2016 (6) TMI 453 - AT - Income Tax

Registration u/s.12A denied - DIT(E) declined registration as is mixed trust (Charitable & non charitable trust) with lack of binding legal obligation on trustees in regard to application of Income - Held that - The main object are charitable in nature and all the activities are not restricted to any cast or creed. Even these facts were accepted by the DIT(E) as on in para 4, page 9 of the order (also reproduce as clause (e) of reason for denial of registration at page no.1 of Fact sheet. Panch Pratikams and other are just for teaching of morals to the general public. It is spread to general public, therefore, trust is an charitable trust. However, at the time of grant of registration director of Exemption is required to verify only the object of the trust and whether the activities of trust are genuineness. The Hon ble Supreme Court in the case of Dawoodi Boharh Jamat 2014 (3) TMI 652 - SUPREME COURT held that the respondent-trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that Section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby, it would be eligible to claim exemption under Section 11 of the Act. Hence, registration required to be granted. In view of the above, we direct the DIT(E) to grant registration within a period of 60 days from the date of receipt of this order of Tribunal. - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of registration u/s.12A of the I.T. Act.

Analysis:
1. The assessee, a trust, was denied registration u/s.12A by the DIT(E) based on the trust deed's clauses, which were deemed religious and commercial in nature, indicating a mixed trust lacking binding legal obligations on trustees for income application. The DIT(E) concluded that the trust was not wholly charitable.

2. The assessee contended that the trust's main objects were charitable, as per clause 16, focusing on relief to the poor, education, medical assistance, and other charitable activities. The trust deed specified the trustee's duty to hold funds for public charitable purposes.

3. The dispute centered on whether the trust was purely charitable or a mix of charitable and religious elements. The DIT(E) argued that the trust's objects were not entirely charitable, while the assessee claimed otherwise, emphasizing the charitable nature of the trust's activities.

4. The ITAT carefully examined the trust deed, finding that the trust's objects were wholly charitable, not falling under the category of a Charitable and Religious Trust. The clauses objected to by the DIT(E) were considered ancillary to the main charitable objects, promoting general public welfare.

5. Referring to specific clauses like 16B(viii) and 16B(i), the ITAT concluded that the trust's activities were not exclusive to any particular religion or community but aimed at the benefit of all mankind. The trust's teachings and activities were viewed as promoting universal values and morals, not limited to a specific religious group.

6. Citing a judgment by the ITAT Hyderabad Bench, the ITAT emphasized that the trust's clauses did not benefit any specific religion or community but aimed at general public welfare. The trust's activities, including teachings from various scriptures and moral upliftment programs, were considered charitable in nature.

7. The ITAT directed the DIT(E) to grant registration to the trust within 60 days, acknowledging the charitable nature of the trust's activities and emphasizing that the trust's primary purpose was to promote the welfare of the general public. The judgment highlighted that even if some clauses had religious connotations, they were ancillary to the dominant charitable purpose of the trust.