2025 (2) TMI 601 - AT - Income Tax

Rejecting the application for registration u/s. 12A(1)(ac)(iii) - Section 13(1)(b) applicability - whether the Trust s objects were charitable in nature and open to the general public or confined to a specific community? - HELD THAT - Hon ble Apex Court in the case of Ahmedabad Rana Caste Association 1971 (9) TMI 8 - SUPREME COURT categorically observed that it is sufficient if intention to benefit a section of public as distinguished from a specified individual and that will not go beyond the purview of public connected together and society at large. The reliance on the decision of Tribunal in case of Brahmakshatriya Kanji Damji Hindu Sarvajanik Dharamshala Palitana 2024 (12) TMI 1532 - ITAT AHMEDABAD has also mentioned the decision of CIT vs. Dawoodi Bohara Jamat which was relied upon by the DR and has categorically mentioned the jurisdictional High Court in the case of Jamiatul Bannat Tankaria 2024 (10) TMI 712 - GUJARAT HIGH COURT which has given interpretation of Section 13(1)(b) while issuing registration u/s 12A of the Act. Thus the decision relied by the DR actually supports the applicant Trust s case. The Hon ble Supreme Court in the case of Shastri Yagnapurush Dasji vs. Muldas Bhudardas Vaishya 1966 (1) TMI 78 - SUPREME COURT has also reiterated the same and thus the CIT (Exemption) should have taken into account these basic principles. The present applicant Trust has categorically mentioned the beneficiaries of the society at large in cl. 7 of the objects. Appeal filed by the assessee is partly allowed for statistical purpose.

Summary

The appeal in this case was filed by the Assessee against the order passed by the CIT (Exemption), Ahmedabad, rejecting the application for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, on the grounds that Section 13(1)(b) would be applicable. The core issue in this case revolved around whether the Trust's objects were charitable in nature and open to the general public or confined to a specific community, namely the Patidar Samaj.The Assessee argued that the Trust's objects, particularly paragraph 7, indicated that the Trust was intended to help distressed people without regard to caste or creed, emphasizing a social cause. The Assessee relied on legal precedents such as the decision of the Hon'ble Apex Court in the case of Ahmedabad Rana Caste Association vs. CIT and a Tribunal decision in the case of Brahmakshatriya Kanji Damji Hindu Sarvajanik Dharamshala Palitana vs. CIT (Exemption) to support their position. On the other hand, the Revenue contended that the Trust was limited to the caste members of Patidar Samaj, citing specific paragraphs in the order of the CIT (Exemption) as evidence.The Tribunal considered the arguments presented by both parties and examined relevant legal principles. Referring to the decision of the Hon'ble Apex Court in the case of Ahmedabad Rana Caste Association, the Tribunal highlighted that the intention to benefit a section of the public, as opposed to specified individuals, falls within the scope of public benefit. Additionally, the Tribunal noted the relevance of the decision in the case of Brahmakshatriya Kanji Damji Hindu Sarvajanik Dharamshala Palitana vs. CIT (Exemption) and the interpretation of Section 13(1)(b) provided by the jurisdictional High Court in the case of CIT (E) vs. Jamiatul Bannat Tankaria.Ultimately, the Tribunal found merit in the Assessee's argument that the Trust's objects aimed to benefit the society at large, as indicated in clause 7. The Tribunal directed the CIT (Exemption) to reconsider the matter in light of the legal principles discussed, emphasizing the need to provide the Assessee with a hearing following the principles of natural justice. As a result, the appeal filed by the Assessee was partly allowed for statistical purposes.In conclusion, the Tribunal's decision centered on the interpretation of the Trust's objects and their alignment with charitable purposes under the Income Tax Act. The Tribunal's analysis underscored the importance of considering public benefit broadly and ensuring procedural fairness in the adjudication of such matters.