FAIZAN E BURHANE MILLAT TRUST,JABALPUR vs. THE CIT EXEMPTION, BHOPAL

This appeal by the Assessee is directed against the order dated 07.02.2023 of Commissioner of Income Tax (Exemption), Bhopal passed u/s 12AA of the Income Tax Act whereby the application for registration was rejected. The assessee has raised following grounds of appeal:

ITANo.55/Ind/2023 Faizan E Burhane Millat Trust “1. The order appealed against is bad-in-law, void-ab-initio, barred by limitation, against the principles of natural justice and fair play, illegal and therefore liable to be quashed.

2. Without prejudice, the Ld. CIT Exemption, Bhopal erred in rejecting the application filed for registration u / s 12AB without considering the documents on records and facts and circumstances of the case.

2. The assessee is a trust registered under M.P. Public Trust Act 1951 vide certificate dated 06.09.2021. As per the deed of declaration of Trust dated 07.01.2021 there are 29 objects to be achieved by the assessee trust. The assessee applied for registration u/s 12AB vide application in form 10AB dated 09.03.2022. The CIT(E) denied the registration u/s 12AB of the Act while passing the impugned order on the ground that the assesse trust is a composite trust for religious and charitable purpose and the assessee has been established for the benefit of particular community/religion. Therefore, it was held that as per provisions of section 13(1)(b) of the Act the benefit of section 11 & 12 of the Act are not available to the assessee. Aggrieved by impugned order of CIT(E) the assessee has filed the present appeal.

3. Before the Tribunal Ld. AR of the assessee has submitted that the assessee trust is the Muslim Religious trust registered for promotion of Islam which is based on the five pillars namely; Profession of faith (shahada), prayer (salah), Alms (zakat), Fasting Page 2 of 18 ITANo.55/Ind/2023 Faizan E Burhane Millat Trust (Roza) & Pilgrimage (hajj). He has referred to the objects of the assessee trust and submitted that all these objects clearly manifested that the assessee is religious trust and therefore, the provision of section 13(1)(b) of the Act are not applicable in the case of the assessee. The objects of the assesse trust intend to promote the spirituality of Islam, encourage the religion of Islam to manage and administer religious education and therefore, all these activities are religious activities. The objects of the assesse trust are also to provide the scholarship to the students engaged in the Islamic studies and to promote the spiritual learning of Islam and to provide residential accommodation only for the Islamic missionaries coming from all over India with the object to support the religious activities of promotion of spiritual teaching of Islam. Ld. Counsel has submitted that all these objects of the assessee trust are completely religious in nature and hence, the assessee trust engaged in the religious activity. The CIT(E) has held that the assessee trust is a composite trust for religious as well as charitable purpose and therefore, the provisions of section 13(1)(b) of the Act are applicable. He has referred to para 49 of the judgment of Hon’ble Supreme Court in case of CIT vs. Dowoodi Bhohra Jamat 364 ITR 39(SC) and submitted that the Hon’ble Supreme Court after analyzing objects of the said trust held that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community. The Hon’ble Supreme Court has further observed that the objects of the said trust do not channel the benefits to any community if not the Dawoodi, Bohra, ITANo.55/Ind/2023 Faizan E Burhane Millat Trust Community and thus would not fall under the provisions of section 13(1)(b) of the Act.

3.1 Ld. Counsel for the assessee has further submitted that the Hon’ble Supreme Court has also considered earlier judgment in case of State of Kerala vs. M.P. Shanti Verma Jain (1998) 5 SCC 63 wherein it was held that the objects of the trust clearly shows that the trust is meant for propagation of Jain religion and rendering help to followers of Jain religion. Even medical aid and similar facilities are to be rendered to persons devoted to jain religion and to non-jains if suffering from ailments but the medical could be given to them only if any member of the families managing the trust, shows sympathy and is interested in their treatment. In the said case the Hon’ble Supreme Court has upheld the order of the Tribunal that the propaganda to religion and restriction benefit of the activities of the trust in its objects to the said community would render the trust as ineligible for claiming exemption under the similar provisions of Kerala Agricultural Income Tax Act. Thus, Ld. AR has submitted that when there is nothing in the object of the assessee trust to restrict the benefit of the activities of the trust to particular community the provisions of section 13(1)(b) are not application. He has relied upon the decision of Agra Bench of the Tribunal in case of Brij Vikas Trust 12 taxmann.com 95 and submitted that the Tribunal has held that merely alleging that Brij Chourasi Kos Marg was mainly used by the tourist who came for having Parikrama does not mean that the trust was wholly or substantially of religious nature relating to Hindu community. He Page 4 of 18 ITANo.55/Ind/2023 Faizan E Burhane Millat Trust has also relied upon the judgment of Hon’ble Delhi High court in case of CIT vs. Bhagwan Shree Laxmi Narayan Dham Trust 62 taxmann.com 358 and submitted that the Hon’ble High court has held that where the assessee trust was involved in imparting of spiritual education through lectures/samagam and in distribution of medicines and clothes to needy and destitute, the said activity could not be included in the broad concepts of Hindu Religious activity and thus anonymous donations received by trust were exempt from tax.

