TaxTMI 
TaxTMI 
2025 (6) TMI 1127
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....on 12AB of the Income-tax Act, 1961 [hereinafter referred to as "the Act"] was rejected, and the earlier provisional registration was also cancelled. Facts of the Case 2. The assessee is a public charitable trust registered vide Certificate No. A/1641 dated 26.02.2019. It was granted provisional registration under section 12AB(1)(ac)(vi) by the CIT(E) on 29.11.2021 for the period covering A.Ys. 2022-23 to 2024-25. Subsequently, the assessee filed an application in Form No. 10AB on 30.09.2023 seeking final registration under section 12AB(1)(ac)(iii). The CIT(E) issued show-cause notices dated 22.11.2023 and 14.03.2024. After examining the objects of the trust, the CIT(E) concluded that the trust was created for the benefit of a particular ....
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....h such institutes and can make necessary expenses for administration of such institutes." 5. According to the AR, this object and some other objects clearly demonstrates the inclusive and public-oriented character of the trust's mandate. The AR placed on record a written synopsis and relied upon binding judicial precedents, including CIT (Exemption) v. Jamiatul Banaat Tankaria [(2024) 168 taxmann.com 35 (Guj.)] and CIT (Exemption) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [(2016) 74 taxmann.com 199 (Guj.)], to submit that the provisions of section 13(1)(b) of the Act are not applicable at the stage of granting registration under section 12AB, and that such issues may only be examined during assessment when it is established that the....
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....hat the assessee trust was constituted on 26.02.2019 and therefore falls under the category of trusts created prior to 1st April 2021 and had been granted provisional registration. The application filed for regular registration has been denied primarily on the ground that the trust's objects and activities are confined to "Leuva Patidar Samaj," and hence, the bar under section 13(1)(b) was invoked. 9. In this context, the Co-ordinate Bench in the case of Gohilwad Vankar Samaj Seva Trust v. CIT (Exemption) [(2025) 173 taxmann.com 263 had occasion to consider an identical issue. After analysing the issue in light of the jurisdictional High Court's judgment in CIT (Exemption) v. Jamiatul Banaat Tankaria [(2024) 168 taxmann.com 35 (Guj.)], the....
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....ted the above observation to conclude that since the assessee trust refers to "Leuva Patidar Samaj" in its objects, it must be presumed to be established for the benefit of a particular religious community or caste and hence barred from registration. However, upon a complete reading of the said judgment and evaluation of its ratio in the correct legal context, it becomes evident that the CIT(E)'s reliance is partial, incomplete, and misplaced. The principles laid down in the said decision, when examined holistically, do not support the rejection of registration in the present case. The CIT(E)'s selective citation of para 45, without engaging with the facts or the stage of proceedings, has resulted in a fundamental misapplication of the bind....
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.... consistent with the statutory design that registration assesses the genuineness of the objects and activities in principle, while section 13 operates at the stage of exemption, based on facts found during assessment. Thus, the Explanation to section 12AB serves as a compliance filter, not a tool of pre-emptive exclusion. It ensures that registration once granted is not misused, by permitting its withdrawal upon detection of specified violations through verifiable facts. It does not override or bypass the settled legal position that section 13(1)(b) is not applicable at the threshold stage of granting registration, particularly in the case of trusts created prior to 1.4.2021 under clause (ac)(iii) of section 12A(1). Any interpretation to th....
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....s contrary to both the letter and spirit of the law, and undermines the staged mechanism of registration, assessment, and exemption envisaged under the Act. 15. Accordingly, it cannot be laid down as a blanket proposition that merely because a trust was registered prior to 1st April 2021, its application under clause (ac)(iii) of section 12A(1) must invariably be accepted without scrutiny. While judicial precedents do emphasize that section 13(1)(b) is not to be applied at the stage of registration for such existing trusts, this does not render the statutory safeguards under section 12AB ineffective. The Explanation to section 12AB, particularly the specified violations enumerated therein, continues to provide the framework for evaluating ....