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4. The learned Counsel for the assessee, at the outset, pointed out that even though the assessee trust was established in the year 1992, it applied for the registration Under Section 12A only in the year 2002. He submitted that the application made by the assessee for such registration, however, was rejected by the D.I.(Exemption) relying on object Clause Nos. 3(1) and 3(2) of the trust deed, according to which, the activities of the assessee trust were meant only for persons belonging to Vaish community which, according to the D.I.(Exemption), was violative of Section 13(1)(b). He contended that at the time of granting the registration as per Section 12AA, CIT was not authorised to go into the aspect of violation, if any, of Section 13(1) and he was required to satisfy himself only about the genuineness of the trust and its charitable objects. He contended that even if some of the objects are found to be charitable, D.I.(Exemption) has to grant registration Under Section 12A and since at least the object of the assessee trust as mentioned in Clause 3(4) of the trust deed relating to establishment of schools, colleges, hospitals etc. for the benefit of public at large was of charitable nature, there was no justification in the action of the D.I.(Exemption) to decline to grant registration applied for by the assessee Under Section 12A. Relying on the decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra) as well as that of Hon'ble Allahabad High Court in the case of CIT v. SDKI Jaipuria Trust (No. 1) (supra), he contended that even the benefit extended to one community representing section of the public, in any case, is a charitable purpose and the learned D.I.(Exemption) was not justified in rejecting the application of the assessee for registration Under Section 12A on this basis.

6. We have considered the rival submissions and also perused the relevant material on record. It is observed that any trust or institution seeking to avail the benefit of the provisions of Sections 11 & 12 is required to apply for registration Under Section 12A. The procedure for registration is prescribed in Section 12AA and as per the provisions of Sub-section (1) of that Section, the CIT [D.I.(Exemption) in the present case] is empowered to satisfy himself about the object of the trust and about the genuineness of the activities of the trust or institution before granting the registration Under Section 12A. Once the CIT has not doubted the genuineness of the activities of the assessee nor doubted its charitable object, he cannot refuse to grant registration Under Section 12A. In the present case, the registration, however, was refused by the D.I.(Exemption) on the ground that as per the object Clause Nos. 3(1) and 3(2), the assessee trust was established for the benefit of people belonging to Vaish community only which was clearly in violation of Section 13(1)(b). However, as held by Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra), an object beneficial to the Section of the public is an object of general public utility and to serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or state. Explaining further, it was observed by the Hon'ble Apex Court that it is sufficient if the intention is to benefit a Section of the public as distinguished from a specified individual. Relying on this decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra), Hon'ble Allahabad High Court in the case of SDKI Jaipuria Trust (No. 1) (supra) has held that trust created for giving medical aid, social welfare and upliftment of poor members of Vaish community is, therefore, for religious and charitable purposes. To the similar effect is another decision of Hon'ble Allahabad High Court in the case of CIT v. Pt. Ram Shankar Misra Trust 222 ITR 252 wherein it was held that expenditure incurred by a trust for the benefit of one community is an expenditure incurred on a public charitable object. The proposition propounded by Hon'ble Supreme Court as well as by Hon'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 to 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 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 93 ITD 546 wherein it was held that so long as the provisions of Sections 11, 12 and 12 A are complied with, the exemption cannot be denied merely because there is any violation of the provisions of Section 13.

7. As already noted, the procedure for registration laid down in Section 12AA requires the CIT to satisfy himself about the genuineness of activities and object of the trust or institution and as such, the scope of his powers is limited in this regard to make such enquiries, as he may deem fit, to satisfy himself in respect of these two aspects. As held by Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra), an object beneficial to the Section of the public is an object of general public utility and to serve a charitable purpose, it is sufficient if the intention is to benefit a Section of the public as distinguished from a specified individual. This decision of Hon'ble Apex Court followed subsequently by Hon'ble Allahabad High Court in the case of SDKI Jaipuria Trust (No. 1) (supra) and in the case of CIT v. Ram Shankar Misra Trust (supra) to hold that the expenditure incurred by a trust for the benefit of one community is an expenditure incurred on a public charitable object, still holds the field notwithstanding provisions contained in Section 13(1)(b) since the definition of the term "charitable purpose" given in Section 2(15) continues to remain the same. The provisions of Section 13(1) are thus not directly relevant in this regard. On the other hand, the said Section begins with the words "Nothing contained in Section 11 or Section 12 shall operate so as to exclude from the total income of the previous year of the person... "which clearly envisages operation of Section 11 or Section 12 before the provisions of Section 13 can be applied or invoked in a given case. It also shows that the said provisions can be applied or invoked only at the time of computation of total income of the previous year of the person who is claiming exemption Under Section 11 or Section 12. Both these situations contemplated in Section 13 can arise only and only if registration Under Section 12A is granted to the said person. If the same is not granted and the person is refused the registration Under Section 12A, he would not be entitled to claim any benefit available Under Section 11 or 12 and there will be no occasion to the Assessing Officer to invoke 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) & 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, 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 AO is required to examine the claim of the assessee for benefits Under Section 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 AO and the provisions contained therein can be invoked by him while framing the assessment and not by the CIT while considering the application for registration Under Section 12AA.

8. Keeping in view the reasons given above, we are of the view that the action of the learned D.I.(Exemption) in refusing to grant registration to the assessee trust on the ground of violation of the provisions of Section 13(1)(b) was not justified especially when he had not doubted either the genuineness of the activities of the assessee trust or the nature of its object being charitable. In that view of the matter, we set aside his impugned order and direct that registration applied for by the assessee trust Under Section 12A be granted to it.