SHREE PARJIYA BRAHMAN ABHYUDAY MANDAL,KUTCH vs. CIT(EXEMPTION), AHMEDABAD

Therefore, ld.CIT (E ) issued a show- cause notice to the assessee, on 19/07/2023, and the relevant portion of the same is reproduced hereunder:

However, the assessee has not furnished any response. Therefore, ld. CIT(E ), from the application of the assessee, noticed that there is a violation of the provisions of section 13(1)(b) of the Act. The Ld CIT(E ) noticed that section 13(1)(b) of the Act is applicable to the assessee, under consideration. The provisions of section 13(1)(b) of the Act, stipulates that provisions of section 11 and 12 would not apply in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof, if the trust or institution is created or established for the benefit of any particular religious community or caste. Therefore, the provision of section 13(1)(b) of the Act, is applicable only in a case of charitable trust/institution created or established after commencement of this Act, if the trust/institution is created or established for the benefit of any particular religious community or caste. As per Form No. 10AB filed by the assessee, the date of incorporation/Creation/Registration of the trust has been mentioned as 28/04/1977, which is pending prior to commencement of Act. Also, one of the objects of the trust is for the benefit of particular religious community. Therefore, there is clear violation of section 13(1)(b) of Income Tax Act. 1961.The ld CIT( E) also relied on the judgement of Hon'ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat, reported in 43 taxmann.com 243, wherein the Hon'ble Apex Court held that the provision of section 13(1)(b) of the Act, is applicable even to a composite trust/institution. Finally, ld.CIT( Exemption) held that assessee cannot be granted registration u/s 12A of - Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E)

Aggrieved by the order of the Ld. CIT(E), the assessee is in appeal before us.

The Ld. Counsel for the assessee, argued a lot and took us through the objects- clauses of the assessee-trust and stated that assessee -trust is not for particular community or caste. The assessee- trust is open for whole section of society and benefits for public. Therefore, the trust activity is not restricted only to ‘Parjiya Brahman Samaj’. The objects of the trust narrated in the objects- clauses of the deed are as follows:

To perform or to make perform religious rituals in the Kankubai Mandir of Adesar, to conduct Jirnoddhar, to provide accommodation and food facilities for pilgrims visiting the temple and for their religious-social rituals.

To organize and take measures to achieve social, legal, educational, academic and cultural cooperation with the communities of the other region.

To carry out activities which increase the sense of unity, cooperation and brotherhood among the members of the society. Note:- There shall be no restriction on the scope or territory of any kind for the provision of education, medical treatment and medical assistance to the members of the Parjiya Brahman Trust.”

On the other hand, Ld. CIT-DR for the Revenue, submitted that objects stated in the trust deed relates to only particular caste and community i.e. ‘Parjiya Brahman Samaj’ only. Therefore, such trust which is exclusively for particular caste or section of persons, should not be granted registration.

We have heard the Learned Counsel appearing on behalf of the respective parties at length. We note that the assessee-trust was denied registration u/s.12A of the Act by the Ld. CIT(E) stating that the objects of the assessee- trust were restricted to particular community and caste, that is, “Parjiya Brahman Samaj”. However, we have gone through the objects of the trust and the activities of the trust in respect of school run by the trust and noted that in the school, the students belonging to all castes and communities are studying, that is, the school run by the trust is open for all sections of students and for general purposes, therefore, we note that registration denied by the Ld. CIT(E) on this ground is not valid. We note that the trust under consideration had large number of other objects for benefit of general public, which is not restricted to a particular community. Therefore, such trust is entitled to get registration. 11.Apart from this, the provisions of Section 13(1)(b) of the Act, is not appliable at the time of registration. These are the provisions which are applicable at the time of doing the assessment, therefore, denial of - Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E)

It is pertinent to note that the Hon’ble Apex Court has categorically held in the said decision that section 13(1)(b) comes into picture and is to be applied only when the eligibility of exemption of income in terms of provisions of section 11 is to be determined and not at the time of grant of registration. The Hon’ble Apex Court has categorically stated that the assessee has to first cross the hurdle of being eligible to exemption under section 11 by obtaining a certificate of registration under section 12A in this regard. Having crossed this hurdle, only then the provisions of section 13(1)(b) would come into picture, and a trust which is for the benefit of particular community, but it objects are otherwise charitable, is a valid trust for the purpose of grant of registration.

The ld.CIT(Exemption), in the present case, we find, has only picked a portion of the order of the Hon’ble Apex Court, wherein it has been held that the provisions of section 13(1)(b) of the Act would be applicable to a trust with mixed objects i.e. both charitable and religious. But he has failed to take note of the finding of the Hon’ble Apex Court that section 13(1)(b) would apply only at the time of grant of exemption under section 11, 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 jurisdictional High Court in the case of CIT Vs. Bayath Kutchhi Dasa Oswal Jain Mahajan Trust, (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 - Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E)

Even otherwise, we have gone through the objects of the trust, which were placed before us in the “statement of facts” which are as under: “1. Propagation and campaign of any sort of Religious and worldly cultivated activities, training and education, to maintain and administer Urdu English & Arabic Language cultivation and training, Cultivation of craft and industrial training.

