Case Law Details
Surti Modh Vanik Jagruti Mandal Vs ITO (E) (ITAT Mumbai)
Introduction: In a landmark ruling, the Income Tax Appellate Tribunal (ITAT) of Mumbai has made its stand clear regarding the rejection of applications for charitable trust registrations. The case in focus is that of “Surti Modh Vanik Jagruti Mandal Vs ITO (E)”, where the ITAT found that the Commissioner of Income Tax (Exemptions) [CIT(E)] had rejected the Trust’s application without sufficient ‘application of mind’. In this article, we’ll delve into the details of the ruling and what it means for charitable trusts in India.
Why the Trust’s Application Was Rejected by CIT(E): The CIT(E) had rejected the application for registration under sections 12A and 80G of the Income Tax Act, 1961. The primary reason for the rejection was that the Trust seemed to serve only a specific community – the Surti Modh Vanik Samaj. The CIT(E) cited that the aims and objectives were not ‘genuine’ and for the broader public but catered to a specific community, making it ineligible for the tax exemptions under the cited sections.
Lack of ‘Application of Mind’ by CIT(E): The ITAT found that the CIT(E) had not properly applied his mind in rejecting the applications. The ITAT pointed out that the CIT(E) had taken note of provisions from Section 80G when discussing the rejection under Section 12AB and vice versa. The overlapping references revealed a lack of thoroughness and raised questions about the validity of the rejection.
Past Track Record of the Trust: Another key point raised by the ITAT was the trust’s longstanding history. The Trust has enjoyed tax-exempt status since 2001 and had filed for re-registration under new rules. ITAT emphasized that the CIT(E) should have considered the Trust’s history of charitable activities, which were not limited to a specific community but had a broader societal impact.
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