CIT(E) Can’t Reject Trust’s Registration Application Based on Only One Clause of Trust Deed | ITAT

Case Details: Shah Gulabchand Mulchand v. CIT (Exemption) - [2024] 165 taxmann.com 731 (Surat-Trib.)

Judiciary and Counsel Details

• Pawan Singh, Judicial Member & Bijayananda Pruseth, Accountant Member
• Hardik Vora, AR for the Appellant.
• Ravi Kant Gupta, CIT-DR for the Respondent.

Facts of the Case

The assessee-trust was established with the objects, inter alia, to set up or to be helpful to educational institutions for the upliftment of the group of people following Jainism. The assessee filed an application for registration under section 12AB of the Income Tax Act.

The CIT(E) rejected the assessee’s application for registration under section 12AB of the Act. He held that the objects of the trust were restricted to the benefit of a particular religious community, i.e. Jain community and, therefore, provisions of Sec. 13(1)(b) would be applicable. The matter reached the Surat Tribunal.

ITAT Held

The Tribunal held that it was clear from the objects of the assessee-trust that it was not for the benefit of only the Jain community. The CIT(E) considered only one clause for proper appreciation of the issue. The objects also include medical help to needy patients, educational, occupational and medical help, welfare activities for the upliftment of the general public, etc.

Hence, rejecting registration based on only one clause is improper. Since the facts of the present case are similar to those of the earlier case, following the reasons given in the earlier case, the matter was restored back to the file of CIT(E) for de novo consideration after giving the assessee adequate opportunity for hearing.

List of Cases Reviewed

• CIT v. Leuva Patel Seva Samaj Trust (2014) 42 taxmann.com 181 (Guj)
• Bhojalram Leuva Patel Seva Samaj Trust v. CIT (2024) 162 taxmann.com 270 (Ahmedabad – Trib.)
• CIT v. Palghat Shadi Mahal Trust 120 Taxman. 889 (SC)
• CIT v. Dawoodi Bohara Jamat 43 taxmann.com 243 (SC)
• CIT(E) v. Bayath Kutchhi Dasha Oswal Jaian Mahajan Trust (2016) 74 taxmann.com 199 (Guj)
• CIT v. Shree Tapeshwar Hanumaji Bajrang Charity Trust (2020) 122 taxmann.com 98 (Guj) [Para 5.1] followed.

List of Cases Referred to

• CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199/243 Taxman 60 (Gujarat) (para 3)
• CIT v. Leuva Patel Seva Samaj Trust [2014] 42 taxmann.com 181/221 Taxman 75 (Gujarat) (para 3)
• Jamiatul Banaat Tankaria v. CIT (Exemption) [2024] 160 taxmann.com 358/205 ITD 673 (Ahmedabad – Trib.) (para 3)
• Bhojalram Leuva Patel Seva Samaj Trust v. CIT (Exemptions) [2024] 162 taxmann.com 270 (Ahmedabad – Trib.) (para 3)
• CIT v. Dawoodi Bohara Jamat [2014] 43 taxmann.com 243/222 Taxman 228/364 ITR 31 (SC) (para 4)
• CIT v. Shree Tapeshwar Hanumaji Bajrang Charity Trust [2020] 122 taxmann.com 98/421 ITR 358 (Gujarat) (para 5.1).