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Facts
The assessee, Sir P. T. Sarvajanik College of Science Alumni Association, filed applications for registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii) of the Income-tax Act. The CIT(E) rejected both applications, citing that the objects of the association were primarily for the benefit of its members and not for the general public, and that valid registration under Section 12A was a prerequisite for 80G approval.
Held
The Tribunal held that the objects of the trust were for the overall development of students in education and for the financial assistance of poor and needy students, covering general public utility. Relying on previous judgments, the Tribunal found that the CIT(E) erred in rejecting the applications solely based on a few objects benefiting members and not considering the overall charitable nature of the trust. The Tribunal also noted that for 80G approval, the issue of 12A registration should be considered separately.
Key Issues
Whether the objects of the alumni association were for the benefit of members only or for general public utility. Whether a valid 12A registration is a mandatory pre-requisite for 80G approval.
Sections Cited
12A(1)(ac)(iii), 80G(5)(iii), 12AB(1)(b)(ii)(B), 115TD, Rule 17CB, Rule 17A(1), Rule 17A(2), 12A(1)(ac)(vi), 12A, 80G(5)(iii), 12A(1)(ac)(vi), 80G(5)(b)(A), 80G, 12A(1)(ac)(iii), 12A, 80G
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Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: These two appeals emanate from the orders dated 27.06.2024 and 28.06.2024 passed by the learned Commissioner of Income-tax (Exemption), Ahmedabad [in short, “the ld. CIT(E)”], wherein ld. CIT(E) rejected assessee’s application filed in Form No.10AB u/s 12A(1)(ac)(iii) of the Income-tax Act (in short, ‘the Act’) and also cancelled the provisional registration. The CIT(E) also rejected application for registration u/s 80G(5)(iii) of the Act. 2. The grounds of appeal raised by the assessee in are as follows: “(1) The learned CIT (Exemption), Ahmedabad's order u/s 12AB(1)(b)(ii)(B) of the Act is contradictory to law and facts of the case and hence, liable to be quashed or annulled in toto.
& 891/SRT/2024 Sir P. T. Sarvajanik College of Science Alumni Association Chapter (2) On the facts and in the circumstances of the case as well in law, the learned CIT (Exemption), Ahmedabad has erred in passing the order rejecting the application filed in Form 10AB u/s 12A(1)(ac)(iii) of the Act for registration w/s 12AB(1)(b)(ii)(A) of the Act and cancelling the provisional registration, without considering in the right, lawful and proper perspectives the corroborative, speaking and credible documentary evidences/materials furnished forming part of the explanations offered by the applicant-trust in response to the various notices/SCN issued during the proceedings for fresh registration u/s 12AB(1) of the Act, to satisfy the CIT(E) about the objects of the trust and the genuineness of the activities carried out by the applicant- trust and hence, the CIT (E)'s action to pass the order u/s 12AB(1)(b)(ii)(B) of the Act denying to grant the registration, being arbitrary, prejudicial, unwarranted of facts, subjective, without jurisdiction, bad in law and hence, liable to be struck down. (3) On the facts and in the circumstances of the case as well in law, the CIT (E) has erred in passing the order appealed against with a direction to the applicant-trust to compute the tax liability u/s 115TD of the Act r.w. Rule 17CB of the I.T. Rules, 1962 and hence, not justified. (4) Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of the appeal.”
The facts of the case in brief are that the assessee filed an application for registration in Form No.10AB u/s 12A(1)(ac)(iii) of the Act. The ld. CIT(E) issued notices on 25.04.2024, 16.05.2024 and 13.06.2024. He has discussed legal background of Rule 17A(1), 17A(2) along with section 12AB of the Act. The assessee-trust had been granted order of provisional approval in Form No.10AC on 07.03.2023 under sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act for the period commencing from AY 2023-24 to 2025- 26. The applicant was requested to furnish details and documents vide notice dated 25.04.2024 and 16.05.2024. In response, the assessee submitted certain details on 09.05.2024 and 16.05.2024. On perusal of details and objectives of the applicant as mentioned in the Memorandum of Association (MoA), it was found that the objectives/objects of the applicant are for the benefit of a & 891/SRT/2024 Sir P. T. Sarvajanik College of Science Alumni Association Chapter particular religious community or caste, i.e., past and present students of Sir P.T. Sarvajanik College of Science, Surat and members of the Trust. Hence, show cause notice was issued by the CIT(E) on 13.06.2024, which is at para 6.2 of the order. Reply of appellant is a para 6.3 of the order. The appellant submitted the main aims and objects of the association is to take measures, do all acts, deeds and things to improve and maintain the social, economic, physical and moral, cultural life and upliftment of general public without any discrimination. The appellant relied upon the various decisions, which is at page 11 of the appellate order. The CIT(E) did not find reply of the assessee as acceptable. He observed that object Nos. 6, 7 and 8 are for the benefit of members only and not for the benefit of public at large. He held that the objects of the applicant are formed as association to protect the business interest and welfare of its members which can hardly be considered as charitable in nature, particularly when the essence of altruism is absent from the same. The welfare activities adopted for its members are in nature of services being rendered to members as are common in other welfare organizations, which could not be termed for general public utility. He relied upon the decision of Hon’ble Punjab & Haryana High Court in case of CIT vs. Truck Operators Association, 9 taxmann.com 267. Further, he held that the case laws relied upon by the applicant are not applicable. The issue is not that assessee-trust is working for some specific religious community or caste. The issue is that some of the objects of the assessee-trust mentioned in para 7 are & 891/SRT/2024 Sir P. T. Sarvajanik College of Science Alumni Association Chapter for the benefit of members only and not for the benefit of public at large. Therefore, the application filed in Form No.10AB u/s 12A(1)(ac)(iii) of the Act was rejected and provisional registration was also cancelled.
