2020 (12) TMI 1027 - AT - Income Tax

Denial of registration u/s 12A r.w.s. 12AA - Charitable activity u/s 2(15) - HELD THAT - Admittedly, the appellant-trust is a registered trust. As per the registration deed, the property of the trust was donated by one goswami Shri Parshotam Lal Ji s/o. goswami Shri Damodar Lal ji for establishment of Shri Goverdhannath Ji temple and for doing other religious and charitable activities. One of the objects is to impart education to the students without any discrimination of caste or religion; to give scholarship and help to needy students for higher education etc. Apart from that, objects of organizing medical camps, blood donations are also part of the objects as per bye laws of the trust. The trust also holds the activity of 'bhandara (free food) to all. As per the provisions of section 11 read with section 12A of the Income Tax Act, 1961, the registration can be granted to the charitable or religious trust or institution. A perusal of the order of the Ld. CIT(E) shows that the Ld. CIT(E) has declined registration mainly on the ground that the appellant trust is pre-dominantly doing the religious activities and that the same do not partake the character of charitable activity. However, as per the relevant provisions of section 11 read with sections12A 12AA of the Act, the registration can be granted to charitable or religious institution. Under the circumstances, there is no bar in granting registration to a religious institution under the relevant provisions. Moreover, as per the objects of the trust, the trust is also involved in charitable activities as noted above. The appeal of the appellant trust is allowed and the Ld. CIT (E) is directed to register the appellant-trust u/s. 12A/12AA of the Income Tax Act. - Decided in favour of assessee.

Summary

Issues:
Denial of registration to the appellant-trust under sections 12A and 12AA of the Income Tax Act as a charitable and religious institution.

Analysis:
The appellant-trust appealed against the order of the Commissioner of Income Tax (Exemptions), Chandigarh, denying registration under sections 12A and 12AA of the Income Tax Act. The Commissioner observed that the trust's activities did not align with the parameters of charitable purposes under section 2(15) of the Act. The trust primarily spent on activities like worship, celebrations, and maintenance, indicating a lack of charitable work using public donations. The absence of clauses like beneficiary, investment, or irrevocability further cast doubt on the trust's charitable nature. Additionally, the trust filed returns in Form ITR-5 instead of ITR-7, suggesting a perception of being outside charitable activities' scope.

The trust's registration deed outlined objectives such as worship, maintenance of a temple, educational initiatives, medical camps, and charitable events like providing free food. The trust's bye-laws detailed activities in line with charitable and religious purposes, including education without discrimination, scholarships, medical camps, and blood donations. The trust's focus on religious activities did not preclude its charitable nature, as religious institutions can also qualify for registration under sections 11, 12A, and 12AA of the Act. The trust's significant spending on charitable activities like providing free food demonstrated a blend of religious and charitable endeavors. The Tribunal found no justification for the Commissioner's denial of registration based on the trust's religious activities, directing registration under sections 12A/12AA of the Income Tax Act.

In conclusion, the Tribunal allowed the appeal of the appellant-trust, overturning the Commissioner's decision to deny registration. The trust's activities, encompassing both religious and charitable initiatives, aligned with the provisions of the Income Tax Act regarding registration for charitable and religious institutions. The Tribunal directed the Commissioner to register the appellant-trust under sections 12A and 12AA of the Act.