2012 (2) TMI 159 - HC - Income Tax

Charitable Trust CIT rejected application of registration on ground that objects of the Trust are both charitable and religious in nature Held that -Section 11(1)(a) and 12AA is applicable to both the Trusts established with the object of charitable as well as religious purposes. Even if the Trust is not created with both the objects, law does not make any disqualification for the trust to make an application for registration. Accordingly, the order passed by the Tribunal holding that the assessee trust is entitled to registration u/s 12AA is confirmed Decided against the Revenue.

Summary

Issues:
1. Entitlement to registration under Section 12AA of the Income Tax Act for a trust with charitable and religious objectives.
2. Granting registration under Section 12AA to a trust without establishing genuineness and charitable activities as per trust deed.

Analysis:
Issue 1:
The appeal challenged the order of the Income Tax Appellate Tribunal regarding the entitlement of a trust to registration under Section 12AA of the Act, even though the trust had both charitable and religious objectives. The Tribunal allowed the appeal, citing judgments to support that there is no provision prohibiting trusts with a mix of religious and charitable objects. The appellant argued that the trust's activities were a mix of both charitable and religious nature, making it ineligible for exemption under Section 11 of the Act. However, the High Court found that Section 12AA does not differentiate between trusts with charitable and religious purposes, and the Tribunal's decision was based on valid evidence, leading to the dismissal of the appeal.

Issue 2:
The second issue involved the direction of the Tribunal to grant registration under Section 12AA to a trust without establishing the genuineness of the trust and charitable activities as per the trust deed. The Commissioner of Income Tax had rejected the trust's application for registration, stating that the activities were a mix of religious and charitable purposes. The Tribunal overturned this decision, emphasizing that there was no provision against trusts with a combination of religious and charitable objects. The High Court upheld the Tribunal's decision, stating that the law does not disqualify trusts with both charitable and religious objectives from applying for registration under Section 12AA, leading to the dismissal of the appeal.

In conclusion, the High Court confirmed the Tribunal's decision in both issues, ruling against the Revenue and dismissing the appeal for lacking merit.