3.2 Ld. Counsel then referred to the decision of Bangalore Benches of the Tribunal in case of Shruti Parampara Gurukulam vs. ITO 150 taxmann.com 125 and submitted that it was held by the tribunal that propagation of vedic thoughts and philosophy cannot be attributed to any religion as same are more concerned with lifestyle of a human being. Ld. Counsel has also referred to the judgment of Hon’ble Gujarat High Court in case of CIT vs. Bayath Kutchhi Dasha Oswal jain Mahajan Trust 74 taxmann.com 199 and submitted that the Hon’ble High Court has held that apart from working for benefit of a certain religious communities, objects of assessee trust stipulated that it would rendered and run education centers, schools, colleges, hostels, training centers for creating awareness in common people and to make education available for public are in the nature of benefit of general public eligible for registration u/s 12AA of the Act.

ITANo.55/Ind/2023 Faizan E Burhane Millat Trust 3.3 Ld. Counsel then referred to the decision of Pune benches of the Tribunal in case of Brahman Sabha Karveer vs. CIT(E) 126 taxmann.com 172 and submitted that the Tribunal has held that the trust existed both for religious and non-religious objects could not be denied registration u/s 12AA merely because some of the objects were religious in nature. He has pointed out that the Pune Benches of the tribunal has followed the judgment of Hon’ble Supreme Court in case of CIT vs. Dowoodi Bhohra Jamat (supra). He then relied upon the decision of this tribunal in case of Dawat E- Islamic Chattisgarh vs. CIT(E) dated 22.09.2023 in ITANo.431/Ind/2022 and submitted that this tribunal has held that where the use of the terms Islamic world in the object and particularly the Islamic scholar would not epso facto lead to the conclusion that the assessee trust is created only for the benefit of specific religions community or cast in violation of the provisions of section 13(1)(b) of the Act. Thus, the Ld. Counsel for the assessee has submitted that the CIT(E) is not justified in denying the registration to the assesse and hence the impugned order of the CIT(A) be set aside and registration u/s 12AA be granted to the assesse.

4. To establish, maintain and aid institutions for training Theologians and Mubalighs (Islamic Missionaries).

5. To establish maintain and aiding institutions for the executions of research of Islam, Comparative Religious and Modern Ideologies.

6. To make arrangements for providing housing accommodations to the wafood and students.

7. To establish, found, build and assist, setup, maintain, manage, administer and run Masajid, Madaris, Jamiat, Darul Ufta. Darul Madina (Islamic System School), Religious Education Centre / institution and other like institutions to propagate Islam strictly in accordance with Qura'an and Sunnah as interpreted and practices by the beloved Prophet Hazrat Muhammad Mustafa (Sallal Laahu Alaihi Wassalam), his companions, his adults and Ulmae Ummat (eg) Imam Azam Abu Hanifa, Sheikh Abdul Haque Mohaddis Dehlvi, Moulana Fazle Haque Khairabadi and Moulana Ahmed Raza Khan of Brailvi etc.

5.1 As it is apparent from the objects of the assessee trust that some of the objects are religious in nature however there are many other objects like to make arrangement for providing housing accommodation to the wafood and students; to establish reading rooms community centers, libraries Reference/landing and publishing Islamic literatures; awarding scholarships and giving stipends to brilliant deserving and needy students engaged in the Islamic studies; to organize and manage ways and means for eradication of social and religious evils from the society; to take up scheme and projects for pollution’s control; planting trees and ITANo.55/Ind/2023 Faizan E Burhane Millat Trust health awareness program, to protest dowry system and to help the people in marriage, funeral and cremation of the dead body etc.

