Trust wins registration appeal after authorities wrongly focused on administrative objects over main charitable purposes under sections 12AB and 80G

ITAT Ahmedabad allowed the appeal of a trust seeking registration under section 12AB and approval under section 80G. The CIT(E) had denied registration claiming the trust's objects primarily benefited members and families rather than the public. The Tribunal held that the CIT(E) incorrectly focused on incidental administrative objects while ignoring the main charitable objects. The Tribunal noted that tax authorities had not challenged the trust's objects for three years, and applying consistency principle, registration could not be denied on the same facts. The trust had submitted expense details without specific findings of non-charitable nature. The Tribunal distinguished this case from purely religious community trusts, finding the objects benefited the general public rather than a particular religious community.

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Issues:
1. Denial of registration under section 12AB of the Income Tax Act, 1961.
2. Denial of approval under section 80G of the Income Tax Act, 1961.

Issue 1: Denial of registration under section 12AB of the Income Tax Act, 1961.
The appellant filed an appeal against the order of the Ld.CIT(E) denying registration under section 12AB of the Act. The Ld.CIT(E) observed that the trust's objects were primarily for the benefit of its members and their families, not the public at large. The trust was seen as functioning as a welfare association collecting fees from its members. The Ld.CIT(E) concluded that the trust's activities did not qualify as charitable under section 2(15) of the Act. The appellant argued that the trust engaged in various charitable activities, including medical relief, disaster aid, educational programs, and social welfare initiatives. The Tribunal found that the Ld.CIT(E) selectively focused on certain incidental objects of the trust, while the main charitable objectives were overlooked. The Tribunal noted that all expenses were in line with charitable activities, and past consistency in tax assessments supported the appellant's eligibility for registration. Relying on a Gujarat High Court decision, the Tribunal allowed the appeal, finding the Ld.CIT(E) erred in denying registration under section 12AB.

Issue 2: Denial of approval under section 80G of the Income Tax Act, 1961.
The second appeal was related to the denial of approval under section 80G(5) of the Act due to the presence of the term "religious" in the trust's objects. The Ld.CIT(E) believed the trust focused on religious activities rather than charitable purposes. The appellant contended that the trust's objects were general and not specific to benefiting any religious community. The Tribunal analyzed the trust's objects and determined that while the term "religious" appeared, the trust primarily aimed at benefiting the public at large through various activities. Consequently, the Tribunal allowed the appeal, stating that the trust was not formed for the exclusive benefit of any religious community. Both appeals of the assessee were allowed, overturning the denials of registration under section 12AB and approval under section 80G of the Income Tax Act, 1961.

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