THE COMMISSIONER OF INCOME TAX- EXEMPTION, vs. SHRI BABA BALAK NATH SEVA SANSTHAN,

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ITA/60/2025HC RajasthanRJHC02042099202508 September 2025Author: K.R. SHRIRAM,MANEESH SHARMA3 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal made factual findings that the objects mentioned in the trust deed were not of a business or commercial nature. Furthermore, the Tribunal found that the trust had not carried out any such activities. This was supported by the statement of income and expenditure accounts for the last five years, which did not indicate any such business activities. The Tribunal noted that for objects to be considered commercial, the dominant intention of the trust must be profit-making, which was not found to be the case. Regarding the alleged activities carried out by the assessee not being in accordance with the trust's objects, the Tribunal found, based on a pamphlet mentioning events organized by Ms. Ritu Agarwal, that it could not be stated that any activity was conducted by the assessee trust against its objectives. Consequently, the High Court held that no substantial question of law arose from the ITAT's order.

What were the facts?

The Commissioner of Income Tax-Exemption, Jaipur (Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated October 15, 2024, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had allowed two appeals filed by Shri Baba Balak Nath Seva Sansthan (assessee). The assessee's applications for registration under Section 12AB of the Act were rejected by the Income Tax Officer. The grounds for rejection were that objects 03 and 06 in the trust deed related to business activities, and that the assessee's activities were not in accordance with its stated objects. The ITAT made factual findings that the objects were not business in nature and that no such activities were carried out by the trust.

What were the issues?

1. Whether, in law and circumstances, the ITAT was justified in holding that the assessee trust is entitled to registration under Section 12A of the Act, despite trust deed objects 03 and 06 relating to development and sale of products from cottage industries, handicrafts, and food processing, which are primarily business/trade in nature and do not fall under the definition of charitable purpose under Section 2(15) of the Act, as interpreted in ACIT (Exemptions) v/s Ahmedabad Urban Development Authority (2022)? - Assessee: Not recorded. - Revenue: Argued that objects 03 and 06 are business-oriented and do not qualify as charitable purposes under Section 2(15), citing the Supreme Court judgment in ACIT (Exemptions) v/s Ahmedabad Urban Development Authority. 2. Whether, in law and circumstances, the ITAT was justified in not deciding whether the specific objects in the trust deed are of a business nature, and merely allowed registration under Section 12AB based on the assessee's claim that no such activities were carried out? - Assessee: Not recorded. - Revenue: Argued that the ITAT failed to decide the nature of the objects and allowed registration solely on the assessee's assertion of not carrying out such activities. 3. Whether, in law and circumstances, the ITAT was justified in not appreciating that the Trust was carrying out activities beyond the objects specified in its Memorandum of Association/deed? - Assessee: Not recorded. - Revenue: Argued that the Trust engaged in activities exceeding its stated objectives.

Which sections of the Income-tax Act were involved?

Section 260A,Section 12A,Section 12AB,Section 2(15)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JP:35765-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 60/2025 The Commissioner Of Income Tax- Exemption, Jaipur. ----Appellant Versus Shri Baba Balak Nath Seva Sansthan, Shivank 69/12, New Sanganer Road, Near Dhanwantri Hospital, Mansarovar, Jaipur- 302015, Rajasthan. ----Respondent For Appellant : Mr. Aditya Doda on behalf of Mr. Shantanu Sharma HON'BLE THE CHIEF JUSTICE MR. K.R. SHRIRAM HON'BLE MR. JUSTICE MANEESH SHARMA

Order 08/09/2025

1.

This appeal filed under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’), raises a grievance against an order dated 15th October 2024, passed by the Income Tax Appellate Tribunal (ITAT). By the said order, the ITAT has allowed two appeals filed by the assessee, who is respondent before us.

2.

Following substantial questions of law have been proposed in the appeal:

“1. Whether in the facts and circumstances of the case and in law, the Learned ITAT was justified in holding that the assessee trust is entitled to registration u/s 12A of the Act 1961. Despite the fact that the specific objects 03 and 06 in the trust deed relate to activities such as development and sale of products from small cottage industries, handicrafts, carpentry, food processing etc., which are primarily in the nature of business trade and commerce and do not fall into the purview of definition of charitable purpose u/s 2(15) of the Act and as further interpreted by the Hon’ble Supreme Court in the case of ACIT (Exemptions) v/s Ahmedabad Urban Development Authority (Civil Appeal No.21762/2017, judgment dt. 19.10.2022) Taxmann.com 278(SC)?

[2025:RJ-JP:35765-DB] (2 of 3) [ITA-60/2025]

2.

Whether on the facts and circumstances of the case and in law, the Learned ITAT was justified in not deciding the issue whether the specific objects in trust deed are of business nature or not and merely allowed the registration of the Trust u/s 12AB of the Act 1961 on the basis of claim of the appellant trust that no activity related to these objects were carried out by the assessee?

3.

Whether on the facts and circumstances of the case and in law, the Learned ITAT was justified in not appreciating the fact that the Trust was doing the activities beyond the objects specified in the MOA/deed of assessee trust?”

3.

The assessee is a registered charitable trust whose applications for registration under Section 12AB of the Act were rejected. The applications were disallowed on two grounds, namely, object Nos.3 and 6 of the deed of the applicant relate to activities which, according to the Income Tax Officer, are commercial/business in nature and secondly, the activities carried out by the assessee were not in accordance with the objects of the trust.

4.

The ITAT has come to a factual finding that the objects mentioned in the deed are not in the nature of business or commercial and secondly, the trust has not carried out any such activity. The ITAT has also come to a factual finding that the statement of income and expenditure account for the last five years also does not indicate that any such activity has ever been carried out. It is settled law that if the authority is coming to a finding that the objects in the deed are commercial or business in nature, then they should also give a finding that the dominant intention of the trust or the institution is profit making. That is not the case and that is also not reflected from the income and expenditure account.

5.

As regards the alleged activities carried out by the assessee not to be in accordance with the objects of the trust, there is a

[2025:RJ-JP:35765-DB] (3 of 3) [ITA-60/2025] factual finding that the events were organized by one Ms. Ritu Agarwal, as mentioned in the pamphlet and the ITAT came to a factual finding that it cannot be stated that any activity was conducted by the assessee trust against its objectives.

6.

In the circumstances, no substantial question of law arises. Appeal dismissed.

7.

Pending application, if any, also stands dismissed. (MANEESH SHARMA),J (K.R. SHRIRAM),CJ KAMLESH KUMAR-RAHUL/1

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