VAISHYA SAMAJ DHARMASHALA PRATISHTHAN ALANI DEVACHI, MUMBAI V. CIT (EXEMPTION), MUMBAI

ITA 1530/MUM/2023

AI Insights

The case involves an appeal by Vaishya Samaj Dharmashala Pratishthan Alandi Devachi against the order of the Commissioner of Income-tax (Exemptions), which denied the registration under section 12AA of the Income Tax Act. The primary contention was that the CIT(Exemptions) incorrectly assessed the trust's objectives as beneficial to a particular community rather than the public at large, and misinterpreted the trust's activities as solely charitable when they also had religious purposes. The tribunal found that the CIT(E)'s decision lacked a comprehensive examination of the trust's objectives and activities, leading to the restoration of the case for a detailed re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123494 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: F
• Next Hearing Date: 10-07-2023
• Assessment Year: 2022-2023
• Appeal Filed On: 02-05-2023
• Other Referred Cases: Ahmedabad Rana Caste Association vs. Commissioner of Income Tax [1971 82 ITR 704], CIT vs. Barkate Saifiyah Society [1995 78 taxmann.com 6 (Gujrat)], CIT, Rajkot vs Leuva Patel Seva Samaj Trust [(2014) 42 taxmann.com 181 (Gujrat)]
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 1530/MUM/2023 Assessment Year: 2022-23 Vaishya Samaj Dharmashala Pratishthan Alandi Devachi 403 Om Sai Darshan CHS Ltd. Plot No. 41 Sector 40 Seawood Nerul Navi Mumbai- 400706 Vs. CIT(Exemptions) 601, 6 th Floor, Cumballa Hill MTNL TE Building, Pedder Road, Dr Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai- 400026 PAN NO. AABTV5222E Appellant Respondent Assessee by : Shri Kedar Phadke Revenue by : Shri Ankush Kapoor, DR Date of Hearing : 11/07/2023 Date of pronouncement : 17/07/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against the order dated 23.03.2023 passed by the Ld. Commissioner of Income-tax (Exemption) [in short ‘the Ld. CIT(E)] in relation to registration u/s 12AA of the Ac. The relevant grounds raised are reproduced as under:- 1. The learned CIT(Exemptions) erred in denying the registration u/s 12A to the trust. ITA No. 1530/M/2023 Vaishya Samaj Dharmashala Pratishthan Alani Devachi 2 2. The learned CIT(Exemptions) erred in stating that the objects are beneficial for a particular community and not for the public at large ignoring the fact that the Memorandum of association does not have any such restriction. 3. The learned CIT(Exemptions) erred in denying the registration on the ground that the nature of activities stated in Form 10AB is charitable and that the trust is for both the purposes i.e. charitable and religious in nature. 4. The learned CIT(Exemptions) erred in not providing sufficient opportunities to the appellant for explaining the object of the trust. 5. In any event, there is no prohibition in registering a trust u/s 12A of the Act even if it has both charitable and religious objects. 6. The appellant craves leave to add, alter or amend any of the grounds of the appeal, at any time before or at the time of hearing. 2. Before us the Ld. Counsel of the assessee referred to the impugned order of the Ld. CIT(E) and submitted that the registration has been rejected mainly on the three grounds, firstly the Ld. CIT(E) has observed that object of the assessee are beneficial for particular community/caste and not for the people at large, secondly, he observed that the assessee violated section 11(1), section 13(1)(a) and section 13(1)(b) of the Act, thirdly, the Ld. CIT(E) has also observed that in the form no. 10AB, assessee has mentioned activity as in the nature of charitable whereas the trust is both charitable and religious in nature. ITA No. 1530/M/2023 Vaishya Samaj Dharmashala Pratishthan Alani Devachi 3 3. The Ld. Counsel of the assessee referred to the memorandum of the trust and submitted that main object of the trust was to construct Dharmshala, pilgrimage for passionate people of vaishya Samaj for their rest and stay at ‘Alandi’ as well as other holy place in Maharashtra. The Ld. Counsel of the assessee referred to the decision of the Hon’ble Supreme Court in the case of Ahmedabad Rana Caste Association vs. Commissioner of Income Tax reported in [1971 82 ITR 704] and submitted that to serve a charitable purpose, it is not necessary that object should be benefit for whole of mankind or all persons in a particular country and state and it is sufficient if intention to benefit a section of public as distinguished from a specified individual. 