Jamali Colony Trust, Pune V. CIT - I, Pune

ITA 1274/PUN/2013

• Counselvise Citation: 127424514 RSA 2013
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Assessee Lawyers: KHUZAIMA POONAWALA
• Keywords: Charitable institution
• Section: 12A; 12AA; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1274/PN/2013 JAMALI COLONY TRUST, S.NO.588/2A, BURHANI COLONY, BIBWEWADI, PUNE 411037 PAN NO.AABTJ4733E .. APPELLANT VS. CIT-I, PUNE .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI KHUZAIMA POONAWALA REVENUE BY : SMT. M.S. VERMA DATE OF HEARING : 03-06-2014 DATE OF PRONOUNCEMENT : 06-06-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28-03-2012 PASSED U/S.12AA(1)(B)(II) OF THE I NCOME TAX ACT BY THE CIT-I, PUNE REFUSING REGISTRATION U/S.12A TO THE ASSESSEE TRUST. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE TRUST WAS SET UP VIDE TRUST DEED DATED 14-08-2012. IT FILED AN APPL ICATION IN FORM NO.10A BEFORE THE LD.CIT-I, PUNE REQUESTING FOR GR ANT OF REGISTRATION U/S.12A OF THE I.T. ACT. AFTER GOING THROUGH THE TRUST DEED AND THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE FROM TIME TO TIME THE LD.CIT NOTED THAT (A) THE OBJECTS OF THE A PPLICANT TRUST ARE PREDOMINANTLY CHARITABLE AND YET SPECIFICALLY MEANT FOR THE BENEFIT OF THE DAWOODI BOHRA COMMUNITY AND (B) THE APPLICANT D ID NOT CARRY OUT ANY ACTIVITIES SINCE INCEPTION. 2 2.1 ACCORDING TO THE LD.CIT AS PER PROVISIONS OF SE CTION 13(1)(B) OF THE I.T. ACT, 1961 THE BENEFIT OF SECTIONS 11 AN D 12 ARE NOT AVAILABLE TO A CHARITABLE TRUST OR CHARITABLE INSTI TUTION IF IT IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RE LIGIOUS COMMUNITY OR CASTE. HE, THEREFORE, HELD THAT THE CASE OF THE ASSESSEE WAS TO BE ADVERSELY HIT BY THE PROVISIONS OF SECTION 13(1)(B) . HE FURTHER NOTED THAT IN ORDER TO AVAIL REGISTRATION BY A TRUST OR I NSTITUTION, THE CIT HAS TO BE SATISFIED NOT ONLY ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION BUT ALSO ABOUT ITS ACTIVITIES. IN THE ABSENCE OF ANY A CTIVITY BY THE ASSESSEE TRUST A FINDING AS REGARDS THE GENUINENESS THEREOF COULD NOT BE GIVEN. IN VIEW OF THE ABOVE, HE AGAIN ASKED THE ASSESSEE TO FURNISH CERTAIN DETAILS. 2.2 FROM THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE, HE NOTED THAT THE OBJECTS OF THE TRUST ARE AS UNDER : '(A) TO CONSTRUCT ON THE OPEN SPACES HEREBY GRANTED BEING PART OF THE TRUST PROPERTY A COMMUNITY HALL MADRASA SCHOOL MASJID J AMAT KHANA AND MUSAFIRKHANA CHILDREN PLYING AREA OR GARDEN OR A S THE TRUSTEES MAY THINK FIT FOR THE USE OF THE DAWOODI BOHRAS AND T O VEST THEM SUBJECT TO THE TRUST HEREOF IN AL DAI AL MUTLAQ .ACCO RDING TO LAW AND TENETS BELIEFS AND TRADITIONS OF THE DAWAT E HADIAH. (B) TO GIVE ON HIRE ON DAY TO DAY BASIS THE COMMUN ITY HALL RECREATION HALL TO DAWOODI BOHRAS FOR THEIR RELIGIOUS PURPOSES OR SOCIAL PURPOSES IN CONFORMITY WITH THE SHAH AT. (C) TO MAINTAIN THE MASJID, COMMUNITY HALL MADRASA SCHOOL JAMATKHANA MUSAFIRKHANA AND GARDEN AND ALL INTERNAL ROADS OF THE LAYOUT IN GOOD STATE OF REPAIRS AND ALL STRUCTURES IN G OOD AND HABITABLE CONDITION; (D) TO PROVIDE FOR EDUCATION BY SUITABLE MEANS INCLU DING ESTABLISHMENT MAINTENANCE AND SUPPORT OF EDUCATIONAL I NSTITUTIONS PROFESSORSHIPS LECTURESHIPS SCHOLARSHIPS AND PRIZES AND OTHER WISE. (E) TO GIVE AND/OR PROVIDE MEDICAL RELIEF BY SUIT ABLE MEANS INCLUDING THE ESTABLISHMENT MAINTENANCE AND SUPPORT OF INSTITUTIO NS OF FUNDS FOR MEDICAL RELIEF SUCH AS HOSPITALS DISPENSARIES HEALTH U NITS CLINICS AND THE LIKE. 3 (F) TO PROMOTE OR SERVE ANY RELIGIOUS OR CHARITABL E OBJECT INCLUDING RELIGIOUS CEREMONIES GATHERINGS MAJLIS FEASTS NIYAZ ZIYA FAT OFFERING OF NAJWA AND OTHERS AS MAY BE DEEMED FIT AND PROPER IN C ONSULTATION WITH THE AAMIL SAHEB ACCORDING TO THE TENETS AND BEL IEFS OF THE DAWOODI BOHRAS; (G) TO ASSIST SUPPORT OR MAINTAIN BY GIVING DONATIONS OR OTHERWISE AS MAY BE FEASIBLE ANY RELIGIOUS OR CHARITABLE TRUST OR ORGANIZATION WHOSE OBJECTS ARE AKIN OR SIMILAR TO THE OBJECTS OF THE TRUST HEREBY CREATED; (H) TO ADVANCE ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY FOR THE BENEFIT OF THE DAWOODI BOHRA NOT INVOLVING ANY ACTI VITY CARRIED ON FOR PROFIT,' 2.3 IN VIEW OF THE ABOVE OBJECTS, THE LD.CIT WAS OF THE OPINION THAT THE APPLICANT TRUST HAS TO BE SEEN PRI MARILY AS A CHARITABLE TRUST WITH CERTAIN RELIGIOUS OBJECTS AS WELL. 2.4 THE LD.CIT WAS OF THE OPINION THAT AS PER SEC TION 13(1)(B), THE BENEFITS OF SECTIONS 11 & 12 SHALL NO T BE AVAILABLE TO A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTI TUTION, CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THE ACT, FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. HE REJ ECTED THE ARGUMENTS ADVANCED BY THE ASSESSEE THAT SECTION 13( 1)(B) WOULD APPLY ONLY TO A PURELY CHARITABLE TRUST OR TO A PUR ELY CHARITABLE INSTITUTION AND IT WOULD NOT APPLY TO A TRUST WHICH HAS CHARITABLE AS WELL AS RELIGIOUS OBJECTS. REFERRING TO VARIOUS CLA USES OF THE TRUST DEED HE FURTHER OBSERVED THAT THE TRUST HAS BEEN SE T UP FOR THE BENEFIT OF THE DAWOODI BOHRA COMMUNITY. THEREFORE, THE APPLICANT IS LIABLE TO BE TREATED AS A CHARITABLE TRUST, ESTA BLISHED FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY. HE, THEREFORE , HELD THAT THE BENEFIT UNDER SECTIONS 11 & 12 WOULD NOT BE AVAILAB LE TO A CHARITABLE TRUST OR INSTITUTION WHICH IS CREATED FO R THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY. 4 THEREFORE, THE BENEFITS OF SECTIONS 11 & 12 SHALL N OT BE AVAILABLE TO THE APPLICANT. 2.5 REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND RELYING ON THE DECISION OF HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF GHULAM MOHIDIN TRUST VS. CIT REPORTED I N 248 ITR 587 HE REJECTED THE CLAIM OF REGISTRATION U/S.12A OF TH E I.T. ACT. 3. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE T O EACH OTHER ON FACTS AND IN LAW 1] THE LEARNED CIT ERRED IN DENYING THE REGIST RATION U/S 12A OF THE ACT TO THE ASSESSEE TRUST. 2] THE LEARNED CIT ERRED IN HOLDING THAT THE ASSE SSEE TRUST WAS A CHARITABLE TRUST ESTABLISHED FOR THE BENEFIT OF A PART ICULAR COMMUNITY AND HENCE, THEREFORE, THE PROVISIONS OF SECTION 13(1) (B) WERE ATTRACTED TO THE CASE OF THE ASSESSEE AND HENCE, THE REG ISTRATION U/S 12A COULD NOT BE GRANTED TO THE ASSESSEE TRUST. 2.1] THE LEARNED CIT FAILED TO APPRECIATE THAT T HE PROVISIONS OF SECTION 13(1)(B) WERE ATTRACTED ONLY TO PURELY CHARI TABLE TRUST AND SINCE THE ASSESSEE TRUST WAS HAVING MIXED OBJECTS VIZ. CHAR ITABLE AS WELL RELIGIOUS OBJECTS, THE PROVISIONS OF SECTION 13(1)( B) WERE NOT ATTRACTED TO THE CASE OF THE ASSESSEE AND HENCE, THE REG ISTRATION U/S 12A SHOULD HAVE BEEN GRANTED TO THE ASSESSEE TRUST. 2.2] THE LEARNED CIT OUGHT TO HAVE APPRECIATED THA T THE CASE OF THE ASSESSEE WAS SQUARELY COVERED BY THE DECISION OF HON'BLE G UJARAT HIGH COURT IN THE CASE OF BARKATE SAIFIYAH SOCIETY [ 213 ITR 492] AND HENCE, THERE WAS NO REASON TO DENY THE REGISTRATION U/ S 12A TO THE ASSESSEE TRUST. 3] THE LEARNED CIT FURTHER ERRED IN HOLDING TH AT THE EXEMPTION U/S 11 WAS ALLOWABLE ONLY TO WHOLLY CHARITABLE OR WHOLLY RELIGIOUS TRUSTS AND ACCORDINGLY, HE ERRED IN DENYING REGISTRATION U/ S 12A TO THE ASSESSEE TRUST. 3.1] THE LEARNED CIT ERRED IN NOT APPRECIATING TH AT THE EXEMPTION U/S 11 WAS ALLOWABLE EVEN TO THE TRUSTS WHICH HAVE BOTH CHARITABLE AS WELL AS RELIGIOUS OBJECTS AND HENCE, THE ASSESSEE TRUST WAS ELIGIBLE TO BE REGISTERED U/S 12A OF THE ACT. 5 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL 4. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECT ED TO THE ORDER OF THE LD.CIT REJECTING THE GRANT OF REGISTRATION U /S.12A OF THE I.T. ACT. HE SUBMITTED THAT SINCE THE ASSESSEE TRUST WAS HAVING MIXED OBJECTS, I.E. CHARITABLE AS WELL AS RELIGIOUS OBJEC TS, THEREFORE, THE PROVISIONS OF SECTION 13(1)(B) ARE NOT ATTRACTED TO THE CASE OF THE ASSESSEE AND REGISTRATION U/S.12A SHOULD HAVE BEEN GRANTED. RELYING ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL I N THE CASE OF GURUDEV DATTA SEVA TRUST VS. CIT VIDE ITA NO.1911/P N/2013 ORDER DATED 26-05-2014 HE SUBMITTED THAT UNDER IDENTICAL CIRCUMSTANCES THE TRIBUNAL, AFTER CONSIDERING THE DECISION OF HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF GHULAM MOHIDIN TR UST HAS ALLOWED THE REGISTRATION U/S.12A OF THE I.T. ACT. 4.1 REFERRING TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF CIT VS. DAWOODI BOHRA JAMAT REPORTED IN 102 DTR (SC) 361 HE DREW THE ATTENTION OF THE BENCH TO THE FOLLO WING CONCLUSIONS (SHORT NOTES) : CONCLUSION : DETERMINATION OF NATURE OF TRUST AS WHOL LY RELIGIOUS OR WHOLLY CHARITABLE OR BOTH CHARITABLE AND RELIGIOUS I S A QUESTION WHICH REQUIRES EXAMINATION OF LEGAL EFFECTS OF THE PROVEN F ACTS AND DOCUMENTS, I.E. LEGAL IMPLICATIONS OF THE OBJECTS OF T HE TRUST AS CONTAINED IN THE TRUST DEED, AND NOT MERELY A QUESTIO N OF FACT. CONCLUSION : WHAT IS INTENDED TO BE DISQUALIFIED FOR E XEMPTION UNDER S.11 IS A TRUST FOR CHARITABLE PURPOSES WHICH IS ESTABLISHE D FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CAST E; TRUSTS WITH COMPOSITE OBJECTS OF RELIGIOUS AND CHARITABLE ARE NOT OUT OF THE PURVIEW OF S.13(1)(B) PER SE; ALTHOUGH TWO OBJECTS OF THE ASSESSEE- TRUST PROVIDE FOR COMPLETELY RELIGIOUS ACTIVITIES OF A SPECIFIC COMMUNITY, ITS OTHER OBJECTS INCLUDE PROVISION OF FOOD TO THE GENERAL PUBLIC ON RELIGIOUS DAYS OF THE DAWOODI BOHRA COMMUNI TY, ESTABLISHMENT OF MADARSA AND ORGANIZATIONS FOR DISSEMINAT ION OF RELIGIOUS EDUCATION AND RENDERING ASSISTANCE TO THE NEE DY AND POOR FOR RELIGIOUS ACTIVITIES WITHOUT RESTRICTING THESE BEN EFITS TO THE 6 MEMBERS OF THE COMMUNITY, WHICH CLEARLY DEMONSTRATE T HAT ITS ACTIVITIES ARE BOTH CHARITABLE AND RELIGIOUS AND NOT EXCLUSIVELY MEANT FOR A PARTICULAR RELIGIOUS COMMUNITY AND THEREFORE S. 13(1)(B) IS NOT ATTRACTED TO THE ASSESSEE-TRUST; IT WOULD BE ELIGIBLE TO CLAIM EXEMPTION UNDER S.11. HE ACCORDINGLY SUBMITTED THAT UNDER THE FACTS AND C IRCUMSTANCES OF THE CASE THE REGISTRATION U/S.12A SHOULD BE GRANTED TO THE ASSESSEE. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD.CIT. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. W E FIND THE LD.CIT REFUSED GRANTING REGISTRATION U/S.12A OF THE I.T. A CT TO THE ASSESSEE TRUST ON THE GROUND THAT THE ASSESSEE TRUST WAS A C HARITABLE TRUST ESTABLISHED FOR THE BENEFIT OF A PARTICULAR COMMUNI TY AND THEREFORE THE PROVISIONS OF SECTION 13(1)(B) ARE ATTRACTED. FURTHER, HE HELD THAT THE EXEMPTION U/S.11 WAS ALLOWABLE ONLY TO WHOLLY C HARITABLE OR WHOLLY RELIGIOUS TRUSTS WHEREAS IN THE CASE OF THE ASSESSEE TRUST IT HAS GOT MIXED OBJECTS, I.E. PARTLY CHARITABLE AND PARTL Y RELIGIOUS. HE, THEREFORE, REJECTED THE CLAIM OF REGISTRATION U/S.1 2A OF THE I.T. ACT. 6.1 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF GURUDEV DATTA SEVA TRUST (SUPRA) WHILE GRANTING REG ISTRATION U/S.12A WHEN THE OBJECTS WERE MIXED, I.E. BOTH CHAR ITABLE AND RELIGIOUS HAS OBSERVED AS UNDER : 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIN D THE LD.CIT 7 REJECTED THE CLAIM OF REGISTRATION U/S.12AA ON THE GR OUND THAT (A) OBJECTS OF THE APPLICANT TRUST ARE PREDOMINANTLY RELI GIOUS AND (B) RELIGIOUS EXPENSES PRE-DOMINATED DURING THREE YEARS. F ROM THE DETAILS FURNISHED BY THE ASSESSEE IN THE PAPER BOOK, WE F IND FOR THE F.YRS ENDING 2010, 2011 AND 2012, BARRING THE FIRST YEAR, THE CHARITABLE EXPENSES ARE MORE THAN THE RELIGIOUS EXPENSE S. FROM THE DETAILS FURNISHED BY THE ASSESSEE, WE FIND FOR THE YEAR E NDING 2010 THE RELIGIOUS EXPENSES ARE 3,37,789/- AS AGAINST CHARIT ABLE EXPENSES AT RS.47,500/-. HOWEVER, FOR THE F.Y. ENDING 2011 A ND 2012 THE CHARITABLE EXPENSES ARE RS.3,52,247/- AND RS.3,80,244 /- AS AGAINST RELIGIOUS EXPENSES OF RS.2,39,638/- AND RS.3,64,947/-. THEREFORE, THE FINDING OF THE LD.CIT THAT RELIGIOUS EXPENSES ARE PRE-DOMINATED DURING THE THREE YEARS IS NOT CORRECT. WE FIND FROM THE NOTIFICATION UNDER SECTION 35AC OF THE I.T. ACT BY GOVT. OF INDIA , MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, A COPY OF WHICH IS P LACED AT PAPER BOOK PAGES 22 TO 27, THAT THE ASSESSEE TRUST HAS BEEN APPR OVED AS ELIGIBLE PROJECT BY NATIONAL COMMITTEE FOR PROMOTIO N OF SOCIAL AND ECONOMIC WELFARE. 7.1 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF MARUTI DEV TRUST (SUPRA) WHILE DIRECTING THE CIT TO GRANT R EGISTRATION U/S.12AA HAS OBSERVED AS UNDER : 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. AT THE OUTSET, WE MAY OBSERVE THAT SO FAR AS THE NATURE OF THE OBJECTS OF THE ASSESSEE ARE CONCERNED, THE COMMISSIONER HA S NOT FOUND ANY FAULT WITH THE SAME EXCEPT TO THE EXTE NT THAT THE SAME ARE AN ADMIXTURE OF RELIGIOUS AS WELL AS CHARITABL E PURPOSES. IN-FACT, THE EXISTENCE OF BOTH TYPES OF OBJE CTS IS THE BASIS FOR THE COMMISSIONER TO DENY REGISTRATION U/S 12AA OF THE ACT. THE MAIN REASON ADVANCED IS BECAUSE OF THE EXPRESSION WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES CONTAINED IN SECTION 11(1)(A) OF THE ACT. IN OUR CO NSIDERED OPINION, THE SAID EXPRESSION CANNOT BE INTERPRETED TO MEAN THAT A TRUST HAVING BOTH CHARITABLE OR RELIGIOUS PURP OSE IS NOT ENTITLED TO CLAIM EXEMPTION U/S 11 OF THE ACT OR FOR GRANT OF REGISTRATION U/S 12AA OF THE ACT. THE HONBLE GUJARA T HIGH COURT IN THE CASE OF A.A. BIBIJIWALA TRUST (SUPRA) AS W ELL AS IN THE CASE OF BARKATE SAIFIYAH SOCIETY (SUPRA) HAS HELD THAT A TRUST IS ELIGIBLE TO CLAIM EXEMPTION U/S 11/12 OF THE ACT, IF IT IS EITHER FOR RELIGIOUS PURPOSES OR FOR CHARITABLE PURP OSES OR FOR BOTH RELIGIOUS AS WELL AS CHARITABLE PURPOSES. IN A NY CASE, FOR THE PRESENT WE ARE ONLY CONCERNED WITH GRANT OF REGISTRATION U/S 12AA OF THE ACT AND AT THIS STAGE, IN OUR CONSIDERED OPINION, THE COMMISSIONER CAN ONLY LOOK INT O THE OBJECTS OF THE TRUST AND EXAMINE IF THEY ARE OF THE N ATURE CONTEMPLATED BY SECTION 11 OF THE ACT I.E. CHARITABL E OR RELIGIOUS OR FOR BOTH CHARITABLE AS WELL AS RELIGIOUS P URPOSES. 7. THE RELIANCE PLACED BY THE COMMISSIONER ON THE JUDGEMENT OF THE HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF GHULAM MOHIDIN TRUST (SUPRA) TO SAY THAT THE BE NEFITS OF SECTIONS 11 AND 12 WOULD APPLY ONLY TO A TRUST WHIC H IS WHOLLY CHARITABLE OR WHOLLY RELIGIOUS AND NOT TO A T RUST WHICH IS BOTH RELIGIOUS AS WELL AS CHARITABLE, IN OUR VIEW IS QUITE MISPLACED. THE JUDGEMENT OF THE HONBLE JAMMU & KAS HMIR HIGH COURT IN THE CASE OF GHULAM MOHIDIN TRUST (SUPRA ), IN OUR CONSIDERED OPINION, HAS BEEN RENDERED IN THE BACK GROUND OF ITS PECULIAR FACTS. THE HONBLE HIGH COURT WAS CON SIDERING A SITUATION WHERE THE TRUST WAS FOUND TO HAVE BEEN 8 ESTABLISHED EXCLUSIVELY FOR THE BENEFIT OF A PARTICULA R RELIGIOUS COMMUNITY, NAMELY, MUSLIM COMMUNITY. MOREOVER, IN T HE CASE BEFORE THE HONBLE HIGH COURT, THE TRUST DEED GA VE ABSOLUTE DISCRETION ON THE TRUSTEES TO SPEND THE INCOME OF THE TRUST AND NO DEFINITE PART OF THE PROPERTY OR IN COME WAS ALLOCABLE TOWARDS CHARITABLE PURPOSES. QUITE CLEARLY , THE FACT POSITION IN THE PRESENT CASE IS QUITE DIFFERENT INASMUCH AS THE APPELLANT IS A TRUST WHICH HAS NOT BEEN ESTABLISHED FOR THE BENEFIT OF A PARTICULAR RELIGIOUS SOCIETY AND IT IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950. MOREOVER, IN THE CASE BEFORE THE HONBLE JAMM U & KASHMIR HIGH COURT IN THE CASE OF GHULAM MOHIDIN TRUS T (SUPRA) ISSUE RELATED TO ALLOWABILITY OR OTHERWISE OF THE BENEFIT OF SECTIONS 11 AND 12 OF THE ACT WHILE PRESENT LY IN THE CASE BEFORE US THE ISSUE RELATES TO GRANT OF REGISTRATION U/S 12AA OF THE ACT. IN-FACT, WHEN THE ASSESSEE BEFORE US WOULD SEEK EXEMPTION U/S 11/12 OF THE ACT, THE ASSESSING OFFICE R IS COMPETENT TO EXAMINE THE CLAIM AS THERE ARE ADEQUATE PROVISIONS, NAMELY, SECTION 13(1)(A) & (B) OF THE ACT TO DENY EXEMPTION IN THE EVENT OF THE INCOME NOT BEING SPENT IN THE MANNER CONTEMPLATED BY THE TRUST DEED. AT THE PRESE NT STAGE, THE SCOPE OF ENQUIRY BY THE COMMISSIONER IS ONLY TO CONFIRM THAT THE OBJECTS ARE EITHER CHARITABLE OR RE LIGIOUS IN NATURE. THEREFORE, THE RELIANCE PLACED BY THE COMM ISSIONER ON CERTAIN OBSERVATIONS BY THE HONBLE JAMMU & KASHM IR HIGH COURT IN THE CASE OF GHULAM MOHIDIN TRUST (SUPRA) ARE NOT RELEVANT AT THE PRESENT STAGE. 8. APART THEREFROM, EVEN IF WE ARE TO ACCEPT THE PROPOSITION OF THE COMMISSIONER BASED ON THE JUDGEMENT OF THE HONBLE JAMMU & KASHMIR HIGH COURT THAT THE BENE FITS OF SECTIONS 11 AND 12 OF THE ACT ARE APPLICABLE ONLY TO A TRUST WHICH IS WHOLLY CHARITABLE OR WHOLLY RELIGIOUS AND NO T TO A TRUST WHOSE OBJECTS ARE AN ADMIXTURE BOTH RELIGIOUS AS WELL AS CHARITABLE; THEN, WE CANNOT LOSE SIGHT OF THE FACT THAT THE JUDGEMENTS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF A.A. BIBIJIWALA TRUST (SUPRA) AND IN THE CASE OF BARKA TE SAIFIYAH SOCIETY (SUPRA) ARE TO THE CONTRARY. AS PE R THE HONBLE GUJARAT HIGH COURT IN THE CASE OF A.A. BIBI JIWALA TRUST (SUPRA) EVEN IF A TRUST IS PARTLY RELIGIOUS AND PARTLY CHARITABLE SO LONG AS NO PART OF THE INCOME OR CORPUS CAN BE UTIL IZED FOR A PURPOSE WHICH IS NEITHER RELIGIOUS NOR CHARITABLE, THE EXEMPTION U/S 11 OF THE ACT WILL BE AVAILABLE. THUS , THE PROPOSITION LAID DOWN BY THE HONBLE GUJARAT HIGH CO URT IS DIVERGENT TO THAT LAID DOWN BY THE HONBLE JAMMU & KASHMIR HIGH COURT AND IN SUCH A SITUATION, FOLLOWING THE PAR ITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC) A VIEW WHICH IS FAVOURABLE TO THE ASSESSEE IS LIABLE TO BE ADOPT ED, SO LONG AS THERE IS NO BINDING VIEW OF THE JURISDICTIONAL HIGH COURT. EVEN IN SUCH A SCENARIO, IN OUR VIEW, FOLLOWI NG THE AFORESAID PROPOSITION, THE ACTION OF THE COMMISSIONER IN DENYING REGISTRATION TO THE ASSESSEE U/S 12AA OF THE ACT IS UNSUSTAINABLE, AS THE VIEW CANVASSED BY THE ASSESSEE IS SUPPORTED BY THE HONBLE GUJARAT HIGH COURT. 9. IN VIEW OF THE AFORESAID DISCUSSION, WE SET-ASIDE THE ORDER OF THE COMMISSIONER AND DIRECT HIM TO ALLOW REGISTRATION U/S 12AA OF THE ACT IN PURSUANCE TO THE 9 APPLICATION FILED BY THE ASSESSEE IN FORM NO.10A DATED 30.08.2011. 7.2 SINCE THE FACTS OF THE IMPUGNED APPEAL ARE IDENT ICAL TO FACTS OF THE CASE CITED (SUPRA), THEREFORE, RESPECTFULLY FOLLO WING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CITED (SUPR A), WE DIRECT THE LD.CIT TO GRANT REGISTRATION TO THE ASSESSEE TRUST U/S.12A OF THE I.T. ACT. 6.2 WE FIND THE HONBLE SUPREME COURT IN THE CASE O F DAWOODI BOHARA JAMAT (SUPRA) HAS OBSERVED AS UNDER : 41. THEREFORE, THE OBJECTS OF THE TRUST EXHIBIT THE DUAL TENOR OF RELIGIOUS AND CHARITABLE PURPOSES AND ACTIVITIES. SEC. 11 OF THE ACT SHELTERS SUCH TRUST WITH COMPOSITE OBJECTS TO CLAIM EXEMP TION FROM LAX AS A RELIGIOUS AND CHARITABLE TRUST SUBJECT TO PROV ISIONS OF S. 13. THE ACTIVITIES OF THE TRUST UNDER SUCH OBJECTS WOULD THEREFORE BE ENTITLED TO EXEMPTION ACCORDINGLY. 42. WE WOULD NOW PROCEED TO EXAMINE THE OBJECTS UND ER THE PROVISIONS OF S. 13(1)(B) OF THE ACT. IT BECOMES AMPLY CLEAR FROM THE LANGUAGE EMPLOYED IN THE PROVISIONS THAT S. 13 IS IN TH E NATURE OF AN EXEMPTION (SIC) FROM APPLICABILITY OF S.S. 11 OR 12 A ND THE EXAMINATION OF ITS APPLICABILITY WOULD ONLY ARISE AT THE STAGE OF CLAIM UNDER SS. 11 OR 12. THUS, WHERE THE INCOME OF A TRUST IS ELIGIBLE FOR EXEMPTION UNDER S. 11, THE ELIGIBILITY FOR CLAIMING EXEMPTION OUGHT TO BE TESTED ON THE TOUCHSTONE OF THE PROVISIONS OF S. 13. IN THE INSTANT CASE, IT BEING ESTABLISHED THAT TH E RESPONDENT- TRUST IS A PUBLIC CHARITABLE AND RELIGIOUS TRUST ELIGI BLE FOR CLAIMING EXEMPTION UNDER S. 11. IT BECOMES RELEVANT, TO TEST IT ON THE ANVIL OF S. 13. 43. THUS, THE SECOND ISSUE WHICH ARISES FOR OUR CONSIDERA TION AND DECISION IS. WHETHER THE RESPONDENT-TRUST IS A CHARI TABLE AND RELIGIOUS TRUST ONLY FOR THE PURPOSES OF A PARTICULAR C OMMUNITY AND THEREFORE, NOT ELIGIBLE FOR EXEMPTION UNDER S. 11 OF THE ACT IN VIEW OF PROVISIONS OF S. 13(1)(B) OF THE ACT. 44. IN THE INSTANT CASE, THE TRIBUNAL HAS FOUND ON FA CTS AFTER ANALYZING THE OBJECTS OF THE TRUST THAT THE RESPONDENT -TRUST IS A PUBLIC RELIGIOUS TRUST AND ITS OBJECTS ARE SOLELY RELI GIOUS IN NATURE AND BEING OF THE OPINION THAT S, 13(1)(B) IS SOLELY M EANT FOR CHARITABLE TRUST FOR PARTICULAR COMMUNITY, NEGATED T HE POSSIBILITY OF APPLICABILITY OF S. 13(1)(B) OF THE ACT AT THE OUTSE T. THE HIGH COURT HAS ALSO CONFIRMED THE AFORESAID VIEW IN APPEAL AND OB SERVED THAT S. 13(1)(B) WOULD ONLY BE APPLICABLE IN CASE OF INCOME OF THE TRUST FOR CHARITABLE PURPOSE ESTABLISHED FOR BENEFIT OF A 'PARTI CULAR RELIGIOUS COMMUNITY. IN OUR CONSIDERED VIEW, THE SAID VIEW I MA Y NOT BE THE CORRECT INTERPRETATION OF THE PROVISION. 45. FROM THE PHRASEOLOGY IN CL. (B) OF S. 13(1), IT COULD BE INFERRED THAT THE LEGISLATURE INTENDED TO INCLUDE ONLY THE TRUSTS ESTABLISHED FOR CHARITABLE PURPOSES. THAT HOWEVER DOES NOT MEAN THAT IF A TRUST IS A COMPOSITE ONE, THAT IS ONE FOR BO TH RELIGIOUS AND CHARITABLE PURPOSES, THEN IT WOULD NOT BE COVERED BY CL. (B). WHAT IS INTENDED TO BE EXCLUDED FROM BEING ELIGIBLE FOR EXE MPTION UNDER S. 10 11 IS A TRUST FOR CHARITABLE PURPOSE WHICH IS ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CAST E. 46. SUCH TRUSTS WITH COMPOSITE OBJECTS WOULD NOT BE EX PELLED OUT OF THE PURVIEW OF S. 13(1)(B) PER SE. THE SECTION REQU IRES 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 RELIGIOU S COMMUNITY OR CLASS OR SERVES ACROSS THE COMMUNITIES AND FOR SOCIETY AT LARGE. [SOLE TRUSTEE LOKA SHIKSHANA TRUST VS.CIT (SUPRA)].THE SECTION OF COMMUNITY SOUGHT TO BE BENEFITED MUST BE EITHER SUFFIC IENTLY DEFINED OR IDENTIFIABLE BY A COMMON QUALITY OF A PU BLIC OR IMPERSONAL NATURE. (CIT VS. ANDHRA CHAMBER OF COMMERC E (SUPRA)]. 47. IN CIT US. PALGHAT SHADI MAHAL TRUST (2002) 172 CTR (SC) 453 : (2002) 9 SCC 685 THE MUSLIM RESIDENTS OF KERALA CONSTITUTED A TRUST 'FOR THE PURPOSE OF CONSTRUCTING AND ESTABLISHING AT PALGHAT A SHADI MAHAL AND OTHER INSTITUTIONS FOR THE EDUCATIONA L, SOCIAL AND ECONOMIC ADVANCEMENT OF THE MUSLIMS AND FOR RELIGIOUS AND CHARITABLE OBJECTS RECOGNISED BY MUSLIM LAW ...' AND L ATER CLARIFIED THAT THE PROCEEDS WOULD BE UTILIZED FOR THE BENEFIT FOR PUBLIC AT LARGE AND UPON THIS BASIS, THE TRUST MADE A CLAIM FOR EXEMPTI ON FROM TAX UNDER S. 11. THIS COURT HELD THAT THE RESOLUTION CLARI FYING THE OBJECT WOULD NOT VALIDLY AMEND THE OBJECT OF THE TRUST-DEED AND SINCE THE OBJECT CONFINED THE BENEFIT TO ONLY MUSLIM COMMUNITY , IT WOULD BE COVERED BY THE RESTRICTION UNDER S. I3(1)(B) OF THE A CT EVEN THOUGH IF FUNCTIONED FOR PUBLIC BENEFIT. THUS, THEREIN THE OBJ ECT SUFFICIENTLY DEFINED OR EXPRESSLY STATED BENEFICIARY CLASS AND RESTRI CTED THE ACTIVITIES OF THE TRUST TO A SPECIFIC COMMUNITY. 48. FURTHER, IN STALE OF KERALA VS. M.P. SHANTI VER MA JAIN (1998) 149 CTR (SC) 279 : (1998) 5 SCC 63 THIS COURT HAS HEL D THAT PROPAGATION OF RELIGION AND RESTRICTION OF BENEFITS O F ACTIVITIES OF TRUST IN ITS OBJECTS TO THE SAID COMMUNITY WOULD RENDER THE TRUST AS INELIGIBLE TOR CLAIMING EXEMPTION UNDER SIMILAR PROV ISIONS OF KERALA AGRIL. I.T ACT. 1950. THE COURT OBSERVED AS FOLLOWS: '...THE DEED OF TRUST AND THE RULES RUN INTO MORE THA N THIRTY PAGES OUT OF WHICH SIX PAGES OF THE TRUST DEED NARRATE THE P HILOSOPHY OF JAIN DHARMA. THE OBJECTS OF THE TRUST CLEARLY SHOW TH AT THE TRUST IS MEANT FOR. PROPAGATION OF JAIN RELIGION AND RENDERI NG HELP TO THE FOLLOWERS OF JAIN RELIGION. EVEN MEDICAL AID AND SIMI LAR FACILITIES ARE TO BE RENDERED TO PERSONS DEVOTED TO JAIN RELIGION AN D TO NON-JAINS IF SUFFERING FROM AILMENTS BUT THE MEDICAL AID COULD BE GIVEN TO THEM ONLY IF ANY MEMBER OF THE FAMILIES MANAGING THE TRUS T, SHOWS SYMPATHY AND IS INTERESTED IN THEIR TREATMENT. THE TRI BUNAL, IN OUR OPINION, WAS RIGHT IN ITS CONCLUSION THAT THE DOMINAN T PURPOSE OF THE TRUST IN THE PRESENT EASE WAS PROPAGATION OF JAIN RELIG ION AND TO SERVE ITS FOLLOWERS AND ANY PART OF AGRICULTURAL INCOM E OF THE TRUST SPENT IN THE STATE OF KERALA ALSO COULD NOT BE TREATE D AS ALLOWABLE ITEM OF THE EXPENSES.' 49. IN THE PRESENT CASE, THE OBJECTS OF THE RESPONDEN T-TRUST ARE BASED ON RELIGIOUS TENETS UNDER QURAN ACCORDING TO RE LIGIOUS FAITH OF ISLAM. WE HAVE ALREADY NOTICED THAT THE PERUSAL OF T HE OBJECTS AND PURPOSES OF THE RESPONDENT-TRUST WOULD CLEARLY DEMONSTRA TE THAT THE ACTIVITIES OF THE TRUST THOUGH BOTH CHARITABLE AN D RELIGIOUS ARE NOT EXCLUSIVELY MEANT FOR A PARTICULAR RELIGIONS COMM UNITY. THE OBJECTS, AS EXPLAINED IN THE PRECEDING PARAS, DO NOT C HANNEL THE 11 BENEFITS TO ANY COMMUNITY IF NOT THE DAWOODI BOHRA C OMMUNITY AND THUS, WOULD NOT FALL UNDER THE PROVISIONS OF S. 13 (1)( B) OF THE ACT. 50. IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSI DERED OPINION THAT THE RESPONDENT-TRUST IS A CHARITABLE AND RELIGIOU S TRUST WHICH DOES NOT BENEFIT ANY SPECIFIC RELIGIOUS COMMUNITY AND THEREFORE, IT CANNOT BE HELD THAT S. I3(L)(B) OF THE ACT WOULD BE ATTRACTED TO THE RESPONDENT-TRUST AND THEREBY, IT WOULD BE ELIGIBLE TO CLAIM EXEMPTION UNDER S. 11 OF THE ACT. 6.3 RESPECTFULLY FOLLOWING THE ABOVE DECISIONS WE H OLD THAT THE ASSESSEE TRUST IS ENTITLED TO REGISTRATION U/S.12A OF THE I.T. ACT. WE, THEREFORE, DIRECT THE LD.CIT TO GRANT REGISTRATION U/S.12A OF THE I.T. ACT. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGL Y ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 06-06-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE DATED: 06 TH JUNE, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE D.R, A PUNE BENCH 4. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE