2017 (2) TMI 698 - AT - Income Tax

Registration under section 12AA denied - from the objects of the society, it has been created for the benefit of persons belonging to the Jain Samaj only - Held that - As per definition of Charitable purpose under section 2(15) includes relief of the poor, education, medical relief (preservation of environment (including watersheds, forests and wildlife) and reservation of monuments or places or objects or artistic or historic interest) and the advancement of any other object of General Public Utility. During the course of hearing, the ld. Counsel for the assessee submitted that Jainism is the philosophy and preservation of symbol of such philosophy would definitely come into the embrace of the word Charitable . During the course of hearing, the ld. D/R could not refute the fact that clauses 16 of the objects which provides that without any discrimination of the caste or creed to help economically poor, old, ailing, handicap, poor students and clause 17 provides for help for hospitalization of ailing persons, medicines, cold water, night shelter and Dharamshala etc. In our considered view, both these objects definitely fall under the category of Charitable purpose and cannot be construed as solely for the benefit of a particular religious community. Keeping these objects in view and respectfully following the judgment in the case of CIT vs. Dawoodi Bohara Jamat, (2014 (3) TMI 652 - SUPREME COURT), the order of ld. CIT (Exemption) is set aside and we hereby direct the ld. CIT (Exemption) to grant registration to the assessee trust. - Decided in favour of assessee.

Summary

Issues involved:
- Refusal of registration to the assessee under section 12AA of the Income Tax Act, 1961 based on the objects of the trust being for the benefit of a particular religious community.
- Interpretation of provisions of section 13(1)(b) and section 2(15) of the IT Act in relation to charitable trusts.
- Whether the objects of the trust are genuinely charitable and for the benefit of the public at large or limited to a specific religious community.

Analysis:
1. Refusal of Registration under Section 12AA:
The appeal was against the order of the ld. CIT (Exemption) refusing registration to the assessee under section 12AA. The ld. Counsel for the assessee argued that the trust should be considered charitable, citing various judicial pronouncements to support the claim. On the other hand, the ld. D/R contended that the trust's objects were primarily for the benefit of a specific religious community, making it ineligible for charitable status.

2. Interpretation of Section 13(1)(b) and Section 2(15):
The ld. CIT based the rejection on the premise that the trust was formed for the benefit of a particular religious community, violating section 13(1)(b) of the IT Act. The Tribunal examined precedents like Agrawal Sabha and Gowri Ashram, which emphasized that trusts benefiting only specific communities do not qualify as charitable organizations under section 2(15). The Tribunal noted that the legislative intent behind charitable purposes is to serve the public at large, not limited groups.

3. Genuineness of Charitable Objects:
The Tribunal considered the objects of the trust, which included provisions for the economically poor, old, ailing, and students without discrimination of caste or creed. These provisions, such as assistance for hospitalization, medicines, and shelter, were deemed charitable in nature. By referencing the Supreme Court judgment in CIT vs. Dawoodi Bohara Jamat, the Tribunal concluded that the trust's objects did not solely benefit a particular religious community but aligned with charitable purposes under section 2(15).

4. Decision and Conclusion:
After evaluating the arguments and the trust's objects, the Tribunal set aside the ld. CIT's order and directed the grant of registration to the assessee trust. The Tribunal found that the trust's activities were genuinely charitable and aimed at benefiting the public at large, thereby allowing the appeal of the assessee.

In conclusion, the judgment highlighted the importance of ensuring that trust objects align with the definition of charitable purposes under the IT Act to qualify for registration and tax exemptions.