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Before: Shri Amit Shukla & Shri L.P. Sahu
In the Income-Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi Before : Shri Amit Shukla, Judicial Member And Shri L.P. Sahu, Accountant Member ITA No. 3598/Del./2014 Pink Flowers Trust, Kargi, vs. C.I.T., Dehradun. P.O. Banjarawala, Near Patel Nagar Kotwali, Dehradun. (PAN: AACTP 3088 P) (Respondent) (Appellant)
Assessee by Dr. Rakesh Gupta, Advocate & Sh. Somil Agrawal, Advocate Revenue by Smt. Paramita Tripathy, CIT/DR
Date of Hearing 27.04.2017 Date of Pronouncement 02.05.2017
ORDER Per L.P. Sahu, A.M.: This is an appeal by the assessee against the order of ld. CIT, Dehradun dated 28.04.2014 refusing to grant registration u/s. 12AA of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Following grounds have been raised by the assessee : 1. The Learned CIT has erred in law as well as on facts and circumstances of the case in rejecting the application filed by the Appellant seeking registration under Section 12AA of the Income Tax Act,1961. 2. The Learned CIT has denied the registration sought under Section 12AA on irrelevant considerations which are not material at the time of grant of registration under Section 12AA.
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The Learned CIT has erred in law in drawing adverse conclusion in the case solely on the basis of few objects (7 in number) of the Trust being for the benefit of a particular religious community, whereas the balance 33 objects out of 40 objects stated in the Trust Deed are charitable in nature. 4. The Learned CIT during the proceedings for grant of registration under Section 12AA verified from the records submitted that the Appellant Trust was undertaking activities of charitable nature as defined under Section 2(15) of the Act i.e. education to children and that there were no perverse findings that the Appellant Trust was not eligible as a charitable institution. 5. The Learned CIT has erred in law and on facts in treating the Appellant Trust as a Private Religious Trust to which Section 13(l)(b) of the Act applies at the time of assessment of income, whereas in our case the Trust is a Public Religious Trust and also that Section 13(1)(b) of the income Tax Act,1961 applies only at the time of grant of exemption when the assessment is being done, whereas our application was for registration under Section 12AA. 6. The Learned CIT on the facts and circumstances of the case, made observations and conclusions in the impugned order which are perverse and against the facts of the case. 7. Because, the Order of the Learned CIT dated 28.4.2014 is bad on facts and on law, therefore needs to be quashed and a direction be given to grant registration under Section 12AAof the Act.
The brief facts of the case are that the assessee-trust filed an application u/s. 12A(a) of the Act in Form 10A before the ld. CIT, Dehradun on 11.11.2013 for granting registration u/s. 12AA of the Act. The learned CIT required the assessee to furnish
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various information & details as mentioned at page 1 of the impugned order. In response, the President of the Trust attended the proceedings from time to time and furnished the written submissions. The learned CIT, however, refused the assessee- trust to grant registration observing as under : “A perusal of the objects mentioned in the Trust deed filed alongwith application for registration in form no. 10A reveals that they are too varied and some are for a particular religious community. The sub clauses (iii) to (xi) of the clause (4) of the Trust Deed read as under. iii. To Teach the Gospel (Good News) of Jesus Christ and the message of the Holy Bible by means of Radio broadcast, Literature distribution, Bible correspondence courses, Bible classes and other Educational medias. iv. To promote and to hold Bible meetings and conferences lo give information relating to the Christian faith. v. To establish and maintain Churches in order that Christians may have the opportunity to meet together for the worship of God, and that they may be instructed in the truths of the Bible. vi. To profess, practice and propagate the teachings of the Lord Jesus Christ and strengthen in the Truths of the Bible. vii. To practice the gospel of Jesus Christ the son of God who came to the world to serve people from iniquity. viii. To conduct baptism and marriage ceremonies in churches for the members of the Church.
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ix. To organize convention/outreach programs internally and utterly to preach about the savior of the world Lord Jesus Christ. x. The write more fruitful hooks from the real experience which derives from Christian life. xi. To believe and preach fully the Holy Bible comprising of all 66 hooks in Old Testaments and new Testaments. 3. A plain reading of the above clauses shows that the objectives of the trust are for the benefit of a particular religious community and Section 13(1)(b) of the I.T. Act. 1961 prohibits exemption/registration for those trusts/societies framed for the benefit of any particular community or caste. Placing reliance on the decisions of Hon’ble Madras High Court in the case of Gowri Ashram vs. Director of Income lax dated 29.04.2013 and Hon’ble Kolkata High Court in the case of Kedia Jatiya Sahayak Sabha and Fund Vs. CIT (1963) 49 1TR 74 (Cal.), the case cannot be considered for registration u/s 12A. Further Hon’ble Supreme Court has also delivered a decision in the favour of revenue in the case of Palhat Shadi Mahal Trust, 254 1TR 212. 4. In view of the foregoing discussion, I am not satisfied about the objects of the trust and the genuineness of its activities. Accordingly, registration is being refused to it.”
Aggrieved by the above order of ld. CIT, the assessee-trust is in appeal before the Tribunal.
During the course of hearing, the ld. AR of the assessee submitted that the Appellant is a Trust registered under the Indian Trust Act, 1882 under the name of "Pink Flowers Trust".
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The Trust was registered on 24th November 2011 at Dehradun. It was submitted that there are 40 objects of the Trust as defined in the Trust Deed out of which 31 objects are of a nature that they fall in the definition of Section 2(15) of the Income Tax Act,1961 viz. Relief to, the Poor, Education, Medical Relief, etc. and only 9 clauses of object No. 4 at serial no. (iii) to (xi) relate to advancement of Christian Religion and values. Presently, the appellant trust is running an Elementary Level School under the name of "Pink Flowers School" under the aegis of " Pink Flowers Trust" in Dehradun and the children in the school are admitted without any discrimination of the caste, colour and religion, on which no objection has been raised by the ld. CIT. All the details and documents were furnished before the ld. CIT. It was submitted that the ld. CIT was not justified in refusing registration stating that the Trust has been formed for the benefit of a particular religious community and the provisions of section 13(1)(b) of the Act prohibits exemption/registration for such trusts which are established for the benefit of particular community. The decisions relied on by the ld. CIT relate to forfeiture of exemption u/s. 4(3)(i) of 1922 Act (conforming to
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section 11(1) of 1961 Act. It was submitted that section 11 of the Act is no where connected with the grant/refusal of registration under Section 12AA. So also with respect to section 13(1)(b) which is applicable to such institutions who have been granted registration under Section 12AA and at the time of the assessment proceedings, it is found that the income of the institution is being applied for the benefit of a particular religious community, which situation does not occur in the present case. Reliance is placed on the following decisions :
(i). Kul Foundation vs. CIT (2015) 68 SOT 310 (ITAT Pune) (ii). Diocese of Pune(CN) vs. CIT 68 SOT 555 (ITAT Pune) (iii). CIT vs. Dawoodi Bohara Jamat, 364 ITR 31 (SC).
On the other hand, the ld. DR relied on the order of the ld. CIT and urged for its sustenance.
We have considered the rival submissions and have perused the entire material available on record. From the composite reading of objects of the Trust, we find that the assessee trust is not established solely for giving benefit to a particular religious community. Out of 40 objects of the Trust only one object No. 4
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and its sub-clauses, as mentioned by the ld. CIT, no doubt throw light on the benefit of Christian Community, but the ld. CIT has failed to give any comment on the other prime objects of the assessee trust, which are undisputedly for the purpose of charity for public at large. The ld. CIT has considered and resorted to the provisions of section 13(1)(b) of the Act, but he has not considered the fact that the provision of section enacts a bar to the availability of exemption under section 11 in respect of various incomes enumerated therein, meaning thereby that the provisions of section 11 are not applicable when the provisions of section 13 are attracted in a particular case. This section, however, does not lay any bar on granting of registration if it is found that the objects of the trust are charitable or religious. To be more clear, the provisions of this section is applicable while considering the exemption claimed by the assessee trust u/s. 11 of the Act at the assessment stage and not at the stage of granting registration u/s. 12AA. The ITAT Pune Bench in the case of Kul Foundation vs. CIT(supra) has held as under : “At the time of grant of registration, the powers of the CIT enshrined under section 12AA of the Act, provided that the CIT is to look into the objects of the Trust and the genuineness of its activities. Merely because, one of the objects of the Trust was for
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the benefit of upliftment of the Jain community as against the pre- dominant object of providing education by the Trust or the Institution, the issue arises whether the grant of registration under section 12AA of the Act could be denied to the assessee. We find no merit in the order of CIT in observing that the said benefit being provided to the Jain community would attract the provisions of section 13(l)(b) of the Act and the assessee therein would not be entitled to the claim of deduction under sections 11 and 12 of the Act and consequently, there was no merit in allowing the registration under section 12A of the Act. The allowability of the deduction under sections 11 and 12 of the Act is to be looked into by the Assessing Officer while completing the assessment in the hands of the assessee at the relevant time. Whether the said deduction under sections 11 and 12 of the Act is allowable or not to the Trust or the Institution by way of non-fulfillment of the conditions laid down in section 13(l)(b) of the Act is to be considered by the Assessing Officer while completing assessment in the hands of the assessee Trust or Institution, But the said violation by the Trust or Institution on account of provisions of section 13(l)(b) of the Act, if any, are not to be considered by the CIT while granting registration under section 12A of the Act.”
The ITAT Pune Bench again in the case of Diocese of Pune (CNI) vs. CIT in the similar circumstances held that ”when objects of Assessee trust reflect activities to be carried on for the purpose of specific religion and also for purpose of public at large, it cannot be held that same are meant for benefit of only specific religious community.”
6.1 Moreover, as is evident from the aims and objects of the assessee trust, it cannot be denied that the assessee trust has
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composite objects both charitable and religious, i.e., for upliftment of a particular religious community as well as for the welfare for the general public and therefore, in view of the decision of Hon’ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat (supra), the decision reached by the ld. CIT in the instant case is not justified and sustainable.
In view of the aforesaid decisions and in the facts and circumstances of the case, we are not inclined to support the order of the ld. CIT and we hold that the assessee-trust is eligible for registration u/s. 12AA of the Act. The ld. CIT is, therefore, directed to grant registration to the assessee trust.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 02.05.2017.
Sd/- Sd/- (Amit Shukla ) (L.P. Sahu) Judicial member Accountant Member
Dated: 02.05.2017 *aks*