TaxTMI 
TaxTMI 
2006 (9) TMI 214
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee. After examination of the said application as well as the accompanying documents, the learned D.I. (Exemption) found that object clause Nos. 3(1) and 3(2) were for the benefit of a specific caste, viz., Vaish and since these clauses were in conflict with the provisions of section 13(1)(b), he required the assessee to offer its explanation in the matter. In reply, it was submitted on behalf of the assessee that Vaish community is fairly broad so as to constitute and represent "public" as envisaged in the relevant provisions. Reliance was placed on behalf of the assessee on the decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704 wherein it was held that for serving a charitable purpose, it is not necessary that the object should be for the benefit of the whole mankind or all persons in a country or a State and it is sufficient if the intention is to benefit, a section of the public as distinguished from a specific individual or person. It Was also held that the section of the community sought to be benefited must be sufficiently defined and identifiable by some common quality of a public or impersonal nature. Further r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4(4) etc. are for the benefit of members of Vaish caste only. Therefore, it is manifestly clear from MOA that the society was created for the benefit of this caste. There is no dispute that Vaish, is a well-recognised and one of the four castes among Hindus. The case of SR Trust & Others, cited by the assessee, did not deal with the issue of caste. Rather it dealt with religious community. Therefore, the effect of section 13(1)(b) would be that assessee's income will not be exempt under sections 11 and 12. Consequently, the assessee will not be able to get benefit of section 11, at any point of time even if it is registered under section 12A(a). Thus, its registration, even if granted, becomes infructuous for the purpose of assessments under the Income-tax Act. This issue was not considered or debated in the case of Ahmedabad Rana Caste Association or the Jaipuria Trust case, and thus, the facts of the case are distinguishable in law from the facts of that case. As registration will not serve any purpose insofar as the assessee's assessment is concerned, no useful purpose will be served by in registering it. Accordingly, I decline to register the case." 3. Aggrieved by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....blic, in any case, is a charitable purpose and the learned D.I. (Exemption) was not jus1ified in rejecting the application of the assessee for registration under section 12A on this basis. 5. The learned DR, on the other hand, submitted that as per the newly inserted section 12AA in the statute with effect from 1-4-1997, more powers have been conferred on the D.I. (Exemption) giving him an authority to make such enquiries as he may deem necessary before granting registration to a trust or institution under section 12A. Relying on the decision of Hon'ble Kerala High Court in the case of Self Employers Service Society v. CIT [2001] 247 ITR 181 he submitted that genuineness of the trust or institution can also be gone into by him before granting registration to a trust or institution as per the procedure laid down in section 12AA. He pointed out that section 13 deals with the cases wherein sections 11 and 12 are not applicable and since registration under section 12A is applied for availing the benefit available under sections 11 and 12, it is all the more necessary for the D.I. (Exemption) to look into the violation of section 13(1), if any, before granting the registration to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tention is to benefit a section of the public as distinguished from a specified individual. Relying on this decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association, Hon'ble Allahabad High Court in the case of Surji Devi Kunji Lal Jaipuria Charitable Trust has held that trust created for giving medical aid, social welfare and upliftment of poor members of Vaish community is, therefore, for religious and charitable purposes. To the similar effect is another decision of Hon'ble Allahabad High Court in the case of CIT v. Pt. Ram Shanker Misra Trust [1996] 222 ITR 252 wherein it was held that expenditure incurred by a trust for the benefit of one community is an expenditure incurred on a public charitable object. The proposition propounded by Hon'ble Supreme Court as well as by Hon'ble Allahabad High Court in the aforesaid judgments clearly shows that the objects of the assessee-trust as indicated in object clauses 3(1) and 3(2) of its trust deed were of charitable nature and since the powers of the CIT/D.I. (Exemption) conferred under section 12AA were confined to satisfy himself about the genuineness of the activities of the trust as well ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 11 or section 12 shall operate so as to exclude, from the total income of the previous year, of the person ...." which clearly envisages operation of section 11 or section 12 before the provisions of section 13 can be applied or invoked in a given case. It also shows that the said provisions can be applied or invoked only at the time of computation of total income of the previous year of the person who is claiming exemption under section 11 or section 12. Both these situations contemplated in section 13 can arise only and only if registration under section 12A is granted to the said person. If the same is not granted and the person is refused the registration under section 12A, he would not be entitled to claim any benefit available under section 11 or 12 and there will be no occasion to the Assessing Officer to invoke or apply section 13 in his case. This position would not only be contrary to the scheme of the Act as laid down in sections 11, 12, 12A, 12AA and 13 but the same may also cause prejudice/hardship to the persons in certain cases. For instance, the objects; for which the assessee trust in the present case is established, as indicated in object clauses 3(1) and 3(2), n....