JAIN SHWETAMBAR MANDIRTRUST,PUNE vs. COMMISSIONER OF INCOME-TAX, (EXEMPTIONS), PUNE

This is an appeal filed by the assessee trust directed against the order of the ld. Commissioner of Income Tax (Exemptions), Pune dated 28.09.2017 passed u/s 12AA(1)(b)(ii) of the Income Tax Act, 1961 (for short “the Act”) denying the registration u/s 12AA of the Act.

The appellant society raised the following grounds of appeal :- “1. On the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income-Tax (Exemptions), Pune is not justified in not granting registration u/s 12AA of the Act to the Appellant Trust.

Being aggrieved by the order of ld. Commissioner of Income Tax (Exemptions), the appellant society is before us in the present appeal.

Before us, when the matter was called none appeared on behalf of the assessee. On the other hand, ld. CIT-DR had relied on the order of the ld. Commissioner of Income Tax (Exemptions).

We heard the ld. CIT-DR and perused the material on record. The only issue involved in the present appeal relates to the grant of registration u/s 12AA of the Act. The ld. Commissioner of Income Tax (Exemptions) had denied the registration primarily on the ground that the object of the trust prima-facie appears to be religious in nature and there was no dissolution clause in the instrument creating the trust. The tenability of the reasoning of the ld. Commissioner of Income Tax (Exemptions) requires to be adjudged for touchstone of the law and the decision of the Hon’ble Supreme Court in the case of Fazlul Rabbi Pradhan vs. State of West Bengal, AIR 1965 SC 1722 held that the words “trust for charitable purposes” would include even trust for advancement of religious. The Hon’ble Supreme Court’s decision was 3 relied upon in the case of CIT vs. Barkate Saifiyah Society, 213 ITR 492 (Guj.) where it was held that the words “trust for charitable purposes” would include even trust for advancement of religious. The words “trust for charitable purposes” would also include even trust for advancement of religious in the following decisions :- (i) CIT vs. Jaipur Charitable Trust , 81 ITR 1; (ii) Zenith Tin Works Charitable Trust vs. CIT, 102 ITR 119; (iii) CIT vs. Ahmedabad Rana Caste Association, 88 ITR 354; and, (iv) CIT vs. Chandra Charitable Trust, 294 ITR 86.

The reasoning of the ld. Commissioner of Income Tax (Exemptions) that in the absence of dissolution clause the appellant trust does not entitle for registration u/s 12AA of the Act is also required to be adjudged in view of the decision of the Hon’ble Gujarat High Court in the cases of (i) DCIT vs. Vanchhara Thirthadhipati Chintamani Paraswaprwabhu, 233 Taxman 01 (Guj.) and (ii) CIT vs. Taapagachha Sangh Mota, 232 Taxman 715 (Guj.) 8. Further, the provisions of section 13(1)(b) of the Act had carved out exception to the exemption available u/s 11 and 12 of the Act. One of those exception is that the exemption u/s 11 and 12 would not be available in case any income of trust or institution is created or established for the benefit of any particular religious, community or caste. The Hon’ble Supreme Court in the case of CIT vs. Dawoodi Bohra Jamat, 364 ITR 31 after exhaustively referring to the earlier precedent, held that where the objects of a trust are both charitable and religious, the trust shall be eligible for registration u/s 12AA of the Act. The section only requires to be established that such charitable purpose is not for the benefit of a particular religious community