SHRI SOUDHARMA BRIHAD TAPOGACHCHIYA TRISTUTIK JAIN SANGHA SAMARPANAM,AHMEDABAD vs. THE COMMISSIONER OF INCOME TAX (EXEMPTION), AHMEDABAD

ORDER \nPER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-\nThis appeal is filed by the Assessee as against the order dated\n27.07.2024 passed by the Commissioner of Income Tax\n(Exemption), Ahmedabad denying registration under section 12AB\nof the Income Tax Act, 1961 [herein after referred as 'the Act'] on\nthe ground that the objects of the Trust exclusively for Jain\nCommunity which is violation of clause (d) to Explanation of\nSection 12AB(4) of the Act r.w.s.13(1)(b) of the Act.\nI.T.A No. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 2\n2. Brief facts of the case is that the assessee is a Trust created on\n05-01-2023 with the following objects:\n\"(4) Objects:-\nThe Trust will follow the principles of lord Mahavira and will confirm to\nhis main objectives, subsidiary objectives and principles of Jainism\n(1) Jainism has seven spheres and it will act accordingly keeping the\nseven spheres before the Centre.\n1.- Jain mandir:\nThis organization will construct, assist in constructing Jin temples\nconforming to the tenets of Jainism as required and property\nadminister and maintain existing-ancient Jin temples\n2. Jain Pratima:\nKeeping Jain Muni's advice in center, the Jain idol will be created.\n3. Shrut Gyan:\nTrust involved in activity of development and shrut gran for the\npurpose of awareness and spreading of Jain shrut gnan. Recreation of\nancient new jain scriptures with ancient method.\n4. Sadhu Sadhvi Valyavacha:\nCreation of Vaiyavacha Khatu for regular and special study of dixarthi,\nsadhu, sadhviji, Acharya Bhagwant, etc, of Jainism and collection of\ndonations keeping in corpus for fulfillment of religious requirement for\nsadhu and sadhvis.\n5. Sadharmik Bhakti:\nProgram and planning for all Jain followers-Shravak and shravika for\nthe purpose of creating internal sense of devotions of Jainism.\nMoreover, supporting in life living requirements and promoting them in\nsociety whose income follows under less income category-Poor\nfamilies. Support and service to future dixarthis and Mumukshs.\n6. Jivdaya:\nOne of the aims of Jainism is jivdaya, any innocent lives will be\nprotected and, providing them required ghascharas-grains-pulses etc.\nRescue animals-birds from butchers and support them to save them\nand creating and raising funds for the same.\n7. Anukampa:\nAs per the principles of Jainism carrying all activities of Anukampa\nSupport to all humans without any bias. One of the aim is to create\nI.T.A No. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 3\ngratitude towards Jainism in general society. Creating and growing\nlove and brotherhood among all.\n(2) Construction of Derasar-upashraya:\nThis institution will construct Derasar, Upashraya, Pathashala,\nGnanmandir, Pushadashala and canteen. So, the Shravakas who come\nfor darshan and worship will get support and adopt the shrines and\nupashrayas and repair them.\n(3) Dev Dravya:\nCreating fund of dev Dravya as per guidance of Acharya Bhagwant and\nas per principles of Jainism. Creating ornaments of tirthankara (Jain\ngod), creating new Jain Idols and Jain temple from collection of income\nfrom Ashtaprakari puja. Anjan Salaka will take action in accordance\nwith the existing law in the works of repair, improvement, increase\netc. and allot the surplus amount to other Jain Sangh as required.\nDevdravya will be used according to the principles of Jainism.\n(4) Creation of a separate fund according to principles of\nJainism:\nAccording to Jain principles, for the Ashtaprakari worship of God,\ndifferent funds like Phulpooja, Sukhadpooja, Prakshal etc. will be\ncollected and spent.\n(5) Consolidated Fund (Common Fund):\nCreate a fund for the upkeep and maintenance of the institution and\nestablish an idol of God as per the constitution of the institution. Anjan\nwill perform Salaka and conduct.\n(6) This Trust runs according to the principles of Jainism and will act\naccordingly and will seek the advice of Acharya Bhagwant wherever\nnecessary.\n(7) This trust will construct Derasar, Gnan Mandir, Pathshala,\nBhojanshala, Upashrayo, Vaiyavacha Bhavan, Ayambil Shala, Yatrik\nBhavan, Library (Books of Jainism) etc. Will maintain and repair when\nnecessary.\n(8) This Trust will greet all the shravak and shravikas who believes in\njain sangh and jainism. According to the principles of Jainism, all\nnecessary steps will be taken to inculcate Jain rites in the children. Will\norganize religious tours. Conducts camps, will work to inculcate rites in\nchildren and Adults.