Charitable Trusts’ Activities Shouldn’t Be Restricted to Specific Caste: ITAT directs Readjudication

Mar Baselius Orthodox Syrian Church Vs CIT(Exemption) (ITAT Surat)

Introduction: The case of Mar Baselius Orthodox Syrian Church vs CIT(Exemption) involves appeals filed by two separate assessee-trusts against the orders of the Commissioner of Income Tax (Exemption) [CIT(E)] denying their registration under section 12AB of the Income Tax Act. The denial was based on the grounds that the charitable activities of these trusts were limited to specific castes or communities. The issue revolved around whether section 13(1)(b) of the Act, which applies to trusts established for the benefit of a particular religious community or caste, was applicable and whether the trusts could qualify for registration.

Analysis: In this case, the Income Tax Appellate Tribunal (ITAT) Surat examined the appeals of both trusts together since the issues were common and identical. The ITAT focused on whether the trusts’ charitable activities were confined to a particular caste or community, as stipulated in section 13(1)(b) of the Income Tax Act.

The CIT(E) had rejected the registration applications under section 12AB, primarily citing the application of section 13(1)(b) due to the trusts’ association with specific castes or communities. The ITAT considered whether the trusts’ activities were truly limited to these groups or whether they had broader charitable purposes open to all sections of society.

The ITAT referenced various objects outlined in the trust deeds of the appellant trusts. While certain objects were limited to specific castes or communities, other objects were of a general charitable nature, benefiting the public at large. The ITAT acknowledged the appellant trusts’ claims that their schools were open to all sections of society and that they were engaged in activities that benefited the wider public.

Please become a Premium member. If you are already a Premium member, login here to access the full content.