ITAT Sets Aside Rejection of 12A Registration After Finding Trust's Objects Not Confined to Caste [Read Order]

The Income Tax Appellate Tribunal (ITAT) Ahmedabad has overturned the rejection of a Trust’s application for registration under Section 12A of the Income Tax Act, 1961, ruling that the trust’s charitable activities were not restricted to a specific caste. The bench, comprising Judicial Member Suchitra Kamble and Accountant Member Narendra Prasad Sinha, directed the Commissioner of Income Tax (Exemption) to reconsider the matter in light of legal precedents.

Patidar Samaj Trust Khajurdi had appealed against the CIT (E)’s order which denied its registration under Section 12A, citing that six of its eleven objects primarily benefited the Patidar community. The CIT (E) had invoked Section 13(1)(b) of the Act, which restricts exemptions for trusts serving a particular religious or caste-based group. However, the trust argued that its seventh object explicitly aimed to assist distressed individuals “without caste and creed,” demonstrating a broader charitable intent.

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During the proceedings, the trust’s counsel, M.K. Patel, highlighted a 160-day delay in filing the appeal, attributing it to the trustees’ lack of computer literacy and delayed awareness of the rejection order. The ITAT condoned the delay, accepting the explanation as genuine. The counsel also relied on the Supreme Court’s ruling in Ahmedabad Rana Caste Association vs. CIT, which held that benefiting a section of the public—rather than specific individuals—qualifies as charitable.

The Revenue, represented by Aarsi Prasad, defended the CIT (Exemption)’s decision, emphasizing that the trust’s membership and primary beneficiaries were confined to the Patidar Samaj. However, the tribunal noted that the trust’s object clause 7 clearly extended benefits to the wider public, aligning with judicial precedents. The bench referenced the Supreme Court’s Shastri Yagnapurush Dasji V. Muldas Bhudardas Vaishya (1966) judgment and the jurisdictional High Court’s decision in CIT vs. Jamiatul Bannat Tankaria, which upheld similar principles.

The ITAT partially allowed the appeal for statistical purposes, instructing the CIT (E) to reassess the application while considering the cited judgments and granting the trust a fresh hearing.

To Read the full text of the Order CLICK HERE

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