has treated the application dated 21.03.2023 as though it were the assessee’s first application for regular approval and has consequently concluded that it was barred by limitation. Such an approach gives primacy to a procedural lapse while disregarding the substantive fact that the assessee had entered the statutory process within the prescribed time.

Further, the other principal reason for rejecting approval under section 80G was the denial of registration under section 12AB. Since we have already set aside that finding and directed the learned CIT(E) to grant registration under section 12AB, the consequential foundation of the order under section 80G also ceases to survive. We accordingly set aside the impugned order relating to section 80G and direct the learned CIT(E) to grant consequential approval under section 80G in accordance with law.

In the result, both the appeals filed by the assessee are allowed. The learned CIT(E) is directed to grant registration under section 12AB