Shia Dawoodi Bohra Jamat, Baroda V. The CIT-III, Baroda

ITA 2767/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6123 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-06-2011
• Assessment Year: misc
• Appeal Filed On: 08-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SURYAVANSHI
• Assessee Lawyers: M K PATEL
• Keywords: Charitable institution
• Section: 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER) ITA NO.2767/AHD/2009 SHIVA DAWOODI BOHRA JAMAT PAVI JETPUR BOHRA HALL, NR. BUS STAND HIGH WAY, PAVI JETPUR DIST. BARODA. PAN : AAITS 1559 C VS. COMMISSIONER OF INCOME TAX-III BARODA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL REVENUE BY : SHRI G.S. SURYAVANSHI O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX-III, BARODA DATED 24.08.2009. 2. THE GROUND RAISED IN THIS APPEAL BY THE ASSESSEE IS AGAINST THE REFUSAL OF THE REGISTRATION OF THE TRUST BY THE CIT UNDER SECTION 12AA OF THE INCOME TAX AC, 1961. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE CIT HAS REJECTED THE REGISTRATION OF THE T RUST ONLY ON THE GROUND THAT THE ASSESSEE TRUST IS NOT FOR THE BENEFIT OF G ENERAL PUBLIC WITHIN THE MEANING OF SECTION 13(1)(A)/13(1)(B) OF THE ACT. H E HAS STATED THAT THE ASSESSEE IS A RELIGIOUS TRUST FOR THE BENEFIT OF A COMMUNITY KNOWN AS SHIYA DAWOODI BOHRA. THAT THE HONBLE APEX COURT H AS CONSIDERED THE IDENTICAL ISSUE IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION VS. CIT, 82 ITR 704 AND HAS HELD THAT A TRUST FOR THE B ENEFIT OF AHMEDABAD ITA NO.2767/AHD/2009 -2- RANA CASTE COMMUNITY IS A TRUST FOR A GENERAL PUBLI C UTILITY. HE HAS STATED THAT THE RATIO OF THE ABOVE DECISION WOULD BE SQUAR ELY APPLICABLE TO THE CASE OF THE ASSESSEE. HE ALSO RELIED UPON THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BA RKATE SAIFIYAH SOCIETY, 213 ITR 492 AND STATED THAT SECTION 13(1)(B) WOULD NOT BE APPLICABLE TO THE RELIGIOUS TRUST. HE FURTHER STATED THAT IDENTI CAL ISSUE IS CONSIDERED BY THE ITAT, INDORE BENCH IN THE CASE OF DAWOODI BOHRA JAMAT, SARANGPURA OTHERS, ITA NO.615/IND/2007 AND ITAT INDORE BENCH G RANTED REGISTRATION UNDER SECTION 12AA TO THE TRUST FOR DA WOODI BOHRA COMMUNITY. HE HAS STATED THAT THE OBJECT OF THE AS SESSEE-TRUST AND DAWOODI BOHRA JAMAT, SARANGPURA (SUPRA) ARE IDENTIC AL. THE ABOVE DECISION OF THE INDORE BENCH IS UPHELD BY THE MADHY A PRADESH HIGH COURT IN THE CASE OF CIT VS. DAWOODI BOHRA JAMAT, P ITOL, DIST. JHABUA IN ITA NO.86 OF 2008 DATED 22-6-2009, REPORTED IN 317 ITR 342 (MP). HE ALSO STATED THAT SIMILAR ISSUE IS ALSO DECIDED BY T HE ITAT, AHMEDABAD D BENCH IN THE CASE OF DAWOODI BOHRA MASJID & KABRAST AN, KAWANT, ITA NO.1915/AHD/2006. HE THEREFORE SUBMITTED THAT THE CIT SHOULD BE DIRECTED TO ALLOW REGISTRATION TO THE TRUST. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE CIT-III, BARODA AND STATED THAT THE ASSESSEE IS NOT ENTITLED TO REGISTRATION BECAUSE IT HAS VIOLATED PROVISIONS OF SECTION 13(1) (A)/13(1)(B) OF THE ACT. 5. WE HAVE CAREFULLY CONSIDERED ARGUMENTS OF BOTH T HE SIDES AND PERUSED THE MATERIAL PLACED BEFORE. FROM THE PERUS AL OF THE ORDERS OF THE AUTHORITIES BELOW, IT IS EVIDENT THAT THE MAIN REAS ON FOR REFUSAL OF THE REGISTRATION IS THE ALLEGED VIOLATION OF THE SECTIO N 13(1)(A)/13(1)(B) OF THE ACT. THAT SECTION 13(1)(A) READS AS UNDER: ITA NO.2767/AHD/2009 -3- 13. SECTION 11 NOT TO APPLY IN CERTAIN CASES.