MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 2094/MUM/2010

• Counselvise Citation: 209419914 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-01-2012
• Assessment Year: misc
• Appeal Filed On: 15-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHEKHAR B KADAM
• Keywords: Search and seizure; Charitable institution
• Section: 12A; 12AA; 63; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.2094/MUM/2010 (ASSESSMENT YEAR: 2008-09) MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TR UST, SHOP NO.7, GIRIRAJ BLDG., DEVIDAS LANE, BORIVALI (WEST), MUMBAI -400 092 ...... APPELLANT VS DIRECTOR OF INCOME-TAX (EXEMPTION), 6TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI -400 012 ..... RESPONDENT PAN: AACTM 3362 R APPELLANT BY: SHRI SHEKHAR B. KADAM RESPONDENT BY: SHRI PAVAN VED DATE OF HEARING: 12.01.2012 DATE OF PRONOUNCEMENT: 18.01.1012 O R D E R PER R.S. PADVEKAR, JM : THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E ORDER PASSED BY THE DIRECTOR OF INCOME-TAX (EXEMPTION) MUMBAI, ( IN SHORT DIT (EXM.) DATED 18.12.2009 U/S.12AA(1)(B)(II) R.W.S. 1 2A OF THE INCOME- TAX ACT, DECLINING TO GRANT THE REGISTRATION TO THE ASSESSEE. THE ASSESSEE HAS TAKEN THE MULTIPLE GROUNDS BUT THE COR E ISSUE FOR CONSIDERATION IS WHETHER FOR THE REASONS STATED IN THE ORDER THE LD. DIT (EXM.) WAS JUSTIFIED IN REFUSING THE REGISTRAT ION TO THE ASSESSEE. 2. AS PER THE FACTS ON RECORD, THE ASSESSEE TRUST W AS CONSTITUTED ON 12.01.2008. THE ASSESSEE FILED THE APPLICATION F OR REGISTRATION U/S.12A OF THE INCOME-TAX ACT ON 25.06.2009. THE L D. DIT (EXM.) EXAMINED THE OBJECTS OF THE TRUST AND CAME TO THE C ONCLUSION THAT THE ITA 2094M/2010 MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TRUST 2 TRUST IS HAVING MIXED OBJECT, PARTLY RELIGIOUS AND PARTLY CHARITABLE. HE, THEREFORE, DENIED THE REGISTRATION TO THE ASSES SEE BY OBSERVING AS UNDER:- 5. THE ARGUMENT OF THE APPLICANT AND FACTS OF THE CASE HAVE BEEN CONSIDERED, THE ARGUMENT OF THE AR THAT SADHU MAHARAJ AND SADHVI MAHARAJ ARE KNOWLEDGEABLE AND RESPECTED PERSON IN THE SOCIETY IS ACCEPTED BUT IT IS ALSO STATED BY TH E AR OF THE APPLICANT TRUST HIMSELF THAT THEY ARE HOLY MEN, BAS ICALLY, THEY ARE RELIGIOUS PRIESTS OR THE REVERED RELIGIOUS GUIDE WH O PREACH THE TENANTS OF JAIN RELIGION AND THE CHATURMAS IS THE P ERIOD OF FOUR MONTHS DURING RAINY SEASON WHEN THE SADHVIS AND SAD HU MAHARAJ DO NOT TRAVEL FROM ONE STHANAK (JAIN UPASHR AY) TO ANOTHER STHANAK WHICH OTHERWISE IS COMPULSORY FOR T HEM HENCE IT IS CLEAR THAT THE CLAUSE IS COMPLETELY RELIGIOUS IN NATURE. THIS IS RELIGIOUS ACTIVITY AND THE TRUST WOULD NOT QUALIFY FOR EXEMPTION AS A TRUST, WHICH IS PARTLY RELIGIOUS AND PARTLY OTHER WISE. IT IS TO BE DENIED EXEMPTION IN VIEW OF THE PROVISIONS UNDER TH E INCOME TAX ACT, 1961, SO THAT ALL THE TRUSTS ESTABLISHED AFTER 01.04.1961, WHICH HAVE BOTH RELIGIOUS AND NONRELIGIOUS OBJECTS WILL NOT BE ELIGIBLE FOR EXEMPTION AS SECTION 11(1)(A) PROVIDES THAT THE TRUST SHOULD HAVE BEEN CREATED EITHER WHOLLY FOR CHARITAB LE OR RELIGIOUS PURPOSES FOR CLAIMING EXEMPTION. AS PER THE RATIO O F JUDGMENT IN THE CASE OF GHULAM MOHIDIN TRUST VS. CIT (2001) 248 ITR 587 (J&K) WHEREIN IT IS HELD THAT IF THE TRUST WAS A PU BLIC TRUST ESTABLISHED AFTER 01.04 1961 SHOULD CONFIRM TO THE REQUIREMENT OF SECTION 11. IT IS ALSO HELD BY THE HONBLE SUPREME COURT IN THE CASE OF STATE OF KERALA VS. M.P. SHANTI VERMA JAM ( 1998) 231 ITR 787 (SC), THAT TO BE A PUBLIC CHARITABLE TRUST, THE TRUST SHOULD HAVE BEEN CREATED EITHER WHOLLY FOR CHARITABLE OR R ELIGIOUS PURPOSE. 6. AS REGARDS TO THE OBJECT CLAUSE 3(XII) OF ORGAN IZING SOCIAL AND CULTURAL ACTIVITIES AND GET TOGETHER, IT IS PRI MA FACIE A VAGUE OBJECT. THE SUPREME COURT IN GANGABAI CHARITIES V. CWT (2001) ITA 2094M/2010 MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TRUST 3 250 ITR 666 UPHELD THE DECISION OF THE MADRAS HIGH COURT REPORTED IN 236 ITR 735 REJECTING THE CLAIM FOR EXE MPTION ON THE GROUND THAT THE TRUST BESIDES RELIGIOUS OBJECTS HAD ALSO INDICATED OTHER PUBLIC CHARITABLE, SOCIAL, CULTURAL AND OTHER ALLIED PURPOSES. SUCH ADMIXTURE PREVENTED ITS BEING CONSIDERED EITHE R AS A PUBLIC RELIGIOUS TRUST OR AS A PUBLIC CHARITABLE ONE AS WA S FOUND IN THE SAME CASE FOR INCOME TAX PURPOSES IN GANGABAI CHARI TIES V. CIT (1992) 197 ITR 416 (SC), WHICH WAS FOLLOWED BY THE HIGH COURT FOR WEALTH TAX CASE AS WELL. THE HONBLE SUPREME C OURT IN THE CASE OF YOGIRAJ CHARITABLE TRUST VS. CIT (103 ITR 7 77), HELD THAT EVEN IF ONE OF THE OBJECT IS NON-CHARITABLE AND OTH ER OBJECTS MAY BE CHARITABLE AND ABSOLUTE POWER IS GIVEN TO THE TR USTEE TO MAKE EXPENDITURE IN RESPECT OF ANY OF THE OBJECT, THE EX EMPTION WOULD BE LOST. 7. AS REGARDS TO THE POINT THAT WHETHER THIS ISSUE CAN BE TAKEN UP AT THE STAGE OF REGISTRATION PROCEEDINGS I T IS POINTED OUT THAT WITH THE INTRODUCTION OF SECTION 12AA W.E.F. 0 1.04.1997 THE REQUIREMENTS FOR REGISTRATION HAVE CHANGED. SECTION 12AA(1)(A) PROVIDES THAT THE COMMISSIONER AFTER SATISFYING HIM SELF ABOUT THE OBJECT OF THE TRUST OR INSTITUTION AND THE GENUINEN ESS OF ITS ACTIVITIES, HE SHALL PASS ORDER FOR REGISTRATION. I T CLEARLY SHOWS THAT THE COMMISSIONER SHOULD EXAMINE THE OBJECT OF THE TRUST. WHAT IS TO BE EXAMINED HAS NOT BEEN MENTIONED. FURT HER, SECTION 12A HAS THE CAPTION CONDITION FOR APPLICATION OF S EC.11 AND 12. THE CAPTION HAS ALSO BEEN INSERTED BY THE FINANCE A CT, 2007, W.E.F. 01.06.2007. SECTION 12A PROVIDES THAT THE P ROVISIONS OF SEC.11 AND SEC.12 SHALL NOT APPLY IN RELATION TO TH E INCOME OF ANY TRUST OR INSTITUTION UNLESS THE CONDITION OF REGIST RATION IS FULFILLED. A COMBINED READING OF SEC.12A AND 12AA SHOWS THAT T HE COMMISSIONER HAS TO EXAMINE ABOUT THE OBJECTS OF TH E TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES I N RESPECT OF SEC.12A ALSO I.E. AS TO THE CONDITIONS FOR APPLICAB ILITY OF SEC.11 AND SEC.12. IT IS IMPORTANT TO POINT OUT THAT HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OF SHRI DHAKAD SAMAJ ITA 2094M/2010 MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TRUST 4 DHARAMSHALA BHAWAN. TRUST VS. CIT REPORTED IN 302 I TR 321 HAS HELD, SINCE SECTION 11 OF THE INCOME-TAX ACT, 1961, PROVIDES FOR EXEMPTION TO THE TRUST REGISTERED UNDER THE ACT, IT IS PRIMARILY THE PURPOSE OF SECTION 11 THAT WILL DOMINATE OR PREVAIL OVER OTHER CONSIDERATION. IT CLEARLY SHOWS THAT IN THE REGIST RATION PROCEEDING U/S.I2AA OF THE ACT, WHAT IS TO BE ANALYSED IN RESP ECT OF THE OBJECTS OF THE TRUST IS THAT IT SHOULD BE SUCH THAT SECTION 11 IS ALLOWABLE. 