SHREE NISHKALANK MAHADEV KOLIYAK,BHAVNAGAR V. CIT(EXEMPTION), AHMEDABAD

ITA 868/AHD/2024

AI Insights

The case involves Shree Nishkalank Mahadev Koliyak, a trust, appealing against the decision of the Commissioner of Income Tax (Exemptions), Ahmedabad, which denied the trust's application for registration under Section 12AB of the Income Tax Act. The Commissioner had rejected the application on grounds that the trust's objectives primarily benefit a private religious community and that certain expenditures were not in consonance with the trust's objects. The Tribunal, referencing several judicial precedents, held that the denial of registration based on Section 13(1)(b) of the Act was inappropriate at the registration stage and should be considered only during the assessment stage.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24970 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Other Referred Cases: Bargahe Husaini Trust-Monpar [2024] 165 taxmann.com 141/208 ITD 158 (Ahmedabad - Trib.), Bhojalram Leuva Patel Seva Samaj Trust v. CIT (Exemptions) [2024] 162 taxmann.com 270 (Ahmedabad - Trib.), Jamiatul Banaat Tankaria v. CIT (Exemption) [2024] 160 taxmann.com 358/205 ITD 673 (Ahmedabad - Trib.), Malik Hasmullah Islamic Educational and Welfare Society v. CIT [2012] 24 taxmann.com 93/138 ITD 519 (Lucknow), St. Joseph Academy v. DIT (Exemption) [2014] 50 taxmann.com 216/153 ITD 669 (Hyderabad - Trib.), CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199/243 Taxman 60 (Gujarat)/[2017] 8 ITR-OL 494 (Guj.)
• Laws Referred To: Section 12AB of the Income Tax Act, Section 13(1)(b) of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RITESH PARMAR
• Assessee Lawyers: MOHIT BALANI
• Keywords: Opportunity of being heard
• Section: 12A; 13; 12

