2016 (8) TMI 518 - HC - Income Tax

Entitlement to registration under section 12A(a) r.w.s. 12AA - Dawoodi Bohra Community - Held that - Considering the decision of the Honble the Supreme Court in the case of Dawoodi Bohra Jamat (2014 (3) TMI 652 - SUPREME COURT ), the question, which is raised in the present appeal is required to be answered in favour of the assessee as held that respondent-trust was a charitable and religious trust which did not benefit any specific religious community and therefore, it could not 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 u/s. 11 of the Act. Even otherwise there are concurrent finding of facts with which we also concur and therefore no elaborate reasons are required - Decided in favour of assessee

Summary

Issues involved:
1. Challenge to the order of the Income-tax Appellate Tribunal by the appellant-revenue.
2. Substantial question of law regarding the registration of a trust under section 12A(a) r.w.s. 12AA of the Income-tax Act.
3. Interpretation of the nature of a trust as wholly religious, charitable, or both.
4. Application of section 13(1)(b) of the Act to determine trust eligibility for exemption under section 11.

Analysis:
1. The appellant-revenue challenged the Income-tax Appellate Tribunal's order regarding the registration of a trust under the Income-tax Act. The court framed a substantial question of law concerning whether the Dawoodi Bohra Community qualifies as a Public Trust for registration under section 12A(a) r.w.s. 12AA of the Act. The court also decided to hear this matter with another Tax Appeal.

2. Tax Appeal No. 1187 of 2006 involved a trust formed by Dr. Syedna Mohammed Burhanuddin Saheb, Mumbai, and the rejection of its registration application under section 12A of the Act. The CIT (Appeals) initially concluded that the trust was a private religious trust for the Dawoodi Bohra Community, making it ineligible for registration under section 12A(a). However, the ITAT later deemed the trust a public charitable trust, justifying registration. The appellant-revenue contested this decision, leading to the current Tax Appeal.

3. The court considered the legal implications of the trust's objects as outlined in the trust deed to determine its nature as wholly religious, charitable, or both. Referring to a previous Supreme Court decision, it was established that the trust's objects, based on religious tenets under the Quran, demonstrated charitable and religious activities not exclusively benefiting a particular community. Consequently, the trust was deemed a charitable and religious trust, not specifically benefiting any religious community, thus exempt from section 13(1)(b) and eligible for exemption under section 11 of the Act.

4. In light of the Supreme Court's decision and the nature of the trust's activities, the court ruled in favor of the assessee, upholding the ITAT's order granting registration as a charitable and religious trust. The court concurred with the concurrent findings of facts and dismissed the appeal, affirming the trust's eligibility for exemption under section 11 of the Act.