SHREE NISHKALANK MAHADEV KOLIYAK,BHAVNAGAR vs. CIT(EXEMPTION), AHMEDABAD

Your appellant craves liberty to add, to alter, to modify, to amend or to withdraw / delete any of the grounds of appeal at any time, on or before the hearing of appeal.”

At the outset, we observe that the appeal is time barred by 07 days. Asst.Year –N.A. - 2–

The brief facts of the case are that the assessee filed application for registration of trust under Section 12AB of the Act. However, Ld. CIT(E) rejected the application for grant of registration for the reasoning that firstly the objective / objects of the trust are for the benefit of Mahanat and his family. Secondly, the trust vide response dated 01.12.2023 has only submitted part details and has not furnished the full details / documents as called for. Thirdly, on perusal of documents / responses received by the trust, CIT(E) was of the view that expenditure towards “Gaushala” as reported in the annual accounts are not in consonance with the objects of the trust. The CIT(E) noticed that one of the objects of the trust was providing for up-keep and rearing of Mahant’s family and therefore, the trust falls under the category of “private religious community”. Accordingly, assessee’s application for grant of registration under Section 12AB of the Act was rejected by Ld. CIT(E).

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(E), denying the grant of registration under Section 12AB of the Act.

Before us, the Counsel for the applicant trust submitted that the Mahant family is an employee of the temple and therefore, any expenditure of such employees or their family was well within the objects of the trust. Asst.Year –N.A. - 3–

In response, the Ld. D.R. placed reliance on the observations made by the Ld. CIT(E) in his order.

We have heard the rival contentions and perused the material on record. It is a well settled law that provisions of Section13(1)(b) of the Act can be invoked only at time of assessment and not at time of grant of registration under Section 12A of the Act. In the case of Bargahe Husaini Trust-Monpar [2024] 165 taxmann.com 141/208 ITD 158 (Ahmedabad - Trib.), the assessee-trust filed application for grant of final registration under section 12A of the Act. The Commissioner (Exemption) observed Asst.Year –N.A. - 4–

We have heard the rival contentions and perused the material on record. In the case of Bhojalram Leuva Patel Seva Samaj Trust v. CIT (Exemptions) [2024] 162 taxmann.com 270 (Ahmedabad - Trib.) , the ITAT held that provisions of section 13(1)(b) can be invoked only at the time of assessment and not at the time of grant of registration under section 12A.

Again, in the case of Jamiatul Banaat Tankaria v. CIT (Exemption) [2024] 160 taxmann.com 358/205 ITD 673 (Ahmedabad - Trib.), the ITAT held that where objects of assessee-trust were primarily charitable rather than favouring any specific religious community, CIT(E) was not justified in denying registration under Section 12A, by invoking Section 13(1)(b) as said provision would be attracted only at time of assessment and not at time of grant of registration.

In the case of Malik Hasmullah Islamic Educational and Welfare Society v. CIT [2012] 24 taxmann.com 93/138 ITD 519 (Lucknow), the ITAT held that since provisions of Sections 11, 12 and 13 are intended for exercise of juri iction by an Assessing Officer in an assessment Asst.Year –N.A. - 5–

In the case of St. Joseph Academy v. DIT (Exemption) [2014] 50 taxmann.com 216/153 ITD 669 (Hyderabad - Trib.), the ITAT held that provisions of Section 13 can be invoked by Assessing Officer while framing assessment and not by Commissioner while considering application for registration under Section 12AA.

In view of the above judicial precedents, looking into the facts of the instant case, we are of the considered view that the provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration under Section 12A of the Act.

Our view is further supported by the decision of the Hon 'ble juri ictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199/243 Taxman 60 (Gujarat)/[2017] 8 ITR-OL 494 (Guj.) wherein on the issue of denial of grant of registration u/s 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. The relevant finding of the Hon'ble High Court at para 8 of his order is as under:

In the result, in view of the above observations, the matter is restored to the file of CIT (Exemptions), for de-novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order for rejecting the application filed by the assessee trust. CIT (Exemptions) is directed to look into the merits of the activities of the applicant trust and thereafter pass appropriate orders in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 22/01/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 22/01/2025