2015 (7) TMI 1274 - AT - Income Tax

Application for registration u/s 12AA rejected - Held that - As in the present appeal is squarely covered in favour of the assessee inter alia by the decision of the coordinate bench of this Tribunal in the case of Rehoboth Mission V/s. Director of Income-tax(Exemption) (2010 (5) TMI 669 - ITAT HYDERABAD ), wherein it was held that there is nothing in the language of the relevant provisions of the Act to suggest that an institution with mixed objects is precluded from getting registration under S.12AA of the Act. It was held that a trust which is only for religious purposes is excluded and debarred from getting registration under S.12AA of the Act, and trust whose are charitable as well as religious cannot be denied registration under S.12AA. - Decided in favour of assessee.

Summary

Issues:
Registration under Section 12AA of the Income Tax Act - Eligibility criteria for trust with mixed charitable and religious objects.

Analysis:

The appeal was filed by the assessee against the order of the Director of Income-tax(Exemptions), Hyderabad, rejecting the application for registration under Section 12AA of the Income Tax Act. The assessee, a trust, had both religious and charitable objects as per the Memorandum of Association. The Director of Income-tax(Exemptions) contended that a trust must have wholly charitable or wholly religious objects to be eligible for registration under Section 12AA, and having both types of objects simultaneously renders it ineligible. The Tribunal analyzed the issue and referred to a previous decision by a coordinate bench in the case of Rehoboth Mission. The Tribunal held that there is no statutory bar preventing a trust with mixed objects from obtaining registration under Section 12AA. It was clarified that a trust solely for religious purposes is excluded from registration, but a trust with both charitable and religious objects can be granted registration under Section 12AA. Consequently, the Tribunal set aside the order of the Director of Income-tax(Exemptions) and directed the grant of registration to the assessee trust.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that a trust with both charitable and religious objects is not automatically disqualified from registration under Section 12AA. The decision was based on the interpretation of relevant provisions and a precedent set by a coordinate bench, ensuring that the trust's application for registration was approved.