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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee Trust against the order of the Learned Commissioner of Income Tax (Exemptions), Chennai (hereinafter ‘the Ld.CIT(E)’), dated 30.03.2023, rejecting the application filed by the assessee for regular registration for five years u/s.12A(1)(ac)(iii) of the Income Tax Act, 1961, (hereinafter "the Act"). Santhome Charitable & Educational Trust :: 2 ::
2. The assessee trust is running Educational Institutuion and had applied for the first time registration u/s.12A(1)(ac)(vi) of the Act, and was granted for three years provisional registration u/s.12AB of the Act.
Thereafter, the assessee filed online application on 30.09.2022 for regular registration for five years u/s.12A(1)(ac)(iii) of the Act, which was processed by the Ld.CIT(E) and assessee was directed to file various documents for examining the genuineness of the assessee’s activities.
Pursuant to it, the assessee filed the Trust Deed and the Ld.CIT(E) on perusal of the same noted that the benefits of the Charitable Institution was mainly for the Christian students and therefore, he issued show cause notice (SCN) to the assessee dated 16.03.2023 which reads as under:
On perusal of the clauses 1 and 2 of VI, Aims and objectives in the trust deed dt: 07.04.2014 and your reply dt: 02.02.2023, a) it is seen that you have sought approval as a charitable institution whereas as per the clauses 1 and 2 of VI, you have mentioned that the benefits are mainly for the Christian students and Christian minority community without distinction of caste, race, community, color, creed and region only, though the word "irrespective of religion” has not been mentioned in the Trust deed. But in response to the query no: 20) C1) to the questionnaire, you have stated that the objects are not for benefit for any particular caste, creed, religion or community.
Please note that as per section 13(1)(b) of the IT Act, 1961, a charitable trust cannot be established or created for the benefit of any particular religious community.
3. In response, the assessee filed reply as under:
"... kindly note that the objects clause in the Trust Deed do carry the words for the benefit of Christian Minority but there is no clause which states that the benefit is exclusively for the Christian Minority. We are enclosing the details of student strength of the school since its inception and one can find that the Santhome Charitable & Educational Trust :: 3 :: number of Christian students is very low. Request your good selves to grant the registration as a charitable one. Or as a last resort, give us time to amend our Trust Deed accordingly so that we can get ourselves registered as a Charitable Trust".
However, the Ld.CIT(E) was not satisfied with the reply and he rejected the application Form No.10AB dated 30.09.2022 by holding as under:
9. The reply of the applicant was carefully considered. The applicant has stated that the object clause in the trust deed do carry the words for the benefit of Christian minority but there is no clause which states that the benefit is exclusively for the Christian minority. The applicant also produced the students strength of the school since inception and stated that the number of Christian students is very low and requested to grant registration.
The contentions of the applicant are not acceptable. In the trust deed dt: 07.04.2014, as per clause 1 and 2 of VI (Aims and Objectives), the benefits are mainly for the Christian students and Christian minority community without distinction of caste, creed, race, community, color and region. The applicant contention that there is no clause which states that the benefit is exclusively for the Christian minority is devoid of merits as the applicant has not added the word “religion" in beneficiary clause though no distinction will be made in the name of caste, creed, race, community, color and region etc has been mentioned. In the absence of the word "religions", it is implied that the benefits are for a particular religious community i.e Christian minority community in this case. As per section 13(1)(b) of the IT Act, a charitable trust cannot be established or created for the benefit for any particular religious community.
The number of Christian students are very low in the school is not a conclusive factor to determine that the beneficiaries does not belong to a particular religious community. Registration u/s.12AB on the IT Act is based on objects of the trust. As long as the beneficiary clause for Christian students and Christian minority community without distinction of caste, creed, race, community, color and region remains in the trust deed with the exclusion of the word "religion" registration u/s.12AB cannot be granted
10. In view of the above, the application in Form No.10AB filed by the applicant on 30.09.2022 cannot be processed as per the provisions of section 12AB of the I.T. Act, 1961.
Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is before us. Santhome Charitable & Educational Trust :: 4 ::
Assailing the action of the Ld.CIT(E), the Ld.AR submitted that the Ld.CIT(E) erred in cherry-picking few words/expessions from clause (i)
“especially for the members of the Christian minority community’, but omitted to see the words accompanying it i.e. ‘without distinction of caste, race, creed, colour or region and to perform work of charity and welfare services for the needy’. Further, according to him, a perusal of clause (ii) would reveals that the Ld.CIT(E) only noted the expression ”mainly for the benefit of Christian students” but missed the sentence following it “and also for other students irrespective of caste, race, creed, etc., more specifically, education of middle and lower income groups under privileged persons’. According to Ld AR, assessee was providing education to all children irrespective of religion/caste/creed etc and that assessee was able to demonstrate before the Ld.CIT(E) that Christian students in the educational institutions run by the Trust was comparitevely low when compared to other students of other religions and drew our attention to page 37 of PB; and submitted that registration u/s 12AB ought not to have been denied by Ld CIT(E) by reading the objects of assessee in isolation whereas, he should have read the objects of the assessee as a whole and cited the following judicial decisions to support his submission, which are noted as under: i. CIT(Ujjain) v Dawoodi Bohara Jamat - Superme Court of India 43 taxmann.com 243 ii. CIT v Christian Medical College - High Court of Punjab and Haryana 61 taxmann.com 68 Santhome Charitable & Educational Trust :: 5 :: iii. CIT v Chandra Charitable Trust - High Court of Gujarat - 156 Taxman 19 iv. Diocese of Pune v CIT - ITAT Pune - 57 taxmann.com 175 v. Amritsar Diocese of Believers Eastern Church y/ CIT (Exemptions) - ITAT Amritsar - 149 taxmann.com 182 And moreover, it was pointed out by the Ld AR that the assessee sought time from Ld CIT(E) to amend Trust Deed, which request was declined and that Ld CIT(E) hurridely passed the impugned order. Therefore, he pleaded that if an oppurtunity is given, assessee would amend its Trust Deed.
Per contra, the Ld.CIT-DR reiterated the Ld.CIT(E)’s objections for granting registration and cited sec.13(1)(b) of the Act as well as Explanation-2 in Sec.13, which carves out an exception only for schedule castes, backward classes, scheduled tribes or women, children; and emphasized that exception is not applicable for Christian students and cited the decision in the case of "Buxar Diocesan Society v Commissioner of Income Tax, Patna" [2015] 62 Taxmann.com91 (Patna- Trib), wherein, it was noted that "membership was restricted to Priests incardinated in Diocese of Buxar and member of religious order/ congregations’’.
Therefore, the Tribunal held that it was established or formed for benefit of a particular religious community, i.e., Christian Community and hence section 13(1)(b) was applicable, therefore Registration was rightly denied". According to Ld DR, the case laws relied by assessee Trust are distinguishable and not applicable to the facts of assessee’s Santhome Charitable & Educational Trust :: 6 :: case.According to Ld DR, the case laws submitted by the assessee trust in its paper book, in Page 41 and Page 55, were rendered for "Religious Trusts" in contra-distinction to the fact of the present assessee being a Charitable Trust and not Religious Trust. Therefore, Ld DR submitted that the cited decisions do not apply to the assessee's case i.e, Santhome Charitable Trust which is seeking registration under the head purely "Charitable Trust". Similarly in the case relied by the assessee trust referred in its paper book page 57, it was submitted that in that case the "Ambulance facility" was available to all, therefore, ITAT held it to be "Charitable cum Religious trust" and directed, registration be given. Thus according to Ld DR, the case laws relied upon by assessee Trust cannot come to the aid of assessee because the main objective of those trust was NOT exclusively charitable in nature, but they were religious in nature.
However, in the present case under appeal the main objective is Charitable in nature, but favoring "Christians" and therefore Ld CIT(E) rightly rejected the application for registration and does not want us to interfere with the action of Ld CIT(E).
We have heard both the parties and perused the material available on record. The assessee is a Trust, which was formed on 07.04.2014 with the following objectives:
The main aim and objectives of the Santhome Charitable and Educational Trust is as same as to take up education, social and economic development, social service Santhome Charitable & Educational Trust :: 7 :: and social welfare and health care, program in all parts of India and to work for the welfare of the people, irrespective of caste, creed, colour, sex or region and the specific objectives of the Trust shall be as under:-
To work for economic, social and educational development and upliftment of people in India such as the women, children, small farmers, laborers, disabled people, tribal and under privileged groups and artisans in rural areas and urban slums as well as poor people and indigent persons, especially for the members of Christian minority community, without distinction of caste, race, community, color, creed or region and to perform work of charity and welfare services for the needy.
To promote education, training and research in the country mainly for the benefit of Christian students and also for other students irrespective of caste, creed, race etc. more specifically education of middle and lower income groups and also to collaborate with organizations at national and international level and to take up research on service projects for the above said categories of underprivileged persons.
To establish education centers, training centers, schools, residential schools, colleges, industrial and technical training institutes, libraries, research centers. and to organize distance education programmes, literacy programmes and to print and publish books, periodicals, journals, newsletters, magazines and audio-visual aids and documentaries for the promotion of the objects/objectives of the Trust and to promote sports training, sports events and sponsorships.
The assessee’s Trust is running Educational Institutions but did not apply for the registration, and for the first time it sought provisional registration u/s.12A(1)(ac)(vi) of the Act, and was granted provisional registration u/s.12AB of the Act, for three years. Thereafter, the assessee filed online application on 30.09.2022 for regular registration for five years u/s.12A(1)(ac)(iii) of the Act, and the same was rejected on the ground that it was constituted mainly for the benefits of Christian students/Christian minority community; and therefore, the registration was denied by the impugned order dated 30.03.2023. We note that the assessee is a Charitable Trust and if it is created for the benefit of any particular religious community or caste, then it would fall foul of Santhome Charitable & Educational Trust :: 8 ::
sec.13(1)(b) of the Act. Be that as it may be, we are not entering into various arguments that has been raised before us by both the parties, since, the assessee has expressed in its reply (supra) to the Ld.CIT(E) that “or as a last resort given to us time to amend our Trust Deed accordingly, so that we can get ourselves registered as Charitable Trust”.
Therefore, without expressing anything about the merits of the impugned action of Ld CIT(E), we set aside the impugned order of the Ld.CIT(E) and restore the application back to his file, with a direction to give an opportunity to the assessee to amend its Trust Deed as requested (supra); and the Ld.CIT(E) to consider the registration afresh for registration for five years. Needless to say that assessee-Trust be given an opportunity of hearing; and the assessee to file amended Trust Deed if advised to do so; and the Ld.CIT(E) to decide the issue on merits in accordance to law.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 30th day of May, 2024, in Chennai.