SHRI DASHA PALIVAL BRAHMAN GYATI TRUST,BHAVNAGAR vs. THE CIT(EXEMPTION), AHMEDABAD

ITA 46/AHD/2026Status: DisposedITAT Ahmedabad29 September 20266 pages
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What were the facts?

The assessee, Shri Dasha Palival Brahman Gyati Trust, filed appeals ITA Nos. 45 & 46/Ahd/2026 before the Income Tax Appellate Tribunal (ITAT), Ahmedabad 'A' Bench, against an order dated 22/09/2023 passed by the Commissioner of Income Tax (Exemption), Ahmedabad (CIT(E)). The CIT(E) denied registration under Section 12A of the Income Tax Act, 1961, and cancelled the provisional registration. The appeals were filed with a delay of 778 days, which the Tribunal condoned due to the age and health-related difficulties of the active trustees. The assessee is a charitable trust established in 1966 for the benefit of the 'Dasha Palival Brahman Gyati' community, previously registered under Section 12A and eligible for exemption under Sections 11 & 12. The CIT(E) invoked Section 13(1)(b) based on the trust's objects benefiting a specific community, citing Supreme Court judgments. ITA No. 46/Ahd/2026 pertains to the denial of renewal of registration under Section 80G.

What did the Tribunal hold?

The Tribunal held that Section 13(1)(b) cannot be invoked at the stage of considering an application for registration under Section 12A or 12AB of the Income Tax Act. The scope of inquiry by the Commissioner at the registration stage is limited to examining the genuineness of the trust and its activities, and whether such activities are carried out in accordance with its declared objects. The question of denial of exemption under Section 11 on the ground of applicability of Section 13(1)(b) arises only during the assessment proceedings, not at the stage of registration. The Tribunal noted that the CIT(E) had proceeded solely on the basis of the trust's objects without recording any finding that the assessee had actually incurred any expenditure for the benefit of a particular caste. Therefore, the order of the CIT(E) denying registration under Section 12A was set aside. For ITA No. 45/Ahd/2026, the matter was restored to the file of the CIT(E) with a direction to grant final registration after giving the assessee an adequate opportunity of hearing and examining if any expenditure was incurred for the benefit of a particular caste. For ITA No. 46/Ahd/2026, the matter was also restored to the CIT(E) to adjudicate the application for renewal of registration under Section 80G, considering the reasons for delay and the decision on the Section 12A application.

What were the issues?

1. Whether Section 13(1)(b) of the Income Tax Act, 1961, can be invoked at the stage of granting registration under Section 12A of the Act? (Question of law) Assessee's contentions: The assessee argued that Section 13(1)(b) cannot be invoked at the stage of registration. They relied on decisions of the Ahmedabad ITAT and the Gujarat High Court in CIT(Exemption) vs Jamiatul Banaat Tankaria and CIT vs. Bayath Kutchhi Dasa Oswal Jain Mahajan Trust. Special emphasis was placed on a Co-ordinate Bench decision in Bhavnagar Dashashrimali Kantibandh vs CIT(E), which followed the Gujarat High Court's ruling that Section 13(1)(b) is not applicable during the registration stage. The scope of inquiry by the Commissioner at this stage is limited to the genuineness of the trust and its activities, not the denial of exemption under Section 13(1)(b), which arises during assessment. Revenue's contentions: The revenue, through the CIT(E), invoked Section 13(1)(b) based on the trust's objects being restricted to a particular religious community or caste, citing Supreme Court judgments in CIT vs. Palghat Shadi Mahal Trust and CIT vs. Dawoodi Bohara Jamat. The revenue concluded that the trust was not eligible for registration under Section 12A.

Which sections of the Income-tax Act were involved?

Section 12A,Section 11,Section 12,Section 13(1)(b),Section 12AB,Section 12A(1)(ac)(iii),Section 80G,Section 80G(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH

Before: DR. BRR Kumar & Shri Tapas Ram Misra

For Appellant: Shri Tushar Hemani, Sr. Advocate
For Respondent: Shri Kiran Unavekar, CIT-DR

PER TAPAS RAM MISRA, JUDICIAL MEMBER:

ITA No. 45/Ahd/2026 is filed by the Assessee against the order passed by the Commissioner of Income Tax (Exemption), Ahmedabad dated 22/09/2023 denying registration under section 12A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Both these appeals have been filed belatedly with the delay of 778 days. The assessee has filed an Affidavit seeking condonation of delay. It is stated on affidavit that the active Trustees of the assessee trust were senior citizens and were facing various age and health related diff

The order continues below.

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