DAWAT E ISLAMI,RAIPUR vs. THE CIT ( EXEMPTION ) BHOPAL, BHOPAL

Ld. AR has also relied upon the judgment of Hon’ble Supreme Court in case of CIT, Ujjain vs. Dawoodi Bohra Jamat 43 Taxmann.com 243 (SC). Thus, Ld. AR has submitted that the Hon’ble Supreme Court has held that religious trust is entitled for exemption u/s 11 & 12 of the Act which are substantive provisions provided for exemption available to a religious or charitable trust. Therefore, income derived from property held by such public trust as well as voluntary contributions received by the said trust are the subject matter of exemptions from the taxation under the Act. Dawat E Islami Page 3 of 7 Section 12A & 12AA contemplates the procedural requirements for making an application to claim exemption u/s 11 or 12 by the assesse. Thus, the Ld. AR has submitted that the provisions of section 13(1)(b) are not applicable in the case of the assesse which is purely religious trust. The CIT(E) itself has accepted the fact that the assesse is a public religious trust and accepted some of the objects as religious but other objects are treated as charitable in nature. The mere mentioning of word “ Islamic World in the objects does not established that the assessee trust is created only for the benefit of particular community or the activities to be carried out outside India. He has also relied upon the following decisions:

On the other hand, Ld. DR has submitted that after considering the objects of assesse trust the CIT(E) has pointed out that the assessee trust is created for benefit of particular religious community and further the assessee has not carried out any activity of charity as pointed out by the CIT(E) in para 3 of the impugned order. He has further submitted that the assessee has not explained as to why the provisions of section 13(1)(b) are not applicable in the case of the assessee. He has relied upon the impugned order of the Ld. CIT(E).

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 Page 3 of 7 Dawat E Islami Page 4 of 7 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:

The assessee has objects which allow the assessee to carry out activities outside India and also there is no such restriction for Muslim communities of outside India being beneficiary.

Hence, the assessee is not eligible for registration U/s 12AB of the Act.

Further, as per Section 12AB(1)(b)(i)(B) of the Act; "12AB. (1) The Principal Commissioner or Commissioner… (a) where the application is made….. (b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of the said clause- (i) call for ..... (i) after satisfying himself. (A) pass an order.......... (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard" 8-- Considering the facts of the case, the application of the assessee filed in Form 10AB for grant of registration u/s 12AB of the Act is hereby rejected and the provisional registration/approval u/s 12AB in Form 10 AC vide URN No. AADTD7213RE20211 dated 06.10.2021 granted by CPC is also hereby cancelled.”

The first objection of the CIT(E) is regarding no expenditure in respect of charitable activities was shown in the profit and loss account. The second objection is regarding some of the objects of the assessee trust are religious in nature and some are charitable and therefore, the provisions of section 13(1)(b) are attracted. It appears that the CIT(E) has selected some of the objects without considering overall objects of the assessee trust. The assesse has clearly explained that it was first year and the assessee yet to start the activities and in the subsequent years the assesse has carried out the activities which are charitable/religious in nature. Accordingly in the facts and circumstances of the case we find that the activities carried out by the assessee in the subsequent years are Page 5 of 7 Dawat E Islami Page 6 of 7 required to be verified in order to satisfy himself by the CIT(E) to decide whether objects and activities of the assessee are charitable/religious in nature or not. Further mere use of the terms Islamic world in the objects and particularly the Islamic Scholars would not epso facto lead to the conclusion that the assessee trust is created only for the benefit of specific religious community or cast in violation of the provisions of section 13(1)(b) of the Act. The Overall objects of the assessee trust as well as activities carried out by the assessee trust are required to be taken into consideration in the light of various judgments relied upon by the assessee including judgment of Hon’ble Supreme Court in case of CIT, Ujjain vs. Dawoodi Bohra Jamat (supra). Accordingly in our considered opinion this matter requires reconsideration after proper verification and examination of the relevant facts in the light of the above observations. Hence, the impugned order is set aside and the matter is remanded to the record of the CIT(E) for reconsideration of registration application of the assessee after giving an appropriate opportunity of hearing to the assessee.