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TMI Blog2014 (11) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... goals are also set out in the trust deed, the trust is a charitable as well as a religious trust and section 13(1)(b) would not be applicable. We are of the considered opinion that the assessee trust is entitled to registration u/s.12A of the I.T. Act. We therefore set aside the order of the CIT and direct him to grant registration u/s.12A of the I.T. Act to the assessee trust. Grounds raised by the assessee are accordingly allowed. - ITA No. 2167/PN/2013 - - - Dated:- 17-11-2014 - Shri R.S. Padvekar, Judicial Member And Shri R.K. Panda, Accountant Member For the Assessee : Shri S.N. Doshi For the Department : Mrs. M.S. Verma ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 30-09-2012 of the CIT(A)-I, Pune refusing registration u/s.12A of the Income Tax Act, 1961. 2. Facts of the case, in brief, are that the assessee society was set up vide a Memorandum of Association executed on 23-09-2008. It was registered under the Bombay Public Trust Act, 1950 vide Notification dated 04-02-2012 issued by the Assistant Charity Commissioner, Pune Region, Pune. It is also registered under the Societies Registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic utility. Similarly, the object of the society to encourage, conduct and support activities leading to universal, spiritual upliftment as preached by the Tirthankar Bhagwants as per clause 3(b) of the object clause is religious in nature. He further noted that some of the activities carried out by the assessee society appears to be for the benefit of the members of the Jain Community which is apparent from the JITO Cricket Tournament conducted by the assessee society. The various other activities conducted by the assessee society according to the Ld.CIT are also geared for the benefit of the Jain Community. The assessee society happens to be a predominantly charitable institution notwithstanding the few objects which cannot be prima-facie regarded as charitable. 3.1 According to the Ld. CIT, when a charitable trust or institution is established for the benefit of a specific religious community or caste, the provisions of section 13(1)(b) gets attracted. In such a situation, the concerned trust or institution cannot avail the benefit of deduction u/s.11 and 12. Registration u/s.12A confers an in-principle recognition of entitlement to such benefits. When the benefits envisag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferring to the copy of the trust deed placed at pages 3 to 20 of the paper book, he submitted that the view of the CIT that settlement of dispute cannot be considered as an object of general public utility is devoid of any merit. He submitted that the members of the trust may or may not necessarily be the traders or professionals and membership is open to any person. The Traders or professionals who are the members of the trust undisputedly provide the essential services to the public at large. All these traders are expected to continue to do so. They together attend to achieve the economic prosperity that takes care of the under privileged class of the society. As the dispute may arise not only amongst the members but also could be related to the policies of the Government that create hurdles in carrying out the activities, therefore, this clause is charitable in nature. For the above proposition, he relied on the following decisions : 1. CIT Vs. Andhra Chamber of Commerce reported in (1965) 55 ITR 722 (SC). 2. Addl.CIT Vs. Surat Art Silk Cloth Manufacturers Association reported in (1980) 121 ITR 1 (SC) 3. CIT Vs. World Agriculture Fair Memorial Farmers Welfare Trust Soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT Vs. Chandra Charitable Trust reported in 294 ITR 86 he submitted that the Hon ble High Court in the said decision has held that if the objects of the assessee trust are not only to propagate Jainism or help and assist maintenance of temple, Sadhus, Sadhvis, Shraviks and Shravaks and other goals are also set out in the trust deed, the trust is a charitable as well as a religious trust and section 13(1)(b) would not be applicable. He also relied on the following decisions : 1. Shri 1008 Parshwanth Digambere Jain Mandir Trust Vs. DIT ITAT Mumbai Bench 2. Kasyapa Veda Research Foundation Vs. CIT ITAT Cochin Bench 3. CIT Vs. Arulmigu Sri Kamatchi Amman Trust 20 taxmann.com 55 Madras High Court 4. Shiv Mandir Devsttan Panch Committee Sanstan Vs. CIT ITAT Nagpur Bench 5. Malik Hasmullah Islamic Educational and Welfare Society Vs. CIT 24 taxmann.com 93 ITAT Lucknow Bench 7. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT. She submitted that the Ld. CIT has given a clear cut finding as to why the trust is not eligible for registration u/s.12AA which is self-explanatory. She accordingly submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intricately entwined, sometimes to the extent of blurring the domains in which they ought to be considered and, therefore, require cautious consideration. A question where the legal effect of proven facts is intrinsically in appeal has to be differentiated from a question where a finding of fact alone is assailed. WALI MOHAMMAD v. MOHAMMAD BAKSH [1930] 57 IA 86 ; SECRETARY OF STATE FOR INDIA IN COUNCIL v. RAMESWARAM DEVASTHANAM [1934] 61IA 163 ; LAKSHMIDHAR MISRA v. RANGALAL [1949] 76 IA 271 and SREE MEENAKSHI MILLS LTD. v. CIT [1957] 31ITR 28 (SC) relied on. A conjoint reading of sections 11,12,12A and 12AA of the Income-tax Act, 1961, makes it clear that registration under sections 12A and 12AA is a condition precedent for availing of the benefit under sections 11 and 12. Under the scheme of the Act, sections 11 and 12 are substantive provisions which provide for exemptions available to a religious or charitable trust. Section 13 lists the circumstances under which the exemption would not be available to a religious or charitable trust otherwise falling under section 11 or 12 and, therefore, requires to be read in conjunction with the provisions of sections 11 and 12 towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 777 (SC) ; SOLE TRUSTEE, LOKA SHIKSHANA TRUST v. CIT [1975] 101 ITR 234 (SC) and CIT v. ANDHRA CHAMBER OF COMMERCE [1965] 55 ITR 722 (SC) relied on. Section 13 is in the nature of an exception from applicability of section 11 or 12 and the examination of its applicability would only arise at the stage of claim under section 11 or 12. Thus, where the income of a trust is eligible for exemption under section 11, the eligibility for claiming exemption ought to be tested on the touchstone of the provisions of section 13. From the phraseology in clause (b) of section 13(1), it could be inferred that the Legislature intended to include only 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, 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. Such trusts with composite objects would not be expelled out of the purview of section 13(1)(b) per se. The section requires it to be establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust was confined only to a particular religious community section 13(1)(b) would be attracted. On appeal, the Tribunal (see Dawoodi Bohra Jamat v. CIT [2009] 317 ITR (AT) 133 (Indore)) came to the conclusion that since the assessee was a public religious trust as the objects of the trust were wholly religious in nature the provisions of section 13(1)(b) which were otherwise applicable in the case of charitable trusts would not be applicable and held that the assessee-trust was entitled to exemption and directed the Commissioner to grant registration under section 12A read with section 12AA of the Act to the assessee-trust. On appeal by the Department, the High Court concluded, firstly, that since the Appellate Tribunal had recorded a finding of fact that the assessee was a public religious trust, it would not interfere with such a finding of fact in exercise of its powers under section 260A and, secondly, as the trust was not created or established for the benefit of any particular religious community or caste, the provisions of section 13(1)(b) would not be applicable to it and dismissed the appeal filed by the Department. On further appeals : Held, dismissing the appeals, (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or institutions to impart religious education to the masses would qualify as a charitable purpose qualifying under the head of education under the provisions of section 2(15) of the Act. Similarly, assistance by the assessee-trust to the needy and poor for religious activities would not divest the trust of its altruist character. Therefore, the objects of the trust exhibited the dual tenor of religious and charitable purposes and activities. Section 11 of the Act allowed such trust with composite objects to claim exemption from tax as a religious and charitable trust subject to the provisions of section 13. The activities of the trust under such objects would, therefore, be entitled to exemption accordingly. In re : TRUSTEES OF THE TRIBUNE [1939] 7 ITR 415 (PC) and In re : SOUTH PLACE ETHICAL SOCIETY ; BARRALET v. ATTORNEY GENERAL [1980] 3 All ER 918; [1980] 1 WLR1565; 54 Tax Cas 446 applied. (iii) That the objects of the assessee-trust were based on religious tenets under the Quran according to the religious faith of Islam. The activities of the trust though both charitable and religious were not exclusively meant for a particular religious community. The objects did not cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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