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Facts
The assessee, Gulam Arif Will Waqf, an old trust, had its application for registration under section 12A/12AB rejected by the CIT(E) on the grounds that its activities were not for the general public but primarily for a religious group (Ranger Sunni Vohra Panchayat), with only a small percentage utilized for humanitarian work. The CIT(E) also alleged breaches of specific provisions of explanation to section 12AB(4).
Held
The Tribunal held that the mere mention of a specific community does not negate that the trust is working for the general public at large, especially when the trust's objects and activities are charitable. The Tribunal relied on the Supreme Court's decision in Ahmedabad Rana Caste Association, which states that a section of the public can be beneficiaries, and the common quality uniting them is impersonal.
Key Issues
Whether the rejection of registration under Section 12A/12AB was justified when the trust's activities, though mentioning a specific community, were otherwise charitable and for the general public's benefit, and if beneficiaries from a specific community constitute a 'section of the public' for charitable purposes.
Sections Cited
12A, 12AB(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT “DB” BENCH, SURAT
Before: Dr. BRR Kumar, Hon’ble & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 30-06- 2025 passed by CIT(E), Ahmedabad for assessment year 2022-23.
The grounds of appeal are as under:- “(1) On the facts and circumstances of the case and as per the law, the learned CIT(E) was not justified in rejecting registration u/s. 12A.
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(2) The learned CIT(E) was not justified in invoking Explanation to Section 12AB(4) by holding as though, the appellant was covered by "Specified violation". (3) The learned CIT(E) deprived the appellant from the opportunity to counter with the physical inquiry, defined the natural justice. (4) The above grounds are prejudiced to one another. (5) The appellant craves leave to add, alter or vary any of the grounds of appeal.”
The applicant trust was registered u/s. 12A of the Act. The applicant trust was registered with Charity Commissioner under Bombay Public Trust Act, 1950. The applicant trust was registered under Gujarat State Waqf Board on 22-07-202017. The applicant trust filed an application for obtaining approval under clause (iii) of first proviso to sub-section (v) of section 80G on 02-02-2024 which was rejected by the CIT(E) vide order dated 29-08-2024. The applicant was already granted registration u/s. 12A on 01-04-2022 from assessment year 2022-23. The applicant trust made application u/s. 12A (amended provisions) and provisions of new section 12AB of the Act. After issuing notice on 9-11-2024, the applicant filed reply dated 23-12-2024. After taking cognizance of the said reply, the Assessing Officer categorically held that the activities of the applicant trust are not for the general public but for also for religious group i.e. Ranger Sunni Vohra Panchayat. The CIT(E) categorically mentioned that 85% of the earmark fund is utilised/accumulated for the purposes through which no general public is benefited. Only 10% for humanitarian work, educational work etc and 5% to mosques has been allotted. Thus, the CIT(E) held that it is a breach to the provisions of explanation (a) below section 12AB(4) of the Act. Further, the CIT(E) also held that the applicant trust has committed specific violations under clause (a), (d), (e), (ii) of
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explanation to section 12AB(4) of the Act. Therefore, the CIT(E) rejected the registration w.e.f. 01-04-2021 and cancelled the registration vide order dated 13-06-2025.
The ld. A.R. submitted that clause (a) of explanation to section 12AB(4) of the Act does not apply to the applicant as it has undertaken in accordance with the prescription of the trust be it religious or charitable. The ld. A.R. submitted that the stipulation of the trust deed categorically mentions the objects of the trust as well as the activities which is in the public. The ld. A.R. submitted the audited accounts. The ld. A.R. further submitted that there is no denial that the charging is not done. The ld. A.R. further submitted as follows: • Gulam Arif Will Wagf is over 100 years old Trust, and came to be settled in the year 19-4-1902 in Rangoon through Will of Gulam Arif. It held properties in Surat which continues to be held by the appellant • The appellant has given sufficient evidence to demonstrate that Trust was settled 100 years back i.e. before the commencement of the Income-tax Act, 1961. O The scheme for the management of Waqfs created by Haji Gulam Arif deceased in the Chief Court of Lower Burmah (Page No.20 to 24). O More particularly, Clause 1.C. (Page No.20), Clause 3 (Page No.21) and Clauses 4 to 15-Clause 8 and 9 in particular (Page No.21 to 24) are referred. O Copy of Trust Deed executed on 29-3-1994 is merely giving effect to the Waqf already settled in the year 1902. O Last page Trust Deed executed on 29-3-1994 notes the fact of genesis of the Trust (Page No.41) O Affidavit executed in Rangoon (Page No.25 to 28). • All these were explained to the learned CIT(E) vide para 4 of letter dated 23- 12-2024 (Page No.8 to 12). • There has been no allegation that activities have been carried out other than charitable or religious. • The CIT(E) does not deny the fact of Waqf being settled in 1902. • All the activities have been genuine and exclusively for the charity. Reference is invited to the submission before the CIT(E) from Page No.16 to 18 of the paper book.
