Jewellers and Diamond Traders Association Vs CIT (Exemptions) (ITAT Chennai)
The Jewellers and Diamond Traders Association (“the Association”) filed an appeal before the Income Tax Appellate Tribunal (ITAT), Chennai, challenging the rejection of its application for registration as a charitable trust under Section 12AB of the Income Tax Act, 1961 (“the Act”). The application had been rejected by the Commissioner of Income Tax (Exemption), Chennai [CIT(E)] on 25 March 2025, following the Association’s filing in Form No.10AB on 19 August 2024.
The primary issue in dispute was whether the Association’s activities qualified as “charitable” under Section 2(15) of the Act, specifically as “advancement of any other object of general public utility” (GPU), or whether its operations were restricted to mutuality, i.e., the benefit of a limited class of members.
Contentions of the Assessee
The Association contended that it qualified as a “Trade Association” whose objects promoted trade and commerce, placing reliance on the Supreme Court judgment in Assistant Commissioner of Income-tax (Exemptions) vs Ahmedabad Urban Development Authority [2022] 449 ITR 1 (SC). The Association argued that the promotion of trade, including the welfare of diamond and jewellery merchants, indirectly benefited a broader section of the public by contributing to economic development.
Additionally, the assessee referred to CIT v Ahmadabad Rana Caste Association (1972 AIR 273) to assert that its activities served a class of the public, which falls under the ambit of charitable purpose. The Association also urged the Tribunal to examine whether the CIT(E)’s finding of mutuality was correct, and to pass an order on merits regarding the applicability of mutuality.
