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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
This appeal has been filed by the assessee against the order dated 30.05.2018 passed by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh (hereinafter referred to as the CIT(Exemption), challenging
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT therein rejection of its application for registration u/s 12A of the Income Tax Act, 1961.
2. The assessee has raised the following grounds of appeal:
“1. That the order passed by the Commissioner of Income Tax (Exemptions), Chandigarh, u/s 12AA(l)(b)(ii) of the IT Act, 1961, therein refusing to grant the registration is against the facts of the case and is untenable in law.
2. That no proper & reasonable opportunity of being heard was allowed before refusing to allow the registration u/s 12AA(l)(b)(ii) of the IT. Act, 1961. As such, the order passed is bad in law and the same is liable to be cancelled.
3. That the Ld CIT(E) failed to appreciate that this trust was created for charitable purpose only and as such the order passed by the Ld CIT(E) therein refusing to grant the registration is liable to be cancelled.
4. That the Ld CIT(E) failed to appreciate that at the time of granting the registration, the worthy CIT(E) has to examine the only objects & genuineness of activities of the trust. It is submitted that genuineness of the trust and the activities of the trust are not doubted and as such the registration should have been granted.
5. That merely on the basis of conjectures, surmises and suppositions the registration u/s 12AA cannot be rejected.
6. That it is prayed that the CIT(E) Chandigarh may be directed to allow the registration as claimed by the trust especially when all the formalities were completed and there was no reason and occasion for denying the registration. As such the registration claimed may be allowed.
7. Any other ground of appeal which may be urged at the time of hearing of the appeal.”
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT 3. The appellant assessee trust filed an application for registration under section 12AA on 08/11/2017 seeking registration u/s 12AA of the Income Tax Act, stating therein that the Trust was an ongoing entity in operation since, 07/05/2016.
The CIT(Exemption) by an order dated 18.09.2018 rejected the application inter alia observing that the intent of the trust seems to be merely expansion of religious structures. The applicant clearly does not carry the character of an entity with charitable intent and that entire expenses incurred on activities that could actually be termed as charitable is a mere one percent of the total receipts. The CIT (exemption) also observed that the ownership of the Masjids/trusts whose control & management are sought to be taken over needed to be clearly established which regrettably has not been done. Specific resolutions and their registration by the competent authorities, wherever applicable, in case of these entities need to be in place. There is no evidence, in case the ownership can't be established, whether the same have become public property and whether there is a permission/go-ahead from the J&K state government since alienation of land rights and ownership is guided by special provisions endemic to the state and its special status. In view of the Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT above, the activities of the applicant trust cannot be termed to fall under the category of "charitable purpose”.
4.1 The Ld. CIT(E) further observed that large scale cash transactions during the first year of its formations pose a dent on the claimed charitable intent of the applicant trust given that the F.Y. coincided with the period of demonetization. It is also toe case that practically the entire income (being claimed to be exempt) is unverifiable and not amenable to scrutiny; that making donations to some other entity and spending public money received through donations (mostly in cash) towards construction works for various entities like Masjids etc. do not fall in any of the categories of charitable purpose under, section 2(15) of the Act; that even if the claims of the trust of having undertaken these activities are accepted, the amount spent on these activities is very meagre for an entity having receipts in the tune of Rs. 2.0 crores. It shows that the main focus of the applicant trust is on expansion of its assets rather than using the donation receipts for charitable purposes that benefit general public and that there was no evidence, in case the ownership can't be established, whether the same have become public property and whether there is a permission/go-ahead from the J&K state government since alienation of land rights and ownership is guided by special provisions endemic to the state and its Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT special status. In view of the above, the activities of the applicant trust cannot be termed to fall under the category of "charitable purpose" and
5. The Ld. Counsel for the assesse submitted that the order passed by the Commissioner of Income Tax (Exemptions), Chandigarh, u/s 12AA(l)(b)(ii) of the IT Act, 1961, therein refusing to grant the registration is against the facts on record as the trust was created for charitable purpose only and that the Ld CIT(Exemption) failed to appreciate that at the time of granting the registration, he has to examine the only objects and genuineness of activities of the trust and that the worthy CIT(Exemption) has not doubted the objective and genuineness of activities of the trust and mere conjectures, surmises and suspicion about the activities of the trust being doubted is not sufficient to refuse the registration sought for by the applicant. The counsel prayed that the CIT(E) Chandigarh may be directed to allow the registration as claimed by the trust especially when all the formalities were completed and there was no reason and occasion for denying the registration. The Ld. AR filed a brief synopsis, a paper book of relevant document and case laws in support of the contention. The relevant part of the synopsis is reproduced as under:
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT 1. Hazarat Sain Baba Miran Baksh R H The Holiest "Sufi" "Saint" and the greatest Apostle of Islam in Poonch established the holy shrine in the name of Sain Miran Baba Darvesh Ghulam Qadir Shrine as the spiritual centre of devotion and symbol of inspiration to the seekers of Truth and Perfection. Lakhs of Pilgrims and Devotees without distinction of caste and creed from all over the country and abroad pay their respects at the Holy Shrine with their heart felt desires and cherished wishes and return brimful with the fruition of their inner aspirations. The Shrine is situated 250 Kms from Jammu and 180 Kms from Srinagar.