5.2 The above mentioned objects out of the total 29 objects of the assessee society are undoubtedly charitable in nature. Therefore, we agree with the view of the CIT(E) that the objects of the assessee trust are comprising of religious as well as charitable in nature. As it is apparent that some of the objects of the assesse trust are charitable in nature whereas the others are in the nature of providing activities completely religious in nature and also restricted to the specific community and to that extent objects of the assesse trust are religious purpose only. The object to make arrangement for providing housing accommodation to the wafood and students as well as awarding scholarships and giving stipends to brilliant deserving and needy students engaged in the Islamic studies cannot be restricted to a particular community as the students can be from any community pursuing the scholarship in the particular subject. Further to establish reading rooms, community centers, libraries reference/landing and publishing Islamic literatures is also activity which is not restricted only to a specific community but these facilities are available to all who are interested in learning and reading of Islamic literature. Further the activities to organize and manage ways and means for eradication of social and religious evils from the society is also charitable activity and not an activity for the benefit of specific community. Similarly to protest dowry system and to help the people in marriage, funeral and cremation of the dead body as well as the activities for Page 11 of 18 ITANo.55/Ind/2023 Faizan E Burhane Millat Trust pollution’s control, planting trees and health awareness program etc. are all the activities of promoting well-being of general public and are charitable in nature. The Hon’ble Supreme Court in case of CIT vs. Dawoodi Bohara Jamat (supra) has observed in para 30,36 & 38 as under:

“30.According to Section 2(15), the expression "charitable purpose" has been defined by way of an inclusive definition so as to include relief to the poor, education, medical relief and advancement of any other object of genera l public utility. A catena of decisions of this Court which have interpreted the said provision and especially t he expression "any other object of general public utility" have observed that the said expression is of the widest connotation. The word "general" in the said expression means pertaining to a whole class. (CIT v. Gujara t Maritime Board, (2007) 14 SCC 704). Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose. (CIT v. Ahmedabad Rana Caste Assn.) The said expression would prima facie include all objects which promote the wellbeing of the general public. It cannot be said that a purpose would cease to be charitable even when public welfare is intended to be served. 31.xxxxx 32.xxxxxx 33.xxxxxxxx 34.xxxxxxx 35.xxxxxx 36. In certain cases, the activities of the trust may contain elements of both: religious and charitable and thus, both the purposes may be over lapping. More so when the religious activity carried on by a particular section of people would be a charitable activity for or towards other members of the Page 12 of 18 ITANo.55/Ind/2023 Faizan E Burhane Millat Trust community and also public at large. For example, the practice of optional charity in the form of Khairat or Sadaquah under Mohammadan Law would be covered under both charitable as well as religious purpose. Further, while providing food and fodder to animals especially cow is religious activity for Hindus, it would be charitable in respect to non-Hindus as well. Similarly, service of water to the thirsty would find mention as religious activity in sacred texts and at the same time would qualify as a charitable activity. 37.xxxxxxx 38. Unquestionably, objects (c) and (f) which provide for the activities completely religious in nature and restricted to the specific community of the respondent-trust are objects with religious purpose only. However, in respect to the other objects, in our view the fact that the said objects trace their source to the Holy Quran and resolve to abide by the path of godliness shown by Allah would not be sufficient to conclude that the entire purpose and activities of the trust would be purely religious in color. The objects reflect the intent of the trust as observance of the tenets of Islam, but do not restrict the activities of the trust to religious obligations only and for the benefit of the members of the community. The Privy Council in Re The Tribune, 7 ITR 415 has held that in judging whether a certain purpose is of public benefit or not, the Courts must in general apply the standards of customary law and common opinion amongst the community to which the parties interested belong to. Therefore, it is pertinent to analyse whether the customary law would restrict the charitable disposition of the intended activities in the objects.” 5.3 After analyzing objects and activities of the said trust in case of CIT vs. Dawoodi Bohara Jamat (supra) the Hon’ble Supreme Court has come to the conclusion in para 41 as under:

