Bhavnagar Dashashrimali Kantibandh Vs CIT (Exemption) (ITAT Ahmedabad)
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) heard two consolidated appeals filed by a public charitable trust against separate orders passed by the Commissioner of Income Tax (Exemption) [CIT(E)], Ahmedabad, rejecting its application for registration under section 12AB of the Income Tax Act, 1961. The first appeal challenged the CIT(E) order dated 23.09.2023, which denied conversion of the trust’s provisional registration into regular registration under section 12AB(1)(ac)(iii), while the second appeal challenged the subsequent order dated 06.12.2024, which rejected a fresh application relying on CBDT Circular No. 07 of 2024. The appeals were filed with a delay of 417 days, which the ITAT condoned, observing that the delay was bona fide, caused due to procedural misunderstanding, and consistent with the principles established by the Supreme Court in Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy. The Tribunal emphasized that substantial justice should prevail over technical objections and recognized that the assessee had diligently pursued remedies, including filing a fresh application under the Circular and promptly appealing upon rejection.
The assessee-trust, incorporated on 08.03.2022, is a registered public charitable trust operating for the welfare, education, medical relief, and social development of members of the Dashashrimali Kanthibandh (Vaishnav) Vanik Gnati community. The CIT(E) had rejected the initial application for regular registration primarily on the ground that the trust’s objects were confined to a specific caste, invoking section 13(1)(b) of the Act. The CIT(E) further held that Explanation 2 to section 13(1), which exempts trusts benefiting Scheduled Castes, Scheduled Tribes, backward classes, women, or children, did not apply to the assessee, as no evidence was provided showing the community fell within these categories. The rejection was supported by references to Supreme Court judgments in CIT v. Palghat Shadi Mahal Trust and CIT v. Dawoodi Bohra Jamat, which had held that exemption under sections 11 and 12 is denied if a trust restricts its benefits to a particular community or caste. The second order rejected the subsequent application as non-maintainable, asserting that the CBDT Circular did not apply because the earlier rejection was on merits.
