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

आयकर अपील सं /ITA No.1182/Ahd/2024

आयकर अपील सं /ITA No.1183/Ahd/2024 िनधारण वष /Assessment Year : 2025-26

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.

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.”

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. ITA Nos.1182 and 1183/Ahd/2024 Asst. Year : 2025-26

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.

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.

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.

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.

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.

In the combined result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the Open Court on 12th February, 2025 at Ahmedabad. (SUCHITRA KAMBLE) JUDICIAL MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 12/02/2025

अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(E), Ahmedabad 5. िवभागीय #ितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड फाईल / Guard file.