2012 (11) TMI 931 - AT - Income Tax

Cancellation of registration u/s.12A of the Income-tax Act alleged that assessee Trust/institution is having mixed objects i.e. partly charitable and partly religious Held that - Following the case of Calicut Islamic Cultural Society vs. ACTI (2008 (7) TMI 621 - ITAT COCHIN) and Society of Presentation Sisters (2009 (9) TMI 75 - ITAT COCHIN ) - directed to grant registration to the assessee u/s.12AA In favor of assessee

Summary

Issues:
- Challenge to denial of registration under section 12AA(1)(b)(ii) of the Income Tax Act based on mixed religious and charitable objects.

Analysis:
1. The appeal was filed challenging the order denying registration to the assessee by the Director of Income-tax (Exemption) Mumbai under section 12AA(1)(b)(ii) of the Income Tax Act. The core issue was whether the denial of registration was justified due to the mixed nature of the trust's objects, being partly religious and partly charitable.

2. The Trust was constituted in 2008 and applied for registration under section 12A in 2009. The Director examined the Trust's objects and concluded that it had mixed objects, which led to the denial of registration. The Director's decision was based on the argument that the Trust's objects were partly religious and partly charitable, rendering it ineligible for exemption under the Income Tax Act.

3. The Tribunal noted that the denial of registration was solely based on the mixed nature of the Trust's objects, without any indication of non-religious or non-charitable objects. Citing precedents, including the decision of the ITAT Cochin Bench in similar cases, the Tribunal held that the denial of registration on the grounds of mixed objects was not justified. The Tribunal directed the Director to grant registration to the assessee under section 12AA within thirty days.

4. The Tribunal emphasized that the thin line between charity and religion should not bar registration under section 12AA. It highlighted that the Act recognizes charitable purposes as being of public character, and there is no explicit definition of religious purposes. The Tribunal rejected the argument that objects should be wholly charitable or wholly religious for exemption, stating that the Act allows for mixed activities that are partly charitable and partly religious.

5. Ultimately, the Tribunal allowed the assessee's appeal, setting aside the Director's order and directing the grant of registration under section 12AA. The decision was based on the precedent set by the ITAT Cochin Bench and the understanding that mixed charitable and religious objects should not hinder registration under the Income Tax Act.