8 IT IS CLEARLY LAID DOWN IN THE PROVISIONS OF SECT ION 12AA(1)(B), A TRUST IS TO BE REGISTERED IF THE COMM ISSIONER IS SATISFIED ABOUT THE OBJECTS OF THE TRUST AND THE GE NUINENESS OF ITS ACTIVITIES. IN THE LIGHT OF THE ABOVE DISCUSSION, T HE APPLICATION FOR REGISTRATION IS THEREFORE, REJECTED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. WE FIND THAT THE ONLY REASON FOR DENI AL OF THE REGISTRATION TO THE ASSESSEE IS THAT THE ASSESSEE IS HAVING THE MIXED OBJECT, PARTLY RELIGIOUS AND PARTLY CHARITABLE. NOWHERE IT IS THE CASE OF DIT (EXM.) THAT THE ASSESSEE IS HAVING NON-RELIGIOUS OR NON-CH ARITABLE OBJECTS. NOW THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE ITAT COCHIN BENCH IN THE CASE OF CA LICUT ISLAMIC CULTURAL SOCIETY VS. ACTI (2001) 28 SOT 148 (COCH.) AND THE SAID DECISION HAS BEEN FOLLOWED BY THE SAME BENCH IN THE CASE OF THE SOCIETY OF PRESENTATION SISTERS VS. ITO (2009) 318 ITR (AT) 287)(COCH) (TM). THE LD. CIT D.R. FAIRLY CONCEDED THAT NOW TH E ISSUE HAS BEEN COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE ITAT COCHIN BENCH IN THE CASES OF CALICUT ISLAMIC CULTURAL SOCI ETY (SUPRA) AS WELL AS THE SOCIETY OF THE PRESENTATION SISTERS (SUPRA). THE ISSUE IN QUESTION WAS ELABORATELY DISCUSSED AND DECIDED BY T HE COCHIN BENCH OF THE TRIBUNAL AND OPERATIVE PART OF THE DECISION OF THE TRIBUNAL IN THE CASE OF CALICUT ISLAMIC CULTURAL SOCIETY (SUPRA ) IS AS UNDER: 21. THE ABOVE OBSERVATIONS ARE QUOTED IN N.S. BIND RAS INTERPRETATION OF STATUTES (NINTH EDITION, PAGE NO. 15). IN SHORT, ITA 2094M/2010 MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TRUST 5 THE ENGLISH LANGUAGE CANNOT BE TREATED AS INSTRUMEN T OF MATHEMATIC PRECISION. NOW THE QUESTION IS CAN IT B E SAID THAT IT IS THE INTENTION OF THE LEGISLATURE AS PER THE LANGUAG E USED IN CLAUSE (A) TO SECTION 11(1) OF THE ACT THAT SAVE THE PROVI SIONS OF SECTIONS 60 TO 63 OF THE ACT FOR CLAIMING THE INCOME EXEMPT WHICH IS DERIVED FROM THE PROPERTY HELD UNDER THE TRUST WHIC H MUST WHOLLY FOR THE CHARITABLE OR WHOLLY RELIGIOUS PURPOSES. I F THE INSTITUTION OR TRUST ARE ENGAGED INTO THE MIXED OBJECT WHICH ARE P ARTLY RELIGIOUS AND PARTLY CHARITABLE OR AS PER THE CASE OF THE ASS ESSING OFFICER AS WELL AS THE CIT (A) THE INSTITUTION OR TRUST IS HAVING THE MIXED ACTIVITIES OF CHARITY AS WELL AS RELIGION THEN THE EXEMPTION CANNOT BE CLAIMED. THE ARGUMENT OF THE LEARNED SENIOR COU NSEL IS THAT THERE IS A VERY THIN LINE OF DEMARCATION BETWEEN TH E CHARITY AND RELIGION. EVERY RELIGION IS HAVING THE PRINCIPLES OF THE CHARITY AND MANY CHARITABLE PURPOSES MAY NOT HAVE THE PRINCIPLE S OF RELIGION, THOUGH THE RELIGION IS THE QUESTION OF FAITH. IT I S TO BE MENTIONED HERE THAT CHARITABLE PURPOSE IN SECTION 2(15) OF THE ACT MAKING THE INCLUSIVE DEFINITION AND TRYING TO MAKE THE CHA RITABLE PURPOSE