Gujarat High Court
The Principal Commissioner Of Income ... vs Shree Kalol Sthanakvasi Jain Mitra ... on 5 May, 2026
Author: A.S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/TAXAP/455/2025 ORDER DATED: 05/05/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 455 of 2025
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THE PRINCIPAL COMMISSIONER OF INCOME TAX (OSD)(EXEMPTION),
AHMEDABAD
Versus
SHREE KALOL STHANAKVASI JAIN MITRA MANDAL
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Appearance:
MR AMAN MIR(10881) for the Appellant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE MAULIK J.SHELAT
Date : 05/05/2026
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. In the present Tax Appeal filed under Section 260A of the Income Tax Act, 1961, assailing the order dated 18th November, 2024 passed by the Income Tax Appellate Tribunal (for short 'the tribunal') in ITA No. 947/Ahd/2024, the following substantial question of law is proposed.
"B.(i) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in deciding the case on the issue of "benefit of a particular religious community or caste" whereas exemption was denied to the assessee trust on the basis that object Nos 1,4 & 5 of the assessee trust are not for the benefit of public at large and hence do not fall under the definition of charitable activities u/s 2(15) of the Income-tax Act, 1961?"
2. Learned Senior Standing Counsel Mr.Aman Mir appearing for the Revenue has submitted that the Page 1 of 6 Uploaded by MOHMMEDSHAHID(HC01113) on Fri May 08 2026 Downloaded on : Sat May 09 01:54:38 IST 2026 NEUTRAL CITATION C/TAXAP/455/2025 ORDER DATED: 05/05/2026 undefined impugned order of the tribunal dated 18th November, 2024 allowing the appeal filed by the respondent - trust is required to be quashed and set-aside as the tribunal has fell in error in setting aside the order passed by the CIT (E) i.e. the Commissioner of Income Tax (Exemption). It is submitted that the CIT (E) had precisely found that the activities of the respondent - trust would not fall in the provision of Section 2 (15) of the Income Tax Act, 1961 (for short 'the Act') which defines the objects of the trust. Thus, it is urged that the present appeal may be allowed.
3. We have perused the impugned order passed by the tribunal. Before the tribunal, the respondent assessee, which is a trust, had assailed the order dated 30th March, 2024 passed by the CIT (E). The assessee is a trust having registration under Section 12A of the Income Tax Act, which filed an application in Form 10 AB on 22nd September, 2023 for registration under Section 12A(1)(ac)(iii) of the Income Tax Act. The assessee was previously granted provisional approval under Form 10AC on 27th May,2021 for Assessment Years 2021-2022 to 2023-2024 under sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act. In response Page 2 of 6 Uploaded by MOHMMEDSHAHID(HC01113) on Fri May 08 2026 Downloaded on : Sat May 09 01:54:38 IST 2026 NEUTRAL CITATION C/TAXAP/455/2025 ORDER DATED: 05/05/2026 undefined to the application, the CIT(E) issued notices, requesting additional information and documents. The applicant replied to these notices on 29.12.2023, providing the requested details. Upon reviewing the applicant's objectives, as outlined in its constitution, the CIT(E) noted that the primary purpose of the trust was to benefit the members of the "Shri Kalol Sthanakvasi Jain Mitra Mandal" through social, economic, and religious activities. The trust's objectives included promoting unity among members and providing assistance in their times of need. On 14.03.2024, the CIT(E) issued a show cause notice questioning the eligibility of the trust for registration under section 12A of the Act. The notice pointed out that the objectives of the trust appeared to be restricted to the welfare of its members rather than the public at large. The provisions of section 2(15) of the Income Tax Act, which defines "charitable purpose," include activities aimed at benefiting the public or a section of the public. Since the applicant's activities were limited to its members and did not extend to the public at large, the CIT(E) raised concerns that the trust's objectives would not qualify as "charitable" under the