ITAT grants registration to society for Kurni community

The ITAT Hyderabad allowed the appeal, overturning the DIT(E)'s rejection and directing the grant of registration under section 12AA to the society. The ITAT held that the society's focus on the Kurni community, recognized as a backward class, falls within the exception provided in explanation 2 to section 13, making it eligible for registration despite being established for the benefit of only one community. Additionally, the ITAT determined that the society's membership restriction to the Kurni community did not disqualify it as a public charitable trust, emphasizing that benefiting a section of the public is sufficient for charitable purposes.

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Issues:
1. Rejection of registration u/s 12A of the Act based on the society being established for the benefit of only one community, the Kurni caste.
2. Rejection of registration due to membership restrictions to the Kurni community.

Issue 1: Rejection based on single community benefit:
The DIT(E) rejected the registration application under section 12A of the Act, citing the society's establishment for the sole benefit of the Kurni caste. The DIT(E) interpreted the explanation 2 to section 13 narrowly, stating that since it refers to scheduled castes, backward classes, and scheduled tribes in plural, the society focusing on one community does not qualify for an exception. However, the ITAT Hyderabad disagreed, emphasizing a broader interpretation of legislative intent. They noted that the society's focus on the Kurni community, recognized as a backward class, falls within the exception provided in explanation 2 to section 13. Referring to the General Clauses Act, they highlighted that backward classes in the explanation should be understood to include any backward class, not limited to multiple classes. Thus, the ITAT held that the restriction under section 13(1)(b) does not apply to the society, making it eligible for registration under section 12AA.

Issue 2: Membership restrictions to the Kurni community:
The DIT(E) also raised concerns about the society's membership being limited to the Kurni community, suggesting it did not qualify as a public charitable trust. In response, the ITAT Hyderabad reasoned that the society's establishment for the benefit of the Kurni community, representing a section of the public, did not negate its public charitable trust status. They referenced legal precedents emphasizing that benefiting a section of the public suffices for charitable purposes, not requiring universal public benefit. Citing the Supreme Court's stance in similar cases, the ITAT concluded that the society's membership restriction did not compromise its public character. Furthermore, they clarified that the DIT(E) overstepped by considering section 13 conditions during the registration process, as those are pertinent to assessment proceedings. As the DIT(E) did not question the society's charitable objectives or activities' genuineness, the ITAT directed the grant of registration under section 12AA, overturning the DIT(E)'s decision.

In conclusion, the ITAT Hyderabad allowed the appeal, setting aside the DIT(E)'s rejection and instructing the grant of registration under section 12AA to the society.

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