\n(9) This Trust will request for the chaturmas of Acharya Bhagwant and\nwill make the do chaturmas according to the conveniency and will take\nI.T.A No. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 4\nbenefit to gain knowledge from Acharya Bhagwant, Sadhus and\nsadhviji in paryushan and will endeavor to disseminate it.\n(10) To inculcate the religious spirit in the children, services of\nreligious experts will be taken and the children studying in the school\nwill be encouraged. Create and promote a library of religious books.\nThe Trust shall act in accordance with the principles of Jainism and\nexisting laws and shall raise necessary funds (donations) for the same\nand plan expenditure as per the provision in the Constitution as\nnecessary and allocate the amount as per the provisions of the\nConstitution and principles of Jainism as necessary to the organization\nwith the same purpose.\n(11) Notwithstanding anything not stated in this trust deed, the\nAcharya may take discretionary decisions and act according to the\nadvice of the Lords in accordance with the principles of Jainism. All the\nactivities of this organization like Derasaro- Upashrayo-Paushadshalas-\nPrachan Hall Murtipratistha, Anjan Shalaka etc. will be done according\nto the prevailing principles of Jainism.”\n3. The assessee filed application for registration in Form 10AB on\n13-01-2024 before Ld. CIT(E) for registration u/s.12AB of the Act.\nThe assessee was called upon to furnish details of documents vide\nnotices dated 30-04-2024, 06-06-2024. In response, the assessee\nfurnished partial details. Therefore a show cause notice dated 24-\n07-2024 was issued by the Ld CIT[E] that the objects of the Trust\nare confined to the benefit of particular religious community or\ncaste namely “Jains” which is specific violation as defined in\nExplanation to Section 12AB(4) of the Act and why the registration\nshould not be rejected to the assessee Trust. The assessee neither\nfiled reply nor sought for any adjournment. Therefore the Ld. CIT(E)\ndenied registration by observing as follows:\n\" ...

7. In a recent judgment of the Supreme Court in CIT v. Dawoodi\nBohara Jamat [2014] 43. taxmann.com 243, it has been held that Sections\n11 and 12 are substantive provisions which provide for exemptions to\nreligious or charitable trusts. Sections 12A and 12AA lay down the\nprocedural requirements. Section 13 sets out the circumstances in which\nthe exemption would not be available to a religious or charitable trust.\nOne restriction is where the trust or institution is created or established\nfor the benefit of any particular religious community or caste [Section\n13(1)(b)]. In this context, while interpreting the scheme of these\nprovisions, the Supreme Court has held that Section 13 has to be read in\nconjunction with the provisions of Sections 11 and 12 for determining the\neligibility of a trust to claim exemption under the aforesaid provisions:\n\"16. Therefore, under the scheme of the Act. Sections 11 and 12\nare substantive provisions which provide for exemptions available\nto a religious or charitable trust. Income derived from property\nheld by such public trust as well as voluntary contributions\nreceived by the said trust are the subject-matter of exemptions\nfrom the taxation under the Act. Sections 12A and 12AA detail the\nprocedural requirements for making an application to claim\nexemption under Sections 11 or 12 by the assessee and the grant\nor rejection of such application by the Commissioner. A conjoint\nreading of Sections 11, 12, 12A and 12AA makes it clear that\nregistration under Sections 12A and 12AA is a condition precedent\nfor availing benefit under Sections 11 and 12. Unless an institution\nis registered under the aforesaid provisions, it cannot claim the\nbenefit of Sections 11 and 12. Section 13 enlists the circumstances\nwherein the exemption would not be available to a religious or\ncharitable trust otherwise falling under Section 11 or 12 and\ntherefore, requires to be read in conjunction with the provisions\nof Sections 11 and 12 towards determination of eligibility of a\ntrust to claim exemption under the aforesaid provisions.\"\nI.T.A Νο. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 6\n8. In the case before the Supreme Court, it has further been held as\nfollows:\n\"45.... What is intended to be excluded from being eligible\nfor exemption under Section 11 is a trust for charitable\npurpose which is established for the benefit of any particular\nreligious community or caste.