SHRI VAISHNAV SADHU (BAVA VAIRAGI) GNATI TRUST MAHUVA,BHAVNAGAR vs. THE CIT (EXEMPTION), AHMEDABAD

In response, the assessee filed its reply dated 28-08-2023 as follows:

The above reply was considered by the Ld. CIT(E) and denied the registration by observing as follows: “8. I have gone through the reply of assessee. The application has stated that it has applied for the amendment of deed and the same is pending with Joint Charity Commissioner Office Bhavnagar. Hence, the present application of the applicant is suppose to be decided on the basis of the trust dated 25.01.1995. The second issue raised by the applicant is that all its activities are purely religious. In this regard, it is observed that applicant has applied for charitable trust in form 10AB filed by him for granting regular registration to the trust. The objects discussed in Para 6.1 above also does not appear to be Page No 4 Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E) objects of religious nature. Therefore no benefit can be granted to the applicant in this regard also.

Provision of sec 13(1)(b) of the Act is applicable to the applicant/assessee. Section 13(1)(b) of the Act stipulates that provisions of sec 11 and 12 would not apply in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste. Therefore, the provision of sec 13(1)(b) of the Act is applicable only in a case of charitable trust/institution created or established after commencement of this Act, if the trust/institution is created or established for the benefit of any particular religious community or caste Various courts have held that the provisions of sec 13(1)(b) of the Act is not applicable in the case of a religious trust. The provision of sec 13(1)(b) of the Act is applicable to a charitable trust, has been settled by the Hon'ble Supreme Court in the case of CIT vs. Palghat Shadi Mahal Trust, reported in 120 Taxman 889, wherein in the case of a public charitable trust, the Hon'ble Apex court held that where the benefit is available to Muslims from all over the world, none of whom except in Kerala are backward classes, the provision of sec 13(1)(b) would be attracted and therefore the trust is not entitled for exemption u/s 11 of the Act. Even some courts had held that in case of composite trust/institution, i.e., charitable cum religious, the provision of sec 13(1)(b) of the Act is not applicable. However, the said controversy was resolved by the Hon'ble Supreme Court in the case of CIT vs Dawoodi Bohara Jamat, reported in 43 laxmann.com 243, wherein the Hon'ble Apex Court held that the provision of sec 13(1)(b) of the Act is applicable even to a composite trust/institution and held as under. "45. From the phraseology in clause (b) of section 13(1), it could be inferred that the Legislature intended to include only the trusts established for charitable purposes. That however does not mean that if a trust is a composite one, that is one for both religious and charitable purposes, then it would not be covered by clause (b). What is intended to be excluded from being eligible for exemption under Section 11 is a trust for charitable purpose which is established for the benefit of any particular religious community or caste."

Further, the Hon'ble Supreme Court in the said case of CIT vs Dawoodi Bohara Jamal (supra) which was composite in nature, after analyzing the various objects of the trust, held that two of its objects provide for the activities completely religious in nature and restricted to the specific Page No 5 Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E) community of the assessee trust are objects with religious purpose only. However, the Hon'ble Apex Court held that other four objects of the assessee trust was charitable in nature and finally held that the trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that sec 13(1)(b) of the Act would be attracted and hence the trust would be eligible to claim exemption u/s 11 of the Act. In concluding para the Hon'ble Apex Court held has under: “50. In that view of the matter, we are of the considered opinion that the respondent-trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that Section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby it would be eligible to claim exemption under Section 11 of the Act"

From the above referred discussion and objects of the applicant/assessee it is evident that it is not a religious trust, but it is a charitable trust and above referred objects, which are in the nature of charitable is restricted to benefit of a particular religious community or caste "Vaishnav Sadhu (Bava Vairagi)" and therefore as per law laid down by the Hon'ble Apex court in the above referred cases, the provision of sec 13(1)(b) would be applicable and therefore the applicant/assessee would not be eligible for exemption u/s 11 of the Act. Therefore in the facts and circumstances of the case, the applicant/assessee cannot be granted registration u/s 12A of the Act.

In view of the above, the present application filed in Form No.10AB u/s 12A(1)(ac)(ii) of the Act is rejected and provisional registration is also cancelled."

Aggrieved against the same, assessee is in appeal before us raising the following Grounds of Appeal:

Ld. Counsel appearing for the assessee filed a Paper Book but does not contain the translated copy of the Trust Deed as well as the amended Trust Deed pending with the Joint Charity Page No 6 Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E)

In the result, the appeal filed by the Assessee is hereby dismissed.