Religious Trust Established in 1930 Not Hit by Sec 13(1)(b) | ITAT

Case Details: Mukund Bhavan Trust vs. Commissioner of Income-tax (Exemption) - [2025] 174 taxmann.com 36 (Pune-Trib.)

Judiciary and Counsel Details

• R.K. Panda, Vice President & Ms Astha Chandra, Judicial Member
• V.L. Jain for the Appellant.
• Mallikarjun Utture, CIT for the Respondent.

Facts of the Case

The assessee-trust was formed in 1930. The Commissioner (Exemption) noted that the trust deed categorically mentioned that the trust was a private trust set up to impart religious education to a particular caste, namely Marwari Brahmins and Maheshwari Vaishyas, who accept the principle of Varnashrama Dharma.

The deed further stated that the trust would not benefit any other caste or individual. CIT(E) thought that the trust was not a public charitable trust established to conduct charitable activities for the welfare of the people at large, but a private trust established for the benefit of a particular caste/community.

Therefore, he believed that prima facie the provisions of section 13(1)(a) and section 13(1)(b) applied to the case of the assessee. Assessee approached before the Tribunal.

ITAT Held

The Pune Tribunal held that as such the assessee-trust is in direct violation of the provisions of section 13(1) considered to be a violation of clause (e) of section 12AB(4) is concerned, it is an admitted fact that the trust came into being in the year 1930 and was granted approval on 25-8-1975 and again on 24-9-2021.

A perusal of the provisions of section 13(1)(b) would show that the provisions of section 11 not to apply in some instances if such trust has been created or established before the commencement of this Act to any income thereof, if the trust or institution is created or established for the benefit of any particular religious community or caste. Since in the instant case the trust was already created in the year 1930, i.e. much before the Income-tax Act, 1961, the Commissioner (Exemption) was not justified in holding that the assessee had violated the provisions of section 13(1)(b).

Further, it is also an admitted fact that the trust was granted registration by the Commissioner under section 12A on 25-8-1975 and under section 12AB(1)(ac)(i) on 24-9-2021. The trust is also regularly assessed to tax, with most of the years being evaluated under section 143(3), and nowhere the activities of the trust have been treated as non-genuine. Therefore, following the rule of consistency even in tax proceedings would demand that a different view cannot be taken if there were no changes in facts compared to earlier years.

List of Cases Reviewed

• New Noble Educational Society v. Chief CIT [2022] 143 taxmann.com 276/290 Taxman 206/448 ITR 594 (SC) [Para 40] – distinguished
• DIT (Exemption) v. Sheth Mafatlal Gagalbhai Foundation Trust [2001] 114 Taxman 19/249 ITR 533 (Bombay)
• CIT v. Shri Ram Memorial Foundation [2004] 140 Taxman 263/269 ITR 35 (Delhi)
• CIT v. Sarladevi Sarabhai Trust No. 2 [1988] 40 Taxman 388/172 ITR 698 (Gujarat)
• CIT v. Hindustan Charity Trust [1982] 11 Taxman 135/139 ITR 913 (Calcutta)
• CIT v. Trustees of the Jadi Trust [1982] 133 ITR 494 (Bombay) [Para 50] – followed

List of Cases Referred to

• New Noble Educational Society v. Chief CIT [2022] 143 taxmann.com 276/290 Taxman 206/448 ITR 594 (SC) (para 5)
• Arunachal Pradesh Forest Corporation Ltd. v. Asstt. CIT [2007] 162 Taxman 277/290 ITR 139 (Gauhati) (para 15)
• DIT (Exemption) v. Sheth Mafatlal Gagalbhai Foundation Trust [2001] 114 Taxman 19/249 ITR 533 (Bombay (Bombay) (para 19)
• CIT v. Karimia Trust [2008] 302 ITR 57/302 ITR 56 (Jharkhand)) (para 21)
• South India Trust Association v. Telugu Church Council (1996) 2 SCC 520 (para 22)
• Radhasoami Satsang v. CIT [1992] 60 Taxman 248/193 ITR 321 (SC) (para 22)
• Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) (para 22)
• CIT v. Excel Industries Ltd. [2013] 38 taxmann.com 100/219 Taxman 379/358 ITR 295 (SC) (para 22)
• Commissioner of Income tax-I, Madurai v. Sarvodaya Ilakkiya Pannai [2012] 20 taxmann.com 546/206 Taxman 115/343 ITR 300 (Madras) (para 23)
• Sri. Ramjanki Tapovan Mandir v. CIT (Exemptions) [2022] 144 taxmann.com 183/290 Taxman 317/451 ITR 458 (Jharkhand) (para 23)
• CIT v. Maheshwari Agarwal Marwari Panchayat [1982] 10 Taxman 183/136 ITR 556 (Madhya Pradesh) (para 23)
• CIT v. Paramhans Ashram Trust [1993] 203 ITR 711 (Rajasthan) (para 23)
• Deokinandan v. Murlidhar 1957 AIR 133 (para 23)
• Commissioner of Wealth-tax v. H.E.H. The Nizam’s Supplemental and Religious Endowment Trust [1973] 89 ITR 80 (Andhra Pradesh) (para 23)
• CIT v. St. George Forane Church [1988] 36 Taxman 42/170 ITR 62 (Kerala) (para 23)
• CIT v. Birla Janahit Trust [1994] 73 Taxman 465/208 ITR 372 (Calcutta) (para 23)
• CIT v. Ganga Charity Trust Fund [1986] 29 Taxman 413/162 ITR 612 (Gujarat) (para 23)
• CIT v. Trustees of the Jadi Trust [1982] 133 ITR 494 (Bombay) (para 23)
• CIT v. Hindustan Charity Trust [1982] 11 Taxman 135/139 ITR 913 (Calcutta) (para 23)
• CIT v. Sarladevi Sarabhai Trust No. 2 [1988] 40 Taxman 388/172 ITR 698 (Gujarat) (para 23)
• CIT v. Shri Ram Memorial Foundation [2004] 140 Taxman 263/269 ITR 35 (Delhi) (para 23)
• CIT v. Agricultural Produce and Market Committee [2007] 163 Taxman 359/291 ITR 419 (Bombay) (para 23)
• CIT v. Sun Engineering Works (P.) Ltd. [1992] 64 Taxman 442/198 ITR 297 (SC) (para 23)
• CIT v. Arya Vysya Kalyana Nilaya Sangam [1986] 159 ITR 324 (Andhra Pradesh) (para 23)
• CIT(E) v. Mukund Bhavan Trust [IT APPEAL No. 683 of 2018, dated 5-8-2022] (para 23)
• Sony Nyat Samast Vadi Dwarka v. CIT (Exemption) [2024] 165 taxmann.com 83 (Rajkot – Trib.) (para 23)
• Gestetner Duplicators (P.) Ltd. v. CIT [1979] 1 Taxman 1/117 ITR 1 (SC) (para 23)
• Samaj Kalyan Parishad v. ITO [2007] 105 ITD 29/11 SOT 632 (Delhi) (para 23)
• Dy. CIT v. M.P. Madhyam (2009) 31 DTR 15 (MP) (para 23)
• Farman Ali Khan v. Mohd. Khan AIR 1950 All. 62 (para 23).