\"\n9. In the present case, the CIT has held that the dominant nature\nunderlying the setting up of a trust was to benefit only the\nAgrawal community. The CIT relied upon such material as was\nproduced by the assessee. If according to the assessee, the trust\nexists not merely for the benefit of the Agrawal community or for a\nparticular religious group but for the benefit of the general public\nfor a charitable or religious purpose, it would be necessary for the\nassessee to satisfy the Commissioner about the activities of the\ntrust or the genuineness of its objects. Such a requirement is\nexpressly incorporated in clauses (a) and (b) of sub section (1) of\nSection 12AA.\n10. The assessee having failed to discharge the burden, the Tribunal\nin our view was justified in confirming the decision of the\nCommissioner. At the same time, it has been left open to the\nassessee to move a fresh application for registration before the\nCommissioner. We need only to clarify that if this is done, it shall\nbe duly considered in accordance with law on the basis of the\nmaterials that will be produced by the assessee.\n11. Learned counsel appearing on behalf of the assessee relied upon\nan earlier judgment of the Supreme Court in Ahmedabad Rana\nCaste Association v. CIT (1971) 82 ITR 704. The judgment of the\nSupreme Court may not be of much assistance to the appellant\nsince the position under the 1922 Act was materially different from\nthe Act of 1961, as would be apparent from the following extract of\nthe judgment:\n\"4... Under the Act 1922 a trust for the benefit of any\nparticular religious community or caste was entitled to\nexemption but under the Act of 1961, a charitable trust\nwhich is created for such benefit on or after the first day of\nApril, 1962, would be disentitled to the exemption. In the\npresent case the trust was created prior to 1st April, 1962,\nI.T.A No. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 7\nand, therefore, no question arises of its not being entitled to\nthe exemption if other conditions were satisfied even though\nit was created for the benefit of the Rana caste of\nAhmedabad,\"\n12. In the circumstances, on the basis of the material which was\nproduced by the assessee on the record of the Commissioner and\nbefore the Tribunal, we are of the view that no substantial question\nof law would arise in this appeal so as to warrant the Interference\nof this Court. However, while dismissing the appeal, we clarify that\nthis would not affect the liberty which has been granted to the\nsociety to file a fresh application for registration.\n9.2 It is also important to go through the provisions of sec 13(1)(b) of the\nAct is applicable in the present case which are reproduced as under:\n\"13. (1) Nothing contained in section 11 or section 12 shall operate\nso as to exclude from the total income of the previous year of the\nperson in receipt thereof-\n(a) any part of the income from the property held under a trust for\nprivate religious purposes which does not ensure for the benefit\nof the public;\n(b) in the case of a trust for charitable purposes or a charitable\ninstitution created or established after the commencement of this\nAct, any income thereof if the trust or institution is created or\nestablished for the benefit of any particular religious community\nor caste;\"\nFrom the above it can be gathered that, the provision of sec 13(1)(b) of the\nAct is applicable only in a case of charitable trust/institution created or\nestablished after commencement of this Act and is created or established\nfor the benefit of any particular religious community or caste. However,\nsome courts had held that in case of composite trust/institution, ie,\ncharitable cum religious, the provision of sec 13(1)(b) of the Act is not\napplicable. However, the said controversy was resolved by the Hon'ble\nSupreme Court in the case of CIT vs Dawoodi Bohara Jamat, reported in\n43 taxmann.com 243, wherein the Hon'ble Apex Court held that the\nprovision of sec 13(1)(b) of the Act is applicable even to a composite\ntrust/institution and held as under.\n\"45. From the phraseology in clause (b) of section 13(1), it could be\ninferred that the Legislature intended to include only the trusts\nI.T.A No. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 8\nestablished for charitable purposes. That however does not mean\nthat if a trust is a composite one, that is one for both religious and\ncharitable purposes, then it would not be covered by clause (b).\nWhat is intended to be excluded from being eligible for exemption\nunder Section 11 is a trust for charitable purpose which is\nestablished for the benefit of any particular religious community or\ncaste.