SHREE PATAN VISHA SHRIMALI SONI GYANTI PATAN,PATAN vs. THE CIT(EXEMPTION), AHMEDABAD

Shri Kunal Shangvi, the Ld. AR of the assessee submitted that the assessee is an old Trust and its activities had commenced from 29.03.1986. It had also obtained provisional registration on 27.09.2022. He explained that the assessee had complied to the notices of the Ld. CIT(E) and furnished the documents and details as required. The Ld. AR explained that all the objectives and purposes of the Trust were charitable in nature and were open to the general public. Merely because the Trust Shree Patan Visha Shrimali Soni Gyanti Patan Vs. CIT(E) 3 was initially constituted for the families of Visa Srimali Soni Gnyati settled at Patan, the registration application should not have been rejected without examining the exact nature of activities carried out by the assessee trust. He submitted that the assessee did not apply any part of its income for the benefit of any particular religious community or caste and, therefore, was not hit by the mischief of clause (d) of Explanation below section 12AB(4) of the Act. He, therefore, requested that the matter may be set aside to the file of Ld. CIT(E) with a direction to allow another opportunity to the assessee to explain the application of income of the Trust.

Per contra, Shri R P Rastogi, the Ld. CIT-DR, supported the order of Ld. CIT(E). He submitted that the assessee trust was limited to the families of Visa Shrimali Soni Gnyati settled in and around Patan and, therefore, the Ld. CIT(E) had rightly held that the benefits of the trust were confined to the particular caste and community.

We have considered the rival submissions. From the constitution of the trust brought on record in the paper-book, it is found that the assessee trust was limited to the families of “Visa Shrimali Soni Gnyati” settled at Patan or elsewhere. However, we do not find any specific clause in the constitution of the trust that the benefits of the trust or the income accruing to the trust will be applied only to the families of Visa Shrimali Soni Gnyati. On the other hand, the objectives of the trust to spread education, social service, social development, medical treatment and medical aid, organizing Navaratri and religious festivals etc. are all charitable in nature. The specified violation under the provision of section 12AB of the Act, flagged by the Ld. CIT(E), reads as under:

There is no finding given by the Ld. CIT(E) that the assessee trust had applied any part of its income for the benefit of the community or caste i.e. “Visa Shrimali Soni Gnyati”. Merely the reference to this community in the constitution of the trust doesn’t establish that the income of the trust was applied for their benefit. This aspect was required to be examined vis- à-vis the actual expenses incurred by the assessee. In the absence of any categorical finding regarding application of income of the trust for the benefit of particular caste and community, we deem it proper to set aside the matter to the file of the Ld. CIT(E) with a direction to allow another opportunity to the assessee to explain the application of its income. The Ld. CIT(E) may decide the application of the assessee after calling for the details of income and expenditure account of the assessee and after verifying whether any part of the income was applied for the benefit of the particular community or caste, for which it was formed.

In the result, the appeal of the assessee is allowed for statistical purpose.