(1) N OTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXC LUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIP T THEREOF (A) ANY PART OF THE INCOME FROM THE PROPERTY HELD U NDER A TRUST FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENURE FOR THE BENEFIT OF THE PUBLIC ; FROM THE ABOVE, IT IS EVIDENT THAT SECTION 13(1)(A) IS APPLICABLE FOR A PRIVATE RELIGIOUS TRUST WHICH DOES NOT ENURE FOR TH E BENEFIT OF THE PUBLIC. WE FIND THAT THE HONBLE APEX COURT HAS CONSIDERED SIMILAR ISSUE IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION (SUPRA). IN THAT CASE THEIR LORDSHIPS HELD AS UNDER: THAT BETWEEN THE MEMBERS OF THE RANA CASTE OR COMMU NITY OF AHMEDABAD AND THOSE WHO HAD TO GET ADMITTED TO THAT COMMUNITY ACCORDING TO CUSTOM AND USAGE THERE WAS A COMMON QU ALITY WHICH UNITED THEM, NAMELY, OF BEING MEMBERS OF THE RANA C ASTE OR COMMUNITY. THE MERE FACT THAT A PERSON OF THE RANA COMMUNITY W HO WAS NOT AN ORIGINAL NATIVE OF AHMEDABAD HAD TO PROVE HIS CREDE NTIALS ACCORDING TO THE CUSTOM AND USAGE OF THAT COMMUNITY TO GET ADMIT TED INTO THAT COMMUNITY DID NOT INTRODUCE A PERSONAL ELEMENT WHIC H WOULD DETRACT FROM THE IMPERSONAL NATURE OF THE COMMON QUALITY. IT IS WELL-SETTLED THAT AN OBJECT BENEFICIAL TO A S ECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. TO SERVE A CHARIT ABLE PURPOSE IT IS NOT NECESSARY THAT THE OBJECT SHOULD BE TO BENEFIT THE WHOLE OF MANKIND OR ALL PERSONS IN A COUNTRY OR STATE. IT IS SUFFICIENT IF THE INTENTION TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPE CIFIED INDIVIDUAL IS PRESENT. THE SECTION OF THE COMMUNITY SOUGHT TO BE BENEFITED MUST BE SUFFICIENTLY DEFINITE AND IDENTIFIABLE BY SOME COMM ON QUALITY OF A PUBLIC OR IMPERSONAL NATURE. FROM THE ABOVE, IT IS EVIDENT THAT THOUGH THE ABOVE DECISION WAS WITH REGARD TO EXAMINING WHETHER FOR THE PURPOSE OF EXEM PTION UNDER SECTION 11(1)(A), THE AHMEDABAD RANA ASSOCIATION IS A ELIGI BLE BECAUSE THE BENEFITS WERE AVAILABLE TO A PARTICULAR RELIGIOUS C OMMUNITY I.E. AHMEDABAD RANA CASTE ASSOCIATION. THEIR LORDSHIPS ACCEPTED THE ITA NO.2767/AHD/2009 -4- ASSESSEES CLAIM AND HELD THAT IF AN OBJECT IS FOR THE BENEFIT TO A SECTION OF THE PUBLIC, IT IS AN OBJECT OF GENERAL PUBLIC UTILI TY. THE SECTION OF PUBLIC IS DISTINGUISHED FROM A SPECIFIED INDIVIDUAL. IN OUR OPINION, THE RATIO OF THE ABOVE DECISION WOULD BE APPLICABLE WHILE INTERPRETI NG THE WORDS PRIVATE RELIGIOUS TRUST WHICH DOES NOT ENURE FOR THE BENEF IT OF THE PUBLIC. IN THE CASE OF THE ASSESSEE-TRUST, THE BENEFIT OF THE TRUS T IS AVAILABLE TO ALL PERSONS OF DAWOODI BOHRA COMMUNITY, THEREFORE THE BENEFIT I S AVAILABLE TO A SECTION OF A PUBLIC AND NOT TO SOME SPECIFIED INDIV IDUALS. AS THE HONBLE APEX COURT HAS HELD THAT BENEFIT TO A SECTION OF TH E SOCIETY IS SUFFICIENT TO ALLOW EXEMPTION UNDER SECTION 11, THEREFORE, IN OUR OPINION, WHEN THE BENEFIT IS AVAILABLE TO ENTIRE COMMUNITY I.E. SHIYA DAWOODI BOHRA, IT CANNOT BE SAID THAT THE TRUST IS FOR PRIVATE RELIGI OUS PURPOSE. WE FIND THAT SIMILAR VIEW IS TAKEN BY THE ITAT INDORE BENCH IN T HE CASE OF DAWOODI BOHRA JAMAT, SARANGPURA OTHERS (SUPRA) WHICH IS UPH ELD BY THE HONBLE MP HIGH COURT IN THE CASE OF DAWOODI BOHRA JAMAT, P ITOL (SUPRA). 