SHRI VAISHNAV SADHU (BAVA VAIRAGI) GNATI TRUST MAHUVA,BHAVNAGAR V. THE CIT (EXEMPTION), AHMEDABAD

ITA 806/AHD/2023

AI Insights

The case involves the Shri Vaishnav Sadhu (Bava Vairagi) Gnati Trust Mahuva, which appealed against the decision of the CIT(Exemption), Ahmedabad, denying their registration under section 12AB of the Income Tax Act, 1961. The Trust's application was initially rejected because its objects were found to benefit a specific religious community, which under section 13(1)(b) of the Act, disqualifies it from receiving certain tax exemptions. The Trust argued that their activities were charitable and not restricted to the specific community, and they had applied for an amendment to their Trust Deed, which was still pending. However, the Tribunal found that the Trust did not meet the criteria for exemption under the Act as it primarily benefited a particular religious community.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 102451 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Other Referred Cases: CIT vs. Palghat Shadi Mahal Trust, CIT vs Dawoodi Bohara Jamat
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 11; 43; 12A; 12

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: DR. BRR KUMAR, VICE PRESIDENT And Shri T.R. SENTHIL KUMAR, JUDICIAL MEMBER Shri Vaishnav Sadhu (Bava Vairagi) Gnati Trust Mahuva Hanu Mant Bag B/H High School, Kumbharwad, Satubangh Apartment Mahuva Bhavnagar-364001 PAN: AANTS7969K (Appellant) Vs CIT(Exemption), Ahmedabad (Respondent) Assessee Represented: Shri Mohit Balani, A.R. Revenue Represented: Shri Prathvi Raj Meena, CIT-DR Date of hearing : 09-04-2025 Date of pronouncement : 16-04-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the order dated 29.08.2023 passed by the Commissioner of Income Tax (Exemption), Ahmedabad denying registration under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Brief facts of the case is that the assessee filed Form 10AB for registration of the Trust u/s. 12AB of the Act. From the perusal of ITA No: 806/Ahd/2023 I.T.A No. 806/Ahd/2023 Page No Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E) 2 the objects of the Trust, the Ld. CIT(E) found that many objects are for the benefit of a particular religious community or caste “Vaishnav Sadhu (Bava Vairagi)”. Hence a show cause notice dated 24-08-2023 was issued as follows: “Please refer to your application filed in Form 10AB for registration u/s. 12A(1)(ac)(iii) of the Act. For further seeking required details for granting registration u/s. 12AB, notice was issued on 11.07.2023 and 11.08.2023. In response to the same, you have filed/submitted certain details/documents on 16.08.2023 2. In this respect, your attention is drawn toward the Objects/Motives of the Trust stipulated in the copy of Trust deed as under: “4 Objects/Motives of the Trust 1. To carry out all the means of educational spread, promotion to make the members of the caste to take interest in the cause of educational and social upliftment 2 To make physically and financially weaker brothers and sister of the caste self-sufficient through financial help 3 To start and run cultural picnic, tourism and sport programs to appreciate the work of student and members of caste and to develop inner talent. 7 To promote and to administer objective of the caste land, house, vadi, shop etc. can be taken on rent can be purchase and similarly can be given for rent and can be sold. 8 …….. 9 To give medical assistance to needy members of the caste, similarly to give medical assistance or Financial assistance to widow and needy members of the caste during illness or natural calamities. 3. Further, it is observed that as per row no 3 of Form 10AB, the trust/institution is a Charitable and above referred object, which is charitable in nature, appears to be restricted to benefit of a particular religious community or caste i.e. Vaishnav Sadhu (Bava Vairagi) Gnati. I.T.A No. 806/Ahd/2023 Page No Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E) 3 Therefore, please clarify that as to how there is no specified violation as defined in the Explanation to section 12AB(4). 4 You are also requested to show cause as to why your application filed in Form 10AB u/s. 12A(1)(ac)(iii) should not be rejected and also your provisional registration should not be cancelled for the reasons discussed in the notice.” 3. In response, the assessee filed its reply dated 28-08-2023 as follows: “Our Trust is registered under Gujarat public trust act on 02/02/1995 we have agreed with you our object of the trust deed as for the cast Shri Vaishnav Sadhu (Bava Vairagi) Gyati. But To Our Activities is Purely Religious for all Gyati As You see in our Audited Balance-Sheet For Such Situation Of Trust Deed We have Clarified that our Trust is Constituted in 1995 on that time No Any Income tax section violate the benefit of section 11 and Sec 12 and Sec 13. Than sec 13(1)(b) and the sec 13(1)(c) enforce and the violate the sec 11 and sec 12, Immediately we have to apply joint charity commissioner for Amendment of deed under the sec 50(A) of Bombay Public Trust Act. At Now our application for Amendment Of deed is pending with Joint charity Commissioner Office Bhavnagar. In Application Form of 10AB we have mentioned Only Charitable in Row No-3 By Mistake We Have Much Apologies For That So we have request you to consider our reply and sanction our application.” 