2016 (1) TMI 1073 - AT - Income Tax

Registration under section 12AA denied - Held that - Applying the ratio of Hon ble Supreme Court Ahmedabad Rana Cast Association vs. CIT (1971 (9) TMI 8 - SUPREME Court), the decision of the Co-ordinate Bench in the case of Shree Vasupujya Swam Jain Derasar Trust vs. CIT, Valsad (2010 (8) TMI 937 - ITAT AHMEDABAD ) and the decision of co-ordinate Bench in the case of Shri Sayla Sukhadiya Parivar Trust vs.CIT(Exemption) (2015 (9) TMI 600 - ITAT AHMEDABAD), to the facts of the case of assessee, wherein the trust is formed mainly for the benefit of a particular community i.e. Shri Ranpariya Solanki Sukhadiya Parivar Trust but the type of activities which the trust is running are for general public also i.e. for charity, medical relief and promotion of educational activities, we are of the view that the trust is serving charitable activities. Accordingly in our considered view it will be just and in the interest of justice to restore the matter back to the ld. CIT(E) with the directions to re-examine the matter in the light of various decisions mentioned above as well as the objects of the trust stipulated in the trust deed so as to satisfy himself about the genuineness of objects of the trust and its activities and pass appropriate orders in accordance with law after allowing reasonable and proper opportunity of hearing to the assessee before adjudicating the issue. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Rejection of application for registration under section 12AA of the Income-tax Act, 1961.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad was against the order of CIT(Exemption) rejecting the application for registration under section 12AA of the Income-tax Act, 1961. The main issue was that the trust was established for the benefit of a particular community, Ranpariya Solanki Sukhadiya Parivar Trust, and not for the general public. The assessee, a religious trust, had applied for registration under section 12AA with all necessary documents, including the trust deed, PAN Card, and audit report. The CIT(Exemption) rejected the application solely on the grounds of benefiting a specific community. The assessee contended that the trust's objects also included activities for the general public, such as welfare, educational activities, and charity.

The Appellate Tribunal considered the provisions of section 12AA, which require the CIT(Exemption) to satisfy himself about the genuineness of the trust's activities. The Tribunal noted that the only reason for denial of registration was the perception that the trust was solely for the benefit of a particular community. Referring to the decision of the Hon'ble Supreme Court in a similar case, the Tribunal emphasized that an object beneficial to a section of the public constitutes an object of general public utility. The Tribunal also cited a previous case where registration was declined, but upon re-examination, it was found that the trust's objects were indeed charitable in nature.

Based on the legal precedents and the trust's activities aimed at general public welfare, the Tribunal decided to restore the matter back to the CIT(Exemption) for re-examination. The Tribunal directed the CIT(Exemption) to review the trust's objects and activities to ensure their genuineness and pass appropriate orders in accordance with the law. The appeal was allowed for statistical purposes, indicating that the decision was made to facilitate further review by the CIT(Exemption).

In conclusion, the Tribunal's decision highlighted the importance of benefiting a section of the public as a charitable purpose, even if the trust was primarily established for a particular community. The Tribunal emphasized the need for a thorough examination of the trust's activities to determine their charitable nature and directed the CIT(Exemption) to re-evaluate the matter accordingly.