ANNAPURNA CHARITABLE TRUST,BANASKANTHA V. THE CIT(EXEMPTION), AHMEDABAD

ITA 2214/AHD/2024

AI Insights

Annapurna Charitable Trust appealed against the decision of the CIT (Exemption), which denied them registration under Section 80G(5) of the Income Tax Act, 1961, due to the inclusion of an object related to running service camps for pilgrims at religious places. The Trust argued that their activities serve a broader public benefit and do not cater exclusively to any particular religion. The Tribunal referenced a similar case, Gohilwad Vankar Samaj Seva Trust vs. CIT(E), and other judicial precedents to support the view that incidental religious activities do not disqualify a trust predominantly established for charitable purposes from receiving registration under Section 80G(5).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669128 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Other Referred Cases: Gohilwad Vankar Samaj Seva Trust - Vs- CIT(E), CIT(E) vs. Jamiatul Banaat Tankaria, CIT v. Bayath Kutchhi Dasa Oswal Jain Mahajan Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Question of law; Charitable institution
• Section: 11; 12A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member Annapurna Charitable Trust Bhabhar, Bhabhar S.O. Banaskantha, Gujarat-385320 PAN: AAHTA9604K (Appellant) Vs CIT (Exemption), Ahmedabad (Respondent) Assessee Represented: Shri Mehul Thakkar, A.R. Revenue Represented: Shri Sher Singh, CIT-DR Date of hearing : 16-06-2025 Date of pronouncement : 25-06-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the order dated 27.11.2024 passed by the Commissioner of Income Tax (Exemption), Ahmedabad denying registration under section 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on account of religious activities carried out by the Trust. 2. Brief facts of the case is that the assessee is a Charitable Trust formulated in January 2020 for the main objects of providing Food, canteen for the poor, destitute people in which food is provided to poor people for small token amount, to construct and maintain bird ITA No. 2214/Ahd/2024 I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 2 perches, water stand, to provide medical assistance to poor people, etc. The Assessee Trust was provided registration u/s.12AB by Ld. CIT(E) vide order dated 12-03-2024 for the Asst. Years 2022-23 to 2026-2027. However, exemption for Section 80G(5) was denied for the sole reason that clause (8) of the objects namely “to raise and run the service camps for the services to the pilgrims at the religious places” which is said to be for religious purposes. Therefore Ld. CIT(E) denied registration u/s.80G(5) of the Act and also cancelled the provisional approval granted to the assessee Trust. 3. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The Lamed Commissioner of Income Tax (Exemptions), Ahmedabad, erred in law and on facts by rejecting the appellant's application under Section 800(5) of the Income Tax Act, 1961, without properly appreciating the overall charitable intent and nature of the Trust's objectives. 2. The Learned CIT(E) failed to consider that the trust's object of raising and runing service camps for pilgrims at religious places serves a broader public benefit and does not cater exclusively to any particular religion, thereby falling within the scope of charitable purposes under the Act 3. The rejection of the application on the ground that one object is religious in nature is arbitrary and contrary to the well settled legal principle that incidental religious activities do not disqualify a trust predominantly established for charitable purposes. 4. The Learned CT(Exemptions) erred in concluding that the object \"to raise and run the service camps for the service to the pilgrims at the religious places\" is wholly or substantially religion in nature without examining its implementation and societal benefit in detail, 5. The Learned CIT(Exemptions) acted unjustly in rejecting the appellant's application under Section 80G(5) without properly evaluating the comprehensive response and explanations provided by the appellant in its submission dated 11/11/2024. I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 3 6. The Learned CIT(Exemptions) failed to consider that the appellant trust's activities, as evidenced by its past performance and financial records, predominantly serve charitable purposes, thereby qualifying for approval under Section 80G(5) of the Income Tax Act, 1961 7. The Ld. CIT-Exemption, Ahmedabad has erred in interpreting the legislative intent underlying the provision of Section 80G(58) of the Income Tax Act, 1961. The said provision was inserted by Finance Act, 1999 with a view to extend eligibility for approval under section 80G(5) to trusts or institution predominantly engaged in charitable activities. According to this provision, eligibility for the approval under section 80G(5) is extended to trust or institution predominantly engaged in charitable activities provided their expenditure on religious activities does not exceed 5% of their income during the relevant previous year The appellant trust conforms to this criterion as it has not Incurred any expenditure towards religious activity. 8. The appellant prays that the Hon’ble Tribunal quash the impugned order of the Learned CIT(Exemptions) and direct the approval of the appellant’s application under section 80G(5). 4. We have heard rival submission and perused the materials available on record including the objects of the Trust. Perusal of the objects makes it very clear, the Trust is meant for General Public at large and to animals and birds. Even the clause (8) of the object to run service camp for the pilgrims and religious places, is not particularly relating to any particular religion, community or caste. Thus the rejection order u/s.80G(5) of the Act, in our considered view is not correct proposition of law. Since, co-ordinate Bench of this Tribunal in the case of Gohilwad Vankar Samaj Seva Trust - Vs- CIT(E) in ITA No.796/Ahd/2023 vide order dated 03-04-2025 held as follows: “… 4. We have heard rival submissions and perused the materials available on record. In the present case, the objects (extracted in Para 2 hereinabove) of the Trust namely 1 to 5 are relating to particular caste or community, however objects No. 6 & 7 are not relating to particular community but public at large. Thus the I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 4 objects enumerated are both religious to particular community and charitable to public at large in nature, which are mixed objects. 4.1. Therefore the solitary question that arise for consideration is whether a Trust created before 01-04-2021 can be denied registration under section 12AB of the Act and by invoking the provisions of Section 13(1)(b) of the Act? This issue is no more res- integra since the Jurisdictional High Court Judgment in the case of CIT(E) vs. Jamiatul Banaat Tankaria reported in [2024] 168 taxmann.com 35 held that the provisions of Section 13 of the Act would be attracted only at the time of assessment since the quantum of expenses made for religious and common purposes can be determined from Profit and Loss accounts only and not at the time of granting registration u/s. 12A of the Act following Jurisdictional High Court decision in the case of CIT v. Bayath Kutchhi Dasa Oswal Jain Mahajan Trust and by observing as follows: “5. Learned Senior Standing Counsel Ms. Maithili Mehta for the Appellant revenue submitted that the order of ITAT is erroneous because the ITAT has erred by misinterpreting the decision of Hon'ble Supreme Court in Dawoodi Bohara Jamaat (supra) and has wrongly noted that the Hon'ble Supreme Court has held that Section 13(1)(b) would apply only at the time of grant of exemption u/s 11 and not at the time of grant of registration u/s 12A of the Act. Further, the ITAT has not considered the fact that decision of Hon'ble Supreme Court in Dawoodi Bohara Jammat (supra) was rendered in case of a composite trust/institution i.e. a trust which was both charitable as well as religious trust. 6. We have noticed that the ITAT has decided the issue as under: \"5. We have gone through the decision of Hon'ble Apex Court in the case of Dawoodi Bohara Jamat (supra) and we find that the ld. CIT (Exemption) has totally mis-appreciated the decision rendered by the Hon'ble Apex Court in the said case. The Hon'ble Apex Court, we find, in the said case had categorically held that Trust with charitable objects, which existed for the benefit of a particular religious community qualified as charitable entity serving the public at large and this was sufficient for grant of registration under Section 12A of the Act, and the provisions of Section 13(1)(b) of the Act would be attracted only at the time of granting exemption to the assessee, wherein if it was found that the must existed for the benefit of a particular religious community only, the exemption under I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 5 section 11 was to be denied to the assessee. The Hon'ble Apex Court, therefore, categorically found that as per the provisions of law, section 13(1)(b) could not be applied for denying the grant of registration, but was to be applied only while granting denying exemption to the assessee. 6. It is pertinent to note that the Hon'ble Apex Court has categorically held in the said decision that section 13(1)(b) comes into picture and is to be applied only when the eligibility of exemption of income in terms of provisions of section 11 is to be determined and not at the time of gram of registration. The Hon'ble Apex Court has categorically stated that the assessee has to first cross the hurdle of being eligible to exemption under section 11 by obtaining a certificate of registration under section 12A in this regard. Having crossed this hurdle, only then the provisions of section 13(1)(b) would come into picture, and a trust which is for the benefit of particular community, but it objects are otherwise charitable, is a valid trust for the purpose of grant of registration. 7. The Id CIT(Exemption), in the present case, we find, has only picked a portion of the order of tire Hon'ble Apex Court, wherein it has been held that the provisions of section 13(1)(b) of the Act would be applicable to a trust with mixed objects i.e. both charitable and religious. But he has failed to take note of the finding of the Hon'ble Apex Court that section 13(1)(b) would apply only at the time of grant of exemption under section 11, and not at the time of grant of registration under section 12A of the Act. 8. Our view is further supported by the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Bayath Kutchhi Dasa Oswal Jain Mahajan Trust, (2017) 8 ITR-OL 494 (Guj) wherein on the issue of denial of grant of registration u's 12A of the Act by invoking section 13(1)(b) of the Act, it was categorically held that the provisions of section 13 would be attracted only at the time of assessment and not at the time of grant of registration. The relevant finding of the Hon'ble High Court at para 8 of his order is as under. \"8. Thus, very premise for the Commissioner to come to the conclusion that the objects of the trust were confined for the benefit of a religious community, is incorrect. Thereafter to suggest that the activities were earned out I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 6 only for such purposes would be entering in the realm of granting exemptions in terms of section 13 of the Act, which would be the task of the Assessing Officer to be undertaken at the time of assessment on the basis of material that may be brought on record.