9911796707
TMI Blog2015 (1) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... cation on certain issues. After examining the reply of assessee and the informations submitted, ld. DIT(E) observed that though in Form No. 10A assessee has shown date of creation of trust as 13/03/2013, however, such date of creation is not mentioned in the trust deed. Further, trust deed does not contain amendment clause, audit clause and dissolution clause. He also observed that there is no clause in the trust deed making the trust irrevocable. Due to these deficiencies, ld. DIT(E) was of the view that the trust cannot be treated as a public charitable trust, hence, not eligible for registration u/s 12AA of the Act. On further verification of the objects mentioned in the trust deed, ld. DIT(E) observed that the trust has both religious and charitable objects. Ld. DIT(E) was of the view that as the trust is formed after 01/04/1962 and having mixed objects i.e. both charitable and religious, income of the trust will not be eligible for exemption u/s 11 of the Act. Ld. DIT(E) referring to certain judicial precedents held that as the trust is having mixed objects, it is not eligible for registration u/s 12AA of the Act. Accordingly, he rejected the application for grant of registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g mixed objects i.e. both religious and charitable, it cannot be granted registration u/s 12AA of the Act. At the outset, we will deal with the issue as to whether a trust having mixed objects is ineligible for registration u/s 12AA. Before dwelling on this particular issue, it is necessary to mention that on perusal of the particular object clause referred to by ld. DIT(E), we are of the view that they cannot be considered to be of religious nature benefitting a particular religious community, caste or creed. Even assuming for the argument sake that assessee has mixed objects, but, still then that cannot by itself be a ground to deny registration to assessee u/s 12AA of the Act, for the following reasons: 6.1 Section 11(1)(a) of the Act makes no distinction between religious or charitable institution so far as grant of exemption is concerned, save and except the conditions imposed u/s 13 of the Act. The word 'or' between charitable and religious as used in section 11(1)(a) is not disjunctive but conjunctive in nature, therefore, it is necessary to read that income derived from property held under trust wholly for charitable or religious purposes or both are exempt. The Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objects are solely religious in nature and being of the opinion that Section 13(1)(b) is solely meant for charitable trust for particular community, negated the possibility of applicability of Section 13(1)(b) of the Act at the outset. The High Court has also confirmed the aforesaid view in appeal and observed that Section 13(1)(b) would only be applicable in case of income of the trust for charitable purpose established for benefit of a particular religious community. In our considered view, the said view may not be the correct interpretation of the provision. 45.From the phraseology in clause (b) of section 13(1), it could be inferred that the Legislature intended to include only the trusts established for charitable purposes. That however does not mean that if a trust is a composite one, that is one for both religious and charitable purposes, then it would not be covered by clause (b). What is intended to be excluded from being eligible for exemption under Section 11 is a trust for charitable purpose which is established for the benefit of any particular religious community or caste. 46.Such trusts with composite objects would not be expelled out of the purview of Section 13(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igion and to non- Jains if suffering from ailments but the medical aid could be given to them only if any member of the families managing the Trust, shows sympathy and is interested in their treatment. The Tribunal, in our opinion, was right in its conclusion that the dominant purpose of the Trust in the present case was propagation of Jain religion and to serve its followers and any part of agricultural income of the Trust spent in the State of Kerala also could not be treated as allowable item of the expenses." 49.In the present case, the objects of the respondent-trust based on religious tenets under Quran according to religious faith of Islam. We have already noticed that the perusal of the objects and purposes of the respondent-trust would clearly demonstrate that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraphs, do not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of Section 13(1)(b) of the Act. 50.In that view of the matter, we are of the considered opinion that the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Judicial Member, like the revenue authorities, misconstrued the legal implication of the word 'or' in section 11(1)(a). 6.3. The principle of law emerging from the aforesaid decisions are a trust/institution having charitable and religious objects will be eligible for exemption u/s 11 unless hit by restrictions imposed u/s 13(1)(a) or 13(1)(b) of the Act. As in the present case, ld. DIT(E) has not brought any material on record to show that provisions of section 13(1)(a) or 13(1)(b) applies to the assessee, denial of registration u/s 12AA for alleged violation of section 11(1)(a), in our view, is not justified. Moreover, applicability of section 13 of the Act can be looked into by the AO at the time of assessment proceedings and not by ld. DIT(E) while exercising power u/s 12AA of the Act. 6.4 In view of the aforesaid, we hold that ld. DIT(E) was not justified in refusing grant of registration u/s 12AA of the Act on the ground that assessee is having mixed objects. We expect that in future ld. DIT(E) while considering such issue shall bear in mind the ratio laid down by Hon'ble Supreme Court in case of CIT Vs. M/s Dawoodi Bohara Jamat (supra). 7. As far as the other objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
