Hazrat Saiyad Mahebub Raheman Kadri Al Zilani Mazar Sharif Trust, AMRELI V. The Commissioner of Income Tax, Rajkot-III, RAJKOT-GUJARAT

ITA 49/RJT/2013

• Counselvise Citation: 4924914 RSA 2013
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 20-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N R SONI
• Assessee Lawyers: DR ADHIA
• Keywords: Charitable institution
• Section: 11; 12A; 12AA

Judgement Text

I : : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT . . , . . , BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 49/RJT /2013 HW W / ASSESSMENT YEAR : 2012 - 13 HAZRAT SAIYAD MAHEBUB RAHEMAN KADRI AL ZILANI MAZAR SHARIF TRUST APPELLANT PRATAPPURA, DRABAR GARH COMPOUND, AMRELI PAN: AAATH8267J V. COMMISSIONER OF INCOME - TAX, RAJKOT III, RAJKOT RESPONDENT D ATE OF HEARING: 12.04.2013 DATE OF PRONOUNCEMENT: 30 .05.2013 ASSESSEE BY: SHRI D R ADHIA, AR REVENUE BY: SHRI N R SONI, DR / ORDER . . / D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE - TRUST IS DIRECTED AGAINST THE ORDER PASSE D BY THE LD COMMISSIONER OF INCOME - TAX, RAJKOT - III U/S 12AA OF THE INCOME - TAX ACT ON 31.01.2013 ON THE FOLLOWING GROUNDS: - 1. THE LD. C.I.T. HAS ERRED IN LAW AND FACTS IN REJECTING APPLICATION FOR REGISTRATION U/S 12A FILED BY THE APPELLANT. THE APPELLAN T DESERVES REGISTRATION. 2. THE LD CIT HAS ERRED IN LAW AND FACTS IN REJECTING THE APPLICATION MADE FOR REGISTRATION U/S 12A ON THE IRRELEVANT GROUNDS. THE APPELLANT DESERVES REGISTRATION. 3. THE LD CIT HAS ERRED IN LAW AND FACTS IN REJECTING THE APPLICATI ON MADE FOR REGISTRATION U/S 12A ON THE IRRELEVANT CONSIDERATIONS. THE APPELLANT DESERVES REGISTRATION. 4. THE LD CIT HAS ERRED IN LAW IN NOT APPRECIATING THAT AS PER LEGAL AND STATUTORY POSITION, THE APPELLANT WAS DESERVING REGISTRATION. THE APPELLANT DE SERVES REGISTRATION. 5. THE LD CIT HAS ERRED IN LAW IN NOT PROVIDING REASONABLE AND APPROPRIATE OPPORTUNITY. HIS ORDER DESERVES MODIFICATION / CANCELLATION. 2 ITA 49 /RJT/201 3 6. THE LD CIT HAS ERRED IN NOT GRANTING REGISTRATION WITHOUT APPRECIATING THE FACTUAL AND LEGAL PO SITION THAT THE APPELLANT DESERVES REGISTRATION FORM THE FIRST DAY OF FY IN WITH APPLICATION IS MADE, I.E. 01.04.2012. THE APPELLANT DESERVES REGISTRATION. 7. WITHOUT PREJUDICE, THE LD CIT HAS ERRED IN NOT GRANTING REGISTRATION WITHOUT APPRECIATING THE FA CTUAL POSITION THAT THE APPELLANT DESERVES REGISTRATION AT LEAST FROM THE 01.04.2012 OR 17.07.2012, I.E. THE DATE OF MAKING APPLICATION. THE APPELLANT DESERVES REGISTRATION. 8. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND AND/OR ANY OR ALL THE GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAKE PLACE. 2. THE ASSESSEE - TRUST APPLIED FOR REGISTRATION U/S 12AA OF THE INCOME - TAX ACT ON 17.07.2012 BEFORE THE COMMISSIONER OF INCOME - TAX, RAJKOT TOGETHER WITH APPLICATION IN FORM NO.10A, COPY OF TRUST DEED, COPY OF R EGISTRATION CERTIFICATE WITH CHARITY COMMISSIONER, COPY OF PAN CARD, LIST OF NAME & ADDRESS OF THE TRUSTEES, COPY OF ACTIVITIES REPORT, THE DETAILS OF INCOME - TAX RETURNS FOR AY 2009 - 10 & 2011 - 12 AND COPY OF OBJECT REPORT. IT WAS SUBMITTED BEFORE THE COMMIS SIONER THAT THE ASSESSEE - TRUST CAME INTO EXISTENCE ON 23.05.1989 AND IS DULY REGISTERED UNDER THE BPT ACT. THE LD COMMISSIONER PERUSED THE DOCUMENTS FILED BEFORE HIM AND NOTED THAT THE ACTIVITIES OF TRUST WERE DIRECTED FOR THE BENEFIT OF MUSLIM COMMUNITY. HE, THEREFORE, DENIED REGISTRATION TO THE ASSESSEE - TRUST WITH THE FOLLOWING OBSERVATIONS: - 5. IN RESPONSE TO THE ABOVE SHOW CAUSE NOTICE, THE ASSESSEE FILED A WRITTEN SUBMISSION VIDE LETTER DT. 22.1.2013. THE CONTENTION OF THE ASSESSEE IS CAREFULLY CONSI DERED. THE SAME IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: A ) THE ASSESSEE TRUST IS REGISTERED UNDER WAQF BOARD WHICH TERMS THAT THE ASSESSEE TRUST IS CREATED FOR THE BENEFIT OF A PARTICULAR COMMUNITY I.E. MUSLIM COMMUNITY. B ) THE ASSESSEE TRUST IS RUNNING SC HOOL KNOWN AS MADRESSA WHERE THE KNOWLEDGE OF FARSI & URDU IS GIVEN TO THE STUDENTS. THE SAID EDUCATIONAL ACTIVITY IS NOT FOR THE GENERAL PUBLIC BUT FOR THE STUDENTS OF PARTICULAR COMMUNITY I.E. MUSLIM COMMUNITY. 3 ITA 49 /RJT/201 3 C ) FURTHER ON VERIFICATION OF THE OBJECTS OF T HE TRUST IT IS OBSERVED THAT ALL THE OBJECTS OF THE TRUST ARE FOR THE BENEFIT OF ONE COMMUNITY I.E. MUSLIM COMMUNITY. D ) ON PERUSAL OF THE PHOTOGRAPHS OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE TRUST IT IS OBSERVED THAT ALL THE ACTIVITIES ARE CARRIED OUT F OR THE BENEFIT OF A PARTICULAR COMMUNITY I.E. MUSLIM COMMUNITY AS NO DETAILS OF NON - MUSLIM STUDENTS HAVE BEEN GIVEN. E ) THOUGH IN PARA 4 OF THE SUBMISSION DT. 22.1.2013, IT HAS BEEN CLAIMED THAT 15 STUDENTS BELONGING TO OTHER THAN MUSLIM COMMUNITY ARE STUDYIN G IN THE SCHOOL, HOWEVER NO DETAILS THEREOF HAVE BEEN SUBMITTED. THIS LEADS TO THE CONCLUSION THAT THE TRUSTS REGISTRATION CLAIM IS DEFECTIVE TO THE ABOVE EXTENT. HENCE THE APPLICATION MADE BY THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT IS LIABLE T O BE REJECTED. 3. WE HAVE HEARD BOTH THE PARTIES. SECTION 11 PROVIDES THAT INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES SHALL NOT BE INCLUDED IN THE TOTAL INCOME ON FULFILLMENT OF THE CONDITIONS PRESCRIBED THEREIN. SECTION 12A PROVIDES THAT THE PROVISIONS OF SECTION 11 SHALL NOT APPLY UNLESS SUCH TRUST OR INSTITUTION IS REGISTERED BY THE COMMISSIONER OF INCOME - TAX U/S 12A. PROCEDURE FOR REGISTRATION OF TRUST OR INSTITUTIONS IS SPEL T OUT IN SECTION 12AA OF THE INCOME - TAX ACT. CLAUSE (A) O F SUB - SECTION ( 1 ) OF SECTION 12AA AUTHORIZES THE COMMISSIONER TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE FEELS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR THE INSTITUTION. CLA USE (B) OF SUB - SECTION ( 1 ) OF SECTION 12AA REQUIRES THE COMMISSIONER TO PASS AN ORDER IN WRITING REGISTER ING THE TRUST OR INSTITUTION IF HE IS SATISFIED ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES. IT ALSO AUTHORIZES HIM TO PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION IF HE IS NOT SATISFIED ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES . 4. SUB - SECTION ( 1 ) OF SECTION 13 PROVIDES THAT THE PROVISIONS OF SE CTION 11/12 SHALL NOT APPLY IN CERTAIN CASES. IN THE MATTER BEFORE US, WE ARE CONCERNED WITH THE 4 ITA 49 /RJT/201 3 PROVISIONS OF CLAUSE (B) AND (C) OF SUB - SECTION (1) OF SECTION 13 OF THE INCOME - TAX ACT. CLAUSE (B) OF SUB - SECTION ( 1 ) OF SECTION 13 MAKES THE PROVISION OF SEC TION 11 INAPPLICABLE TO THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CAST E . CLAUSE (C) OF SUB - SECTION ( 1 ) OF SECTION 1 3 MAKES THE PROVISION OF SECTION 11 INAPPLICABLE TO THE CASE OF A TRUST FOR CHARITABLE OR RELIGIOUS PURPOSE S OR A CHARITABLE OR RELIGIOUS INSTITUTION IF ANY PART OF THE INCOME OF SUCH TRUST OR INSTITUTION ENURES DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF AN Y PERSON REFERRED