KSHATRIYA VIKASH SANSTHA,AHMEDABAD vs. CIT(EXEMPTION), AHMEDABAD

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ITA 1182/AHD/2024Status: DisposedITAT Ahmedabad12 February 2025AY 2025-265 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(E) erred in rejecting the assessee's applications for registration under section 12A and approval under section 80G at the stage of granting registration. Following the Gujarat High Court's decision in CIT v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust and the Co-ordinate Bench's decisions in Bhojalram Leuva Patel Seva Samaj Trust and Shree Naminath Shwetambar Murtipujak Tapagachh Jain Religious Trust, the Tribunal stated that the applicability of section 13(1)(b) should be examined at the assessment stage, not at the time of granting registration. The Tribunal directed the CIT(E) to re-examine the applications by considering the financial records and activities of the trust, and to provide the assessee with a reasonable opportunity of being heard. The orders of the CIT(E) were set aside, and the matter was restored to the CIT(E) for fresh adjudication. No issue was expressly left undecided.

What were the facts?

The assessee, Kshatriya Vikash Sanstha, filed applications for registration under section 12A and approval under section 80G of the Income Tax Act, 1961, for Assessment Year 2025-26. The Commissioner of Income Tax (Exemptions) [CIT(E)], Ahmedabad, rejected both applications. The CIT(E)'s reasoning was that the trust's objectives primarily benefited the Chauhan community, thus attracting section 13(1)(b) of the Act, and that the assessee failed to provide sufficient evidence of general public benefit. The assessee appealed these orders, dated 30-03-2024 (for 12A) and 22-03-2024 (for 80G), to the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench.

What were the issues?

1. Whether the Ld. CIT(Exemption) erred in law and fact in rejecting the application for registration under section 12A of the Income Tax Act, 1961, on the grounds that the trust's objectives primarily benefited the Chauhan community, thereby invoking section 13(1)(b) at the registration stage. 2. Whether the Ld. CIT(Exemption) erred in law and fact in rejecting the application for approval under section 80G of the Income Tax Act, 1961, on grounds of limitation (implicitly referring to the same issue as in question 1). Assessee's Arguments: The assessee contended that the trust deed and audited financial statements (FY 2018-19 to 2023-24) demonstrate genuine charitable activities not solely restricted to the Chauhan community. The assessee argued that section 13(1)(b) should be examined at the assessment stage, not during the grant of registration under section 12A, and that the CIT(E) failed to conduct a proper factual examination. The assessee relied on judicial precedents like Bhojalram Leuva Patel Seva Samaj Trust and Shree Naminath Shwetambar Murtipujak Tapagachh Jain Religious Trust. The assessee requested the matter be restored to the CIT(E). Revenue's Arguments: The Revenue, through the CIT-DR, did not object to the matter being restored to the CIT(E) for fresh consideration.

Which sections of the Income-tax Act were involved?

Section 12A,Section 80G,Section 13(1)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AUMEDABAD

Before: MS. SUCHITRA KAMBLE

For Appellant: Shri Chetan Agarwal, AR
Hearing: 10/02/2025Pronounced: 12/02/2025

Heard together (2 matters)

ITA No.1182/Ahd/2024
ITA No.1183/Ahd/2024

Read from the judgment's own cause title. This page is filed under one of them.

PER MAKARAND V. MAHADEOKAR, AM:

These appeals have been filed by the assessee against the orders of the Commissioner of Income Tax (Exemptions), Ahmedabad [hereinafter referred to as “CIT(E)”], rejecting the application for registration under section 12A and approval under section 80G of the Income Tax Act, 1961 [hereinafter referred to as “the Act"]. The order under section 12A of the Act

was passed vide order dated 30-03-2024, and the order under section 80G of the Act was passed vide order dated 22-03-2024. The CIT(E) rejected the applications on the ground that the objectives of the trust were primarily directed towards benefiting the Chauhan community, thereby attracting the provisions of section 13(1)(b) of the Act.

Facts of the Case:

2.