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.868/Ahd/2024 (Assessment Year: N.A.) Shree Nishkalank Mahadev Koliyak, Koliyak Gogha, Bhavnagar-364070 Vs. Commissioner of Income Tax (Exemption), Ahmedabad [PAN No.ABGTS0692B] (Appellant) .. (Respondent) Appellant by : Shri Mohit Balani, A.R. Respondent by: Shri Ritesh Parmar, CIT DR Date of Hearing 26.11.2024 Date of Pronouncement 22.01.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 19.02.2024. 2. The assessee has taken the following grounds of appeal:- “1. The learned CIT(Exemption) has erred in law and on the facts of the case in rejecting the provisional registration u/s 12AB of the Act. 2. Your appellant craves liberty to add, to alter, to modify, to amend or to withdraw / delete any of the grounds of appeal at any time, on or before the hearing of appeal.” 3. At the outset, we observe that the appeal is time barred by 07 days. The delay of 07 days is condoned on due consideration of facts and owing to smallness of delay causing no perceptible prejudice to other side. ITA No. 868/Ahd/2024 Shree Nishkalank Mahadev Koliyak vs. CIT(E) Asst.Year –N.A. - 2– 4. The brief facts of the case are that the assessee filed application for registration of trust under Section 12AB of the Act. However, Ld. CIT(E) rejected the application for grant of registration for the reasoning that firstly the objective / objects of the trust are for the benefit of Mahanat and his family. Secondly, the trust vide response dated 01.12.2023 has only submitted part details and has not furnished the full details / documents as called for. Thirdly, on perusal of documents / responses received by the trust, CIT(E) was of the view that expenditure towards “Gaushala” as reported in the annual accounts are not in consonance with the objects of the trust. The CIT(E) noticed that one of the objects of the trust was providing for up-keep and rearing of Mahant’s family and therefore, the trust falls under the category of “private religious community”. Accordingly, assessee’s application for grant of registration under Section 12AB of the Act was rejected by Ld. CIT(E). 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(E), denying the grant of registration under Section 12AB of the Act. 6. Before us, the Counsel for the applicant trust submitted that the Mahant family is an employee of the temple and therefore, any expenditure of such employees or their family was well within the objects of the trust. Secondly, the Counsel for the assessee argued that the provisions of Section 13(1)(b) of the Act cannot be applied at the time of grant of registration and various judicial precedents have upheld the principle that ITA No. 868/Ahd/2024 Shree Nishkalank Mahadev Koliyak vs. CIT(E) Asst.Year –N.A. - 3– Section 13(1) of the Act cannot be looked into only during the course of assessment proceedings. Thirdly, it was submitted that the trust was formed for carrying out religious activities like organizing food for Sadhu and Sadhvi, arranging for Puja provide food to Sadhu and Sadhvi of our temple to celebrate festivals like Diwali and give sweets to poor and backward children, to undertake conservation and maintenance activities for the temple and also perform Puja in temple every month. Therefore, it is evident that there was no violation of any of the conditions specified in Section 12AB of the Act, so as to deny grant of registration to the applicant trust. It was submitted that Ld. CIT(E) has only denied grant of registration by only stating that applicant trust is a private religious community and in view of the provisions of Section13(1) of the Act, since the object of the trust is for up-keep and rearing of Mahant family, it is a private trust which is not entitled for registration under Section 13(1) of the Act. 7. In response, the Ld. D.R. placed reliance on the observations made by the Ld. CIT(E) in his order. 8. We have heard the rival contentions and perused the material on record. It is a well settled law that provisions of Section13(1)(b) of the Act can be invoked only at time of assessment and not at time of grant of registration under Section 12A of the Act. In the case of Bargahe Husaini Trust-Monpar [2024] 165 taxmann.com 141/208 ITD 158 (Ahmedabad - Trib.), the assessee-trust filed application for grant of final registration under section 12A of the Act. The Commissioner (Exemption) observed ITA No. 868/Ahd/2024 Shree Nishkalank Mahadev Koliyak vs. CIT(E) Asst.Year –N.A. - 4– that objects of trust appeared to be restricted to benefit of a particular religious community or caste, which was Khoja Shia Ishna Ashari Samaj and thus, Section 13(1)(b) would be applicable and dismissed application for grant of final registration. The Ahmedabad Tribunal held that provisions of section 13(1)(b) of the Act can be invoked only at time of assessment and not at time of grant of registration under section 12A of the Act. Therefore, in view of aforesaid legal position, matter was to be restored to file of CIT (Exemptions), for de-novo consideration. While passing the order, the Tribunal made the following observations: 7. We have heard the rival contentions and perused the material on record. In the case of Bhojalram Leuva Patel Seva Samaj Trust v. CIT (Exemptions) [2024] 162 taxmann.com 270 (Ahmedabad - Trib.) , the ITAT held that provisions of section 13(1)(b) can be invoked only at the time of assessment and not at the time of grant of registration under section 12A. 9. Again, in the case of Jamiatul Banaat Tankaria v. CIT (Exemption) [2024] 160 taxmann.com 358/205 ITD 673 (Ahmedabad - Trib.), the ITAT held that where objects of assessee-trust were primarily charitable rather than favouring any specific religious community, CIT(E) was not justified in denying registration under Section 12A, by invoking Section 13(1)(b) as said provision would be attracted only at time of assessment and not at time of grant of registration. 10. In the case of Malik Hasmullah Islamic Educational and Welfare Society v. CIT [2012] 24 taxmann.com 93/138 ITD 519 (Lucknow), the ITAT held that since provisions of Sections 11, 12 and 13 are intended for exercise of jurisdiction by an Assessing Officer in an assessment ITA No. 868/Ahd/2024 Shree Nishkalank Mahadev Koliyak vs. CIT(E) Asst.Year –N.A. - 5– proceedings, Commissioner is not competent to invoke such provisions for purpose of declining registration under Section 12AA. 11. In the case of St. Joseph Academy v. DIT (Exemption) [2014] 50 taxmann.com 216/153 ITD 669 (Hyderabad - Trib.), the ITAT held that provisions of Section 13 can be invoked by Assessing Officer while framing assessment and not by Commissioner while considering application for registration under Section 12AA. 12. In view of the above judicial precedents, looking into the facts of the instant case, we are of the considered view that the provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration under Section 12A of the Act. 13. Our view is further supported by the decision of the Hon 'ble jurisdictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199/243 Taxman 60 (Gujarat)/[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 carried out only for such purposes would be entering in the realm of granting exemptions in terms of Section 13 of the Act, which ITA No. 868/Ahd/2024 Shree Nishkalank Mahadev Koliyak vs. CIT(E) Asst.Year –N.A. - 6– 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.\" 14. In the result, in view of the above observations, the matter is restored to the file of CIT (Exemptions), for de-novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order for rejecting the application filed by the assessee trust. CIT (Exemptions) is directed to look into the merits of the activities of the applicant trust and thereafter pass appropriate orders in accordance with law. 15. In the result, the appeal filed by the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 22/01/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 22/01/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "