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2014 (11) TMI 1220 - AT - Income TaxRegistration u/s 12A denied - denied the benefit of registration u/s.12A on the ground that some of the objects are not charitable in nature and mainly intended for the benefit of a particular religious community - HELD THAT - We find the Hon ble Supreme Court in the case of CIT Vs. Andhra Chamber of Commerce 1986 (3) TMI 1 - SUPREME COURT has held that an object beneficial to a section of the public is an object of general public utility. The expression General Public Utility however is not restricted to objects beneficial to the whole of mankind. To serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or even for persons living in a particular country or province. It is sufficient if the intention is to benefit a section of the public as distinct from specific individuals. We in the case of CIT Vs. Chandra Charitable Trust 2006 (7) TMI 96 - HIGH COURT GUJARAT has held that if the objects of the assessee trust are not only to propagate Jainism or help and assist maintenance of temple Sadhus Sadhvis Shraviks and Shravaks and other goals are also set out in the trust deed the trust is a charitable as well as a religious trust and section 13(1)(b) would not be applicable. We are of the considered opinion that the assessee trust is entitled to registration u/s.12A of the I.T. Act. We therefore set aside the order of the CIT and direct him to grant registration u/s.12A of the I.T. Act to the assessee trust. Grounds raised by the assessee are accordingly allowed.
Issues Involved:
1. Whether the objects of the trust are charitable in nature. 2. Whether the object clause 3(b) is prima-facie religious. 3. Whether the activities carried on by the trust are primarily meant for members of the Jain community, attracting the provisions of section 13(1)(b) of the Income Tax Act, 1961. 4. Whether the trust is eligible for registration under section 12A of the Income Tax Act, 1961. Detailed Analysis: 1. Whether the objects of the trust are charitable in nature: The CIT noted that some objects of the trust, such as arbitration in trade disputes and expansion of production of goods and services, were not prima-facie charitable. The CIT argued that these objects did not advance any general public utility and were not charitable in nature. The assessee countered by citing various judicial precedents, including CIT Vs. Andhra Chamber of Commerce and CIT Vs. Surat Art Silk Cloth Manufacturers Association, which held that objects beneficial to a section of the public are considered objects of general public utility. The Tribunal agreed with the assessee, stating that the intention to benefit a section of the public is sufficient for an object to be considered charitable. 2. Whether the object clause 3(b) is prima-facie religious: The CIT identified clause 3(b) of the Memorandum of Association, which aimed at "Universal Spiritual Upliftment as preached by Tirthankar Bhagwants," as religious in nature. The assessee argued that the object did not restrict the benefits to the Jain community alone and cited the Supreme Court decision in CIT Vs. Dawoodi Bohra Jamat, which held that objects reflecting religious tenets but not restricting benefits to a specific community are not solely religious. The Tribunal found that the trust's activities, although inspired by religious tenets, were not restricted to the Jain community and thus did not fall under the exclusive category of religious activities. 3. Whether the activities carried on by the trust are primarily meant for members of the Jain community, attracting the provisions of section 13(1)(b): The CIT observed that activities like the JITO Cricket Tournament were aimed at uniting the Jain community, suggesting that the trust was established for the benefit of a specific religious community. The assessee cited multiple judicial decisions, including those from the Supreme Court, which held that trusts with composite objects (both charitable and religious) do not attract section 13(1)(b) if the benefits are not restricted to a specific community. The Tribunal noted that the trust's activities, while benefiting the Jain community, were not exclusively for them and thus did not attract section 13(1)(b). 4. Whether the trust is eligible for registration under section 12A of the Income Tax Act, 1961: The CIT denied registration under section 12A, citing the non-charitable nature of some objects and the benefit to a specific religious community. The assessee argued that the trust's objects and activities were charitable and not restricted to the Jain community. The Tribunal referred to judicial precedents, including the Supreme Court's decision in CIT Vs. Dawoodi Bohra Jamat, which supported the assessee's claim. The Tribunal concluded that the trust's objects and activities were charitable and not exclusively for a specific community, making it eligible for registration under section 12A. Conclusion: The Tribunal set aside the CIT's order and directed the CIT to grant registration under section 12A of the Income Tax Act, 1961, to the assessee trust. The appeal filed by the assessee was allowed.
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