The assessee, Kshatriya Vikash Sanstha, is a trust engaged in activities claimed to be charitable in nature. The assessee filed applications seeking registration under section 12A of the Act and approval under section 80G of the Act. The CIT(E) rejected both applications on the grounds that the objectives of the trust were primarily directed towards benefiting the Chauhan community, thereby invoking section 13(1)(b) of the Act. The CIT(E) also noted that the assessee failed to provide sufficient evidence

demonstrating that its activities were for the benefit of the general public.

3.

Aggrieved by the order of CIT(E) the assessee is in appeal before us with following grounds of appeal:

In ITA No. 1182/Ahd/2024 - AY 2025-26

“Ld.CIT(Exemption) erred in law as well as on fact in rejecting and not granting registration u/s.12A of the Act on the facts and circumstances of the case.”

In ITA No. 1183/Ahd/2024 - AY 2025-26

“Ld. CIT (Exemption) erred in law as well as on fact in rejecting approval u/s.80G of the Act on ground of limitation.”

4.

During the course of the hearing, the Authorized Representative (AR) submitted a copy of the trust deed along with an English translation, as well

as the audited financial statements for the financial years 2018-19 to 2023-24. The AR contended that these documents establish that the trust is engaged in genuine charitable activities and is not restricted solely to the Chauhan community. The AR argued that section 13(1)(b) of the Act should not be invoked at the stage of granting registration under section 12A of the Act, as its applicability should be examined only at the assessment stage based on the actual utilization of funds and activities undertaken by the trust. The AR emphasized that the CIT(E) erred in rejecting the application without a proper factual examination of the trust's operations. In support of the contentions, the AR relied on various judicial precedents, including: - Bhojalram Leuva Patel Seva Samaj Trust (ITA No. 667 & 668/Ahd/2023) and Shree Naminath Shwetambar Murtipujak Tapagachh Jain Religious Trust (ITA No. 874/Ahd/2024).

5.

The AR further submitted that the audited financial statements of the trust indicate that its activities are aimed at public welfare, including education, medical relief, and other charitable objectives. The AR contended that these financial records should have been examined by the CIT(E) before concluding that the trust’s benefits are confined to a particular community. The AR requested to restore the matter back to CIT(E). The DR did not object to the matter being restored to the CIT(E) for fresh consideration based on the financial statements and other material placed on record.

6.

We have considered the arguments of both parties and reviewed the material placed on record. The key issue is whether the CIT(E) was justified in rejecting the assessee’s applications for registration and approval under sections 12A and 80G of the Act, respectively, by applying section 13(1)(b) of the Act, at the stage of registration.

6.1.

The Hon'ble Gujarat High Court in the case of CIT v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199 (Guj) held that section 13(1)(b) of the Act should be examined at the assessment stage, not at the time of granting registration under section 12A of the Act. The Co- ordinate Bench in the case of Bhojalram Leuva Patel Seva Samaj Trust and Shree Naminath Shwetambar Murtipujak Tapagachh Jain Religious Trust (supra) reiterated this position and directed reconsideration of registration

applications where section 13(1)(b) of the Act was prematurely invoked.

7.

Following the above judicial precedents, we find that the CIT(E) erred in rejecting the applications at the registration stage. The CIT(E) is directed to re-examine the application for registration under section 12A and approval under section 80G of the Act by considering the financial records and activities of the trust and affording a reasonable opportunity of being heard

to the assessee.

8.

In light of the foregoing discussion, we set aside the orders of the CIT(E) and restore the matter back to the CIT(E) for fresh adjudication.

9.

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

Order pronounced in the Open Court on 12 February, 2025 at Ahmedabad. (SUCHITRA KAMBLE) (MAKARAND V. MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

HeAGIAIG/Ahmedabad, feaie/Dated 12/02/2025 GP. WR, TAF. G./ 7. 0. NAIR. Sr PS ane wl wfaferft aif / Copy of the Order forwarded to :

Ss 7 PF OP PP

anftarif / The Appellant were / The Respondent.

‘Safes STAHL HTYET / Concerned CIT

NTR STYERT (3tihet) / The CIT(E), Ahmedabad faurtta viata, srry articta aftexor , UaHe/DR,ITAT, Ahmedabad,

mS BA /Guard file.

HTSRIFIR/ BY ORDER, weartta wet//

AeA UHR (Asstt. Registrar) oraer ontetta afer, ITAT, Ahmedabad

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