4. The above reply was considered by the Ld. CIT(E) and denied the registration by observing as follows: “8. I have gone through the reply of assessee. The application has stated that it has applied for the amendment of deed and the same is pending with Joint Charity Commissioner Office Bhavnagar. Hence, the present application of the applicant is suppose to be decided on the basis of the trust dated 25.01.1995. The second issue raised by the applicant is that all its activities are purely religious. In this regard, it is observed that applicant has applied for charitable trust in form 10AB filed by him for granting regular registration to the trust. The objects discussed in Para 6.1 above also does not appear to be I.T.A No. 806/Ahd/2023 Page No Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E) 4 objects of religious nature. Therefore no benefit can be granted to the applicant in this regard also. 8. Provision of sec 13(1)(b) of the Act is applicable to the applicant/assessee. Section 13(1)(b) of the Act stipulates that provisions of sec 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 sec 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 Various courts have held that the provisions of sec 13(1)(b) of the Act is not applicable in the case of a religious trust. The provision of sec 13(1)(b) of the Act is applicable to a charitable trust, has been settled by the Hon'ble Supreme Court in the case of CIT vs. Palghat Shadi Mahal Trust, reported in 120 Taxman 889, wherein in the case of a public charitable trust, the Hon'ble Apex court held that where the benefit is available to Muslims from all over the world, none of whom except in Kerala are backward classes, the provision of sec 13(1)(b) would be attracted and therefore the trust is not entitled for exemption u/s 11 of the Act. Even some courts had held that in case of composite trust/institution, i.e., charitable cum religious, the provision of sec 13(1)(b) of the Act is not applicable. However, the said controversy was resolved by the Hon'ble Supreme Court in the case of CIT vs Dawoodi Bohara Jamat, reported in 43 laxmann.com 243, wherein the Hon'ble Apex Court held that the provision of sec 13(1)(b) of the Act is applicable even to a composite trust/institution and held as under. \"45. From the phraseology in clause (b) of section 13(1), it could be inferred that the Legislature intended to include only the trusts established for charitable purposes. That however does not mean that if a trust is a composite one, that is one for both religious and charitable purposes, then it would not be covered by clause (b). What is intended to be excluded from being eligible for exemption under Section 11 is a trust for charitable purpose which is established for the benefit of any particular religious community or caste.\" 9. Further, the Hon'ble Supreme Court in the said case of CIT vs Dawoodi Bohara Jamal (supra) which was composite in nature, after analyzing the various objects of the trust, held that two of its objects provide for the activities completely religious in nature and restricted to the specific I.T.A No. 806/Ahd/2023 Page No Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E) 5 community of the assessee trust are objects with religious purpose only. However, the Hon'ble Apex Court held that other four objects of the assessee trust was charitable in nature and finally held that the trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that sec 13(1)(b) of the Act would be attracted and hence the trust would be eligible to claim exemption u/s 11 of the Act. In concluding para the Hon'ble Apex Court held has under: “50. In that view of the matter, we are of the considered opinion that the respondent-trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that Section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby it would be eligible to claim exemption under Section 11 of the Act\" 10. From the above referred discussion and objects of the applicant/assessee it is evident that it is not a religious trust, but it is a charitable trust and above referred objects, which are in the nature of charitable is restricted to benefit of a particular religious community or caste \"Vaishnav Sadhu (Bava Vairagi)\" and therefore as per law laid down by the Hon'ble Apex court in the above referred cases, the provision of sec 13(1)(b) would be applicable and therefore the applicant/assessee would not be eligible for exemption u/s 11 of the Act. Therefore in the facts and circumstances of the case, the applicant/assessee cannot be granted registration u/s 12A of the Act. 11. In view of the above, the present application filed in Form No.10AB u/s 12A(1)(ac)(ii) of the Act is rejected and provisional registration is also cancelled.\" 5. Aggrieved against the same, assessee is in appeal before us raising the following Grounds of Appeal: 1. Ld. CIT(E) has erred in law and on the facts of the case in rejection the provisional registration of the Appellate u/s. 12AB of the Act. 2. Your appellant reserves the right to add, delete modify or revise any ground of appeal. 6. Ld. Counsel appearing for the assessee filed a Paper Book but does not contain the translated copy of the Trust Deed as well as the amended Trust Deed pending with the Joint Charity I.T.A No. 806/Ahd/2023 Page No Shri Vaisnav Sadhu (Bava Vairagi) Gnati Trust Mahuva vs. CIT(E) 6 Commissioner, Bhavnagar. In the absence of the above relevant objects and revised objects of the Trust, Ld. Counsel’s reliance on the decision rendered by this Tribunal in ITA No. 796/Ahd/2023 in Gohilwad Vankar Samaj Seva Trust will not be applicable to the facts of the present case and clearly distinguishable with the facts of the present case. Hence we have no hesitation in confirming the order passed by the Ld. CIT(E). 7. In the result, the appeal filed by the Assessee is hereby dismissed. Order pronounced in the open court on 16-04-2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad: Dated 16/04/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद "