KSHATRIYA VIKASH SANSTHA,AHMEDABAD V. CIT(EXEMPTION), AHMEDABAD

ITA 1183/AHD/2024

AI Insights

The case involves Kshatriya Vikash Sanstha, a trust seeking registration under section 12A and approval under section 80G of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemptions) rejected these applications, citing that the trust primarily benefits the Chauhan community, which could invoke section 13(1)(b) of the Act. The trust appealed against these decisions, arguing that their activities are charitable and not limited to a specific community. The Tribunal, referencing precedents, found that section 13(1)(b) should be considered at the assessment stage, not at the registration stage, and thus remanded the matter back to the CIT(E) for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 39175 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: CIT v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199 (Guj), Bhojalram Leuva Patel Seva Samaj Trust (ITA No. 667 & 668/Ahd/2023), Shree Naminath Shwetambar Murtipujak Tapagachh Jain Religious Trust (ITA No. 874/Ahd/2024)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. NANDAKUMAR
• Assessee Lawyers: CHETAN AGARWAL
• Keywords: Set aside; Opportunity of being heard
• Section: 12A; 80G

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदा बा द \u0012ा यपीठ “बी“, अहमदा बा द । IN THE INCOME TAX APPELLATE TRIBUNAL “ B ” BENCH, AHMEDABAD सु\u0017ी सुिच\u0019ा का \u001aले, \u0012ा ियक सद\u001c एवं \u0017ी मकरंद वसंत महा देवकर, लेखा सद\u001c क े सम\"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER 1. आयकर अपील सं /ITA No.1182/Ahd/2024 2. आयकर अपील सं /ITA No.1183/Ahd/2024 िनधा \u0010रण वष\u0010 /Assessment Year : 2025-26 Kshatriya Vikash Sanstha 2, Jalsagar Society Near Nirant Cross Road Swaminarayan Gurukul Vastral Ahmedabad – 382 418 (Gujarat) बनाम/ v/s. The CIT (Exemption Anandnagar road Ahmedabad – 380 015 (Gujarat) \u0014थायी लेखा सं./PAN: AADTK 3996 Q अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee by : Shri Chetan Agarwal, AR Revenue by : Shri V. Nandakumar, CIT-DR सुनवाई की तारीख/Date of Hearing : 10/02/2025 घोषणा की तारीख /Date of Pronouncement: 12/02/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: These appeals have been filed by the assessee against the orders of the Commissioner of Income Tax (Exemptions), Ahmedabad [hereinafter referred to as “CIT(E)”], rejecting the application for registration under section 12A and approval under section 80G of the Income Tax Act, 1961 [hereinafter referred to as “the Act\"]. The order under section 12A of the Act was passed vide order dated 30-03-2024, and the order under section 80G of ITA Nos.1182 and 1183/Ahd/2024 Kshatriya Vikash Sanstha vs. CIT (Exemption Asst. Year : 2025-26 2 the Act was passed vide order dated 22-03-2024. The CIT(E) rejected the applications on the ground that the objectives of the trust were primarily directed towards benefiting the Chauhan community, thereby attracting the provisions of section 13(1)(b) of the Act. Facts of the Case: 2. The assessee, Kshatriya Vikash Sanstha, is a trust engaged in activities claimed to be charitable in nature. The assessee filed applications seeking registration under section 12A of the Act and approval under section 80G of the Act. The CIT(E) rejected both applications on the grounds that the objectives of the trust were primarily directed towards benefiting the Chauhan community, thereby invoking section 13(1)(b) of the Act. The CIT(E) also noted that the assessee failed to provide sufficient evidence demonstrating that its activities were for the benefit of the general public. 3. Aggrieved by the order of CIT(E) the assessee is in appeal before us with following grounds of appeal: In ITA No. 1182/Ahd/2024 – AY 2025-26 “Ld.CIT(Exemption) erred in law as well as on fact in rejecting and not granting registration u/s.12A of the Act on the facts and circumstances of the case.” In ITA No. 1183/Ahd/2024 – AY 2025-26 “Ld. CIT (Exemption) erred in law as well as on fact in rejecting approval u/s.80G of the Act on ground of limitation.” 4. During the course of the hearing, the Authorized Representative (AR) submitted a copy of the trust deed along with an English translation, as well as the audited financial statements for the financial years 2018-19 to 2023-24. ITA Nos.1182 and 1183/Ahd/2024 Kshatriya Vikash Sanstha vs. CIT (Exemption Asst. Year : 2025-26 3 The AR contended that these documents establish that the trust is engaged in genuine charitable activities and is not restricted solely to the Chauhan community. The AR argued that section 13(1)(b) of the Act should not be invoked at the stage of granting registration under section 12A of the Act, as its applicability should be examined only at the assessment stage based on the actual utilization of funds and activities undertaken by the trust. The AR emphasized that the CIT(E) erred in rejecting the application without a proper factual examination of the trust's operations. In support of the contentions, the AR relied on various judicial precedents, including: - Bhojalram Leuva Patel Seva Samaj Trust (ITA No. 667 & 668/Ahd/2023) and Shree Naminath Shwetambar Murtipujak Tapagachh Jain Religious Trust (ITA No. 874/Ahd/2024). 5. The AR further submitted that the audited financial statements of the trust indicate that its activities are aimed at public welfare, including education, medical relief, and other charitable objectives. The AR contended that these financial records should have been examined by the CIT(E) before concluding that the trust’s benefits are confined to a particular community. The AR requested to restore the matter back to CIT(E). The DR did not object to the matter being restored to the CIT(E) for fresh consideration based on the financial statements and other material placed on record. 6. We have considered the arguments of both parties and reviewed the material placed on record. The key issue is whether the CIT(E) was justified in rejecting the assessee’s applications for registration and approval under sections 12A and 80G of the Act, respectively, by applying section 13(1)(b) of the Act, at the stage of registration. ITA Nos.1182 and 1183/Ahd/2024 Kshatriya Vikash Sanstha vs. CIT (Exemption Asst. Year : 2025-26 4 6.1. The Hon'ble Gujarat High Court in the case of CIT v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199 (Guj) held that section 13(1)(b) of the Act should be examined at the assessment stage, not at the time of granting registration under section 12A of the Act. The Co- ordinate Bench in the case of Bhojalram Leuva Patel Seva Samaj Trust and Shree Naminath Shwetambar Murtipujak Tapagachh Jain Religious Trust (supra) reiterated this position and directed reconsideration of registration applications where section 13(1)(b) of the Act was prematurely invoked. 7. Following the above judicial precedents, we find that the CIT(E) erred in rejecting the applications at the registration stage. The CIT(E) is directed to re-examine the application for registration under section 12A and approval under section 80G of the Act by considering the financial records and activities of the trust and affording a reasonable opportunity of being heard to the assessee. 8. In light of the foregoing discussion, we set aside the orders of the CIT(E) and restore the matter back to the CIT(E) for fresh adjudication. 9. In the combined result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the Open Court on 12th February, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 12/02/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS ITA Nos.1182 and 1183/Ahd/2024 Kshatriya Vikash Sanstha vs. CIT (Exemption Asst. Year : 2025-26 5 आदेश की #ितिलिप अ$ेिषत/Copy of the Order forwarded to : 1. अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(E), Ahmedabad 5. िवभागीय #ितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u0010 फाईल / Guard file. आदेशानुसार/ BY ORDER, स&ािपत #ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 10.1.2025 2. Date on which the typed draft is placed before the Dictating Member. : 10.1.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 12.2.5 7. Date on which the file goes to the Bench Clerk. : 12.2.25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "