2024 (12) TMI 1532 - AT - Income Tax

Rejecting the application for registration u/s 12A(1)(ac)(ii) - as per CIT(A) objects of the assessee-trust were for the benefit of particular religious community and accordingly held that the assessee was not entitled to exemption in terms of Section 13(1)(b) - AR argued that what is to be examined is whether the trust had charitable objectives or not and qualified as charitable entity which existed for serving public at large and nothing beyond it HELD THAT - CIT(E) has not considered the interpretation in the case of Shastri Yagnapurush Dasji V. Muldas Bhudardas Vaishya 1966 (1) TMI 78 - SUPREME COURT and also Jamiatul Banaat Tankaria 2024 (10) TMI 712 - GUJARAT HIGH COURT with regard to interpretation of Section 13(1)(b) while issuing registration u/s 12A of the Act. Hence we direct the ld. CIT(Exemption) to pass an order afresh after considering the above quoted judgements. Appeal of the assessee is allowed for statistical purposes.

Summary

The appeal in this case was filed by an Assessee-trust against the order of the Commissioner of Income-tax (Exemption) Ahmedabad, rejecting the application for registration under Section 12A(1)(ac)(ii) of the Income Tax Act, 1961. The main issue revolved around whether the trust's objectives qualified as charitable under the Act, specifically concerning the benefit of a particular religious community, in this case, the Hindu community. The Appellate Tribunal considered the arguments presented by both parties and analyzed the legal framework, precedents, and key evidence before reaching its decision.The core legal question was whether the trust's activities were solely for the benefit of a particular religious community, namely Hindus, and if this disqualified it from obtaining registration under Section 12A of the Act.The Tribunal analyzed the decision of the Commissioner of Income-tax (Exemption), who based the rejection of the registration application on the grounds that the trust's objectives were primarily for the benefit of the Hindu community. The Commissioner cited Section 13(1)(b) of the Act, which prohibits registration for trusts benefiting specific religious communities or castes. The Tribunal noted that the Commissioner did not consider relevant legal interpretations by the Hon'ble Supreme Court and the jurisdictional High Court in similar cases.The Tribunal referred to legal precedents such as CIT vs. Palghat Shadi Mahal Trust and CIT vs. Dawoodi Bohara Jamat to establish that the provision of Section 13(1)(b) applies to charitable trusts created for the benefit of specific religious communities. The Tribunal highlighted that the trust's objects, while charitable in nature, were limited to benefiting the Hindu community, thus falling under the purview of Section 13(1)(b).In its analysis, the Tribunal emphasized the distinction between religious and charitable trusts, asserting that the trust in question was charitable but restricted to benefiting a particular religious community. Therefore, the Tribunal concluded that the trust did not qualify for exemption under Section 11 of the Act due to a violation of Section 13(1)(b).The Tribunal directed the Commissioner to reconsider the case in light of the legal interpretations provided by the Hon'ble Supreme Court and the jurisdictional High Court, indicating a lack of consideration of these judgments in the initial decision. Ultimately, the Tribunal allowed the appeal for statistical purposes, signaling a need for a fresh decision by the Commissioner.In conclusion, the Tribunal's decision focused on the interpretation of relevant legal provisions and precedents to determine the eligibility of the trust for registration under Section 12A of the Income Tax Act, highlighting the importance of considering legal interpretations in such cases.