The provisions of Section 13 of the Income Tax Act, 1961, are applicable only during assessment proceedings by the Assessing Officer and cannot be used by the Commissioner to decline the grant of registration under Section 12A or 12AB.

ORAL ORDER

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

1. This Tax Appeal is preferred under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ’the Act’ for short) proposing the following substantial question of law arising out of the order dated 24.04.2024 of the Income Tax Appellate Tribunal passed in ITA No.59/Ahd/2023

“i. Whether the facts and in the circumstances of the case and law, the Hon'ble Tribunal has erred while interpreting the decision of the Hon’ble Supreme Court in the case of Dawoodi Bohara Jamat 43 Taxmann.com 243 and holding that section 13(1)(b) cannot be applied for denying the grant of registration under Section 12AB of the Income Tax Act, 1961 despite the fact that the assessee trust is not created for the benefit of general public but one of its object clause is for the benefit of a particular religious community?

ii. Whether on the facts and in the circumstances of the case and law, the Hon'ble Tribunal has erred in ignoring the recent amendments in Income Tax Act wherein a new procedure of registration under section 12AB of Income Tax Act, 1961, has been inserted and whereby as per clause (d) of explanation to sub- section (4) of section 12AB of Income Tax Act, application of income for the benefit of any particular religious community has been listed as a specific violation for cancellation of registration of trust?”

2. Brief facts of the case are as under.

2.1 The respondent assessee had filed an application seeking registration of the Trust under Section 12A B of the Act on 15.06.2022 in form No.10AB under Rule 17A of the Income Tax Rules, 1962. The Commissioner of Income-Tax (Exemption), Ahmedabad after issuing notice to the respondent assessee seeking necessary information held that the assessee was not entitled to exemption in terms of Section 13(1)(b) of the Act, and therefore, denied the respondent assessee grant of registration under Section 12A of the Act.

3. Being aggrieved by the order passed by the Commissioner of Income Tax (Exemption), the respondent assessee preferred an appeal before the Income Tax Appellate Tribunal, Ahmedabad (hereinafter referred to as ‘Tribunal’ for short). The appeal came to be numbered as ITA No. 59/Ahd/2023. The Tribunal vide order dated 24.04.2023, allowed the appeal of the respondent assessee and restored the file before the Commissioner of Income Tax (Exemption), which has led to filing of the present Tax Appeal.

4. Mr. Aman Mir, learned Senior Standing Counsel has categorically submitted that this issue is no more res-integra and covered by the decision of the Hon’ble Supreme Court in the case of CIT v. Dawoodi Bohara Jamat , reported in [2014] 43 taxmann.com 243 (SC), which has been followed by the Tribunal itself in various decisions. The learned Tribunal has categorically observed, at page-26 of the paper-book, as under:

“6. We have heard the rival contentions and perused the material on record. We observe that in the case of Jamiatul Banaat Tankaria 160 taxmann.com 358 (Ahmedabad - Trib.), the ITAT held that where objects of assessee-trust were primarily charitable rather than favouring any specific religious community, CIT(E) was not justified in denying registration under Section 12A , by invoking Section 13(1)(b) as said provisions would be attracted only at time of assessment and not at time of grant of registration. In the case of Malik Hasmullah Islamic Educational and Welfare Society 24 taxmann.com 93 (Luck.), the ITAT held that since provisions of Sections 11, 12 and 13 are intended for exercise of jurisdiction by an Assessing Officer in an assessment proceedings, Commissioner is not competent to invoke such provisions for purpose of declining registration under Section 12A A. In the case of St. Joseph Academy 50 taxmann.com 216 (Hyderabad - Trib.), the ITAT held that provisions of Section 13 can be invoked by for Assessing Officer while framing assessment and not by Commissioner while conside