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2015 (7) TMI 1024 - ITAT HYDERABAD

2015 (7) TMI 1024 - ITAT HYDERABAD - TMI - Grant of registration u/s. 12AA rejected - consequent rejection of approval u/s. 80G(5) - Held that:- Trust/institution having charitable and religious objects will also be eligible for exemption u/s. 11, unless hit by restrictions imposed u/s. 13(1)(a) or 13(1)(b) of the Act. The DIT(E) has not brought any material on record to show that provisions of Section 13(1)(a) or 13(1)(b) applies to assessee, denial of registration u/s. 12AA for alleged violati .....

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ion to the appellant-trust u/s. 12AA of the Act from the period it applied for registration. See Shiva Shakthi Shiridi Sai Anugraha Mahapeetam Versus Dy. Director of Income-tax (Exemptions), Hyderabad [2014 (12) TMI 250 - ITAT HYDERABAD]

Since the DIT(E) refused approval u/s. 80G only on the reason that registration u/s. 12AA was denied to assessee, we direct the DIT(E) to examine the application and grant registration u/s. 80G, if other conditions are satisfied. - Decided in favour o .....

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ction of approval u/s. 80G(5) of the Act. 2. Assessee filed appeal No. 1263/Hyd/2013 against the order of 12AA raising grounds both on 12AA registration and also rejection of 80G with 3 days delay. This delay was explained as misplacement of order of DIT in the office of assessee at Ramayampet by the staff and consequent to delay in filing in appeal in Hyderabad with 3 days delay. Considering the explanation of assessee, the delay in filing the appeal is condoned. ITA No. 1799/Hyd/2014 is howeve .....

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d was granted and accordingly this appeal is also admitted. 3. Briefly the facts are, assessee claiming itself to be a charitable trust created vide registered deed with a registration No. 722/09, filed application seeking registration u/s. 12AA of the Act before the Ld. DIT(E) in the prescribed manner on 18-12-2012. In the course of scrutiny, the DIT(E) has issued a questionnaire on 06-03-2013 asking assessee-society to furnish details on specific points, to produce all original documents of tr .....

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for propagations of Dharmic values to help establish new temples wherever necessary and to take all necessary steps for enabling proper management and administration of temples and their properties. Xiv. To promote Dharmic awakening and patriotism through festivals, jatharas etc and organizing social bhajans plays, dramas, group songs and other culture activities and to organize social and Dharmic lectures for propagation of Dharmic values". 4. During the course of proceedings, the Presiden .....

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ying on various case law as recorded in the order, the DIT held that the trust can not be allowed registration under the Act. He extracted the observations of the Hon ble Jammu and Kashmir High Court in the case of Ghulam Mohidin Trust Vs. CIT [248 ITR 587] to consider that assessee is not eligible for registration. Accordingly, he did not grant registration u/s. 12AA of the Act. Consequently, he also rejected the other application filed in Form 10G for approval u/s. 80G(5) of the Act by the sam .....

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ot able to get the revised/amended objects of the society. He filed a copy of the revised objects of the society for perusal. It was requested that registration may be granted to assessee-society as the objects are charitable in nature. 6. Ld. CIT-DR however, relied on the orders of the DIT(E). 7. We have considered submissions of the parties and perused the impugned order of Ld. DIT(E) as well as other materials on record. At present, as the assessee-society amended those objects which the DIT( .....

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accepts the majority of the objects are charitable in nature. Specific objection of Ld. DIT(E) is with reference to three objects which in his view violates the provisions contained in Section 11. The object clause which Ld. DIT(E) considers to be of religious nature are as under: "Xii. To propagate our dharma and culture by evolving suitable methods to reach various sections of our society. Xiii. To promote and encourage the use of temples as centers for propagations of Dharmic values to .....

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either for the benefit of a particular religion or community nor they are confined to a particular class of people or people of particular caste or creed. On the contrary, these object clauses certainly gives an impression that it is for the benefit of general public. As can be seen from Clause-Xii, it speaks of propagating Dharma and Culture by evolving suitable methods to reach various sections of our society. These objectives cannot be treated as for the benefit of a particulars religion or c .....

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ar religion or a community. In fact these are for the benefit of general public. Just because the word 'Dharma' is used in the above clauses, it does not mean that it pertains to a religious activity. 'Dharma' can be of any religion or for any social order which is for the benefit of society in general. 9. Thus, on careful reading of the object clauses in general specifically clauses on which Ld. DIT(E) has raised concern stating that they are of religious nature, the impression .....

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u/s. 2(15) of the Act. Law is well settled that 'any other object of general public utility' is of the widest connotation as the word 'general' in said expression signifies a whole class. Hence, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose. Considered in the aforesaid perspective, there cannot be any doubt that the main object of assessee- trust .....

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which is ancillary or incidental to the dominant purpose, would not prevent the trust or institution from being a charitable trust. 10. Even in a case where there are mixed objects, there is both charitable and religious, the registration cannot be denied and this issue was elaborately discussed by the co-ordinate bench in the case of Shiva Shakthi Shiridi Sai Anugraha Mahapeetam in ITA No. 1232/Hyd/2014 dt. 03-12-2014 as under: "11. Even assuming that appellant trust has mixed objects i.e .....

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r, in our view, the object clauses specifically referred to by ld. DIT(E) are for the benefit of the general public and not confined to any particular religious class or community. Reverting back to the issue whether having objects of both charitable and religious nature disentitles from availing exemption u/s 11. Let us examine the said provision which reads as under: 11. (1) [(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which s .....

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interpretation cannot be given to section 11(1)(a) of the Act. Section 11(1)(a) of the Act makes no distinction between religious or charitable institution so far as grant of exemption is concerned, save and except the conditions imposed u/s 13 of the Act. The word or between charitable and religious as used in section 11(1)(a) is not disjunctive but conjunctive in nature, therefore, it is necessary to read that income derived from property held under trust wholly for charitable or religious pu .....

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igious activity for a particular community but may be charitable for others. Similarly, feeding poor people or giving water to thirsty may be religious for some but charitable for others. Analysing the objects of the trust by keeping the aforesaid principles in view, hon ble Apex Court finally held as under: 41.Therefore, the objects of the trust exhibit the dual tenor of religious and charitable purposes and activities. Section 11 of the Act shelters such trust with composite objects to claim e .....

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arise at the stage of claim under Sections 11 or 12. Thus, where the income of a trust is eligible for exemption under section 11, the eligibility for claiming exemption ought to be tested on the touchstone of the provisions of section 13. In the instant case, it being established that the respondent-trust is a public charitable and religious trust eligible for claiming exemption under Section 11, it becomes relevant to test it on the anvil of Section 13. 43.Thus, the second issue which arises .....

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hat Section 13(1)(b) is solely meant for charitable trust for particular community, negated the possibility of applicability of Section 13(1)(b) of the Act at the outset. The High Court has also confirmed the aforesaid view in appeal and observed that Section 13(1)(b) would only be applicable in case of income of the trust for charitable purpose established for benefit of a particular religious community. In our considered view, the said view may not be the correct interpretation of the provisio .....

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rticular religious community or caste. 46.Such trusts with composite objects would not be expelled out of the purview of Section 13(1)(b) per se. The Section requires it to be established that such charitable purpose is not for the benefit of a particular religious community or caste. That is to say, it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for so .....

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ons for the educational, social and economic advancement of the Muslims and for religious and charitable objects recognised by Muslim law … and later clarified that the proceeds would be utilized for the benefit for public at large and upon this basis, the trust made a claim for exemption from tax under Section 11. This Court held that the resolution clarifying the object would not validly amend the object of the trust-deed and since the object confined the benefit to only muslim communit .....

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e trust as ineligible for claiming exemption under similar provisions of Kerala Agricultural Income Tax Act, 1950. The Court observed as follows: …The Deed of Trust and the rules run into more than thirty pages out of which six pages of the Trust Deed narrate the philosophy of Jain Dharma. The objects of the Trust clearly show that the Trust is meant for propagation of Jain religion and rendering help to the followers of Jain religion. Even medical aid and similar facilities are to be ren .....

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ld not be treated as allowable item of the expenses. 49.In the present case, the objects of the respondent-trust based on religious tenets under Quran according to religious faith of Islam. We have already noticed that the perusal of the objects and purposes of the respondent-trust would clearly demonstrate that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraphs, do .....

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under Section 11 of the Act. 12. In case of The Society of Presentation Sisters and others Vs. ITO, 318 ITR(AT)287, the Hon ble Third Member while concurring with the view expressed by Hon ble Accountant Member, held as under: It is clear from plethora of authorities where after considering the provisions of section 11(1)(a) that so far as the aforesaid provision is concerned, no distinction is made between charitable and religious purposes. A charitable institution can have religious purposes; .....

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are no doubt religious purposes but these are also considered as charitable in India. Therefore, the view taken in the two cases before me that exemption under section 11(1)(a) cannot be allowed to a charitable trust as it is also carrying some purposes which are termed as religious is totally unwarranted. The above view is totally contrary to the well established an settled law in India, as laid down by their Lordships of the Supreme Court. The other reason given by the learned Judicial Member .....

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umble opinion, there is no statutory provision to support proposition of law, stated by the learned Judicial Member. The learned Judicial Member, like the revenue authorities, misconstrued the legal implication of the word or in section 11(1)(a). 13. The principle of law emerging from the aforesaid decisions are 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. As in the presen .....

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