The Trust was formed on 7.5.2016 and registered by the Sub-Registrar Poonch. The Trust Carried out the under noted activities.
The Trustees of the Trust has taken over the Corpus/Capital Fund of Rs.408.85 lacs and the fixed and Current assets, loans & advances alongwith Closing balance of Imprest Bank balances and TDR/CCR as on 31.3.2016 of Rs.408.85 lacs details of which are given in Para 1(c) of reply dated 13.9.2017.
4. The Trust is presently maintaining and running the under noted Institutions whose names and adresses are as under:
i) Ziarat Sharief Guntrian, Tehsil Haveli, Poonch. ii) Ziarat Sharief Takia, Bandi Chechian, Tehsil Haveli, Poonch. iii) Gundi Masjid, Tehsil Haveli, Poonch. iv) Jamia Masjid Sharief Guntrian, Tehsil Haveli, Poonch. v) Mia Wazirni Ziarat, Allapur, Poonch. vi) Masjid Sharief, Houndi Shahpur, Poonch. vii) Masjid Sharief Takia, Bandi Chechian, Tehsil Haveli, Poonch.
The Main objects of the Trust include the following:- Relief to the poor, Education, Medical Relief and advancement of any a. other general public utility. b. To fulfill of its objects, the trust has presently undertaken the under noted objects:-
i) Relief to the poor- The Trust has spent Rs.1,99,160/- for relief to the poor and needy persons and students pursuing education. ii) Medical Relief- The Trust has spent Rs.1,89,959/- for Medical Relief to patients of cancer, operation of brain and other illness.
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT iii) Advancement of any other general public utility- The Trust has paid donations of Rs.18.32.285/- to various Masjid for the welfare and usefulness of the General Public.
The Trust has also constructed various Masjids at Various places for the c. welfare and usefulness of the general public and spent on constructon works as under:-
Particulars Amount i) Gundi Masjid, Tehsil Haveli, Poonch. 2,11,050/- ii) Jamia Masjid Sharief Guntrian, Tehsil Haveli, Poonch. 90,600/- iii) Mia Wazirni Ziarat, Allapur, Poonch. 54,804/- iv) Masjid Sharief, Houndi Shahpur, Poonch. 1,06,635/- v) Masjid Sharief Takia, Bandi Chechian, Tehsil Haveli, Poonch. 24,19,781/- Total 28,82,870/- d. The Trust has also made addition to the undernoted Ziarats for the Welfare and usefulness of the general public and spent on construction work as under :-
Particulars Amount
Ziarat Sharief Guntrian, Tehsil Haveli, Poonch 32,46,170/- i) ii) Ziarat Sharief Takia, Bandi Chechian, Tehsil Haveli, Poonch 41,15,140/- Total 73,61,310/-
It is apparent from the above that all the activities are charitable in nature and covered under Section 11,12 & 13 read with Section 2(15) of the Income Tax Act 1961. Therefore the specific limb u/s 2(15) of the Income Tax Act for charitable activities fall under:- i) Relief to the poor ii) Medical Relief and iii) Advancement of any other general public utility.
