2014 (12) TMI 250 - AT - Income Tax

Refusal to grant registration u/s 12A – Activities not commenced – Whether the Trust or institution should have been established either for religious or charitable purpose and it cannot have mixed objects - Held that:- As decided in assessee’s own case for the earlier assessment year, on the earlier occasion, DIT(E) had rejected assessee’s application solely for the reason that assessee has not commenced its activities - DIT(E) never raised any issue with regard to mixed objects of the appellant trust – it was clearly mentioned that prima-facie objects of the appellant trust were of charitable nature - DIT(E) has found a new reason to deny registration to assessee by stating that as per section 11(1)(a) of the Act, a Trust or institution should have been established either for religious or charitable purpose and it cannot have mixed objects – DIT(E) accepts the fact that objects of the trust are charitable in nature - relying upon Commissioner of Income Tax Versus M/s. Dawoodi Bohara Jamat [2014 (3) TMI 652 - SUPREME COURT] wherein it has been held that in certain cases activities of the trust may contain elements of both religious and charitable and thus, both the purposes may be overlapping - when the religious activity carried on by a particular section of people would be a charitable activity for or towards other members of the community or also public at large.

A trust/institution having charitable and religious objects will be eligible for exemption u/s 11 unless hit by restrictions imposed u/s 13(1)(a) or 13(1)(b) of the Act - DIT(E) has not brought any material on record to show that provisions of section 13(1)(a) or 13(1)(b) applies to the assessee, denial of registration u/s 12AA for alleged violation of section 11(1)(a) is not justified - applicability of section 13 of the Act can be looked into by the AO at the time of assessment proceedings and not by DIT(E) while exercising power u/s 12AA of the Act – thus, the order of the DIT(E) is set aside and direct him to grant registration to the appellant trust u/s 12AA of the Act – Decided in favour of assessee.