MORE ELABORATE BUT THERE IS NO DEFINITION OF THE R ELIGIOUS PURPOSE UNDER THE ACT. NO DOUBT THE LAW RECOGNISES NO PURP OSE AS CHARITABLE UNLESS IT IS OF THE PUBLIC CHARACTER. I N SHORT, IF SHOULD BE FOR THE BENEFIT OF THE COMMUNITY OR THE SECTION OF THE COMMUNITY AS HELD IN THE CASE OF AHMEDABAD RANA CAS TE ASSOCIATION (SUPRA) BY THE HONBLE SUPREME COURT. AS FAR AS RELIGIOUS PURPOSE IS CONCERNED MEANS RELIGIOUS PURP OSE WITHIN THE MEANING OF PERSONAL LAW APPLICABLE TO THE ASSESSEE AS HELD BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF BAI HIRBAI RAHIM ALOO PAROO & KESARBAI DHARAMSEY KAKOO CHARITABLE & RELIGIOUS TRUST V. CIT [1968] 68 ITR 821. THERE ARE INNUMERA BLE EXAMPLES WHERE THERE WILL BE VERY THIN LINE OF DEMARCATION B ETWEEN THE PURPOSES TO IDENTIFY WHICH ARE THE CHARITABLE PURPO SES OR WHICH ARE THE RELIGIOUS PURPOSES. IN BOTH THESE APPEALS, IT IS NOT THE CASE OF THE DEPARTMENT EITHER THAT ANY OF THE BARS PROVIDED UNDER SECTION 13 OF THE ACT ARE APPLICABLE TO BOTH THESE ASSESSEES AS ITA 2094M/2010 MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TRUST 6 PER THE INTERPRETATION GIVEN BY THE ASSESSING OFFIC ER AS WELL BY THE CIT (A). AS PER THE PROVISIONS OF SECTION 11(1 )(A) OF THE ACT, IT REQUIRES THAT THERE SHOULD BE NEXUS BETWEEN THE PRO PERTY HELD UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES AND THE INCOME UNDER CONSIDERATION. THE INTERPRETATION GIV EN BY THE ASSESSING OFFICER AS WELL AS BY THE CIT (A) IS THAT THE PURPOSE SHOULD BE WHOLLY CHARITABLE OR WHOLLY RELIGIOUS. W E ARE AFRAID, WHETHER SUCH INTERPRETATION CAN BE ACCEPTED. IN OU R OPINION, SAID INTERPRETATION GIVEN BY BOTH THE AUTHORITIES IS ONL Y ACADEMIC. WHEN THE LEGISLATURE HAS CATEGORICALLY DEFINED THE PURPOSES LIKE RELIGIOUS AND CHARITABLE AND IF THE ASSESSEE IS ENG AGED AS PER THEIR OBJECTS IN MIXED ACTIVITIES, WHICH ARE PARTLY CHARITABLE AND PARTLY RELIGIOUS, IT CANNOT BE SAID THAT SECTION 11 (1)(A) OF THE ACT DOES NOT CONTEMPLATE SUCH SITUATION. 4. AS ADMITTEDLY, IN THE PRESENT CASE THE ONLY RESE RVATION OF THE LD. CIT (A) FOR REFUSING THE REGISTRATION TO THE ASSESS EE IS THAT THE ASSESSEE TRUST/INSTITUTION IS HAVING MIXED OBJECTS I.E. PART LY CHARITABLE AND PARTLY RELIGIOUS. IN OUR OPINION, THE RATIO LAID D OWN IN THE CASES OF CALICUT ISLAMIC CULTURAL SOCIETY (SUPRA) AND THE SO CIETY OF PRESENTATION SISTERS VS. ITO (2009) 318 ITR (AT) 28 7)(COCH) (TM) (SUPRA) ARE SQUARELY APPLICABLE TO THE PRESENT CASE . WE, THEREFORE, SET ASIDE THE ORDER OF THE DIT (EXE.) MUMBAI AND HE IS HEREBY DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE U/S.12AA WITHIN THIRTY DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 8TH JANUARY, 2012. SD/- ( RAJENDRA SINGH ) ACCOUTANT MEMBER SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 18TH JANUARY, 2012 ITA 2094M/2010 MATUSHREE JEVIBEN PREMJI JIVRAJ NISAR CHARITABLE TRUST 7 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE DIT (EXEMPTION)-CONCERNED, MUMBAI. 4) THE CIT / DDIT (E) -)-CONCERNED, MUMBAI. 5) THE D.R. G BENCH, MUMBAI. BY ORDER / / TRUE COPY // ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN