COMMISSIONER OF INCOME TAX-III V. DAWOODI BOHRA JAMAT

TAXAP/1187/2006

AI Insights

The case revolves around the Commissioner of Income Tax-III appealing against the decision of the Income Tax Appellate Tribunal (ITAT), which granted registration to the Dawoodi Bohra Jamat under section 12A(a) of the Income Tax Act, 1961. The initial rejection by the Assessing Officer and subsequent affirmation by the CIT(A) were based on the trust being a private religious trust. However, the ITAT found it to be a public charitable trust, leading to the current appeal. The Supreme Court's earlier decision on a similar matter involving the same trust was pivotal, establishing that the trust's activities, while religious, are also charitable and not confined to a specific religious community, thus qualifying for tax exemptions.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 744890 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 28-11-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner Of Income Tax vs. Dawoodi Bohra Jamat (2009) 314 ITR 309
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: MANISH SHAH
• Assessee Lawyers: K M PARIKH
• Keywords: Income tax appellate tribunal; Private Religious Trust; Public charitable trust; Registration under section 12A; Tax appeal
• Section: 11; 12AA; 13(1)(b); 12A(a)

Judgement Text

"O/TAXAP/1187/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1187 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX-III....Appellant(s) Versus DAWOODI BOHRA JAMAT....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 MR MANISH J SHAH, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 5 O/TAXAP/1187/2006 JUDGMENT Date : 28/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘SMC’ (hereinafter referred to as ITAT) dated 10.03.2006 in ITA No. 2610/Ahd/2005 for the Assessment Year 2004-05, the revenue has preferred the present Tax Appeal. 2. This appeal was admitted on 27.06.2007 for consideration of the following substantial question of law: “Whether, the Hon’ble ITAT was right in law and on facts in holding that the assessee Trust is entitled to get registration u/s 12A(a) r.w.s. 12AA of the IT Act, 1961?” 3. The assessee is a trust run by one Dr. Syedna Mohammed Burhanuddin Saheb, Mumbai and was formed vide trust deed dated 24.04.2003. After examining the trust deed, the Assessing Officer rejected the application filed by the assessee in form no. 10A for registration u/s 12A of the Act. On appeal before the CIT(A), the CIT (Appeals) concluded that the Trust is a private religious trust established for the benefit of Dawoodi Bohra Community, thus disentitling itself for being registered u/s 12A(a). 4. On appeal before the ITAT, by impugned order, ITAT has held that as the trust shows that it is public charitable trust, registration should be granted. Being aggrieved and Page 2 of 5 O/TAXAP/1187/2006 JUDGMENT dissatisfied with the impugned order passed by the ITAT, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 5. Mr. Manish Shah, learned advocate appearing on behalf of the respondent – assessee has submitted that as such the issue involved in the present Tax Appeal is now not res integra in view of the decision of the Hon’ble Supreme Court in the case of Commissioner Of Income Tax vs. Dawoodi Bohra Jamat reported in (2009) 314 ITR 309 wherein considering the case of the same trust - assessee, according to the Hon’ble Supreme Court, the determination of the nature of trust as wholly religious or wholly charitable or both charitable and religious under the Act was not a question of fact. It was a question which required examination of legal effects of the proven facts and documents, that is, the legal implication of the objects of the respondent-trust as contained in the trust deed. It is only the objects of a trust as declared in the trust deed which would govern its right of exemption u/s. 11 or 12. It is the analysis of these objects in the backdrop of fiscal jurisprudence which would illuminate the purpose behind the creation or establishment of the trust for either religious or charitable or both religious and charitable purpose. 5.1 The Supreme Court in the said decision held that the High Court had erred in refusing to interfere with the observations of the Tribunal in respect of the character of the trust. Having said so, the Supreme Court proceeded to examine the question, whether the Courts below were justified in coming to the conclusion that the respondent-trust Page 3 of 5 O/TAXAP/1187/2006 JUDGMENT was a public religious trust and therefore, outside the purview of section 13(1) (b) and eligible for exemption u/s. 11 of the Act. The Supreme Court held that in the present case, the objects of the respondent-trust were based on religious tenets under the Quran according to the religious faith of Islam. As already noticed, the perusal of the objects and purposes of the respondent-trust clearly demonstrated that the activities of the trust though both charitable and religious were not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraphs, did not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of section 13(1)(b) of the Act. In that view of the matter, the Supreme Court held that the respondent-trust was a charitable and religious trust which did not benefit any specific religious community and therefore, it could not be held that section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby, it would be eligible to claim exemption u/s. 11 of the Act. 6. Having heard Mr. Parikh, learned advocate appearing on behalf of the Department and Mr. Shah, learned advocate appearing on behalf of the assessee and the question posed for consideration by us reproduced hereinabove and considering the decision of the Honble the Supreme Court in the case of Dawoodi Bohra Jamat (Supra), the question, which is raised in the present appeal is required to be answered in favour of the assessee. We are not giving any elaborate reasons for the same as in the case of very same assessee i.e. Dawoodi Bohra Jamat (Supra), it is held by Honble the Supreme Court that respondent-trust was a Page 4 of 5 O/TAXAP/1187/2006 JUDGMENT charitable and religious trust which did not benefit any specific religious community and therefore, it could not be held that section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby, it would be eligible to claim exemption u/s. 11 of the Act. Even otherwise there are concurrent finding of facts with which we also concur and therefore no elaborate reasons are required. 7. In view of the above, the present Tax Appeal is held in favour of the assessee and consequently, the impugned judgment and order passed by the ITAT is confirmed. Hence, the present Tax Appeal is dismissed. No costs. (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 5 of 5 "