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TMI Blog2022 (9) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... at these communities owe their origin to the fact that they were agriculturist and not to any particular religion and therefore cannot be treated as a religious community for invoking section 13(1)(b) of the Act. In the said case the ITO had examined the President of the Leuva Patel Nutan Kelwani Mandal to determine whether they belonged to a particular religious community or caste. Whether it constitutes a caste, in our view, the answer is in the affirmative. There can be no doubt that the Kedva Patels are a caste. Owing their origins to agriculturists, this community clearly represents social stratification with defined occupation, lifestyle and customs, though the same over period of time may have faded. But their cultural characteristics are still defined and have an inherited social lifestyle. AO, in the case of Leuva Patel Nutan (supra), while tracing the historical background of Leuvas, stated that Leuvas and Kedva Patels were agriculturists originating from different sections of Punjab who had migrated to Gujarat and are closed communities having no relations with each other in marriage and dinner. It is but obvious that Kedva Patel is undoubtedly a caste. Even the AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Leuva and Kedva Patel Community were neither religious communities nor caste, we have noted examined the issue only from the aspect of the community having any connection with a particular religion. Therefore it cannot be said that there was any finding relating to the group of people representing a caste. - Decided against assessee. - ITA No. 187/Rjt/2016 - - - Dated:- 29-6-2022 - Ms. Annapurna Gupta, Accountant Member And Shri TR Senthil Kumar, Judicial Member Appellant by: Shri Deepak Rindani, A.R. Respondent by: Shri S. S. Rathi, Sr. D.R. ORDER PER: ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-3, Ahmedabad, (in short referred to as CIT(A)), dated 01-03-2016, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the Act ) pertaining to Assessment Year (A.Y) 2011-12 2. The solitary issue in the present appeal relates to denial of exemption u/s. 11 of the Act, as a charitable trust, to the assessee. And the ground raised by the assessee in this regard reads as under: 1. The Learned Commissioner of Income - tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions filed by the Ld.Counsel for the assessee is being reproduced hereunder: NOTE Appeal is filed against order of the Learned CIT(Appeals) sustaining the assessment order in which it is held that as the appellant-trust is created and established for the benefit of a particular caste of Kadva Patidar, it is hit by provisions of sec. 13(1)(b) and therefore it is not entitled to benefit of sec. 11 of the Act. Consequently, the amount of Rs. 15,51,780/- expended and applied by the trust during the year and claimed as a deduction has been disallowed and total income is computed at Rs. 15,51,780/-. Propositions against the addition in appeal may be stated in nutshell as under: I. TRUST IS NOT CREATED OR ESTBALISHED ONLY FOR KADVA PATIDARS BUT FOR ALL PEOPLE OF SOCIETY ALSO: 1. The appellant-trust submitted before lower authorities and reiterates that it is not created or established for any particular community or caste but it is open for all sections of the society and hence it is not covered under section 13(1)(b). The objects of the trust are not restricted to kadva patidars but out of six objects listed in its constitution, four objects (Sr. Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a trust is created for any particular community or caste, it is held by Apex Court that a section of public is as good as public at large and therefore benefit of sec. 11 cannot be denied. Case law Citation Case Law Compilation Page o. Dawoodi Bohra Jamat 364 ITR 031 SC 120-125 Ahmedabad Rana Caste Association 140 ITR 01 SC 126 Rajkot Visha Shrimali Jain Samaj 111 ITD 238 RAJKOT Trib. 1-4 Shia Dawoodi Bohra Jamat Waqf 64 SOT 173 Kol Trib. 22-27 7. In present case, not only the objects are charitable in nature and also meant for all sections of the society (as good as public at large), its premises were being allowed to be used by all, not only to kadva patidars, as borne out from sample rent receipts (Paperbook Page 26-30). III. KADVA PATIDARS CANNOT BE DUBBED AS A RELIGIOUS COMMUNITY OR CASTE: 8. Patels are historically agriculturists and cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been applied. If a receipt of capital nature is to be treated as income, expenditure though on an asset should also be deducted therefrom on matching principle as also on real income theory. The AO cannot blow both hot and cold at the same time. VI. WRITTEN SUBMISSIONS MADE BEFORE CIT(A) MAY ALSO BE CONSIDERED (Paper-book pages 31-36). 6. Ld DR however vehemently supported the order of the Ld.CIT(A) contending that the objects of the assessee trust clearly showed that it was created for the benefit of a particular caste i.e Kadva Patels, and was therefore clearly ousted from enjoying the benefits of exemption u/s 11 of the Act, as per section 13(1)(b) of the Act. The relevant findings of the Ld.CIT(A) at para 5.1 of the order is as under: 5.1 The case law cited by the Ld. A.R. of Leuva Patel Nutan Kelwani Mandal vs. ITO (supra) does not help the case of the appellant because the Hon ble ITAT, Ahd in that case had opined that (1) Section 13(1)(b) could not be invoked because the beneficiaries were the children who are covered under Explanation (2) to the section 13, and (2) the Leuva Patel community consist mainly of agriculturists and cannot be dubbed as religious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h we are seized, relates to one such situation, being a charitable trust for the benefit of a particular religious community /caste, i.e a communal trust. 11. This denial of exemption to communal trusts was not there in the Income Tax Act ,1922,.The Hon ble apex court had the occasion to examine the eligibility to exemption of charitable trusts created for the benefit of a particular caste or community ,under the old Act, i.e. 1922 Act. The issue before it was whether such Trusts catering to a particular community created prior to 1st of April 1961, when the new Act came into force, could be termed as public charitable trusts to be eligible to exemption u/s 11 of the Act, In the case of Ahmedabad Rana Caste Association vs Commissioner of Income Tax (1971) 82 ITR 704(SC). The Hon ble apex court held that such trusts though benefitting only a section of the society, could still be termed as for the benefit of public at large, as long as the community it served was united by an impersonal character and not a personal character. The Hon ble Court further noted that in the 1961 Act this benefit of exemption, vis a vis a trust created for the benefit of a particular community or caste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent or in any other manner. 3. That, this trust shall provide medical facility to the necessary people of the society i.e. hospitals, dispensary, resident centres, medical centres, nursing homes, Anath Ashrams, etc, and also shall make medical assistance to such institutions and shall maintain the same. 4. That, for the publication and development, this institute shall establish Schools, Colleges, Research Centres, etc. and shall maintain it and shall also other educational activities and shall make help to such other institutes and maintain. 5. That, shall make economic and other helps to the peoples of the societies who are affected in earthquake, draughts or in any natural calamity as well as also shall provide grass, water, shelter etc. to the affected cattle, birds, etc, and shall also do other necessary activities. 6. That, there shall be make assistance to the required peoples of the society either by economically or by doing other works and shall make assistance to such other such type of institutes by collecting funds, donations, loans, etc. and shall do such other activities. 16. A bare perusal of the objects reveals that the first two object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Swami Narayan religion, Vaishnav religion, Jain religion, Shiv Puja religion etc. Thus, the benefit of Kelwani Mandal is given to the Children of the agriculturists who follow different religions. Q. No. 5. Can you say about any Special Custom or Usage in the Leuva Patel Community ? A. No. 5. In the said community about 90 per cent are agriculturists. Different customs are being followed differently, in different parts, according to the prevailing usage. Q. No. 6. Will you state the names of the present office bearers or workers of your Mandal ? A. No. 6. Dr. C. R. Baldha, President Shri Laljibhai Karamsibhai Vekaria, Jt. Secreatary Shri Kantilal Jethabhai Dholaria, Treasurer Shri Shivlal Nagjibhai Vekaria, Secretary Shri Raghavji Ramjibhai Patel, Vice-President Q. No. 7. Can you say what religion is being followed by the present workers and office bearers, whose names are given ? A. No. 7. I myself follow Vaishnav religion, Shri Laljibhai follows Hindu religion, Shri Kantilal Dholaria follows Vaishnav religion, Shri Raghavjibhai fofllows Swaminarayan religion, Shri Shivlalbhai follows Khijda Panthi Shivshkate Panth. 18. The AO thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Patel Community. Under the said constitution, the assessee-trust is required to start institutions, hostels, etc., for the benefit of the children of the Leuva Patel Community. Therefore, in our opinion, the assessee's case could not be brought within the provisions of s. 13(l)(b) of the Act, in view of the Explanation 2 to the said section. It appears that this aspect of the matter has escaped the attention of the lower authorities. Apart from this, on going through the historical background and the material already brought on record, we are of the view that the assessee's contention that the provisions of s. 13(l)(b) of the Act are not applicable in its case is well founded and should be accepted. We have come to this conclusion as it is quite apparent from the material already brought on record that the Leuva Patel Community consists mainly of agriculturists. Such community cannot be dubbed as religious community or caste as has been held by the IT authorities. In this view of the matter, the order of the Tribunal in the case of Shri Rajkot Viswakarma Kelwani Mandal (to which one of us was a party) squarely supports the stand taken on behalf of the assessee. Even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the apex court in the case of CIT vs Dawoodi Bohra Jammat (2014) 364 ITR 31(SC), in which case the Hon ble apex court found that the trust had both religious and charitable flavor and on the question of applicability of section 13(1)(b) to such trusts went on to hold that it would apply to such mixed trusts also. Relevant portion of the order of the Hon ble apex court is as under: 43.Thus, the second issue which arises for our consideration and decision is, whether the respondent-trust is a charitable and religious trust only for the purposes of a particular community and therefore, not eligible for exemption under Section 11 of the Act in view of provisions of Section 13(1)(b) of the Act. 44. In the instant case, the Tribunal has found on facts after analysing the objects of the trust that the respondent- trust is a public religious trust and its objects are solely religious in nature and being of the opinion that Section 13(1)(b) is solely meant for charitable trust for particular community, negated the possibility of applicability of Section 13(1)(b) of the Act at the outset. The High Court has also confirmed the aforesaid view in appeal and observed that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them as for benefitting the Kedva Patel Community only. In this regard the reliance placed by the Ld.Counsel for the assessee on the decision of the Hon ble apex court in the case of Rana Caste(supra) we find is misplaced ,since as noted above the said judgment was rendered in the backdrop of the Income Tax Act ,1922 ,when there was no such provision para materia to section 13(1)(b) of the 1961,Act.This dinstinction ,as pointed out above by us, was noted even by the Hon ble apex court. The contention of the Ld.Counsel for the assessee that section 13(1)(b) does not apply to composite trusts ,we have noted above is contrary to the decision of the Hon ble apex court in Dawoodi Bohra Jamaat (supra). All decisions relied upon by the Ld.Counsel for the assessee are either distinguishable for the reason that they were rendered on the issue of grant of registration u/s 12A of the Act, which is a totally different proposition, where the provisions of section 13(1)(b) in any case do not get invoked at all. We have also dealt with the issue of nature of the Kedva Patels and found them to be a caste. The decision of the ITAT in the case of Leuva Patel Nutan Kelwani Mandal 12 ITD 276(Ahd), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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