Nishkalank Mahadev Koliyak Vs CIT (ITAT Ahmedabad)
ITAT Ahmedabad rules Section 13(1)(b) applies only during assessment, not registration, remands trust 12AB application to CIT(E); ITAT: Trust Registration Cannot Be Denied Solely on Grounds Applicable During Assessment; Ahmedabad Bench Remands Case, Cites Jurisdictional High Court Precedent
Ahmedabad: The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, has directed the Commissioner of Income Tax (Exemptions) [CIT(E)] to reconsider an application for registration of a trust under Section 12AB of the Income Tax Act, 1961. The Tribunal found that the CIT(E) had erred in rejecting the application primarily by invoking Section 13(1)(b) of the Act, a provision that restricts income exemption for trusts applying funds for the benefit of a particular religious community or caste. The ITAT, relying on consistent judicial pronouncements including a binding decision of the Gujarat High Court, held that Section 13 can only be applied during the assessment proceedings to determine if a trust’s income is exempt, not at the stage of granting initial registration.
The case involved Nishkalank Mahadev Koliyak, a trust, which had applied for provisional registration under Section 12AB of the Income Tax Act. Obtaining registration under Section 12A or 12AA (and subsequently 12AB under a newer scheme) is a prerequisite for a trust or institution to claim income exemption under Sections 11 and 12 of the Act. The registration process involves an examination of the trust’s objects and genuineness of its activities.