“41.Therefore, the objects of the trust exhibit the dual tenor of religious and charitable purposes and activities. Section 11 of the Act shelters such trust with composite objects to claim Page 13 of 18 ITANo.55/Ind/2023 Faizan E Burhane Millat Trust exemption from tax as a religious and charitable trust subject to provisions of Section 13. The activities of the trust under such objects would therefore be entitled to exemption accordingly.” 5.4 Therefore, the objects of the trust manifest the dual tenor of religious and charitable purposes and activities were held to be entitled for exemption u/s 11 & 12 of the Act subject to the provisions of section 13(1)(b) of the Act. Hence, the applicability of the provisions of section 13 and particularly section 13(1)(b) would dependent on the fact whether a trust for charitable purpose is established for the benefit of any particular religious community of cast. The Hon’ble Supreme Court has held that even in case of trust having objects of both religious and charitable purpose it would be covered by provisions of section 13(1)(b) if the trust is establish for benefit of any particular religious community or cast in para 45 & 46 asunder:

“45.From the phraseology in clause (b) of section 13(1), it could be inferred that the Legislature intended to include only the 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, then 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. 46.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 established that such charitable purpose is not for the benefit of a particular religious community or caste. That is to say, it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large. (Sole Trustee, Loka Shikshana Trust v. CIT, (1975) 101 ITR 234 (SC)). The Page 14 of 18 ITANo.55/Ind/2023 Faizan E Burhane Millat Trust section of community sought to be benefited must be either sufficiently defined or identifiable by a common quality of a public or impersonal nature. (CIT v. Andhra Chamber of Commerce, 55 ITR 722).”

5.5 Therefore, in order to apply the provisions of section 13(1)(b) it is required to be examined whether such religious charitable activity carried on by the trust are only for the benefit of particular religious community or class or serves across the communities and for society at large. Finally, the Hon’ble Supreme Court has held in para 49 & 50 as under:

“49.In the present case, the objects of the respondent-trust are based on religious tenets under Quran according to religious faith of Islam. We have already noticed that the perusal of the objects and purposes of the respondent-trust would clearly demonstrate that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraphs, do not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of Section 13(1)(b) of the Act. 50.In that view of the matter, we are of the considered opinion that the respondent-trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that Section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby, it would be eligible to claim exemption under Section 11 of the Act.”

5.6 We have given our deep thought to the objects of the assessee trust and found that so far as the objects are charitable in nature ITANo.55/Ind/2023 Faizan E Burhane Millat Trust the activity of the assesse trust are not restricted to any particular community or cast but those activities are available for the public and society at large. Accordingly the provisions of section 13(1)(b) cannot be pressed into service to deny the benefit of exemption u/s 11 & 12 to the assesse trust. This tribunal in case of Dawat E Islami Chhatisgarh vs. CIT(E) in ITANo.431/Ind/2022 has considered the applicability of section 13(1)(b) in para 5 & 6 as under:

5. We have considered the rival submissions as well as relevant material on record. The CIT(E) has denied the registration to the assessee trust by citing the reasons that the assessee has not submitted any activity note which clarifies about the activities of the assesse. Only some photographs are produced by the assessee but nowhere the name of the assessee is shown in there and nature of activities carried out by the assessee. Secondly the CIT(E) observed that the objects of the assessee are not charitable as it is created for specific community and hit by section 13(1)(b) of the Act. The CIT(E) has given the finding in para 6 to 8 as under: “xxxxxxxxxxxxxxxxxxxxxxxx

5.7 Therefore, mere use of term Islamic world in the objects and particularly the Islamic Scholars would not epso facto lead to the conclusion that the assesse trust is created only for religious community or cast. The CIT(E) has accepted this fact in the impugned order that some of the objects of the assessee trust are charitable in nature but denied the benefit on the ground that one of the objects it is stated that to serve all Muslims through the expositions, propagation and implementation of the spiritual teaching of Islam and to create the love of Hazram Muhammad Mustafa in the hearts of every Muslim. These are only two of the objects and activities out of the total number of 29 objects and therefore, for bringing the case in the mischief of section 13(1)(b). It is to be considered that whether the non-religious objects which are charitable in nature are confined for the benefit of a particular religious community or cast. When the charitable objects of the assesse are not restricted the activities to a particular religious community or cast then it would not fall under the provision of section 13(1)(b) of the Act. Accordingly in the facts and circumstances of the case and by following the judgment of Hon’ble ITANo.55/Ind/2023 Faizan E Burhane Millat Trust Supreme Court we hold that the assesse is entitle for registration u/s 12AB of the Act. Hence, the impugned order of the CIT(E) is set aside with direction that the assessee be grant registration u/s 12AB of the Act.

Order pronounced in the open court on 20.03.2024.