SHREE PARJIYA BRAHMAN ABHYUDAY MANDAL,KUTCH V. CIT(EXEMPTION), AHMEDABAD

ITA 327/RJT/2023

AI Insights

The case involves Shree Parjiya Brahman Abhyuday Mandal, a trust, which appealed against the decision of the CIT(Exemption) rejecting their application for registration under Section 12A of the Income Tax Act, 1961. The CIT(Exemption) had initially rejected the application citing that the trust's objectives, which included benefits to a specific religious community, violated Section 13(1)(b) of the Act. However, the Tribunal found that the trust's activities were not limited to the specific community and included broader charitable activities, thus meriting registration under Section 12A.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 27243 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Other Referred Cases: CIT vs. Dawoodi Bohara Jamat, Jamiatul Banaat tankaria vs. CIT(E), CIT(E) vs. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA
• Assessee Lawyers: KALPESH DOSHI
• Keywords: Set aside; Opportunity of being heard; Question of law; Charitable institution
• Section: 11; 43; 12A; 13; 12

Judgement Text

" Page | 1 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.327/RJT/2023 (Ǔनधा[रण वष[ / Assessment Year: (NA) (Hybrid Hearing) Shree Parjiya Brahman Abhyuday Mandal Adesarr Rapar, Kutch Rapar, Gujarat 370155 Vs. CIT(Exemption) Ahmedabad èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ABEAS2267F (Assessee) (Respondent) Assessee by : Shri Kalpesh Doshi, AR Respondent by : Shri Sanjay Punglia, CIT.DR Date of Hearing : 08/10/2024 Date of Pronouncement : 06/01/2025 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, is directed against the order passed by the Learned Commissioner of Income Tax (Exemption), Ahmedabad [in short ‘Ld. CIT(E)’], dated 27.07.2023, wherein the CIT(E) rejected the application of the assessee filed in Form No.10AB, under Section 12A(1)(ac) (iii)of Income Tax Act, 1961 (in short ‘the Act’). 2. The grievances raised by the assessee are as follows: “1. That the learned CIT( Exemption) has failed to grant proper opportunity of being heard and has wrongly rejected the application filed in form no. 10AB for granting registration u/s 12A of the IT. Act, 1961 Page | 2 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) 2. That, the findings of the learned CIT. Exemption are not justified in law as well as facts of the case and required to be deleted. 3. The assessee craves to add, alter, amend or delete any of the above grounds of appeal.” 3. Brief facts, as discernible from the orders of lower authorities are that assessee before us is a trust and has filed Form 10AB, u/s 12A(1)(ac) (iii) of the Act, on 18/01/2023. The assessee had been granted order for provisional registration in Form No. 10AC issued on 07/04/2022, under section 12A(1)(ac)(vi) for the period commencing from assessment year (AY) 2022-23 to AY 2024-25. The ld CIT(Exemption), examined the objects of the assessee- trust and noticed that following one object, which is otherwise charitable in nature, is for the benefit of any particular religious community or caste \"Parjiya Brahm Samaj\": “1. To do social, cultural, educational, medical aid and economical relief for the upliftment of all Parjiya Brahm Samaj” 4. Therefore, ld.CIT (E ) issued a show- cause notice to the assessee, on 19/07/2023, and the relevant portion of the same is reproduced hereunder: 2. In response to the same, you have filed/submitted details/documents. In this respect, your attention is drawn to the para 4(1) of objects of the trust in the constitution stipulated as under “1. To do social, cultural, educational, medical aid and economical relief for the upliftment of all Parjiya Brahm Samaj 3. In view the above, you are requested to provide notarized or certified copy of original deed as well English translation thereof (if it is not in English) 4. Further, it is observed that as per row no. 3 of Form 10AB, the trust/institution is a religious cum charitable trust and above referred objects, which is in the nature of charitable appears to be restricted to benefit of a particular religious community or caste. Therefore, please clarify that there is no specified violation as defined in the Explanation to section 12AB(4) Page | 3 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) 5. You are also requested to show cause as to why your application filed in Form 10AB u/s 124(1)(ac)() should not be rejected for the reasons discussed in the notice\" 5. However, the assessee has not furnished any response. Therefore, ld. CIT(E ), from the application of the assessee, noticed that there is a violation of the provisions of section 13(1)(b) of the Act. The Ld CIT(E ) noticed that section 13(1)(b) of the Act is applicable to the assessee, under consideration. The provisions of section 13(1)(b) of the Act, stipulates that provisions of section 11 and 12 would not apply in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof, if the trust or institution is created or established for the benefit of any particular religious community or caste. Therefore, the provision of section 13(1)(b) of the Act, is applicable only in a case of charitable trust/institution created or established after commencement of this Act, if the trust/institution is created or established for the benefit of any particular religious community or caste. As per Form No. 10AB filed by the assessee, the date of incorporation/Creation/Registration of the trust has been mentioned as 28/04/1977, which is pending prior to commencement of Act. Also, one of the objects of the trust is for the benefit of particular religious community. Therefore, there is clear violation of section 13(1)(b) of Income Tax Act. 1961.The ld CIT( E) also relied on the judgement of Hon'ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat, reported in 43 taxmann.com 243, wherein the Hon'ble Apex Court held that the provision of section 13(1)(b) of