2024 (12) TMI 910 - AT - Income Tax

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 ... Denial of grant of registration of Trust u/s. 12AB and approval u/s. 80G - charitable activity u/s 2(15) - trust's objects were primarily for the benefit of its members and their families, not the public at large - HELD THAT:- We observe that the Objects which were selected/picked up by the CIT(E) were only incidental Objects, which were only aimed at providing administrative support to the main Objects of the trust, which in our view, are charitable in nature. We also observe that all details of expenses incurred by the assessee-trust were submitted before the CIT(E) and no specific finding has been given that the said expenses were not charitable in nature. We further observe that for the past three years, the Objects of the trust have not been challenged by the Tax Authorities and even on the principle of consistency, unless any new facts comes on record, registration cannot be denied to the assessee, on the basis of same set of facts. Accordingly, CIT(E) has erred in facts and law in denying granting of registration to the applicant-trust u/s.12AB of the Act. As decided in Bayath Kutchhi Dasha Oswal Jain Mahajan Trust 2016 (9) TMI 8 - GUJARAT HIGH COURT] has held that where apart from Objects which were for the benefit of religious community, the assessee-trust had large number of other objects which were for benefit of general public, the Tribunal was correct in allowing registration to the assessee. Denial of approval u/s 80G - This is not a fit case where registration u/s. 80G(5) of the Act should be denied to the assessee, since from the Objects of the applicant-trust it is evident that the Trust has not been formed for benefit of any particular religious community or for that matter for carrying out religious activities per se. As a result, appeal of the assessee is allowed. 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.