PCIT (Exemption) Vs Shree Naminath Shwetamber Murtipujak Tapagachh Jain Religious Trust (Gujarat High Court)
Religious Community Benefit No Bar to Section 12A Registration Stage; Section 13 Violations to Be Examined at Assessment, Not Registration Stage: Gujarat HC
The Gujarat High Court considered a tax appeal filed by the Principal Commissioner of Income Tax (Exemption) under Section 260A of the Income-tax Act, 1961 against the order of the Income Tax Appellate Tribunal dated 30.09.2024.
The Revenue proposed substantial questions of law concerning the Tribunal’s decision to restore the matter relating to grant of registration under Section 12A. It contended that the Tribunal had ignored the amendment introduced by the Finance Act, 2022 inserting Section 12AB(4), under which application of income for the benefit of a particular religious community is treated as a specified violation. The Revenue further contended that registration should not be granted where such specified violation exists and relied upon the principle that exemption provisions require strict interpretation.
The respondent trust had filed an application in Form No. 10AB on 28.09.2023 seeking registration under Section 12A. It had earlier been granted provisional approval on 26.10.2022 covering Assessment Years 2023-24 to 2025-26. Thereafter, the Commissioner of Income Tax (Exemptions) issued a show cause notice stating that the trust’s objectives were primarily intended to serve a particular religious community rather than the public at large and therefore were not in conformity with Section 12AB(4). After considering the reply, the Commissioner rejected the application in Form 10AB and cancelled the provisional registration by order dated 28.03.2024.