\" 9. Even otherwise, we have gone through the objects of the trust, which were placed before us in the “statement of facts” which are as under: \"1. Propagation and campaign of any sort of Religious and worldly cultivated activities, Gaining and education, to maintain and administer Urdu English & Arabic Language cultivation and training, Cultivation of craft and industrial training. 2. To do welfare activities for upbringing and development of each section of the society. 3. To establish Children Nurseries, Primary schools, High schools, Colleges, Madressa, Masjid boarding houses, Hospitals, Dispensaries etc. And for that accommodating fixed assets and to manage the same thereby. And to do every land of charitable activities. 4. To make necessary arrangements for accommodation of poor people. 5. To help the Blind, Weak, Feverish people and those poor people who cannot run their lives. 6. To give Scholarships to Muslims Students for their studies and do make provisions so as they can get the religious education. 7. To give medical assistance in the events of requirement irrespective of caste and creed and to organise medical camps. 8. To help the post, unhappy, orphan and economical poor classes and to help in burial and funerals. 9. Cottage Industries, Rural Industries, Women Industries and to run each such activities to remove unemployment with the help of the government\" I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 7 10. The Ld. CIT(Exemption) has referred to object at S. no 6 which is scholarship to Muslim students for their studies and to make provision so can get religious education for arriving at his finding that the objects are for the benefit of a particular religious community so as to invoke section 13(1)(b) of the Act. Further we find that the Ld. CIT(Exemption) notes that otherwise the objects are chartable in nature except for the aforestated object. As per section 13(1)(b) exemption u/s 11 is dented if the trust is created or established for the benefit of a particular religious community. With majority of the objects found to be not catering to a particular community and no finding of the assessee actually catering for the benefit of a particular community, there is no case for invoking section 13(1)(b) of the Act in the present case. Therefore, we hold that even on merits the Ld.CIT(Exemption) was wrong in holding that section 13(1)(b) was applicable in the facts of the present case. 11. In view of the above, we hold that the objects of the trust are not wholly for the benefit of a particular religious community, but are largely charitable in character for general public at large, and for the purpose of granting registration under section 12A, the provision of section 13(1) (b) cannot be referred to, which is to be applied only when granting the exemption to the trust. 12. The order of the ld.CIT(Exemption) denying grant of registration is accordingly set aside, and the Ld. CIT (Exemption) is directed to grant the assessee-trust registration under Section 12A of the Act. 13. In the result, the appeal of the assessee is allowed.\" 7. In view of the findings recorded by the Tribunal, supported by decision of this Court in case of Commissioner of Income-tax (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust (2017) 8 IRT-OL 493 (GUJ)/[2016] 74 taxmann.com 199/243 Taxman 60 (Gujarat) that the objects of the trust are not holly for the benefit of a particular religious community, but are largely charitable in character for general public at large and for the purpose of granting registration under 12A of the Act, the provision of section 13(1)(b) cannot be referred to. Section 13(1)(b) is to be applied while granting exemption to the trust. In view above finding, we do not find any question of law much less any substantial question of law arises for consideration.” I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 8 5. The above judgments will hold good to a Trust created before 01- 04-2021. Since the assessee has to first cross the hurdle of being eligible to exemption under section 11 by obtaining a certificate of registration under section 12A of the Act. Having crossed this hurdle then after the provisions of Section 13(1)(b) will get attracted whether the trust spended for the benefit of particular community, when the trust having mixed objects in it. Therefore respectfully following the above judicial precedents, the grounds raised by the assessee is hereby allowed. The matter is restored to the file of Ld. CIT (Exemption) with a direction to grant Final Registration u/s. 12AB of the Act, after giving due opportunity of hearing to the assessee and in accordance with law. ” 5. The same logic applicable to the present case for registration u/s.80G(5) of the Act. Therefore following the above judicial precedent, we set-aside the order passed by Ld. CIT(E) with a direction to grant registration u/s.80G(5) of the Act after giving due opportunity of hearing to the assessee Trust and in accordance with law. 6. In the result, the appeal filed by the Assessee is allowed for statistical purpose. Order pronounced in the open court on 25-06-2025 Sd/- Sd/- (NARENDRA PRASAD SINHA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 25/06/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT I.T.A No. 2214/Ahd/2024 Page No Annapurna Charitable Trust vs. CIT(E) 9 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद "