2004 (10) TMI 299 - AT - Income Tax

Summary

Issues:
Registration under section 12A of the Income Tax Act for a trust primarily focused on Jainism and charitable activities.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the registration of a trust under section 12A of the Income Tax Act, 1961. The trust, Shri Shantinath Jain Mandir Pedhi, Bheswara, applied for registration, but the Commissioner concluded that since the trust was formed mainly for the advancement of Jainism, it fell under section 13(1)(b) of the Act, which restricts exemption for trusts established after the Act's commencement for the benefit of a particular religion. The assessee challenged this decision. The Authorized Representative relied on the trust's objects and section 13(1)(b), arguing against the Commissioner's finding. The Income Tax Appellate Tribunal (ITAT) examined section 13(1)(b) and found no prohibition for religious institutions to register under section 12A. The ITAT noted that the trust's main object was charitable, citing a Gujarat High Court decision that trusts for charitable or religious purposes are not debarred from registration. Additionally, a Madras High Court decision emphasized that registration only requires a timely application and audited accounts, not an inquiry into the trust's objects. The ITAT found the Gujarat and Madras High Court decisions applicable to the present case, with no contrary decisions presented by the Department.

Furthermore, the ITAT referenced a Madras High Court decision where it was held that a society's religious nature does not disqualify it from seeking registration under section 12A. The ITAT disagreed with the Commissioner's view that religious aspects must be removed for consideration, emphasizing that income application need not be determined at the registration stage. The rejection of registration based on religious nature was deemed unjustified. The ITAT also addressed the Commissioner's contention that the Gujarat High Court decision was not binding in Rajasthan, asserting that jurisdictional High Court decisions are binding for consistency. Consequently, the ITAT directed the Assessing Officer to grant registration to the trust under section 12A, overturning the lower authorities' decisions and accepting the assessee's appeal.