Aggrieved by the order of CIT(E), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) submitted a paper book giving various details including the applicant for provisional registration under Rule 17A, provisional registration order u/s 12A(1)(ac)(vi), Memorandum of Association, Rules and Regulations of the Trust, application registration u/s 12A(1)(ac)(iii) in Form 10AB, compliance of show cause notice dated 13.06.2024 and provisional approval under clause (iv) of first proviso to sub-section (5) of section 80G of the Act. He relied on the decisions in the cases of (i) CIT vs. Dawoodi Bohara Jamat, 43 taxmann.com 243 (SC), (ii) CIT(E) vs. Jamiatul Bannat Tankaria, 168 taxmann.com 35 (Guj.), (iii) Bargahe Husaini Trust-Monpar vs. CIT(E), 165 taxmann.com 141 (Ahd- Trib.), (iv) Shree Dandhavya Chhasath Prajapati Samaj vs. CIT(E), 167 taxmann.com 610 (Ahd – Trib.), (v) Ahmedabad Rana Caste Association vs. CIT(E), 82 ITR 704 (SC), (vi) Indus Alumni Association Indus University Campus vs. CIT(E), 168 taxmann.com 526 (Ahd – Trib.), (vii) CIT(E) vs. Bayath Kutchhi Dasha Oswal Jain Maharaj Trust, 74 taxmann.com 199 (Guj.), (viii) Jito Bhavnagar Chapter Foundation vs. CIT(E), 167 taxmann.com 646 (Ahd – Trib.), (ix) Ahil Bhartiya Pashwachandra Jain Charitable Trust vs. CIT(E), 167 taxmann.com 459 (Rajkot – Trib.), (x) Sunni Muslim Jamat Aamena Madressa Ebdatgah Waqf Committee vs. CIT(E), 161 ITA Nos.890 & 891/SRT/2024 Sir P. T. Sarvajanik College of Science Alumni Association Chapter taxmann.com 555 (Surat- Trib.), (xi) CIT vs. D. N. Memorial Trust, 152 taxmann.com 33 (J & K), (xii) CIT(E) vs. Rajkot Jilla Gayatri Parivar Trust, 117 taxmann.com 122 (SC) and (xiii) Shirmoni Gurdwara Parbandhak Committee vs. CIT(E), 129 taxmann.com 214 (Amritsar – Trib.). He also relied upon the decision of Co-ordinate Bench of ITAT, Surat in case of SVNIT Alumni Association Surat Chapter vs. CIT(E), in & 1077/SRT/2024, dated 20.02.2025. The ld. AR submitted that the ld. CIT(E) has rejected the application for registration only on the basis of objects Nos.6, 7 & 8 out of the 16 objects of the association. The objects are to be seen as whole and not in isolation. The ld. AR has submitted an analysis of the objects of the trust and argued that only object Nos.6, 7 and 8 may be considered as being for the benefit of the Alumni. He submitted that the very noble object behind creation of this alumni trust is to provide financial as well as non-financial support to the poor and needy students without any discrimination on the basis of caste, community, colour, class or creed. The ld. CIT(E) ignored that the beneficiaries are the students to whom the scholarships or other support or guidance are provided through various activities carried out by the trust and more notably, the beneficiaries students are not the member of the appellant trust. He, therefore, requested to set aside the order of the CIT(E) and allow registration to the assessee-trust.
ITA Nos.890 & 891/SRT/2024 Sir P. T. Sarvajanik College of Science Alumni Association Chapter 5. On the other hand, the learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) submitted that the Bench may take appropriate decision.
