2012 (8) TMI 448 - AT - Income Tax

Rejection of registration under section 12AA - the activities of the trust are partly religious and partly charitable - Held that - Section 12AA does not make any difference between the Trusts created with the object of Charitable and religious purposes and 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. The assessee-trust had applied for initial certificate of exemption under section.80G(5) on 09.03.2011 along with application for grant of registration under section.12AA the CIT s order that only ground for rejecting the assessee s application has been that under section 12AA as well, the application for registration has been rejected vide order of even date - in favour of assessee.

Summary

Issues:
1. Appeal against the order of the Commissioner of Income Tax rejecting registration under section 12AA of the Income Tax Act, 1961.
2. Appeal against the order of the Commissioner of Income Tax rejecting exemption under section 80G(5) of the Income Tax Act, 1961.

Issue 1: Appeal against rejection of registration under section 12AA:
The assessee's appeal was directed against the Commissioner of Income Tax's order rejecting registration under section 12AA of the Income Tax Act, 1961. The Commissioner observed that the trust's activities were a mix of religious and charitable purposes, with most expenses being for religious purposes. Relying on section 11(1)(a) and section 13(1)(b) of the Act, the Commissioner concluded that even having one religious purpose disentitles the trust from approval. The Commissioner also considered a CBDT circular in rejecting the application. The assessee argued that the rejection was incorrect, citing a High Court case. The Tribunal found that the rejection based on the mix of religious and charitable activities did not hold ground based on the High Court judgment, thus allowing the appeal.

Issue 2: Appeal against rejection of exemption under section 80G(5):
The assessee's appeal was also against the Commissioner's order rejecting exemption under section 80G(5) of the Income Tax Act, 1961. The rejection was based on the same grounds as the rejection under section 12AA. The Authorized Representative supported the grounds, while the Revenue relied on the Commissioner's order. The Tribunal, having allowed the appeal under section 12AA, also allowed the appeal under section 80G(5) based on the same reasoning. Consequently, both appeals of the assessee were allowed, and the orders were pronounced in favor of the assessee on 28th June 2012.