VILAYAT GIDC INDUSTRIES ASSOCIATION,BHARUCH vs. COMMISSIONER OF INCOME TAX (EXEMPTION), AHMEDABAD

The brief facts of the case are that the assessee had filed an application in Form No.10AB on 29.04.2024 for registration of the trust u/s.12A of the Act. In response thereto, the Ld. CIT(E) had called for certain details/documents vide notices dated 02.07.2024 and 12.08.2024, which was complied by the assessee & 2180/Ahd/2024 [Vilayat GIDC Industries Association vs. CIT(E)] - 2 – on 25.08.2024. The Ld. CIT(E) had noticed that the objects of the assessee trust were restricted for the benefits of its members and were not for the benefit of public at large, therefore, they did not fall under the category of charitable object as per provision of Section 2(15) of the Act. Therefore, a show cause notice dated 1/10/2024 was issued to the assessee in this regard to which there was no compliance. Thereafter, the Ld. CIT(A) had passed the impugned order rejecting the application for registration u/s.12A of the Act and the provisional registration granted earlier was also cancelled. Further, in the absence of registration u/s.12A of the Act, which is a pre-requisite for grant of approval u/s. 80G of the Act, the application for approval u/s 82G(5) was also rejected.

Shri Jigar Shah, Ld. AR of the assessee submitted that the application of the assessee was rejected without allowing proper opportunity of being heard to the assessee. He submitted that only effective opportunity was allowed by the Ld. CIT(E) vide show cause notice dated 01.10.2024. Further that, the assessee had sought adjournment on the date which was not considered by the Ld. CIT(E) and the application of the assessee was rejected. He further submitted that the objectives as well as activities carried on by the assessee trust were for the benefit of general public as well and, therefore, qualified to be charitable in nature. He, therefore, requested that the matter may be set aside to the file of the Ld. CIT(E) with a direction to allow another opportunity to the assessee, so that, the matter can be clarified before him.

& 2180/Ahd/2024 [Vilayat GIDC Industries Association vs. CIT(E)] - 3 – 4. Per contra, Ld. CIT.DR had no objection if the matter was set aside to the file of the Ld. CIT(E).

We have considered the submission of the assessee. It is found that only one opportunity was allowed by the Ld. CIT(E) vide show cause notice dated 01.10.2024 to explain the nature of objects of the trust, which was held to be non-charitable by the Ld. CIT(E). It is also found that the Ld. CIT(E) had relied upon only few of the objects to come to the conclusion that the objects were restricted for the benefit of its members and all the objects of the trust have not been considered in totality. In the interest of justice, we deem it necessary to set aside the matter to the file of the Ld. CIT(E) with a direction to allow another opportunity to the assessee to explain the objects and demonstrate as to how they are covered under the category of charitable object as per provision of Section 2(15) of the Act. The assessee is also directed to make compliance before the Ld. CIT(E) and not to seek unnecessary adjournment. The matter regarding approval u/s.80G(5) of the Act is also required to be set aside which has to be re-adjudicated after first deciding the matter of registration u/s.12A of the Act.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.