We have heard both parties and perused the materials available on record. We have also deliberated on the decisions relied upon by the ld. AR. On perusal of the objects of the trust, it cannot be said that the appellant association has been formed only for the benefit of the members of the association. We find that the objects of the trust were for overall development of students in the field of education, relief to the poor, medical relief and charitable in nature. It was also for the financial assistance to poor and needy students. We find that issue under consideration is covered by the decision of the Co-ordinate Bench of ITAT, Surat in the case of SVNIT Alumni Association Surat Chapter vs. CIT(E), in & 1077/SRT/2024, dated 20.02.2025 wherein the Tribunal set aside the order of ld. CIT(E) and allowed the appeal. The relevant part of this order is reproduced as under: “6. We have heard both parties and perused the materials available on record. We have also deliberated on the decisions relied upon by the ld. AR. On perusal of the objects of the trust, it cannot be said that the appellant association has been formed only for the benefit of the members of the Alumni Association. We find that the objects of the trust were for overall development of students in the field of Science, Engineering and Technology. It was also for the financial assistance to poor and needy students. The activities of the association are for benefit of cross section of the society, which covers general public utility and not for the benefit of any particular segment. The decisions relied upon by the ld. AR are also applicable in the present case. In case of Shah Gulabchand Shree Parshwanath Trust (supra), the matter was remanded back to CIT(E) because he denied registration u/s 12A to the assessee-trust due to one objective benefitting only Jain community, but overlooked broader charitable objectives. The decision of ITAT, Ahmedabad in case of Parul University Alumni Association (supra) is also supports case of the assessee. It was held in the said case that looking into the objects of the trust, it could not ITA Nos.890 & 891/SRT/2024 Sir P. T. Sarvajanik College of Science Alumni Association Chapter be held that the said trust was formed only for the benefit of a particular community, it was also observed that this aspect should be considered at the time of grant of exemption u/s 11 of the Act and the provisions of section 13 should not be invoked at the time of grant of registration u/s 12AA of the Act. After considering the facts of the cases and objectives of the Association, we are of the opinion that objects of the trust are for education, particularly in the field of science, engineering and technology and advancement of any other objects of general public utility and not for benefit of only the members of the association. Hence, the order of CIT(E) is set aside and ground of the appellant is allowed.”
Since the facts of the case are similar, following the decision in case of SVNIT Alumni Association Surat Chapter (supra), we set aside the order of ld. CIT(E) and allowed the appeal of the appellant.
In the result, the appeal of the assessee is allowed.
9. The grounds of appeal raised by the assessee are as under: “(1) The learned CIT (Exemptions), Ahmedabad's order u/s 80G(5)(ii)(b)(B) of the Act is contradictory to law and facts of the case and hence, liable to be quashed or annulled in toto. (2) On the facts and in the circumstances of the case as well in law, the learned CIT (Exemptions), Ahmedabad has erred in not granting the approval u/s 80G(5)(b)(A) of the Act without considering in the right, lawful and proper perspectives the documentary evidences, materials, statements of accounts, information, etc. furnished before him to satisfy himself about the genuineness of the activities carried out by the applicant trust and in fulfilment of all the conditions laid down in Clause (i) to (v) of Sub Section (5) of Section 80G of the Act and hence, the CIT (E)'s action not to grant the approval u/s 80G(5) of the Act being arbitrary, subjective, prejudicial, is without jurisdiction, bad in law and not justified and therefore, the order passed u/s 80G(5)(ii)(b)(B) of the Act is liable to be struck down. (3) Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of the appeal.”
10. In this appeal, the application for approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Act was filed in Form 10AB electronically. The ld. CIT(E) has issued notices of hearing on 26.04.2024. The ITA Nos.890 & 891/SRT/2024 Sir P. T. Sarvajanik College of Science Alumni Association Chapter ld. CIT(E) observed that applicant did not have any valid order for registration u/s 12A/12AB of the Act in Form 10AD because the application u/s 12A(1)(ac)(iii) of the Act was already rejected. The ld. CIT(E) has relied on the decision of Hon’ble Gujarat High Court in case of CIT(E) vs. Shree Tapeshwar Hanumanji Bajrang Charity Trust, 122 taxmann.com 98 and held that the registration u/s 12A of the Act is a pre-requisite for grant of approval u/s 80G of the Act. In absence of valid registration u/s 12A of the Act, approval u/s 80G of the Act was also rejected without deciding on merit.
The ld. AR of the assessee requested to restore the matter to the file of ld. CIT(E) for fresh order on merit. On the other hand, ld. CIT-DR for the revenue relied on the order of ld. CIT(E).
We have heard both parties and perused the materials available on record. We have already set aside the order of ld. CIT(E) in rejecting application for registration u/s 12A(1)(ac)(iii) of the Act in (supra) cited above. Hence, following the reasons given in ITA No.890/SRT/2024 (supra), the order of ld. CIT(E) is also set aside and remitted to the file of ld. CIT(E) for fresh order after deciding the application u/s 12A(1)(ac)(iii) and after granting reasonable and sufficient opportunity of being heard to the appellant. For statistical purposes, this appeal of the assessee is also treated as allowed. 13. In the result, appeal of the assessee is also allowed for statistical purposes.