2015 (5) TMI 759 - AT - Income Tax

Non-grant of registration under section 12A - activities carried on by the trust were meant for members of the Christian community and thus it is established for the benefit of specific religious community attracting the provisions of section 13(1)(b) and therefore no purpose will be served by granting registration u/s.12A as held by CIT(A) - Held that - Looking at the objects of the trust, we find that one of the objects of the assessee trust was to provide Ambulance facility to people at large. The object Nos. 2, 6 and 7 of the Trust, were admittedly relating to Christian community. However, other object Nos. 3, 4, 5 was to provide Ambulance facility to people at large, to establish and administer educational institutions for needy and deserving Christian students in particular and others in general, to establish hostels, libraries, etc. for Christian boys and girls in particular and other deserving & needy boys and girls in general. - trust was not established for Christian community only, but for the public at large. The Hon ble Gujarat High Court in Chandra Charitable Trust case (2006 (7) TMI 96 - HIGH COURT , GUJARAT) had laid down that even where the objects of the trust were not only to propagate the Jainism or help and assist maintenance of temples, Sadhus, Sadhvis, Shraviks and Shravaks, and other goals as set out in the trust deed, the trust was a charitable as well as religious trust and section 13(1)(b) of the Act would not be applicable. Similar proposition has been laid down in CIT v. Barkate Saifiyah Society 1993 (11) TMI 13 - GUJARAT High Court wherein it was held that the exclusion from exemption under section 13(1)(b) of the Act applies only to charitable trust and charitable institution and if the trust was charitable as well as religious in nature, the assessee would be entitled to exemption under section 11 of the Act. Thus we hold that the assessee is a charitable religious trust and the provisions of section 13(1)(b) of the Act would not be applicable. In view thereof, we direct the Commissioner to grant registration to the assessee under section 12A of the Act as charitable religious trust - Decided in favour of assesseee.

Summary

Issues Involved:
1. Whether the activities carried on by the trust were meant for members of the Christian community, thereby attracting the provisions of section 13(1)(b) of the Income-tax Act, 1961.
2. Whether the trust is entitled to registration under section 12A of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

Issue 1: Whether the activities carried on by the trust were meant for members of the Christian community, thereby attracting the provisions of section 13(1)(b) of the Income-tax Act, 1961.

The Commissioner of Income Tax (CIT) held that the trust's activities were primarily for the benefit of the Christian community, thus attracting the provisions of section 13(1)(b) of the Act, which denies benefits of sections 11 and 12 to trusts established for the benefit of a specific religious community. The CIT noted that the trust's objects at serial Nos. 2, 4, 5, 6, and 7 appeared to benefit a particular religious community. The assessee argued that the reference to the Christian community should not be interpreted as benefiting a religious community or caste, explaining that "Christian" refers to a pattern of living rather than a religion. However, the CIT concluded that the trust's activities and preamble indicated a prime thrust towards benefiting the Christian community, thus rejecting the application for registration under section 12A.

Issue 2: Whether the trust is entitled to registration under section 12A of the Income-tax Act, 1961.

The assessee contended that the trust was both charitable and religious, serving the public at large, and cited the Supreme Court's decision in the Dawoodi Bohra Jamat case to support its claim. The Tribunal examined the objects of the trust and found that while some objects were specific to the Christian community, others were for the general public. The Tribunal referred to the Gujarat High Court's decision in CIT v. Chandra Charitable Trust, which held that a trust with both charitable and religious objects is not subject to section 13(1)(b). The Tribunal also cited the Supreme Court's ruling in Dawoodi Bohra Jamat, which recognized that trusts with composite objects (both charitable and religious) are eligible for exemption under sections 11 and 12, provided their activities are not exclusively for a specific religious community.

The Tribunal concluded that the trust had objects and activities benefiting both the Christian community and the public at large. Therefore, it could not be said that the trust was exclusively for the benefit of a specific religious community. The Tribunal held that the provisions of section 13(1)(b) were not applicable and directed the CIT to grant registration under section 12A of the Act.

Conclusion:

The Tribunal allowed the appeal, holding that the trust is a charitable religious trust and is entitled to registration under section 12A of the Income-tax Act, 1961. The grounds of appeal raised by the assessee were allowed, and the CIT was directed to grant the registration.