2025 (2) TMI 601 - AT - Income Tax

Tribunal Orders Reconsideration of Assessee's Section 12A(1)(ac)(iii) Registration; Emphasizes Fairness and Broad Public Benefit Interpretation.

Patidar Samaj Trust Khajurdi Versus Commissioner of Income Tax (Exemption), Ahmedabad.

Patidar Samaj Trust Khajurdi Versus Commissioner of Income Tax (Exemption), Ahmedabad. - TMI The appeal in this case was filed by the Assessee against the order passed by the CIT (Exemption), Ahmedabad, rejecting the application for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, on the grounds that Section 13(1)(b) would be applicable. The core issue in this case revolved around whether the Trust's objects were charitable in nature and open to the general public or confined to a specific community, namely the Patidar Samaj.The Assessee argued that the Trust's objects, particularly paragraph 7, indicated that the Trust was intended to help distressed people without regard to caste or creed, emphasizing a social cause. The Assessee relied on legal precedents such as the decision of the Hon'ble Apex Court in the case of Ahmedabad Rana Caste Association vs. CIT and a Tribunal decision in the case of Brahmakshatriya Kanji Damji Hindu Sarvajanik Dharamshala Palitana vs. CIT (Exemption) to support their position. On the other hand, the Revenue contended that the Trust was limited to the caste members of Patidar Samaj, citing specific paragraphs in the order of the CIT (Exemption) as evidence.The Tribunal considered the arguments presented by both parties and examined relevant legal principles. Referring to the decision of the Hon'ble Apex Court in the case of Ahmedabad Rana Caste Association, the Tribunal highlighted that the intention to benefit a section of the public, as opposed to specified individuals, falls within the scope of public benefit. Additionally, the Tribunal noted the relevance of the decision in the case of Brahmakshatriya Kanji Damji Hindu Sarvajanik Dharamshala Palitana vs. CIT (Exemption) and the interpretation of Section 13(1)(b) provided by the jurisdictional High Court in the case of CIT (E) vs. Jamiatul Bannat Tankaria.Ultimately, the Tribunal found merit in the Assessee's argument that the Trust's objects aimed to benefit the society at large, as indicated in clause 7. The Tribunal directed the CIT (Exemption) to reconsider the matter in light of the legal principles discussed, emphasizing the need to provide the Assessee with a hearing following the principles of natural justice. As a result, the appeal filed by the Assessee was partly allowed for statistical purposes.In conclusion, the Tribunal's decision centered on the interpretation of the Trust's objects and their alignment with charitable purposes under the Income Tax Act. The Tribunal's analysis underscored the importance of considering public benefit broadly and ensuring procedural fairness in the adjudication of such matters.