law. The applicant in it's response submitted that the membership of the trust was open to any individual residing in Page 3 of 6 Uploaded by MOHMMEDSHAHID(HC01113) on Fri May 08 2026 Downloaded on : Sat May 09 01:54:38 IST 2026 NEUTRAL CITATION C/TAXAP/455/2025 ORDER DATED: 05/05/2026 undefined Ahmedabad Municipal territory, thus expanding the potential pool of beneficiaries beyond a closed group. The applicant further argued that their activities were for the betterment of their members, who paid a nominal fee to become members, thus qualifying for benefits. However, after reviewing the reply, the CIT(E) observed that the applicant had acknowledged that its members were the sole beneficiaries and that they paid a membership fee to become eligible for welfare benefits. The trust had no broader charitable objectives for the general public. The authorities noted that the welfare activities were typical of "members-only" welfare organizations, which do not fall within the legal definition of a charitable trust. The applicant cited several judicial precedents, including rulings from the Supreme Court in the case of Ahmedabad Rana Caste Association and CIT vs. Dawoodi Bohra Jamat, [(TS-5107-SC-1971-0), (1971) 82 ITR 0704)] to support its case. However, CIT(E) distinguished these cases, noting that the Rana Caste Association case was based on the Income Tax Act of 1922, which had different provisions from the current Act, particularly with regard to the eligibility of trusts for exemption under sections 11 and 12 of the Income Tax Act. The applicant's case, which involved a Page 4 of 6 Uploaded by MOHMMEDSHAHID(HC01113) on Fri May 08 2026 Downloaded on : Sat May 09 01:54:38 IST 2026 NEUTRAL CITATION C/TAXAP/455/2025 ORDER DATED: 05/05/2026 undefined trust formed for the benefit of a particular community (the Chauhan community), was not deemed to meet the charitable requirements of the current law. The CIT(E) also referred to a ruling from the Punjab & Haryana High Court in the case of CIT vs. Truck Operators Association reported in 9 taxmann.com 267, where it was held that an organization formed solely for the benefit of its members, even if engaged in some welfare activities, could not be classified as operating for the "general public utility." Given that the trust's activities were confined to the welfare of its members and did not serve a broader public interest, the CIT(E) held that the applicant trust did not meet the charitable criteria outlined in section 2(15) of the Act. Accordingly, the application for registration under section 12A of the Act was rejected, and the provisional registration granted earlier was cancelled.
4. Thus, the CIT(E) rejected the application filed by the petitioner - trust by recording that it does not meet the charitable criteria outlined in Section 2 (15) of the Income Tax Act. The assessee filed an appeal before the tribunal. By referring to the judgment of the tribunal in case of Jamiatul Banaat Tankaria vs. The CIT Page 5 of 6 Uploaded by MOHMMEDSHAHID(HC01113) on Fri May 08 2026 Downloaded on : Sat May 09 01:54:38 IST 2026 NEUTRAL CITATION C/TAXAP/455/2025 ORDER DATED: 05/05/2026 undefined (Exemption) (2024) 160 taxmann.com 358/205 ITD 673 (Ahmedabad-Trib), it was held in favour of the assessee. The said judgment has travelled to the Supreme Court and the S.L.P. (CIVIL) Diary No.38594 of 2025, which was filed against the judgment and order dated 9th October,2024 passed in Tax Appeal No.968 of 2024 by this Court, has been dismissed vide order dated 22nd August, 2025. Thus, we do not find any reason to deviate from the observations made by the tribunal as the issue raised in the present Tax Appeal is no more res integra. The denial of grant of registration under Section 12A of the Act looking to the objects of the respondent trust was an illegal action by the CIT (E), which has been precisely set aside by the tribunal and hence, the Tax Appeal fails. The proposed substantial question of law do not fall for consideration before this Court.
5. Accordingly, the present Tax Appeal is dismissed.
(A. S. SUPEHIA, J) (MAULIK J.SHELAT,J) MOHMMEDSHAHID/109 Page 6 of 6 Uploaded by MOHMMEDSHAHID(HC01113) on Fri May 08 2026 Downloaded on : Sat May 09 01:54:38 IST 2026