2015 (11) TMI 913 - AT - Income Tax

Registration under section 12AA denied - there cannot be twin objects, i.e., religious and charitable in nature - Held that - An identical issue was considered by the hon ble Madras High Court in the case of DIT (Exemptions) v. Seervi Samaj Tambaram Trust 2014 (2) TMI 32 - MADRAS HIGH COURT and found that the trust can have twin objects. Thus there is no justification in rejecting the application of the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing the appeal
2. Rejection of application for registration under section 12AA of the Income-tax Act, 1961 based on having both charitable and religious objects in the trust

Analysis:
1. Delay in Filing the Appeal:
The appeal was directed against the order of the Commissioner of Income-tax rejecting the application of the assessee for registration under section 12AA of the Income-tax Act, 1961. The assessee filed an application to condone the delay of seven days in filing the appeal. After considering both sides, the Tribunal found sufficient cause for the delay and thus condoned the delay, admitting the appeal.

2. Rejection of Application for Registration under Section 12AA:
The main issue revolved around the rejection of the application for registration under section 12AA of the Act due to the trust having both charitable and religious objects. The Commissioner of Income-tax contended that a trust cannot have both charitable and religious objects. However, the Tribunal referred to a judgment by the Madras High Court which found that a trust can indeed have twin objects, both religious and charitable. The High Court's decision was based on the interpretation of relevant provisions of the Income-tax Act and determined that there is no disqualification for a trust to apply for registration under section 12AA even if it is established with both charitable and religious purposes.

3. Legal Precedents and Interpretation:
The Tribunal further cited previous cases where similar issues were addressed, emphasizing that the law does not differentiate between trusts created with charitable or religious purposes. It was highlighted that the income derived from property held under trust wholly for charitable or religious purposes shall not be included in the total income of the trust. Therefore, the Tribunal concluded that the provisions of the law apply equally to trusts with charitable and religious objects, and there is no basis for disqualifying a trust from seeking registration under section 12AA based on having both types of objects.

4. Decision and Conclusion:
Based on the legal interpretations and precedents discussed, the Tribunal held that there was no justification in rejecting the application of the assessee for registration under section 12AA of the Act. Consequently, the Commissioner of Income-tax was directed to grant registration under section 12AA to the assessee. As a result, the appeal of the assessee was allowed, and the order was pronounced in an open court on a specified date in Chennai.

In summary, the judgment addressed the issues of delay in filing the appeal and the rejection of the application for registration under section 12AA of the Income-tax Act, emphasizing legal interpretations, precedents, and the ultimate decision to grant registration to the assessee.