2023 (2) TMI 300 - AT - Income Tax

Exemption u/s 11 - Rejection of Application for registration u/s 12AA - CIT-E noted violation of provision of section 13(1)(b) of the Act due to operation only for Christian community - HELD THAT - The assessee-trust has filed application for registration u/s 12A of the Act. The object clause specifically mentioned that the trust is charitable in nature and the charity would be done without prejudice to any cast creed. Primarily the object is never be barred by section 13(1)(b) of the Act. During registration of the trust the revenue authorities will verify the main object of the trust and the activities in relation to the main object of the trust. In second issues, revenue has not made any adverse comment on activity of the assessee-trust. But in the first issue the revenue authority has expressedthe grievance by rejection the application for registration. The ld. counsel for the assessee had fully relied order of M/S SAIN MIRAN BABA DARVESH GHULAM QUADIR TRUST 2022 (12) TMI 737 - ITAT AMRITSAR wherein as well settled law that where the purpose of a Trust is help to poor, medical relief, and advancement of objects of general public benefit/utility at large, the requirement of definition of 'charitable purpose' would be satisfied even if an activity of profit is carried on in the course of actual carrying out of the primary purpose of the Trust or the Institution. If a Trust's claim for charitable purpose is covered under the head of 'advancement of any other object of general public utility'. The question would arise whether the purpose of Trust or Institution involves the carrying on of any activity of profit. However, it would not be relevant as in the present case of the assessee Trust where the objects of the Trust comprise of relief of the poor, education or medical relief, etc. The observation which was taken in referred case by the bench is same view for the assessee-trust. The main object is indicated properly that there is no violation of section 13(1)(b) - CIT-DR was not able to show any evidence against the submission of assessee during the hearing. Decided in favour of assessee.

Summary

Issues Involved:
1. Interpretation of the objects of the Trust by the CIT(E) for registration under section 12AA.
2. Rejection of the application for registration under section 12AA.
3. Consideration of the main object of the Trust and compliance with section 13(1)(b) of the Income Tax Act.

Issue 1: Interpretation of the objects of the Trust by the CIT(E) for registration under section 12AA:
The appeal was filed against the CIT(E)'s order rejecting the application for registration under section 12AA of the Income Tax Act for A.Y. 2019-20. The CIT(E) interpreted the object clauses of the Trust, focusing on clauses (a), (c), and (n), which emphasized the Christian faith and service to humanity. The appellant argued that the CIT(E) failed to consider the Trust's overall objectives, which aimed at the welfare of the general public regardless of class, caste, creed, and religion. The Trust's objects were analyzed to determine if they aligned with the charitable nature required for registration under section 12AA.

Issue 2: Rejection of the application for registration under section 12AA:
The Trust, formed for the welfare of the general public without discrimination, applied for registration under section 12A. The CIT(E) rejected the application citing a restriction to the Christian community, violating section 13(1)(b) of the Act. The appellant contended that the Trust's charitable nature, as outlined in its object clause, did not contravene section 13(1)(b). The ITAT considered the Trust's primary objective and activities to determine if they genuinely served charitable purposes, emphasizing that registration should be granted based on the Trust's genuine charitable intentions.

Issue 3: Consideration of the main object of the Trust and compliance with section 13(1)(b) of the Income Tax Act:
The Trust's main object, as per its deed, aimed at fostering the spiritual and social growth of the Christian faith while providing social, charitable, and humanitarian services to all sections of society. The CIT(E) and the appellant presented arguments regarding the Trust's operations and compliance with section 13(1)(b) of the Act. The ITAT referred to relevant case laws emphasizing the need for genuine charitable activities for registration under section 12AA. The Trust's charitable nature and adherence to its stated objectives were crucial in determining compliance with the Income Tax Act.

In conclusion, the ITAT overturned the CIT(E)'s decision, ruling in favor of the appellant Trust. The ITAT found that the Trust's objectives aligned with genuine charitable purposes, and there was no evidence of violation of section 13(1)(b) of the Act. The Trust's application for registration under section 12AA was granted, emphasizing the importance of serving the welfare of the general public without discrimination.