DCIT (Exemption) Vs Mukund Bhavan Trust (ITAT Pune)
Revenue challenged CIT(A)–NFAC’s common orders dated 13-01-2025 granting exemption u/ss 11 & 12 to the Pune-based charitable trust Shri Mukund Bhavan Trust for A.Ys. 2017-18 & 2018-19. AO had assessed the trust as an AOP & denied exemption alleging violation of Sections 13(1)(c) & 13(2)(b) for leasing its property to specified persons & restricting benefits to a particular caste.
Background
The trust was founded on 10-02-1930 & registered u/s 12A on 25-03-1975. It runs religious & educational activities like Vedic teaching, Puja, providing food & scholarships to poor students. AO observed that the trust had leased three shops to a trustee & his heirs without adequate rent, holding this a benefit to specified persons under s. 13(3). He thus denied s. 11-12 exemption & assessed taxable income at ₹ 16.82 crore.
CIT(A)’s Findings
CIT(A) found that the issue was a legacy one from A.Y. 2010-11 & had been settled in assessee’s favour by ITAT Pune (orders dated 28-06-2017 & 29-04-2025) & affirmed by Bombay HC (05-08-2022).
He noted that clause 2 of the 1930 trust deed allowed trustees & their legal heirs to occupy certain premises without rent – a condition specifically saved by the proviso to s. 13(1)(c)(ii) for trusts created before the Act. The shops leased after a 1987 municipal re-structuring were part of the same original property survey no. 1158 (re-numbered 1105A/B). The trust actually paid some rent to itself, thus no benefit flowed to any person u/s 13(3). Accordingly, he restored the trust’s exemption u/ss 11-12 & status as a trust, not an AOP.
