CIT(E) cannot invoke provisions of section 13 at the time of grant of registration under section 12AB: ITAT

Citation: Bhojalram Leuva Patel Seva Samaj Trust v. CIT(E)

ITAT: Ahmedabad

ITA No: 667 & 668 OF 2023

Date of Order: 30.4.2024

Brief Facts:

• The assessee trust applied for registration under section 12AB and approval under section 80G of the Income-tax Act, 1961 (“the Act”)

• CIT(E) rejected the application for registration u/s 12AB on the ground that the assessee was established for the benefit of a specific religious community and hence, section 13(1)(b) disallowing exemption under section 11 was attracted.

• Consequently, approval under section 80G also could not be granted to the assessee

Observations of the Tribunal

The Tribunal made the following observations:

1. For the purpose of registration under section 12AB, the CIT had to merely decide if the trust had fulfilled the necessary requirements of registration

2. The question as to whether the trust was created or established for the benefit of any particular religious community or caste would be relevant when income of the trust was being assessed in terms of Section 11 of the Act

3. The provisions of section 13 could be invoked only at the time of assessment and not at the time of grant of registration under Section 12AB of the Act

Hence, it restored the matter to the file of CIT(E) for fresh consideration in relation to the application for registration under both section 12AB and section 80G, since the application under section 80G had been rejected due to absence of valid registration.

[Editorial Note: Section 12AB(4) – Explanation (d) allows the tax department to cancel the registration under section 12AB in case any income is applied for the benefit of any particular religious community]