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Issues involved: Appeal against rejection of registration under section 12A of the Income Tax Act 1961.
Summary: The appellant, a trust established for religious purposes, appealed against the rejection of its registration under section 12A of the Income Tax Act 1961 by the Commissioner of Income Tax, Coimbatore. The main ground for refusal of registration was that the trust's activity of interest-free lending to businessmen/women of the Bohra community was not considered a religious activity by the Commissioner. The appellant contended that such lending was in line with its religious objectives, specifically the concept of 'Qardan Hasana'. The Tribunal noted that similar registrations had been granted to trusts with similar activities in Kolkata and Mysore. The Tribunal found that the appellant's lending activities were indeed in conformity with its religious objectives and upheld the appellant's entitlement to registration under section 12AA of the Act. In the case before the Tribunal, the appellant's trust deed outlined various religious objectives, including promoting the religion of Islam among the Dawoodi Bohras, supporting religious education, and facilitating religious activities and infrastructure development. The trust's application for registration under section 12A was initially rejected by the Commissioner of Income Tax, Coimbatore, on the grounds that the interest-free lending activities of the trust did not qualify as religious activities. The Tribunal, after considering the trust's activities and the precedents set by similar cases, concluded that the trust's lending practices were indeed religious in nature, aligning with the principles of 'Qardan Hasana' as per Islamic teachings followed by the Bohra community. The Tribunal highlighted that previous decisions and court rulings supported the registration of trusts engaging in similar activities, emphasizing the religious nature of the trust's objectives. The appellant presented a comprehensive paper book containing relevant documents, including the trust deed, orders under section 12AA for trusts in Kolkata and Mysore, and judgments from previous cases. The Tribunal reviewed the documents and arguments presented by both parties, ultimately ruling in favor of the appellant. The Tribunal's decision, delivered on May 7, 2013, in Chennai, allowed the appeal and granted the appellant registration under section 12AA of the Income Tax Act 1961.
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