ORDER
Pranav Trivedi, J.- Heard learned Senior Standing Counsel Mr. Aman Mir appearing for the appellant.
2. This Tax Appeal is preferred under Section 260A of the Income Tax Act, 1961 (For short “the Act”) proposing the following substantial questions of law arising out of the order dated 30.09.2024 of the Income Tax Appellate Tribunal, “A” Bench, Ahmedabad (hereinafter referred to as “the Tribunal”) in Shree Naminath Shwetamber Murtipujak Tapagachh Jain Religious Trust v. CIT (Exemption) [2024] 209 ITD 379 (Ahd.-Trib)/ ITA No. 874/ Ahd/2024 :-
(i) Whether on the facts and in the circumstances of the case and law, Hon’ble ITAT has erred in ignoring the amendment brought in by Finance Act, 2022 w.e.f 01.04.2022 through which sub-section (4) of Section 12AB was inserted whereby as per clause (d) below explanation to sub section (4) of section 12AB of Income-tax Act, 1961, application of income for the benefit of any particular religious community has been listed as a specified violation for cancellation of registration of trust.
(ii) Whether on the facts and in the circumstances of the case and law, Hon’ble ITAT has erred by not appreciating that registration can not be granted to a trust or institution which is found to be carrying out specified violation at the time of application since that would imply giving registration to an entity whose registration is liable to be cancelled.
(iii) Whether on the facts and in the circumstances of the case and law, Hon’ble ITAT has erred by not appreciating that registration is pre-requisite and essential condition for claiming exception and all the exception provisions are to be strictly interpreted as held by Hon’ble Supreme Court in Commissioner of Customs (Import), Mumbai v. M/s Dilip Kumar & Company and therefore allowing registration even in cases where there is a specified violation mean the most liberal interpretation of the exemptions provision against the ratio laid down by Hon’ble Supreme Court in the case referred.”
3. Brief facts of the case are as under :-
3.1. The respondent – assessee filed an application seeking registration of the Trust under Section 12A of the Act in Form No. 10AB on 28.09.2023 inter alia seeking provisional approval under Section 12(1)(ac)(iii) of the Act. Pursuant to the application preferred by the assessee, provisional approval was granted on 26.10.2022, covering Assessment Years 2023-24 to 2025-26. Upon review of assessee’s application, a show cause notice was issued on 24.01.2024 by the Commissioner of Income Tax (Exemptions) observing that restrictive nature of the charitable objectives of the Trust were with regard to primarily serving the interest of a particular religious community rather than public at large. It was alleged that this was not in alignment of statutory provision of Section 12AB (4) of the Act and therefore, the said show cause notice was issued to show cause as to why the application of the assessee should not be rejected. The assessee filed reply to the said show cause notice and by way of order dated 28.03.2024, the Commissioner of Income Tax (Exemptions), Ahmedabad rejected the application of the assessee filed in Form 10AB and also cancelled provisional registration of the Trust.
3.2. Being aggrieved by the order passed by the CIT (Exemptions), the assesses preferred an appeal before the Tribunal which came to be numbered as ITA/874/Ahd/2024. The Tribunal, after considering the submissions of both the parties, allowed the appeal and remanded the matter to the file of the Commissioner of Income Tax (Exemptions) for de novo adjudication in accordance with law. The relevant observations made by the Tribunal are reproduced hereinbelow: :-
“9. Looking into the judicial precedents on the subject, in our considered view, provisions of Section 13(1)(b) of the Act can be invoked at the time of assessment, on the basis of material that may be brought on record. However, grant of registration under Section 12A of the Act cannot be denied to the assessee by invoking the provisions of Section 13(1)(b) of the Act at the time of grant of registration.
10. In the result, in view of the above observations, m 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.
11. In the result, the appeal filed by the assessee is allowed for statistical purposes.”
4. At the outset, learned Senior Standing Counsel Mr. Aman Mir appearing for the appellant has conceded to the fact that this issue is no more res-integra and is covered by the decision of the Hon’ble Apex Court in the case of
CIT v.
Dawoodi Bohara Jamat [2014] 364 ITR 31 (SC) as well as the decision of this Court in case of
CIT (Exemption) v.
Jamiatul Bannat Tankaria rendered [2024] 5 (
Gujarat)/ [Tax Appeal No. 968 of 2024 dated 09-10-2024]. Further, it was submitted by learned Senior Standing Counsel Mr. Aman Mir that the order passed by this Court in Tax Appeal No. 968 of 2024 was challenged before the Hon’ble Apex Court by way of
CIT (Exemption) v.
Jamiatul Banaat Tankaria Madressa [Special Leave Petition (Civil) Diary No. 38594 of 2025 , dated 22-8-2025] which came to be dismissed on the ground of delay as well as on merits.
4.1. Lastly, learned Senior Standing Counsel Mr. Aman Mir has submitted that the issue involved in the present matter stands concluded by the decision of this Court in CIT v. Bayath Kutchhi Dasa Oswal Jain Mahajan Trust, (2017) 8 ITR-OL 493 (Guj.). In the said decision, while considering the question of denial of registration under Section 12A of the Act by invoking the provisions of Section 13(1)(b) of the Act, this Court categorically held that the provisions of Section 13 of the Act would come into operation only at the stage of assessment and not at the stage of grant of registration under Section 12A of the Act. The relevant observations contained in paragraph 8 of the said judgment read thus:
“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 earned 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, Gaining 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 land 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 scholarship to Muslim students for their studies and to make provision so 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.
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.”
5. In view of the findings recorded by the Tribunal and supported by the decision of the Hon’ble Apex Court in case of Dawoodi Bohara Jamat (supra) as well as decisions of this Court in case of Bayath Kutchhi Dasa Oswal Jain Mahajan Trust (supra) and in case of CIT v. Anjuman E Nusratul Muslimin Tankaria [Tax Appeal No. 1052 of 2024 dated 15-04-2026], for the purpose of granting registration under Section 12A of the Act, the provisions of Section 13(1)(b) of the Act cannot be referred to. The provisions of Section 13(1) is to be applied while granting exemption to the Trust.
6. In view of the findings of fact recorded by the Tribunal and settled position of law, we are of the view that no question of law much less any substantial question of law arises from the impugned order passed by the Tribunal in the present Tax Appeal.
7. Therefore, this Tax Appeal is accordingly dismissed. No order as to costs.
