ORAL ORDER

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. In the present Tax Appeal, following substantial questions of law are proposed:-

(i) Whether on the facts and in the circumstances of the case and law, Hon'ble ITAT has erred in ignoring the amendment brought in by Finance Act, 2022 w.e.f 01.04.2022 through which sub-section (4) of Section 12AB was inserted whereby as per clause (d) below explanation to sub section (4) of section 12AB of Income-tax Act, 1961, application of income for the benefit of any particular religious community has been listed as a specified violation for cancellation of registration of trust.

(ii) Whether on the facts and in the circumstances of the case and law, Hon'ble ITAT has erred in placing upon the decision in the cases of Dawoodi Bohara Jamat (2014) 43 Taxmann.com 243 and CIT VS Bayath Kutchhi Dasa Jain Mahajan Trust (2016) 74 Taxmann.com 199 (Guj) which were delivered before the introduction of Section 12AB(4) of the Income-tax Act, 1961.

(iii) Whether on the facts and in the circumstances of the case and law, Hon'ble ITAT has erred by not appreciating that registration can not be granted to a trust or institution which is found to be carrying out specified violation at the time of application since that would imply giving registration to an entity whose registration is liable to be cancelled.

(iv) Whether on the facts and in the circumstances of the case and law, Hon'ble ITAT has erred by not appreciating that registration is pre-requisite and essential condition for claiming exception and all the exception provisions are to be strictly interpreted as held by Hon'ble Supreme Court in Commissioner of Customs (Import), Mumbai Vs M/s Dilip Kumar & Company and therefore allowing registration even in cases where there is a specified violation mean the most liberal interpretation of the exemptions provision against the ratio laid down by Hon'ble Supreme Court in violation the case referred.”

2. At the outset, learned Senior Standing Counsel Mr.Aman Mir for the appellant has fairly admitted that the issue is squarely covered by the decision of this Court in case of Commissioner of Income-tax Exemption vs. Jamiatul Banaat Tankaria, [2024] 168 taxmann.com 35.

3. The present Tax Appeal emanates from the order dated 16.10.2024 passed by the Tax Appellate Tribunal, “A” Bench, Ahmedabad in ITA No.505/Ahd/2022. The tax appeal is directed against the respondent – Trust which carries out a charitable activities which are not limited to the “Chhasath Prajapati Community”. The activities include conducting educational purpose, providing scholarship, setting up hostels etc., which is meant for social reforms and economic activities including managing fund for trust development.

4. The CIT (Exemption) rejected the application filed by the assessee for registration under Section 12AB of the Income Tax Act, 1961 (for short ‘the Act’) on the grounds that the Trust objects, benefits to a particular community, thereby, invoking Section 13(1)(b) of the Act. Such observations culminated into the filing of an appeal before the Tribunal. The Tribunal, considering the judgment of the Hon’ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat, [2014] 43 taxmann.com 243, has allowed the appeal filed by the assessee, by observing thus:-

“6.3. Upon examination of the Trust's objectives, we find that the Trust is engaged in various educational, social, and economic activities that serve the public at large, not limited to the Chhasath Prajapati Community. These include scholarships, hostel facilities for students, social reform programs, and efforts to uplift the community economically. Therefore, the Trust's activities cannot be said to benefit only a particular religious or caste-based community.

6.4. The registration under section 12AB of the Act is merely a recognition of the charitable status of the Trust. The application of section 13(1)(b) of the Act would only arise at the stage of assess