6. THAT SECTION 13(1)(B) READS AS UNDER: 13. SECTION 11 NOT TO APPLY IN CERTAIN CASES.(1) N OTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE P ERSON IN RECEIPT THEREOF (A) XXXXX (B) IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMEN CEMENT OF THIS ACT, ANY INCOME THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIG IOUS COMMUNITY OR CASTE ; 7. FROM THE ABOVE, IT IS EVIDENT THAT THE SECTION 1 3(1)(B) IS APPLICABLE FOR A TRUST WHICH IS ESTABLISHED FOR CHARITABLE PUR POSE. THEREFORE, THE ITA NO.2767/AHD/2009 -5- SECTION 13(1)(B) IS NOT APPLICABLE FOR RELIGIOUS TR UST. THIS ISSUE IS CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BARKATE SAIFIYAH SOCIETY, 213 ITR 492 WHEREIN THEIR LORDSHIPS HELD AS UNDER: THAT THE TRIBUNAL HAD RIGHTLY HELD THAT SECTION 13 (1)(B) APPLIES ONLY TO TRUSTS WHICH WERE PURELY FOR CHARITABLE PUR POSES AND THE ASSESSEE-TRUST WAS CHARITABLE AS WELL AS RELIGIOUS IN NATURE AND THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT. 8. SIMILAR VIEW IS TAKEN BY HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. DAWOODI BOHRA JAMAT (SUPRA)K WHEREIN THEIR LORDSHIPS HELD AS UNDER: THAT SECTION 13(1)(B) IS ATTRACTED IN THE CASE OF INCOME OF THE TRUST FOR CHARITABLE PURPOSE OF A COMMUNITY OR CAST E, WHICH WAS NOT THE CASE HERE. THUS, THE TRIBUNAL RIGHTLY DECID ED THE ISSUE OF APPLICABILITY OF SECTION 13(1)(B) HOLDING THAT SINC E THE ASSESSEE WAS A RELIGIOUS TRUST, THE PROVISIONS OF SECTION 13(1)( B) WERE NOT APPLICABLE BECAUSE THEY WERE APPLICABLE IN THE CASE OF THE TRUST ESTABLISHED FOR CHARITABLE PURPOSES. FROM THE ABOVE, IT IS EVIDENT THAT THEIR LORDSHIPS OF HONBLE GUJARAT HIGH COURT AS WELL AS M.P. HIGH COURT HAVE HELD THA T SECTION 13(1)(B) WOULD BE APPLICABLE ONLY TO THE TRUSTS WHICH IS PUR ELY FOR CHARITABLE PURPOSE. EVEN IF A TRUST IS FOR CHARITABLE AS WELL AS RELIGIOUS PURPOSE, THE SECTION 13(1)(B) WOULD NOT BE APPLICABLE. ADMITTED LY, THE ASSESSEE TRUST IS A RELIGIOUS TRUST, THEREFORE SECTION 13(1)(B) WO ULD NOT BE APPLICABLE. IN VIEW OF THE ABOVE, WE HOLD THAT IN THE CASE OF THE ASSESSEE, NEITHER SECTION 13(1)(A) WOULD BE APPLICABLE NOR THE SECTION 13(1)( B). NO OTHER REASONS IS GIVEN FOR REFUSING THE REGISTRATION TO THE ASSES SEE-TRUST EXCEPT APPLICATION OF SECTION 13(1)(A)/13(1)(B) OF THE ACT . SINCE WE HAVE ALREADY HELD THAT THE SECTION 13(1)(A) AND THE SECT ION 13(1)(B) BOTH ARE NOT ITA NO.2767/AHD/2009 -6- APPLICABLE IN THE ASSESSEES CASE, WE DIRECT THE CI T, BARODA TO GRANT REGISTRATION TO THE ASSESSEE-TRUST. 9. IN RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 8 TH JULY, 2011 SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 08-07-2011