Welfare of a particular community can also be a charitable purpose for registration u/s 12AA

Brief of the case:

The ITAT Ahmedabad in the case of Ranpariya Solanki Sukhadiya Parivar Trust vs. CIT(Exemption) held that the application made u/s 12AA cannot be rejected even a trust’s object is to function in the interest of a particular community because to serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present.

 Facts of the case:

• The assessee is a religious trust newly created for the purpose of carrying on social charity, religious and educational activities. It made an application for registration of the trust u/s 12AA of the Act in prescribed form no.10A on 24th July, 2014 along with all necessary documents and all necessary undertakings and declarations as per the requirement of provisions laid down u/s 12AA of the Act.

• The application was rejected by CIT(Exemptions) for the reason that the trust is established for the benefit of a particular community namely Ranpariya Solanki Sukhadiya Parivar Trust and not for general public.

• Aggrieved by the order of CIT, assessee is now in appeal before ITAT.

 Contention of the Assessee:

• It was submitted that that the objects mentioned in the trust deed are not only for the specific community but the objects of the trust are also to provide benefit to general public.
• Further, reliance was placed on the decision of Hon’ble Supreme Court in the case of Ahmedabad Rana Cast Association vs. CIT (1971) 82 ITR 704 in support of contention that even if the objects of the trust is to serve a particular section of a society it cannot be termed as non-charitable.
• And the trust had submitted all necessary documents with the application in Form 10A as required by Sec 12AA. Therefore, the application made by trust was complete in all sense and could not be rejected on any ground.

 Contention of the Revenue:

• The learned counsel for the revenue supported the order of CIT and submitted that since the main object of the trust is to work in the interest of Rana community based as Ahmedabad , the object cannot be termed as beneficial for general public but only for a small segment of general public.
• Further, the decision of coordinate Bench in the case of Shree Vasupujya Swam Jain Derasar Trust vs. CIT, Valsad in ITA No.4470/Ahd/2007, relied by the assessee, the matter was restored to the file of CIT(Exemption) with the directions to examine, the matter and, therefore, the matter in this appeal may be restored to the file of CIT(Exemption)

Held by ITAT Ahmedabad:

• As per the provisions of section 12AA it is duty of CIT has to call for such documents or information from the trust or institution as the things necessary in order to satisfy himself about the genuineness of the activities and objectives of the trust or institution. After examining such documents, making such inquiries and examining the objects and activities the CIT shall pass order of either registering the trust or institution or refusing to register the trust or institution.
• In the present case, the assessee has duly submitted application in form No.10A for seeking registration u/s 12AA of the Act with all the necessary enclosures as mentioned in form no.10A.
• The facts of the case are identical to the case of Ahmedabad Rana Cast Association vs. CIT in which Hon’ble Supreme Court held that an object beneficial to a section of the public is an object of general public utility because to serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present.

• Applying the ratio of the above decision to the facts of present case, trust is carrying charitable activities as it is also carrying out activities like charity, medical relief and promotion of educational activities.
• Tribunal held that it will be just and in the interest of justice to restore the matter back to the ld. CIT with the directions to re-examine the matter in the light of various decisions mentioned above as well as the objects of the trust stipulated in the trust deed so that CIT could satisfy himself about the genuineness of objects of the trust and its activities and pass appropriate orders in accordance with law after allowing reasonable and proper opportunity of hearing to the assessee before adjudicating the issue.