4. Further, the Ld. Counsel of the assessee submitted that provision of section 13(1)(b) of the Act applies to trust which are purely for charitable purpose and not applicable to the composite trust for religious and charitable purposes. In support to his contention, he relied on the decision of the Hon’ble Gujrat High Court in the case of CIT vs. Barkate Saifiyah Society in [1995 78 taxmann.com 6 (Gujrat)]. However, he submitted that the violation of provisions of section 13(1)(b) of the Act can be tested at the time of the assessment and cannot be ground for rejecting registration u/s 12AA of the Act. In support of the claim/proposition the Ld. Counsel relied of the decision in the case of CIT, Rajkot vs Leuva Patel Seva Samaj Trust reported in ](2014) 42 taxmann.com 181 (Gujrat)]. ITA No. 1530/M/2023 Vaishya Samaj Dharmashala Pratishthan Alani Devachi 4 5. On the contrary, the Ld. DR relied on the order of the Ld. CIT(E) and submitted that the Hon’ble Supreme Court in the case of Ahmadabad Rana Caste Association noted that Rana community as native of Ahmadabad only and other community whether accepted by the community as per old rules of the community and staying Ahmadabad. Accordingly, he submitted that the Hon’ble Supreme Court has accepted the Rana community as only of the section of the society, as class of persons of particular area and not on base as somebody borne in a particular caste of the society. Where in the case of the assessee as basic benefit of staying , food etc has been restricted only to members of the particular caste and more in nature of benefit to private group and cannot be a benefit to public at large or of section of the public at large. According to him , it not based on heterogeneous division of society and can’t be termed as charitable activity which distinguish people on the basis of birth and provide facility to some but deny to others. Accordingly to him, the decision of the Hon’ble Supreme Court in the case of Ahmedabad Rana caste Association (supra) is distinguishable on facts 6. Before us the Ld. Counsel of the assessee made an alternative prayer without prejudice to above claim that order of ld CIT(E) is cryptic and not a speaking one and therefore matter may be restored back for deciding afresh. The relevant prayer of the assessee is reproduced as under: 4. Without prejudice to our above contentions, we humbly submit that the order of the learned CIT(E) is cryptic and not a ITA No. 1530/M/2023 Vaishya Samaj Dharmashala Pratishthan Alani Devachi 5 speaking one. The learned CIT(E) has treated the appellant trust as both charitable and religious. The rationale for the same is not discussed anywhere in the order. The submission made by the appellant do not appear to have been considered by the learned CIT(E). Further, the learned CIT(E) passed the order on the ground that the objects of the trust are beneficial for a particular community and not for public at large. However he did not afford an opportunity to the appellant of being heard and to make a detailed submissions on this issue. In view of the above, in the alternative the matter may be sent back to the learned CIT(E) to grant an opportunity to the appellant to make submissions where the learned CIT(E) seeks to draw an adverse inference, to consider such submissions and pass a speaking order. 7. On perusal of the order of ld CIT(E), we agree with the contention of the assessee and note that facts have not been properly marshaled and decision is not a speaking one . In view of above, we feel it appropriate to restore the matter back to the Ld. CIT(E) for deciding afresh and pass a speaking order after considering facts of the case in detail. The grounds of the appeal of the assessee are accordingly allowed for statistical purpose. 8. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 17/07/2023. Sd/- Sd/- (KAVITHA RAJAGOPAL) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated:17/07/2023 Shubham P. Lohar Copy of the Order forwarded to : 1. The Appellant ITA No. 1530/M/2023 Vaishya Samaj Dharmashala Pratishthan Alani Devachi 6 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai