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2023 (5) TMI 785 - AT - Income TaxExemption u/s 11 - grant of registration u/s 12AA rejected - private religious trust or public trust - Assessee trust exists solely for a particular sect of the Hindu religion - CIT(E) held for provisions of section 11 the beneficiaries of the trust must be public at large and accordingly, private religious trusts are not entitled for exemption of income, thus denied grant of registration u/s12AA - HELD THAT - In this case, the assessee trust namely, Arulmigu Aathi Karumapuram Sellandiamman Kudipaattukarakal Seva Trust existed for the purpose of Poruleentha Kula Vellala Gounder, which is a sub sect of Vellala Gounder community, established exclusively for them. Therefore, once the assessee trust is established for the purpose of particular subcaste, it is only for the benefit of that sub-caste and thus, it is a private religious trust and registration u/s 12AA of the Act cannot be granted. Six temples are under the control of the Hindu Religious Charitable Endowments Department, Tamil Nadu and it is fully maintained by the Government of Tamil Nadu. Therefore, the argument of the ld. Counsel for the assessee that the assessee trust was doing services to other six temples and is open to public at large cannot be accepted. Therefore, registration u/s 12AA of the Act cannot be granted to the assessee trust. The assessee trust does not come under the purview of charitable trust or under the purview of public religious trust. It is only a private religious trust. Therefore, registration under section 12AA of the Act cannot be granted to the assessee trust. Activities of the Trust are to receive contribution from the members and not from any outsider and the expenditure is only to manage and protect their temple - If the assessee is running on the basis of mutuality, it can carry its activities and nobody will object. However, no 12AA registration can be granted to the assessee trust, being a private religious trust. Receipts of the trust do not come within the definition of income under section 2(24) - The income has to be determined depending upon the receipt, what are the expenditure incurred, what is the source of income and it has to be decided after considering entire details. It cannot be predetermined by the assessee that the receipts derived by the assessee cannot be an income within the meaning of section 2(24) of the Act. Violation of Article 14 and Article 19(c) of the Constitution of India - We find that Article 14 as well as Article 19(c) has no application to the facts of the present case. In this case, whether the assessee is entitled for grant of registration u/s12AA of the Income Tax Act or not has to be determined as per the conditions stipulated under the Income Tax Act. The above mentioned two Articles nowhere correlated to grant of registration u/s 12AA. Neither the State Government nor the Central prohibit forming a trust or association and it is not the policy of either of the Government - If the assessee wanted grant of registration under section 12AA of the Act, the assessee has to satisfy certain conditions stipulated under the Income Tax Act. In this case, the assessee has failed to satisfy the conditions as required u/s 12AA for grant registration as a public religious trust for the reason that the assessee trust existed only for the benefit of a particular sub sect and not general public at large. Decided against assessee.
Issues Involved:
1. Erroneous Order and Natural Justice 2. Consideration of Grounds of Appeal and Written Submissions 3. Association of Persons and Doctrine of Mutuality 4. Incorrect Findings on Income Source 5. Classification as Private Religious Trust 6. Juridical Person as Taxable Entity 7. Voluntary Contributions 8. Membership and Societies Act 9. Applicability of Doctrine of Mutuality 10. Nature of Trust: Private vs. Public Religious Trust 11. Section 13(1)(a) Ineligibility 12. Application of Supreme Court Judgment 13. Nature of Contributions as Voluntary 14. Caste References in Trust Deed 15. Adherence to Principles of Justice 16. Historical Practice and Custom Summary: 1. Erroneous Order and Natural Justice: The appellant argued that the order by the CIT(E) was erroneous in law and against the principles of natural justice. 2. Consideration of Grounds of Appeal and Written Submissions: The appellant claimed that the CIT(E) did not properly consider the grounds of appeal, written submissions, and relevant judicial decisions. 3. Association of Persons and Doctrine of Mutuality: The appellant contended that the trust was merely formalizing a century-old practice carried out by its members, thus satisfying the doctrine of mutuality as held by the Supreme Court in Chelmsford Club (2000) 3 SCC 214. 4. Incorrect Findings on Income Source: The appellant disputed the CIT(E)'s finding that the trust's income was derived from lease amounts from lands donated to temples, asserting it was factually incorrect. 5. Classification as Private Religious Trust: The CIT(E) classified the trust as a private religious trust, which the appellant argued was incorrect, stating the trust was both religious and charitable. 6. Juridical Person as Taxable Entity: The appellant argued against the CIT(E)'s interpretation that every juridical person is a taxable entity under Section 2(31) of the IT Act. 7. Voluntary Contributions: The CIT(E) considered contributions from members as voluntary contributions under Section 2(24) of the Act, which the appellant contested. 8. Membership and Societies Act: The appellant disputed the CIT(E)'s finding that the concept of membership applies only to associations registered under the Societies Act. 9. Applicability of Doctrine of Mutuality: The appellant argued that the principle of mutuality applied to the trust, supported by previous judicial decisions, which the CIT(E) failed to consider. 10. Nature of Trust: Private vs. Public Religious Trust: The CIT(E) deemed the trust a private religious trust, ineligible for registration under Section 12AA, which the appellant contested, stating the trust served public temples and charitable purposes. 11. Section 13(1)(a) Ineligibility: The CIT(E) found the trust ineligible for registration under Section 13(1)(a), which the appellant argued was incorrect. 12. Application of Supreme Court Judgment: The appellant argued that the CIT(E) misapplied the Supreme Court judgment in Kerala Vs. M.P. Shanti Verma Jain (1998) 231 ITR 787, which was not relevant to their case. 13. Nature of Contributions as Voluntary: The appellant contested the CIT(E)'s finding that temple tax imposed on members was voluntary, arguing it was contrary to the meaning of voluntary contributions. 14. Caste References in Trust Deed: The CIT(E) found references to certain castes in the trust deed made it ineligible for registration, which the appellant argued was beyond the CIT(E)'s authority. 15. Adherence to Principles of Justice: The appellant claimed the entire order was vitiated by non-adherence to the principles of justice, non-application of mind, and abuse of power. 16. Historical Practice and Custom: The appellant argued that the trust formalized a long-standing custom and aimed to maintain transparency and accountability, which the CIT(E) failed to appreciate. Tribunal's Findings: The Tribunal upheld the CIT(E)'s order, stating the trust was established for a particular sub-sect, making it a private religious trust, ineligible for registration under Section 12AA. The Tribunal found no merit in the appellant's arguments regarding mutuality, public service, and constitutional violations. The appeal was dismissed.
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