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• The prescription of the Clause is to see the activities and not objects. The CIT(E) has been driven by extraneous consideration to position cancellation based on the objects. • Even the CIT(E) admits that it is a Trust with mixed objects of Religious and Charitable. • Even otherwise, O Sunni Vohra is not a religious community. The word "Sunni" is derived from the word "Sunnah" which as per wikipedia is that in the pre-Islamic period, sunnah was used to mean "manner of acting", whether good or bad. Based on those who followed practices of Islamic prophet Muhammad, were known as "Sunnah" or "Sunni". O "Bohara" (or "Vohara") mean Bohara is a name of Indian (Sanskrit) origin that means "Brave and clever". The name is a corruption of a Gujarati word, vahaurau, meaning "to trade". So, Vohara is essentially a trading community like Patidar or Patel who are an agriculture community. • Also, the activities undertaken for a specific section or class also qualifies to be charitable and is not said to be carried out for a particular community or caste. • Decision of the Supreme Court in case of Ahmedabad Rana Caste Association (82-ITR-704) where it was held that it is not necessary that object should be for benefit of mankind or all persons in a particular country or State and it is sufficient even if it for a particular section of beneficiaries. • List of decisions are relied upon are given separately.” 5. The ld. D.R. categorically mentions that from the perusal of assessee’s audited account it can be seen that the more 30% is used for the particular community and not for the general public. Therefore, the CIT(E) has rightly cancelled the registration.
We have heard both the parties and perused the material available on record. The Ld. AR relied upon the decision of the Hon’ble Supreme Court decision in case of Ahmedabad Rana Caste Association vs. CIT (1971) 82 ITR 704 wherein it is categorically held as under:
“We may usefully refer to the judgment of Lord Greene M.R. in re Compton, Powell v. Compton & Others(1). The Master of Rolls declared that no definition of what was meant by "a section of the public" had, so far as he was aware, been laid down. But he indicated that the trust of a public character is one in which the beneficiaries do not enjoy the benefit when they receive it by virtue of 4
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their character as individuals but by virtue of their membership of a specified class the common quality, uniting potential beneficiaries into the class being essentially an impersonal one. This common quality he said was "definable by reference to what each has in common with the others and that is something into which their status as individuals does not enter". Andrew, L.C.J. accepted this statement of law without hesitation in Trustees of the Londonderry Presbyterian Church House v. Commissioners of Inland Revenue(2). What has to be seen in the present case is whether the members of the Rana caste who are not natives of Ahmedabad but who come to reside there and are accepted as members of that caste according to its usage and customs can be said to have a relationship which is an impersonal one dependent on their condition as members of the Rana community. We are unable to comprehend how such members of the Rana caste can be regarded as having been introduced into that caste by consideration of their personal status as individuals. As a matter of fact the predominant content and requirement of the clause defining "beneficiaries" in the constitution of the assessee is the factum of their belonging to the Rana community of Ahmedabad. The common quality, therefore, uniting the potential beneficiaries into the class consists of being members of the Rana caste or community of Ahmedabad whether as natives or as being admitted to that caste or community under custom or usage. The mere fact that a person of the Rana community who is not an original native of Ahmedabad has to prove his credentials according to the custom and usage of that community to get admitted into that community cannot introduce a personal element. In Oppenheim v. Tobacco Securities Trust Co. Ltd. & Others(1) the trustees were directed to apply certain income in providing for the education of children of employees or "former employees" of a British limited company or any of its subsidiary or allied companies. It was held by the House of Lords by a majority that though the group of persons indicated was numerous, the nexus between them was employment by particular employers and accordingly the trust did not satisfy the test of public benefit requisite to establish it as charitable. This is what Lord Simonds observed -
"A group of persons relationship which takes a group nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes".
The personal element of personal relationship which takes a group out of sestion of the community for charitable purposes is of the nature which is to be found in cases of the aforesaid type. We cannot possibly discover a similar element of personal nature in the members of the Rana community who settle in Ahmedabad and have been accepted by the Rana community of that place as members of that community. As regards the acceptance of such persons as members of the community or caste, according to custom and usage, it is well known that whenever a question arises whether a person 5
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belongs to a particular community or caste the custom or usage prevailing in that community must play a decisive and vital part. That cannot be regarded as an element which would detract from the impersonal nature of the common quality. For the reasons given above the appeals are allowed and the answer returned by the High Court is discharged.” Thus, merely one community is mentioned cannot negate that the trust is not working for general public at large. The activities of the present trust are also carries out benefits of charity for general public at large. Therefore the decision of the Hon’ble Apex Court in case of Ahmedabad Rana Caste Association (supra) is squarely applicable in present case.
In the result, the appeal of the assessee is allowed.
Order pronounced in open court on 06.04.2026
Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member a.k. Ahmedabad : Dated 06/04/2026 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Surat 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Surat