\"\nAccordingly, as per the Registration Certificate issued by the Deputy/\nAsst. Charity Commissioner, Ahmedabad vide certificate bearing\nregistration number E/23860/Ahmedabad it is verifiable that the trust is\nregistered on 04.05.2023 and the above referred object of the assessee trust\nis \"composite\" in nature. To fortify this finding, on perusal of Form 10AB\nat para/point 5 the applicant itself has opted other charitable objects in\naddition to the \"Religious object.\n10. From the above referred discussion and objects of the\napplicant/assessee it is evident that it is a Composite trust and above\nreferred object number 5 is restricted to benefit of a particular religious\ncommunity or caste ie. Jain, which is a specific violation under clause\n(d) below explanation to section 12AB(4) of Income Tax Act, 1961 r.w.s\n13(1)(b) of Income Tax Act, 1961.\n11. In view of the above, the present application filed in Form No. 10AB\nu/s 12A(1)(ac)(iii) of the Act is rejected and provisional registration\nstands cancelled.\n4. Aggrieved against the rejection order, assessee is in appeal\nbefore us raising the following Grounds of Appeal:\n\

1. On the facts and in circumstances of the case as well as law on the subject, the\nlearned Commissioner of Income Tax (Exemption) has erred in rejecting\napplication for registration u/s 12AB of the Act.\n2. On the facts and in circumstances of the case as well as law on the subject, the\nlearned Commissioner of Income Tax (Exemption) has erred in cancelling the\nprovisional registration of the assessee-trust.\n3. On the facts and in circumstances of the case as well as law on the subject, the\nlearned Commissioner of Income Tax (Exemption) has erred in invoking the\nprovisions of Section 13(1)(b) of the Act without considering that assessee-trust is\nI.T.A Νο. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 9\nreligious-cum-charitable trust and section 13(1)(b) of the Act is applicable only to\nthe charitable trust.\n4. On the facts and in circumstances of the case as well as law on the subject, the\nlearned Commissioner of Income Tax (Exemption) has erred in holding that\nassessee-trust has conducted 'specified violations' as per the explanation to\nsection 12AB(4) of the Act without considering that objects of assessee trust are\nnot limited to benefit of people following Jainism for a private group but is\nextended to all the people following Jainism.\n5. On the facts and in circumstances of the case as well as law on the subject, the\nlearned Commissioner of Income Tax (Exemption) has erred in not considering\nthat provisions of Section 13 of the Act can be invoked only at the time of\nassessment and not at the time of grant of registration.\n6. Appellant craves leave to add, alter or delete any ground(s) either before or in\nthe course of hearing of the appeal.\n5. Ld. Counsel Shri Hardik Vora appearing for the assessee\nsubmitted before us a Paper Book containing the Trust Deed with\ntranslated English Copy and relied upon judgements of Hon'ble\nGujarat High Court and others as follows:\n(i) CIT(E) -Vs- Bayath Kutchhi Dasha Oswal Jain Mahajan Trust\n(2016) 74 taxmann.com 199 (Gujarat)\n(ii) CIT, Rajkot -Vs- Leuva Patel Seva Samaj Trust (2014)\n42 taxmann.com 181 (Gujarat)\n(iii) Jamiatul Tankaria -Vs- CIT(E) [2024] 160 taxmann.com\n358 (Ahmedabad-Trib.) and\n(iv) Bhojalram Leuva Patel Seva Samaj Trust -Vs- CIT(E) [2024]\n162 taxmann.com 270 (Ahmedabad-Trib.)\nThus Ld Counsel requested to set aside the order passed by the Ld.\nCIT(E) and direct him to grant Registration u/s.12AB of the Act to\nthe assessee trust.\nI.T.A Νο. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 10\n6. Per contra Ld. CIT-DR Shri Kamlesh Makwana appearing for\nthe Revenue supported the order passed by Ld. CIT(E) and\nsubmitted that the Trust is created and registered on 05-04-2023.\nHence the new provision of Section 12AB(4) with Explanation [d]\nwill be squarely applicable to the facts of the present case. Since\nthe objects of the Trust is exclusively for particular community\nnamely “Jains” which is a specified violation as per Explanation [d]\nof Section 12AB(4) of the Act. Thus, the assessee Trust is not\nentitled for registration and the order passed by the Ld. CIT(E) does\nnot require any interference. Therefore the appeal filed by the\nassessee is liable to be dismissed.