2014 (11) TMI 1082 - HC - Income Tax

Entitlement to get registration u/s 12A(a) r.w.s. 12AA - Held that - Having heard Mr. Parikh, learned advocate appearing on behalf of the Department and Mr. Shah, learned advocate appearing on behalf of the assessee and the question posed for consideration by us reproduced hereinabove and considering the decision of the Honble the Supreme Court in the case of Dawoodi Bohra Jamat (2014 (3) TMI 652 - SUPREME COURT ), the question, which is raised in the present appeal is required to be answered in favour of the assessee wherein held that respondent-trust was a charitable and religious trust which did not benefit any specific religious community and therefore, it could not be held that section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby, it would be eligible to claim exemption u/s. 11 of the Act. Even otherwise there are concurrent finding of facts with which we also concur and therefore no elaborate reasons are required. - Decided in favour of the assessee.

Summary

Issues:
1. Entitlement to registration u/s 12A(a) r.w.s. 12AA of the IT Act, 1961 for a trust.

Analysis:

1. The issue in this case pertains to the entitlement of a trust to get registration under section 12A(a) r.w.s. 12AA of the IT Act, 1961. The appellant, the revenue, challenged the impugned order passed by the Income Tax Appellate Tribunal (ITAT) regarding the registration of the trust for the Assessment Year 2004-05. The substantial question of law considered was whether the ITAT was correct in holding that the assessee trust is entitled to registration u/s 12A(a) r.w.s. 12AA of the IT Act, 1961.

2. The trust in question was formed by Dr. Syedna Mohammed Burhanuddin Saheb for the benefit of the Dawoodi Bohra Community. Initially, the Assessing Officer rejected the registration application filed by the assessee trust under section 12A of the Act. Subsequently, the CIT (Appeals) also concluded that the trust being a private religious trust for the Dawoodi Bohra Community was not eligible for registration u/s 12A(a).

3. However, the ITAT, in its order, determined that the trust was a public charitable trust and thus eligible for registration. The respondent's advocate cited a Supreme Court decision in the case of Commissioner Of Income Tax vs. Dawoodi Bohra Jamat, emphasizing that the nature of the trust as wholly religious or charitable was a legal question based on the trust deed's objects. The Supreme Court held that the trust's objects, based on religious tenets under the Quran, were both charitable and religious, not exclusively benefiting a particular community, making it eligible for exemption u/s. 11 of the Act.

4. Considering the Supreme Court's decision and the nature of the trust's objects, the High Court held in favor of the assessee trust. The Court concurred with the view that the trust was a charitable and religious trust, not benefiting any specific religious community, and thus, section 13(1)(b) of the Act did not apply. Consequently, the High Court confirmed the ITAT's order, dismissing the Tax Appeal in favor of the assessee.