TMI Blog2006 (9) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... r object clause 3(4), it was also established to run schools, colleges, hospitals etc. for the benefit of public at large. In this situation, if the registration applied for u/s 12A is not granted to it for violation of provisions of section 13(1)(b) and it is ultimately found that the assessee-trust actually accomplished the objects as indicated in clause 3(4) only for the benefit of public at large without there being any activity undertaken as per object clauses 3(1) and 3(2), it would be deprived of any benefits which otherwise were available to it under section 11 or section 12. This certainly is not the legislative intention as reflected in the scheme laid down in sections 11, 12, 12A, 12AA and 13. On the contrary, the phraseology of section 13, as already discussed, makes it explicitly clear that the said provisions become operative or relevant only at the stage of assessment when the Assessing Officer is required to examine the claim of the assessee for benefits u/s 11 or section 12 while computing the total income of the assessee of the relevant previous year. The application of section 13 thus falls within the exclusive domain of the Assessing Officer and the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of the whole mankind or all persons in a country or a State and it is sufficient if the intention is to benefit, a section of the public as distinguished from a specific individual or person. It Was also held that the section of the community sought to be benefited must be sufficiently defined and identifiable by some common quality of a public or impersonal nature. Further reliance was also placed on behalf of the assessee on the decision of Hon'ble Allahabad High Court in the case of CIT v. Surji Devi Kunji Lal Jaipuria Charitable Trust [1990] 186 ITR 728 wherein it was held, following the decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association, that Vaish community constituted public and objects of granting assistance on the occasion of marriage to the persons from Vaish community constituted charitable purposes. It was thus contended on behalf of the assessee before the learned D.I. (Exemption) that Vaish community is fairly well defined and it also is fairly large to constitute public rather than an individual. As regards the provisions of section 13(1)(b) pointed out by the D.I. (Exemption) whereby any income of the trust or institution c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Ahmedabad Rana Caste Association or the Jaipuria Trust case, and thus, the facts of the case are distinguishable in law from the facts of that case. As registration will not serve any purpose insofar as the assessee's assessment is concerned, no useful purpose will be served by in registering it. Accordingly, I decline to register the case. 3. Aggrieved by the aforesaid order of the learned D.I. (Exemption), the assessee has preferred this appeal before the Tribunal, on the following ground:- Ld. DIT is not justified in law and facts and circumstances of the case in rejecting the registration to the society under section 12A of the Income-tax Act on the ground that object clause of the Trust conflicts with the provision of section 13(1)(b) under the circumstances when Hon'ble Allahabad High Court in case of CIT v. Surji Devi Kunji Lal Jaipuria Trust (No.1) [1990] 186 ITR 728 has held that, Vaishya community is a section of public, following the decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704. 4. The learned counsel for the assessee, at the outset, pointed out that even though the assessee tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 12AA. He pointed out that section 13 deals with the cases wherein sections 11 and 12 are not applicable and since registration under section 12A is applied for availing the benefit available under sections 11 and 12, it is all the more necessary for the D.I. (Exemption) to look into the violation of section 13(1), if any, before granting the registration to a trust or institution under section 12A. He contended that if certain objects of a trust or institution are violative of section 13(1)(b) like in the present case, the D.I. (Exemption) can refuse to grant registration under section 12A and no fault, therefore, can be found in his action refusing to grant registration. He submitted that the main object of the assessee-trust as per the object clause contained in the trust deed is to work for the benefit of the people belonging to one caste i.e. Vaish which is clearly violative of the provisions of section 13(1)(b). He contended that even the learned counsel for the assessee has not been able to show that there was no such violation of the provisions of section 13(1)(b) and this being so, the impugned order of the D.I. (Exemption) refusing to grant registration to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Allahabad High Court in the aforesaid judgments clearly shows that the objects of the assessee-trust as indicated in object clauses 3(1) and 3(2) of its trust deed were of charitable nature and since the powers of the CIT/D.I. (Exemption) conferred under section 12AA were confined to satisfy himself about the genuineness of the activities of the trust as well as nature of its object being charitable, we are of the view that he was not justified in refusing to grant registration the assessee-trust under section 12A merely on the ground that the said objects were violative of the provisions of section 13(1)(b). As held by Lucknow Bench of ITAT in the case of St. Don Bosco Educational Society v. CIT [2004] 90 ITD 477, the CIT under section 12AA is empowered to satisfy himself only about the object of the trust and about the genuineness of the activities of the trust and such power does not extend to eligibility of the trust/institution for exemption under section 11 read with section 13 which falls within the domain of the Assessing Officer. To the similar effect is the decision of Delhi Bench of ITAT in the case of Aryan Educational Society v. CIT [2005] 93 ITD 546 wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or apply section 13 in his case. This position would not only be contrary to the scheme of the Act as laid down in sections 11, 12, 12A, 12AA and 13 but the same may also cause prejudice/hardship to the persons in certain cases. For instance, the objects; for which the assessee trust in the present case is established, as indicated in object clauses 3(1) and 3(2), no doubt are for the benefits of a particular community, viz., Vaish. Nevertheless, as per object clause 3(4), it was also established to run schools, colleges, hospitals etc. for the benefit of public at large. In this situation, if the registration applied for under section 12A is not granted to it for violation of provisions of section 13(1)(b) and it is ultimately found that the assessee-trust actually accomplished the objects as indicated in clause 3(4) only for the benefit of public at large without there being any activity undertaken as per object clauses 3(1) and 3(2), it would be deprived of any benefits which otherwise were available to it under section 11 or section 12. This certainly is not the legislative intention as reflected in the scheme laid down in sections 11, 12, 12A, 12AA and 13. On the contrary, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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