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Facts
The assessee, Patidar Samaj Trust Khajurdi, applied for registration under Section 12AB of the Income Tax Act. The CIT (Exemption) rejected the application, observing that many of the Trust's objects were confined to the Patidar Samaj community and not for the general public, citing Section 13(1)(b).
Held
The Tribunal held that the CIT's rejection was not justifiable as the Trust's objects, particularly object 7, clearly indicated a purpose to help distressed people regardless of caste or creed, for a social cause. Reliance was placed on Supreme Court and Tribunal decisions regarding the intention to benefit a section of the public.
Key Issues
Whether the CIT erred in rejecting the registration application under Section 12AB on the grounds that the Trust's objects were not for the general public, despite provisions for helping distressed people irrespective of caste or creed.
Sections Cited
12A, 12AB, 13(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the Assessee against order dated 28.03.2024, passed by the CIT(Exemption), Ahmedabad.
The assessee has raised the following ground of appeal :-
“1. That on facts, and in law, the learned CIT (Exemption) Ahmedabad has grievously erred in rejecting the application for registration u/s.12A(1)(ac)(iii) of the Act as Section 13(1)(b) would be applicable.”
The applicant Trust has applied for registration of the Trust under Section 12AB of the Income Tax Act, 1961 on 29.09.2023. Date of provisional approval as per Form 10AC was granted on 15.10.2021. In reference to the application filed by the applicant Trust in Form 10AB with the details the applicant was requested to submit certain details/documents vide notice dated 21.11.2023 and 22.12.2023. The applicant Trust submitted certain details/documents on 23.12.2023 and 19.01.2024. Show cause notice was issued on 02.03.2024 and the assessee submitted its reply on 05.03.2024. After going through the applicant’s submissions, the CIT (Exemption) observed that the Trust is created by the Patidar Samaj and also it can be seen that out of total Patidar Samaj Trust Khajurdi vs. CIT (Exemption) Page 2 of 3 eleven objects of the Trust, the objects 1, 3, 4, 5, 8 & 9 are charitable in nature are found to be confined to the caste members of Patidar Samaj and not for general public. Thus, the CIT (Exemption) rejected the applicant’s application and cancelled the provisional registration vide order dated 28.03.2024. The applicant filed appeal before us.
The Ld. AR submitted that there is a delay of 160 days in filing the present appeal due to the fact that the Managing Trustee of the Trust are not so literate and not having computer knowledge as well as e-mail address also not accessible by the Trustee. The Trustee’s attention was drawn to the rejection order of the CIT (Exemption) during the recent audit of the Trust accounts and, therefore, the Ld. AR requested that the delay in filing the present appeal be condoned as the delay was due to oversight and not deliberately done aby the Trustee. The reasons given for delay in filing the appeal appears to be genuine and hence the delay is condoned.
4.1 The Ld. AR submitted that the objects of the Trust categorically mentioned that paragraph no.7 of the object is clearly set out that this Trust is to help for distressed people without caste and creed, more specifically for social cause. Therefore, the finding of the CIT (Exemption) that some objects are for a particular community i.e. Patidar Samaj only is not justifiable for rejecting the application for registration of the Trust under Section 12A of the Act. The Ld. AR relied upon the decision of Hon’ble Apex Court in the case of Ahmedabad Rana Caste Association vs. CIT, 82 ITR 704 as well as decision of the Tribunal in the case of Brahmakshatriya Kanji Damji Hindu Sarvajanik Dharamshala Palitana vs. CIT (Exemption) - - order dated 09.12.2024.
The Ld. DR relied upon the order of the CIT (Exemption) and particularly pointed out paragraph nos.10 & 12 of the order wherein the particular Trust is confined to the caste member of Patidar Samaj only and not for general public as well as the members will be from the Patidar Samaj only and, therefore, provisions of Section 13(1)(b) of the Act would be applicable in the present case.
We have heard both the parties and perused all the relevant material available on record. Hon’ble Apex Court in the case of Ahmedabad Rana Caste Association (supra) categorically observed that it is sufficient if intention to benefit a section of Patidar Samaj Trust Khajurdi vs. CIT (Exemption) Page 3 of 3 public as distinguished from a specified individual and that will not go beyond the purview of public connected together and society at large. The reliance on the decision of Tribunal in case of Brahmakshatriya Kanji Damji Hindu Sarvajanik Dharamshala Palitana (supra) has also mentioned the decision of CIT vs. Dawoodi Bohara Jamat which was relied upon by the Ld. DR and has categorically mentioned the jurisdictional High Court in the case of CIT (E) vs. Jamiatul Bannat Tankaria (168 taxman.com 35) which has given interpretation of Section 13(1)(b) while issuing registration under section 12A of the Act. Thus, the decision relied by the Ld. DR actually supports the applicant Trust’s case. The Hon’ble Supreme Court in the case of Shastri Yagnapurush Dasji vs. Muldas Bhudardas Vaishya (1966 AIR 1119) has also reiterated the same and thus the CIT (Exemption) should have taken into account these basic principles. The present applicant Trust has categorically mentioned the beneficiaries of the society at large in cl. 7 of the objects. Hence, we direct the CIT (Exemption) to consider these decisions and adjudicate the matter afresh in consonance with the Hon’ble Apex Court’s decision/views. The applicant trust/assessee be given opportunity of hearing by following the principles of natural justice.
In the result, appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on this 12th February, 2025.