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT In support he placed reliance of on Jurisdictional Punjab and Haryana High Court in the cases of CIT(E), Chandigarh vs. Shirdi Sai Darbar Charitable Trust in of 2017 dated 27/03/2017 and CIT(E) vs. Shri Mahaveer Jain Society (Regd.) in ITA No. 670, 671 (ASR)/2015, dated 11/09/2017 and that of Ananda Social & Educational Trust v. CIT [2020] 114 taxmann.com 693/272 Taxman 7/426 ITR 340 (SC).
The Ld. DR supported the impugned order. However, he has not controverted the fact that CIT(E) has not disputed the charitable nature of objects and genuineness of the activities of the Trust except that the applicant clearly does not carry the character of an entity with charitable intent as it is running religious mosque with hardly charitable activity.
We have heard both the sides, perused the record, written submission and the impugned order. Admittedly, the CIT(E) has not disputed the objects and the genuineness of the activities in consonance to
It is evident from the record that inter alia the primary object of the trust was undoubtedly for a charitable purpose as per Trust Deeds dated 08/03/2000 which merged in the new remodel deed dated 07/05/2016 (APB Pgs. 196 to 223). The CIT(E) is required to read and examine each of the Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT activities and incidental objects along with primary object of the trust. The stated objects of the trust are construction and maintenance of mosque for the benefit of the public, construction and running of Madarsas, Mektabs, Schools, colleges, education institutions, free dispensaries, Centres for poor feeding and homes for the aged for the benefit of the public including home for orphan and destitute and helpless women, providing for grants,, scholarships, fellowships and other forms of financial assistance to the needy and deserving students for pursuing education, vocational training, skill development etc., destitute persons, granting of financial assistance to any educational institution for granting scholarships, prizes, medals, awards for excellence in studies, sports and scientific research, distribution of books and note books for poor and deserving students, establishment, conduct, maintenance of clinical laboratories, hospitals, nursing homes, dispensaries and institutions of similar nature and providing financial assistance to the deserving persons for medical treatment, in any medical institution, providing financial assistance for performing and feeding the poor directly and through other institutions, providing for or contributing to education and scientific research and development etc.
The learned AR argued that the necessary details of total receipts of donations by way of cheque in cash book filed before the assessing officer
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT for verification, (APB page 6). The AR argued that the assessee trust is not engaged in any business or trading activity. It is therefore irrelevant doubt the mode of receipt of donations during the period of demonetization from the outsiders, being in conformity to the practice year to year. The learned AR further submitted that the details of the amount spent on construction having been furnished in the regular course before the authorities below; that multiple charitable activities are being carried out from these masjids, such as medical relief to needy poor people, widow ladies, free education food burgers and free accommodation to the student from poor families which are covered within the meaning of section 2(15) of the act. The learned counsel further argued that the appellant trust is engaged in the activity for a noble cause for the betterment of public by serving the society at large. The counsel argued that the learned CIT exemption did not appreciate that only two things are required to be examined while granting registration that is charitable objects within the meaning of section 2(15) and the activities in consonance to these objectives of the trust. In support he placed reliance on the judgement of Jurisdictional High Court, as above.
The Ld. CIT (E) raised objection to cash transactions during the first year of its formations coincided with the period of demonetization as dent to claim charitable intent of the applicant trust for the financial Year under Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT consideration and that use of donation money in construction works for various entities like Masjids etc. do not fall in any of the categories of charitable purpose under, section 2(15) of the Act. However, he is admitting the facts of charitable activity, the amount spent on of course to extent of meager amount to the gross receipts. In our view the Ld. CIT (E) has not appreciated the facts on record that the applicant trust was on expansion of its assets to meet the undisputed objectives proposed in the Trust deed for the benefit of general public at large and that the question of establishing ownership whether the same have become public property and whether there is a permission from the J&K state government since alienation of land rights and ownership is guided by special provisions have no bearing on the objects and activities of the Trust under, special status. Under the circumstances, the activities of the applicant trust can be very well said to be termed to fall under the category of "charitable purpose" and so we do not concur with the observation of the Ld. CIT(E), Chandigarh.
The Hon’ble Jurisdictional Punjab and Haryana High Court in the cases of ‘CIT(E), Chandigarh vs. Shirdi Sai Darbar Charitable Trust’, (Supra) has held as under: The matter has been examined by the Tribunal after perusing the relevant statutory provisions. It has been categorically recorded by the Tribunal that the Commissioner (Exemptions) has to satisfy two conditions while granting
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT registration under section 12AA. Firstly, whether the objects of the assessee are charitable in nature and, thus, the activities are genuine. It cannot be concluded on the basis that the assessee has not filed its income tax returns in earlier years that the activities of the assessee are not genuine. It has been further recorded that section 13 comes into play at the time of granting exemption under section 11 and not at the time of granting registration under section 12AA. No adverse remarks have been recorded by the Commissioner (Exemptions) with regard to the objects contained in the memorandum of the assessee-trust to come to the conclusion that its activities are not genuine. Thus, it has been rightly directed by the Tribunal to the Commissioner (Exemptions) to grant registration under section 12AA. [Para 4]
The Hon’ble Apex court in the case of ‘Ananda Social & Educational Trust v. CIT ‘, (Supra) held as follows:
Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. [Para 9] The purpose of section 12AA is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine. [Para 11] Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, it is viewed that the term 'activities' in the provision includes 'proposed activities'. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. In contrast, the Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT position would be different where the Commissioner proposes to cancel the registration of a Trust under sub-section (3) of section 12AA. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust. [Para 12]
The Income Tax Act provides for exemption of income of charitable institutions under section 12AA of the Act and the section 2(15) of the Act defines the expression 'charitable purpose' and includes the relief of the poor, education, yoga, medical relief, reservation of environment (including water sheds, forest and wild life) and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility. It is well settled law that where the purpose of a Trust is help to poor, medical relief, and advancement of objects of general public benefit/utility at large, the requirement of definition of 'charitable purpose' would be satisfied even if an activity of profit is carried on in the course of actual carrying out of the primary purpose of the Trust or the Institution. If a Trust's claim for charitable purpose is covered under the head of 'advancement of any other object of general public utility'. The question would arise whether the purpose of Trust or Institution involves the carrying on of any activity of profit. However, it would not be relevant as Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT in the present case of the assesse Trust where the objects of the Trust comprise of relief of the poor, education or medical relief, etc.
We understand that the Section 12A of the Act provides for procedure for registration. The Commissioner of Income-tax is required to satisfy himself about the objects of the Trust and genuineness of its activities and has to grant registration only if it is so satisfied. The scope of examination is confined in ascertaining whether the Trust is constituted genuinely for carrying on charitable activities or whether it has the capacity to carry out its professed objects. It is also well settled legal proposition that at the time of grant of registration, Commissioner of Income-tax is not required to examine the application of income and has to examine whether the objects of the Trust are charitable and whether the application is made in consonant with requirements of section 12AA of the Act read with rule 17F of the Income-tax Rules. The genuineness of the activities of the Trust is not a matter to be looked into at the time of dealing with the issue of registration of the Trust under section 12AA of the Act.
From conjoint reading of the Trust Deed, it is axiomatic that primary purpose/objects of the assessee enumerated in the Trust Deed are charitable in nature (APB Pgs.4 to 6). The other clauses of the Trust Deed
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT had to be necessarily read in the context of the aforesaid clauses. Even otherwise, the activities of the assessee as set out in the Trust Deed are covered within the ambit of charitable purpose being primarily for medical help and relief to poor besides imparting value addition to general public through spiritual teaching and education from madrasa and masjids. The aforesaid activities in consonant to objectives of the trust has not been disproved by the Ld. CIT(Exemption). Therefore, the issue with regard to the activity of the assessee being not that of commercial or business in nature, the issue of cash transaction cannot be gone into at the time of consideration of the application under section 12AA of the Act.
In the backdrop of the aforesaid discussion, respectfully following the Hon’ble Jurisdiction High Court we hold that the order of the CIT(E) is perverse to the facts on record. We further hold that there was no material on record to hold that objects of the trust were either not charitable in nature or its activities were not genuine. Therefore, CIT(Exemption), Chandigarh is directed to grant the registration u/s 12AA of the Act to the appellant trust from the date of application.
Sain Miran Baba Darvesh Ghulam Quadir Trust v. CIT 17. In the result, the appeal filed by the assesse is allowed.
Order pronounced in the open court on 20.10.2022 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr/PS/ Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T.