the Act, is applicable even to a composite trust/institution. Finally, ld.CIT( Exemption) held that assessee cannot be granted registration u/s 12A of Page | 4 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) the Act. Therefore, the ld. CIT (Exemption), rejected the assessee`s application in Form No. 10AB u/s 12A(1)(ac)(iii) of the Act. 6. Aggrieved by the order of the Ld. CIT(E), the assessee is in appeal before us. 7. The Ld. Counsel for the assessee, argued a lot and took us through the objects- clauses of the assessee-trust and stated that assessee -trust is not for particular community or caste. The assessee- trust is open for whole section of society and benefits for public. Therefore, the trust activity is not restricted only to ‘Parjiya Brahman Samaj’. The objects of the trust narrated in the objects- clauses of the deed are as follows: “1. To carry out social, cultural, educational, medical treatment and financial assistance works for the overall upliftment of the entire Parjiya Brahman society. 2. To perform or to make perform religious rituals in the Kankubai Mandir of Adesar, to conduct Jirnoddhar, to provide accommodation and food facilities for pilgrims visiting the temple and for their religious-social rituals. 3. To organize and take measures to achieve social, legal, educational, academic and cultural cooperation with the communities of the other region. 4. To carry out activities which increase the sense of unity, cooperation and brotherhood among the members of the society. Note:- There shall be no restriction on the scope or territory of any kind for the provision of education, medical treatment and medical assistance to the members of the Parjiya Brahman Trust.” 8.Taking into account these above objects, the Ld. Counsel also submitted that last three objects of the trust stated above are for the public benefit, hence, the majority of the objects, of the trust are for the general public welfare. Therefore, assessee -trust is not restricted only for a particular Page | 5 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) community. Besides, the assessee- trust, runs school and in that school, all sections and all casts of students are getting admission and studying there. Therefore, school runs by the assessee -trust is not restricted to Parjiya Brahman Samaj only. The Ld. Counsel, thus submitted that the Bench may direct the ld CIT( E) to grant registration to the assessee- trust. 9. On the other hand, Ld. CIT-DR for the Revenue, submitted that objects stated in the trust deed relates to only particular caste and community i.e. ‘Parjiya Brahman Samaj’ only. Therefore, such trust which is exclusively for particular caste or section of persons, should not be granted registration. 10. We have heard the Learned Counsel appearing on behalf of the respective parties at length. We note that the assessee-trust was denied registration u/s.12A of the Act by the Ld. CIT(E) stating that the objects of the assessee- trust were restricted to particular community and caste, that is, “Parjiya Brahman Samaj”. However, we have gone through the objects of the trust and the activities of the trust in respect of school run by the trust and noted that in the school, the students belonging to all castes and communities are studying, that is, the school run by the trust is open for all sections of students and for general purposes, therefore, we note that registration denied by the Ld. CIT(E) on this ground is not valid. We note that the trust under consideration had large number of other objects for benefit of general public, which is not restricted to a particular community. Therefore, such trust is entitled to get registration. 11.Apart from this, the provisions of Section 13(1)(b) of the Act, is not appliable at the time of registration. These are the provisions which are applicable at the time of doing the assessment, therefore, denial of Page | 6 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) registration based on the provisions of Section 13(1)(b) of the Act, is not justified. For that reliance is placed on the judgment of Co-ordinate Bench of ITAT, Ahmedabad in the case of Jamiatul Banaat tankaria vs. CIT(E), [2024] 160 taxmann.com 358 (Ahmedabad-Trib.), wherein it was held as follows: “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 trust existed for the benefit of a particular religious community only, the exemption under 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 grant 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 ld.CIT(Exemption), in the present case, we find, has only picked a portion of the order of the 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 Vs. 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 Page | 7 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) 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 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, training 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 kind 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 poor, 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.” 10. The Ld.CIT(Exemption) has referred to object at S.no 6 which is providing scholarship to Muslim students for their studies and to make provision so as they 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 charitable in nature except for the aforestated object. As per section 13(1)(b) exemption u/s 11 is denied 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. Page | 8 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) 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.” 12. Our view, if further fortified by the judgment of the Hon’ble Jurisdictional Gujarat High Court in the case of CIT(E) vs. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust, [2016] 74 taxmann.com 199 (Guj.), wherein it was held that where the assessee -trust has large number of other objects for the benefits of general public, the registration should not be denied. The detailed findings of the Hon’ble Court are given below: “6. As noted, in the present case the Commissioner referred to the social activities clause contained in the constitution of the trust to come to the conclusion that the objects of the trust were confined for the benefit of a religious community. We, however, notice that there were large number of other objects which were for the benefit of general public. Relevant portion of the constitution of the trust reads as under : “4. Objects of Trust: Object of this institution will be as under: 1. Educational : 1. To do all activities related to Education or which encourages education 2. To establish, maintain and run Educational centres, infant schools, Primary Schools, Secondary Schools, High Secondary Schools, Colleges, to establish, maintain and run Hostels, training Centres and to help in such activities for creating awareness in the common people and to make the publicity of education. 3. To impart knowledge of Computer and latest technology. 4. To help or arrange for such help to students through Scholarships, subsidy, loan prize, stipend, etc. 5. To provide guidance and education for Technical, Vocational and other crafts professions. 2. Social activity : Page | 9 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) 1. To arrange such collective function and to be helpful in such activities which increases relationship, brotherhood, familyness, unity, love amongst the members. 2. To establish, administer and maintain Guest Houses, Bhojanalaya, Service (vaiyavachh), centres and other buildings for the benefit of members of the society. 3. To construct or to arrange for the construction of residential complexes for the members of the Samaj and to provide loan/financial help subject to the provisions of the rules of the trust. 3. Medical : 1. To do all activities of medical help, to establish, administer and maintain Dispensary, Hospital, Laboratory and other medical treatment centres and arrange camps and seminars. 2. To help patients in medical treatment by providing medicines, financial assistance and all other helps. 3. To make publicity of medical education and given Scholarships. 4. Rural Development : 1. To provide employment to the villagers and to do all activities of poverty elimination. 2. To make tree plantation, tree protection and provide energy, forestry and electricity. 3. To create water scheme units for providing water for agriculture and drinking and make storage of water through ponds, small dams and farm ponds, well etc., 4. To take the any Government Scheme to villagers which make development of their area. 5. Literature & Culture : 1. To make efforts for the development and protection of Indian Culture 2. To do or help in such activities, which is socially prosperous for common people in the area of literature, culture, physical education, and in sports. 3. To give every help for encouragement of people who are interested and liking in culture and literature. 6. Others : 1. For development of institutions’ objects, make research, publicity and developmental works or to help any institution, person, doing such activity or with their help to plan Training Centres, camps, Lectures, meetings, gatherings and seminars and to print books and other literatures, publish it or exhibit. 2. To run Cow homes and do the activities of growth of cow. 3. To provide food, cloths, residence, financial help and other help to financially weak and needy persons. 4. During natural or manmade calamities, provide help to needy persons and domestic helpful animals and birds. 5. To do all activity of Jivdaya. 6. To do activities of service to human and animals over the objects mentioned above.” Page | 10 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) 7. It can thus be seen that the Commissioner focused his attention to clause 4.2 of the objects of the trust to come to the conclusion that the same were for the benefit of a certain religious communities only, in the process ignoring various other objects, for e.g. as per clause 4.1, the trust would engage itself in activities relating to education by maintaining and running education centers, infant schools, primary secondary and high schools, colleges etc., to run hostels, training centers for creating awareness in the common people and to make the education available for the public. It would also engage in imparting training in computers. As per clause 4.3, the trust would engage in doing all activities for medical help and to establish and administer dispensaries, hospitals and laboratories etc. It would also help the patients by supplying medicines and financial assistance. Likewise in clause 4.4 the trust could engage in rural development schemes. As per clause 4.5, the trust would engage in literary and cultural activities by making efforts for the development and protection of Indian culture. Clause 4.6 which pertains to other included activities such as running cow shelters, to provide food, cloth and financial help for economically weaker persons, to help during natural or other calamities, to serve humans and animals etc. 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 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. In the result, no question of law arises. The Tax Appeal is dismissed.” 13. In the light of the above facts and circumstances, we direct the ld. CIT(Exemption), to examine the application of the assessee -trust and relevant documents, and grant the registration under Section 12A(1)(ac) (iii) of Income Tax Act, 1961, in accordance with law. For statistical purposes, the appeal of the assessee is treated to be allowed. 14.In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced in the open court on 06/01/2025 Page | 11 ITA No. 327/RJT/2023- Shree Parjiya Brahman Abhyuday Mandal vs. CIT(E) Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 06/01/2025 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "