PRAGATISHEEL CHHATTISGARH SATNAMI SAMAJ,RAIPUR vs. COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL

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ITA 106/RPR/2018Status: DisposedITAT Raipur21 September 2022AY 2017-188 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the rejection of the registration application by the CIT(E) was not justified. Regarding the ground that the society was established for a particular community, the Tribunal noted that the assessee society has charitable as well as religious objects. Citing the Gujarat High Court's decision in CIT Vs. Barkate Saifiyah Society, it was held that Section 13(1)(b) applies only to trusts purely for charitable purposes; if a trust has both charitable and religious objects, Section 13(1)(b) is not applicable. Furthermore, the Tribunal observed that the issue of attracting Section 13(1)(b) and denying exemption under Sections 11 and 12 is a matter to be looked into during assessment proceedings, not at the stage of granting registration under Section 12AA. The primary criteria for registration are the objects of the trust, proper application details, and compliance with the prescribed format. The Tribunal also referred to a coordinate bench decision in Shree Vimalnath Jain Swetamber Mandir Trust, which held that the genuineness of activities is not a criterion for granting registration when the trust is just commencing activities. Consequently, the Tribunal set aside the CIT(E)'s order and directed him to grant registration under Section 12AA.

What were the facts?

The assessee, Pragatisheel Chhattisgarh Satnami Samaj, a society registered in 2012, applied for registration under Section 12AA of the Income Tax Act, 1961, for Assessment Year 2017-2018. The Commissioner of Income Tax (Exemption), Bhopal (CIT(E)), rejected the application. The CIT(E) observed that the society was established for a particular community (Satnami Samaj), published a magazine, and made a donation to an unregistered entity. The CIT(E) concluded that the activities were for the enrichment of the Satnami Samaj, attracting Section 13(1)(b) of the Act, and thus refused registration. The assessee appealed this rejection to the Income Tax Appellate Tribunal (ITAT), Raipur Bench.

What were the issues?

1. Whether the Commissioner of Income Tax (Exemption) was justified in rejecting the assessee's application for registration under Section 12AA of the Income Tax Act, 1961, on the grounds that its activities were for the benefit of a particular community, thereby attracting Section 13(1)(b) of the Act? Assessee's Contentions: - The society's objects and activities are not limited to the Satnami Samaj but are for the public at large, with specific clauses in its bye-laws benefiting the general public. - The application of funds is transparent and for public interest. - Section 13(1)(b) is not applicable due to Explanation 2 of Section 13, which states that trusts for the benefit of Scheduled Castes, backward classes, Scheduled Tribes, women, and children are not considered for the benefit of a religious community or caste. - The 'Satnami' caste is categorized as a Scheduled Caste by the Government of India, making Section 13(1)(b) inapplicable. - Relied on a coordinate bench decision in ITA No. 50/RPR/2018 (Shree Vimalnath Jain Swetamber Mandir Trust, Raipur). Revenue's Contentions: - The assessee failed to prove its activities were for a charitable purpose. - The CIT(E) acted within his powers under Section 12AA(1)(a) and (b) to call for necessary documents and satisfy himself about the genuineness of activities. - The society's activities were for the benefit of a particular community, attracting Section 13(1)(b). - Relied on the CIT(E)'s order.

Which sections of the Income-tax Act were involved?

Section 12A,Section 12AA,Section 12AA(1)(a),Section 12AA(1)(b),Section 13(1)(b),Section 11,Section 12

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM

For Respondent: Shri P.K.Mishra, CIT- DR

O R D E R

Per Arun Khodpia, AM :

1.

This appeal is filed by the assessee against the order passed by the CIT(E), Bhopal, dated 25.04.2018, wherein the assessee has raised the following sole ground :- 1. Ld Commissioner of Income Tax (Exemption) was not justified in rejecting application filed by appellant for registration u/s 12A and in refusing to grant registration without appreciating the facts of the case properly. The rejection order passed by CIT (Exemption) u/s 12AA(1)(b)(ii) is arbitrary, illegal and not justified. The appellant is entitled for registration u/s 12A.; 2. The appellant reserves the right to amend, modify or add any of the grounds of appeal

2. Facts in brief are that the assessee is a society registered under the Society Registration Act, 1973 before the Registrar of Societies, Chhattisgarh on 27.08.2012. The assessee applied for registration u/s.12AA of the Act in Form No.10A. On verification of the objects and activities of the assessee society, the CIT(E) found that the assessee society is established for a particular community and almost objects are for the benefit of a particular community and carried out activities for the benefit of Satnami Samaj, which is a society publishing a magazine in every month in the name of “Satnami Sandesh”. It was also observed by the CIT(E) that the donation of Rs.1,00,000/- paid to Grih Nirman and Satnam Sanstha which is not registered u/s.12A of the Act. Therefore, as per the CIT(E) the activities of the assessee society are for the enrichment of Satnami Samaj and, thus, attracts provision of Section 13(1)(b) of the Act. Further the CIT(E) observed that the assessee could not produce the details to prove to be doing charitable work for Satnami Samaj. Therefore, the CIT(E) rejected the application of the assessee filed for registration u/s.12AA of the Act.

3. Against the rejection of application of the assessee for registration u/s.12AA of the Act by the CIT(E), the assessee is now in appeal before the Tribunal.

4. Ld. AR before us filed paper book containing pages 01 to 124 and submitted that the assessee society has been engaged in spreading education and ethical knowledge especially among women and children, including social reforms and development, religious awareness, establishment of Satnami Centre for spiritual awareness etc. It was also the contention of the ld. AR that as per the bye laws of society, the objects and activities are not limited to Satnami Samaj only but to whole public at large. Objects mentioned in clause 4, 6 & 7 is not for any particular caste and community. It was also submitted by the ld. AR that the source of application of funds by the assessee society is transparent, accounted and for the interest of public. Therefore, the ld. AR submitted that considering the objects and activities of the society, the assessee society is entitled for registration u/s.12AA of the Act. Also, rejection of the application of assessee society by triggering provisions of section 13(1)(b) of the Act was not called for, since, explanation 2 of the section 13 explains that “A trust or institution created or established for the benefit of Scheduled caste, backward classes, Scheduled Tribes or women and children shall not be deemed to be a trust or institution created or established for the benefit of a religious community or caste within the meaning of clause (b) of subsection (1)”, It means a trust or institution created or established for the benefit of Schedule castes, schedule tribes or backward classes then such trust or institution cannot be denied exemption u/s 11 or 12 of the I.T.Act by invoking provisions of section 13(1)(b). Ld AR further drew our attention to the page 11-15 of its paper book, wherein as per notification by Department of Social Justice and Empowerment Government of India dated 26-10-2017 “Satnami” caste of Chhatisgarh State is categorised as Schedule Cast and accordingly has contended that provisions of section 13(1)(b) are not applicable in the assessee societies case. Ld AR in this respect relied on the order of coordinate bench of ITAT Raipur in dated 16.01.2019 in the case of Shree Vimalnath Jain Swetamber Mandir Trust, Raipur, wherein identical issue was raised by the assessee against the order of CIT(E) was decided in favour of the assessee. Since the issue is Raipur Bench in the similar circumstances, the present case is squarely covered by the same and therefore it was prayed by the Ld AR to set aside the order of Ld CIT(E) and direct him to grant registration u/s 12AA of the Act.

5.

On other hand, ld. CIT. DR relied on the order of ld. CIT(E) and submitted that as the assessee society could not prove the working of the assessee society as charitable purpose, therefore, the CIT(E) has rightly rejected the application of the assessee for registration. Moreover, Ld. CITDR has drew our attention for provisions of section 12AA(1)(a) and (b) and argued that the CIT(E) was well within his powers and it his duty to call for all the necessary documents and information from the assessee trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such enquiries as he may deem necessary in this behalf. After satisfying himself about the object of the trust or institution and the genuineness of its activities, he shall pass an order in writing registering the trust or institution or if not satisfied shall pass an order in writing refusing to register the trust or institution. On this note Ld CITDR has contended that CIT(E) is duty bound by this provisions of the act and he can not allow to register a trust or institution till he verify and satisfy himself that the objects and genuineness of the trust. In the present case the assessee Society was failed to demonstrate or substantiate that the society is eligible for registration u/s 12AA of the Act. It is also submitted that the Ld CIT(E) has rightly rejected the application in form 10A of the assessee Samaj”, therefore attracts provision of section 13(1)(b) of the IT Act. Therefore the CIT(E) has rightly refused the registration sought u/s 12AA and order of the Ld CIT(E) needs to be upheld. 6. We have heard rival submissions, perused the material evidence available on record and judicial pronouncement relied upon by the Ld AR. It is observed that the registration under section 12A was denied to the assessee society on the following grounds:

(a) Society is established for a particular Community and almost objects are for the benefit of a particular community. (b) The JCIT/ITO has not recommended to grant registration u/s 12Aon the same ground as in para (a) and not doing any charitable activity. (c) Explanation 2 of section 13 relied upon by the assessee is not acceptable because as per the said explanation it will be applicable to a trust or institution created for all schedule castes/tribes and not for a particular samaj or schedule community/caste. (d) Copy of accounts produced before the Ld CIT(E) also does not show any expenses to prove such claim by the applicant that the assessee society is doing charitable work for Satnami Samaj as well as for others.

7. To decide the above raised issues after carefully hearing both the parties, we have gone through the paper book of the assessee trust 16-88 which shows that the assessee society is doing charitable activities for others also.

8. Regarding duties of CIT(E) to be performed with respect to procedure for registration u/s 12AA(1)(a) and (b) Hon'ble Rajasthan High Court in the case of CIT Vs. Vijay Vargiya Charitable Trust in has categorically held that at the time of granting registration, the objects of the Trust for which it was formed, is only to be looked into and the CIT’s satisfaction about genuineness of activities of the Trust was not criteria as the Trust was just commencing activities. Hence the issue regarding satisfaction or genuineness of the activities of the trust is not a matter to be looked into at the time of granting registration u/s 12AA of the Act.

9. Regarding invoking provision of section 13(1)(b) coordinate bench of the ITAT Raipur in the case of Shree Vimalnath Jain Swetamber Mandir Trust (supra) has given the finding by respectfully following the observation of Coordinate bench of Pune in the case of Kul Foundation Vs. CIT in ITA no 1692/PN/2013 has held that where the conditions of section 13(1)(b) is attracted so to denying exemption u/s 11 and 12 of the Act is a matter to be looked into by the AO at the time of assessment proceedings. However, at the time of granting registration U/s 12AA of the Act, the main criteria which are to be looked into are:

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