2016 (10) TMI 350 - AT - Income Tax

Registration under section 12AA - Held that - We find that the assessee temple is registered with the Endowments Department under section 6(c)(ii) of the A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987. Section 6 of the Act provides for preparation and publication of list of charitable and religious institutions and Endowments on the basis of the income. Clause-(c) and sub-clause (ii) thereof, provides for religious institutions and Endowments other than Mutts not falling under Clause- (a) or Clause-(b) of section-6 of the Act. The religious institutions and Endowments are defined under subsections 22 and 23 of Section-2 of the said Act. The above definitions clearly demonstrate that such religious institutions or Endowments are for the purpose of any service or charity for the public. Therefore, any institution registered under section 6 of the A.P. Charitable and Hindu Religious Institutions and Endowments Act is deemed to be carrying on the charitable and religious activities. The certificate of registration therefore, establishes that the Temple is a religious and charitable institution. The Hon ble Madhya Pradesh High Court in the case of Laxminarayan Maharaj & Another vs. CIT (1983 (9) TMI 50 - MADHYA PRADESH High Court ) has held that when a Trust is not created under an instrument i.e., the document evidencing the creation of the Trust , the evidential document cannot be limited to documents which directly prove the creation of the trust and that all documents which afford a logical basis of inferring creation of the trust can be described to be documents evidencing the creation of the trust within the meaning of Rule 17A(a). In the case before us, since the certificate of registration with Endowments Department of the Government of A.P. is a document evidencing the creation of the Trust, we are of the opinion that the CIT(E) has erred in rejecting the application of the assessee for nonfiling of the Trust Deed. In view of the same, we deem it fit and proper to set aside the order of the CIT(E) and remand the same to his file for re-consideration of the assessee s application for registration under section 12AA by taking the certificate of registration with the Endowments Department as evidence of creation of trust. Decided in favour of assessee for statistical purposes.

Summary

Issues:
- Rejection of application for registration under section 12AA of the Income Tax Act, 1961 based on non-submission of trust deed.
- Validity of certificate of registration with the Endowments Department as evidence of trust creation.
- Interpretation of the term "religious institution" under the A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987.

Analysis:
The judgment dealt with the appeal against the rejection of an application for registration under section 12AA of the Income Tax Act, 1961 due to the non-submission of a trust deed. The assessee, an ancient temple in Nellore District, was under the administrative control of the Assistant Commissioner, Endowments Department, Nellore, and registered under section 6(c)(ii) of the Endowments Act. The temple's day-to-day affairs were managed following established rules. The CIT(E) rejected the application citing the absence of a trust deed, which the assessee contended was unnecessary as the temple was registered with the Endowments Department. The tribunal analyzed the definitions of "religious endowments" and "religious institution" under the A.P. Charitable and Hindu Religious Institutions and Endowments Act, highlighting that institutions registered under section 6 were deemed to be engaged in charitable and religious activities. Referring to a previous Madhya Pradesh High Court decision, the tribunal concluded that the certificate of registration with the Endowments Department could serve as evidence of trust creation, contrary to the CIT(E)'s stance. Consequently, the tribunal set aside the rejection and remanded the application for reconsideration, emphasizing the certificate's validity as proof of trust creation.

The judgment's core issue revolved around the acceptance of the certificate of registration with the Endowments Department as sufficient evidence of trust creation for registration under section 12AA. The tribunal's analysis focused on the legal definitions of religious endowments and institutions under the A.P. Charitable and Hindu Religious Institutions and Endowments Act, emphasizing that registered institutions were inherently involved in charitable and religious activities. By referencing a precedent from the Madhya Pradesh High Court, the tribunal established that the certificate of registration could be considered a document evidencing trust creation, contrary to the CIT(E)'s insistence on a trust deed. This interpretation was crucial in overturning the rejection and highlighting the importance of recognizing the certificate as valid proof of the temple's charitable and religious nature.

The interpretation of the term "religious institution" under the A.P. Charitable and Hindu Religious Institutions and Endowments Act played a pivotal role in the judgment. The tribunal's detailed analysis of the definitions of religious endowments and institutions underscored the broader scope of institutions registered under section 6, emphasizing their charitable and religious activities for the public good. By aligning the temple's registration with the Endowments Department with the Act's definitions, the tribunal established the temple's status as a religious and charitable institution. This interpretation, supported by legal precedents, was instrumental in challenging the CIT(E)'s decision and highlighting the significance of the certificate of registration as valid evidence of trust creation.