To do welfare activities for upbringing and development of each section of the society.

To establish Children Nurseries, Primary schools, High schools, Colleges, Madressa, Masjid boarding houses, Hospitals, Dispensaries etc. And for that accommodating fixed assets and to manage the same thereby. And to do every kind of charitable activities.

To make necessary arrangements for accommodation of poor people.

To help the Blind, Weak, Feverish people and those poor people who cannot run their lives.

To give Scholarships to Muslims Students for their studies and do make provisions so as they can get the religious education.

To give medical assistance in the events of requirement irrespective of caste and creed and to organise medical camps.

To help the poor, unhappy, orphan and economical poor classes and to help in burial and funerals 9. Cottage Industries, Rural Industries, Women Industries and to run each such activities to remove unemployment with the help of the government.”

The Ld.CIT(Exemption) has referred to object at S.no 6 which is providing scholarship to Muslim students for their studies and to make provision so as they can get religious education for arriving at his finding that the objects are for the benefit of a particular religious community- so as to invoke section 13(1)(b) of the Act. Further we find that the Ld.CIT(Exemption) notes that otherwise the objects are charitable in nature except for the aforestated object. As per section 13(1)(b) exemption u/s 11 is denied if the trust is created or established for the benefit of a particular religious community. With majority of the objects found to be not catering to a particular community and no finding of the assessee actually catering for the benefit of a particular community, there is no case for invoking section 13(1) (b) of the Act in the present case. Therefore, we hold that even on merits the Ld.CIT(Exemption) was wrong in holding that section 13(1)(b) was applicable in the facts of the present case.

In view of the above, we hold that the objects of the trust are not wholly for the benefit of a particular religious community, but are largely charitable in character for general public at large, and for the purpose of granting registration under section 12A, the provision of section 13(1)(b) cannot be referred to, which is to be applied only when granting the exemption to the trust.

The order of the ld.CIT(Exemption) denying grant of registration is accordingly set aside, and the Ld. CIT (Exemption) is directed to grant the assessee-trust registration under Section 12A of the Act. 13. In the result, the appeal of the assessee is allowed.”

Our view, if further fortified by the judgment of the Hon’ble Jurisdictional Gujarat High Court in the case of CIT(E) vs. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust, [2016] 74 taxmann.com 199 (Guj.), wherein it was held that where the assessee -trust has large number of other objects for the benefits of general public, the registration should not be denied. The detailed findings of the Hon’ble Court are given below:

To arrange such collective function and to be helpful in such activities which increases relationship, brotherhood, familyness, unity, love amongst the members.

To establish, administer and maintain Guest Houses, Bhojanalaya, Service (vaiyavachh), centres and other buildings for the benefit of members of the society. 3. To construct or to arrange for the construction of residential complexes for the members of the Samaj and to provide loan/financial help subject to the provisions of the rules of the trust. 3. Medical :

It can thus be seen that the Commissioner focused his attention to clause 4.2 of the objects of the trust to come to the conclusion that the same were for the benefit of a certain religious communities only, in the process ignoring various other objects, for e.g. as per clause 4.1, the trust would engage itself in activities relating to education by maintaining and running education centers, infant schools, primary secondary and high schools, colleges etc., to run hostels, training centers for creating awareness in the common people and to make the education available for the public. It would also engage in imparting training in computers. As per clause 4.3, the trust would engage in doing all activities for medical help and to establish and administer dispensaries, hospitals and laboratories etc. It would also help the patients by supplying medicines and financial assistance. Likewise in clause 4.4 the trust could engage in rural development schemes. As per clause 4.5, the trust would engage in literary and cultural activities by making efforts for the development and protection of Indian culture. Clause 4.6 which pertains to other included activities such as running cow shelters, to provide food, cloth and financial help for economically weaker persons, to help during natural or other calamities, to serve humans and animals etc.

Thus, very premise for the Commissioner to come to the conclusion that the objects of the trust were confined for the benefit of a religious community, is incorrect. Thereafter to suggest that the activities were carried out only for such purposes would be entering in the realm of granting exemptions in terms of Section 13 of the Act, which would be the task of the Assessing Officer to be undertaken at the time of assessment on the basis of material that may be brought on record. 9. In the result, no question of law arises. The Tax Appeal is dismissed.”

In the light of the above facts and circumstances, we direct the ld. CIT(Exemption), to examine the application of the assessee -trust and relevant documents, and grant the registration under Section 12A(1)(ac) (iii) of Income Tax Act, 1961, in accordance with law. For statistical purposes, the appeal of the assessee is treated to be allowed.