Section 12AB Registration Denied: Trust’s Activities Restricted to Specific Religious Community

Vaishnav Sadhu Vs CIT (ITAT Ahmedabad)

Income Tax Appellate Tribunal (ITAT) Ahmedabad has dismissed an appeal filed by a trust, upholding the Commissioner of Income Tax (Exemption)’s (CIT(E)) decision to deny registration under Section 12AB of the Income Tax Act, 1961. The core of the dispute revolved around the trust’s foundational objects, which the tax authorities deemed to exclusively benefit a specific religious community or caste, thereby attracting the provisions of Section 13(1)(b) of the Act, which disentitles such trusts from income tax exemptions.

The case, Vaishnav Sadhu Vs CIT (ITAT Ahmedabad), originated from the trust’s application in Form 10AB for registration under Section 12AB. Upon reviewing the trust deed, the CIT(E) identified several objects that appeared to be explicitly restricted to the “Vaishnav Sadhu (Bava Vairagi)” community. These included objectives such as promoting education and social upliftment among caste members, providing financial and medical assistance to needy members of the caste, and organizing cultural and sports programs for students and members of the caste.

A show cause notice was issued to the trust, highlighting that while it claimed to be a charitable trust, its objects seemed to violate the provisions of Section 12AB(4) by exclusively benefiting a particular religious community or caste. The notice specifically questioned how the trust avoided the “specified violation” as defined in the Act.