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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu
Per S. S. Godara, J.M.
This assessee’s appeal arises from the Commissioner of Income Tax (Exemptions), Hyderabad’s order dated 28.03.2021 passed in case No.CIT(EXEMPTION), HYD/2020-21/12AA/10741 involving proceedings u/s. 12AA(1)(b)(ii) of the Income Tax Act, 1961 [in short, ‘the Act’].
Heard both the parties. Case files perused.
ITA No.182/Hyd/2021
. Coming to the assessee’s sole substantive grievance that the learned CIT(Exemptions) has erred in law and on facts in declining section 12AA registration, we note that the corresponding detailed discussion to this effect reads as under :
“2. A notice was issued to the applicant, to the address mentioned in Form 10A, to produce its original Memorandum of Association (MoA) / Trust Deed for verification and to furnish a detailed reply on specific points. The said notice was issued to the assessee through ITBA vide DIN & Notice No.ITBA/EXM/F/41/2020-21/1028009055(1) on 19.09.2020. In the said notice, the assessee has been asked to submit the documents as per the questionnaire given in detail, on or before 29.09.2020 through e-mail/e- proceedings. As the assessee failed to furnish any documentary evidence, one more hearing notice was issued through ITBA vide DIN & Notice No.ITBA/EXM/F/41/2020-21/1030603901(1) on 12.02.2021. In the said notice, the assessee has been asked to submit the documents as per the questionnaire given in detail, on or before 19.02.2021 through e-mail / e- proceedings. However, the assessee has not filed any documentary evidence before the stipulated date. 3. Mixed Objects: As seen from the Form 10A filed online, the assessee has applied for registration u/s. 12A of the Act as a "Religious-cum-Charitable" . Trust. Also, the objects of the assessee contain both charitable and religious objects. The religious objects of the assessee are reproduced as under: 3) To propagate, preach and practice all sanatana dharma related activities and practice which are integral to the culture and faith of Indian society. 4) To propagate and preach the essence of vedas, puranas and other holy/religious books for harmony, peace and progress of human being. Thus, the assessee has religious objects also apart from the charitable objects. 3.1 Sec. 12 says any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes . 3.2 Thus, the exemption is applicable for a trust which is created wholly for charitable purposes or wholly for religious purposes. In this case, in Sec. 12, the word "wholly" has been repeatedly used along with the word charitable. It means the activity of a trust has to be wholly charitable to be eligible for exemption or wholly religious to be eligible for exemption. In other words, a trust with part charitable objects and part religious objects will not be eligible for exemption: The harmonious reading of Sec. 2(15) and Sec. 12 clearly explains the same thing that a trust which is wholly engaged in charitable activity is eligible for exemption or a trust which is wholly engaged for religious activity is eligible for exemption.
ITA No.182/Hyd/2021
3.3 The objects include religious and charitable objects also. As discussed above, the scheme of the Act do not permit exemption to the trust which is having mixed objects. Registration u/s 12A is the entrance gate for claiming exemption u/s 11. Therefore, the assessee trust is not eligible for registration u/s 12A and u/s 12AA of the Act. 4. Case Laws : Reliance is placed on following case laws : 4.1) Buxar Diocesan Society (2015) 62 taxmann.com 91 (Patna – Trib). It has been held "This aspect of the matter stands also gets support from the decision in the case of DawoodiBohraJamat (supra), wherein the Hon'ble Court considered applicability or otherwise of s. 13(1)(b) as a valid ground while considering the issue of registration u/s. 12AA of the Act in as much as registration is a pre-requisite for availing the benefit of sec. 11 & 12 (pg. 41). In the facts of the case, we have found the assessee society to be formed for the benefit of the Christians community and which therefore definitely could form a ground for denial of its registration in as much as its income is liable to be excluded for consideration u/s. 11 and 12 of the Act" 4.2) Reliance is also placed on the decision of Hon'ble High Court of Kerala in the case of Tellicherry Minority Welfare Trust Vs. CIT [2014] 364 ITR 472 wherein it was held as under: "In order to get exemption, they must comply with the conditions enumerated and the 'authorities must also verify whether the activities undertaken by the applicant is really meant for public at large or they are restricted to a particular group with reference to religion or caste. Unless that exercise is done, it would not be proper for the authorities to blindly grant registration under Section 12A to every other applicant. As long as 12A registration is in existence, the assessee can claim the benefit. Without 12A registration, even if the assessee were to spend money on charitable activities, they are not entitled for the benefit. Therefore, registration under Section 12A is like an entry document to secure exemption. Hence, registration, is a relevant process which has to be carefully exercised by the authority concerned. It is always Commissioner who process the applications for registration under Section 12A and it is not entrusted to any other officer below the rank of a Commissioner of Income Tax. 12. The observation of the authorities below with reference to the contents of the trust deed in question persuaded them to opine that the meaning and impact of the word ‘apply’, having regard to the denominational character of the trust on the holistic approach to conclude that the intention was not to extend the benefit to all minorities, but to a particular religious community.” 4.3) The Hon'ble’ ITAT Amritsar Bench in the case of Alexandra School Vs. CIT [2014] 44 taxmann.com 139 has held that since school had been created only for benefit of a particular religious community, its application is liable for dismissal.
ITA No.182/Hyd/2021
In view of the above facts, I am of the view that the applicant is not fit for grant of registration u/s.12AA of the Act. Hence, the application in Form No.10A filed by the above applicant is hereby rejected.”
Suffice to say, we find that the learned CIT(Exemptions) has rejected the assessee’s section 12AA registration for the sole reason that its objects are both charitable as well as religious in nature. That being the case, from judicial pronouncements i.e., Sri Sri Sri Dattatreya Seva Samsthanam Vs. Director of Income Tax (Exemptions), Hyderabad (2016) 69 taxmann.com 360 (Hyderabad Trib), DIT(E), Vs. Seervi Sanaj Tambaram Trust (2014) 362 ITR 199 (Madras) and CIT Vs. Dawoodi Bohara Janat (2014) 364 ITR 31 (SC) hold that the impugned registration ought not to be declined merely because the objects are both charitable as well as religious. We accordingly reject the Revenue’s contentions supporting the learned CIT(Exemptions)’s impugned denial of registration and direct him to grant the necessary relief as prayed for in the instant case. It is further made clear that it shall be very much open to the Assessing Officer to examine the assessee’s activities carried out in appropriate proceedings as per law.
No other substantive ground has been pressed before us.
This assessee’s appeal is allowed.
Order pronounced in the Open Court on 18th November, 2021. Sd-
Sd/- Sd/- (LAXMI PRASAD SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, dated 18th November, 2021. TYNM / sps
ITA No.182/Hyd/2021
Copy to:
S.No Addresses 1 Shree Govatts Foundation, 14-4-259, Joshi Wadi Begum Bazar, Hyderabad – 500012, Telangana. 2 The CIT(Exemptions), Hyderabad 3 The Addl.CIT(Exemptions), Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File.
By Order