\n7. We have given our thoughtful consideration and perused the\nmaterials available on record. Section 12 to 12AB has undergone\nvarious changes from time to time. More particularly after\n01.04.2021 the procedure for making reference to CIT(E) for\ncancellation of registration granted earlier has changed under\nsection 12AB(4) of the Act. For ready reference the same is\nreproduced as under:\n\" (4) Where registration or provisional registration of a trust or an\ninstitution has been granted under clause (a) or clause (b) or clause (c) of\nsub-section (1) or clause (b) of sub-section (1) of section 124A, as the case\nmay be, and subsequently-\n(a) the Principal Commissioner of Commissioner has noticed\noccurrence of one or more specified violations during any previous\nyear, or\n(b) the Principal Commissioner of Commissioner has received a\nreference from the Assessing Officer under the second proviso to\nsub-section (3) of section 143 for any previous year; or\nI.T.A No. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 11\n(c) such case has been selected in accordance with the risk\nmanagement strategy, formulated by the Board from time to time,\nfor any previous year,\nThe Principal Commissioner of Commissioner shall-\n(i) call for such documents or information from the trust or\ninstitution, or make such inquiry as he thinks necessary in order to\nsatisfy himself about the occurrence or otherwise of any specified\nviolation,\n(ii) pass an order in writing, cancelling the registration of such trust\nor institution, after affording a reasonable opportunity of being\nheard, for such previous year and all subsequent previous years, if\nhe is satisfied that one or more specified violations have taken place\n(iii) pass an order in writing, refusing to cancel the registration of\nsuch trust or institution, if he is not satisfied about the occurrence\nof one or more specified violations,\n(iv) forward a copy of the order under clause (ii) or clause (iii), as\nthe case may be, to the Assessing Officer and such trust or\ninstitution.\nExplanation- For the purposes of this sub-section, the following shall\nmean \"specified violation”-\n(a) where any income derived from property held under trust,\nwholly or in part for charitable or religious purposes, has been\napplied, other than for the objects of the trust or institution, or\n(b) the trust or institution has income from profits and gains of\nbusiness which is not incidental to the attainment of its objectives\nor separate books of account are not maintained by such trust or\ninstitution in respect its objectives; or of the business which is\nincidental to the attainment of its objectives; or\n(c) the trust or institution has applied any part of its income from\nthe property held under a trust for private religious purposes,\nwhich does not ensure for the benefit of the public, or\nI.T.A No. 1571/Ahd/2024\nShri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam vs. CIT(E)\nPage No 12\n(d) the trust or institution established for charitable purpose\ncreated of established after the commencement of this Act, has\napplied any part of its income for the benefit of any particular\nreligious community or caste, or\n(e) any activity being carried out by the trust or institution,-\n(i) is not genuine, or\n(ii) is not being carried out in accordance with all or any of\nthe conditions subject to which it was registered: or\n(f) the trust or institution has not complied with the requirement of\nany other law, as referred to in item (8) of sub-clause (i) of clause\n(b) of sub-section (1), and the order, direction or decree, by\nwhatever name called, holding that such non-compliance has\noccurred has either not been disputed or has attained finality of\n(g) the application referred to in clause (ac) of sub-section (1) of\nsection 12A is not complete or it contains false or incorrect\ninformation. “\n7.

1. It is undisputed fact that the Assessee Trust is created on 05-\n01-2023 and the new provisions of section 12AB which is\napplicable from 01.04.2021. Perusal of the above provisions more\nparticularly Clause (d) to Explanation of Section 12AB(4) of the Act\nclearly laid down that registration of the Trust or Institution\nestablished for charitable purpose created or established after\nthe commencement of this Act, wherein the trust has applied\nany part of its income for the benefit of any particular religious\ncommunity or caste can be cancelled. In this context perusal of\nthe main objects of the Trust, which are reproduced in paragraph 2\nof this order, makes it abundantly clear that all the objects\nenumerated therein are related to religious activities more\nparticularly relating to “Jain Community” and to propagate\n"Jainism” i.e. charitable cum religious in nature is for the benefit\nof \"Jain\" caste which is a specific violation under clauses [c] and (d)\nto Explanation to Section 12AB(4) of the Act.\n7.