TO IN SUB - SECTION ( 3 ) OF SECTION 13. IT ALSO PROVIDES THAT THE PROVISIONS OF SECTION 11 SHALL NOT APPLY TO THE CASE OF A TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION IF ANY PART OF INCOME O R PROPERTY OF SUCH TRUST OR INSTITUTION IS APPLIED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB - SECTION ( 3 ) OF SECTION 13. IT IS THUS QUITE EVIDENT ON PERUSAL OF SUB - SECTION ( 1 ) OF SECTION 13 THAT A DISTINCTION HAS BEEN DRAWN BETWEEN (I) A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION AND (II) A TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION. IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION {SECTION 13(1)(B)} , SECTIO N 11 WILL NOT APPLY IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CAST E AS STIPULATED BY CLAUSE (B) OF SUB - SECTION (1) OF SECTION 13. IN THE CASE OF A TRUST BEING CHARITABLE AS WELL AS RELIGI OUS IN NATURE {SECTION 13(1)(C)}, SECTION 11 WILL NOT APPLY IF ANY PART OF ITS INCOME OR PROPERTY ENURES OR IS APPLIED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB - SECTION (3) OF SECTION 13. IN OTHER WORDS, THE ISSUE AS TO WHETHE R THE TRUST HAS BEEN CREATED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE IS RELEVANT ONLY IN CASES OF TRUSTS OF CHARITABLE NATURE AND NOT TO THE TRUSTS OF CHARITABLE AS WELL AS RELIGIOUS NATURE. THE AFORESAID VIEW IS DULY SUPPORTED BY TH E JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN CIT V. BARKATE SAIFIYAH SOCIETY, 213 ITR 492, 497, 501 (GUJ.), IN WHICH IT HAS BEEN HELD THAT THE RESTRICTION CONTEMPLATED BY SECTION 13(1)(B) APPLIES ONLY TO A TRUST PURELY FOR CHARITABLE PURPOSES AND NOT TO THE TRUSTS WHICH ARE CHARITABLE AS WELL AS RELIGIOUS IN NATURE. 5 ITA 49 /RJT/201 3 5. SUB - SECTION (1) OF SECTION 13 PROVIDES THAT NOTHING CONTAINED IN SECTION 11 OR 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIP T THEREOF ANY INCOME OR PART OF ANY INCOME SPECIFIED IN VARIOUS CLAUSES THEREOF. S UB - SECTION (1) OF SECTION 13 THUS DEALS WITH EXCLUSION OF CERTAIN INCOME OF THE NATURE SPECIFIED IN ITS VARIOUS CLAUSES FROM THE TOTAL INCOME OF THE PREVIOUS YEAR. ASSESSMENT OR COMPUTATION OF TOTAL INCOME OF A PREVIOUS YEAR CAN BE DONE BY THE AO AT THE ASSESSMENT STAGE AND NOT BY THE COMMISSIONER AT THE REGISTRATION STAGE. BESIDES, REQUISITE FACTS ESTABLISHING APPLICABILITY OR INAPPLICABILITY OF VARIOUS CLAUSES OF SUB - SECTION (1) OF SECTION 13 IN RESPECT OF A PREVIOUS YEAR WOULD BE AVAILABLE ONLY UPON EXPIRY OF PREVIOUS YEAR AND THUS AT THE STAGE OF ASSESSMENT ONLY AND NOT AT THE STAGE OF REGISTRATION U/S 12A/12AA. THEREFORE THE APPLICABILITY OF VARIOUS CLAUSES OF SUB - SECTION (1) OF SECTION 13 CAN BE EXAMINED BY THE AO AT THE ASSESSMENT STAGE. THE COMMISSIONER IS HOWEVER AUTHORIZED BY SECTION 12A/12AA TO EXAMINE NOT ONLY THE GENUINENESS OF ACTIVITIES BUT ALSO THE OBJECTS OF THE TRUST/INSTITUTION SEEKING REGISTRATION. T HE ISSUE AS TO WHETHER A TRUST OR INSTITUTION HAS BEEN CREATED FOR CHARITABLE PURPOSES OR FOR RELIGIOUS PURPOSES OR FOR BOTH IN TERMS OF SECTION 13(1)(B) AND (C) CAN ALSO THEREFORE BE EXAMINED BY THE COMMISSIONER AS PART OF OVERALL EXAMINATION INTO THE GENUINENESS OF ACTIVITIES AND THE OBJECTS OF THE TRUST/INSTITUTION WITH REFERENCE TO VARIOUS CLAUSES IN TRUST DEED, MEMORANDUM OF ASSOCIATION, BYE - LAWS, ETC.. 6 . PERUSAL OF THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER DOES NOT SPELL OUT AS TO WHETHER THE ASSESSEE - TRUST IS A CHARITABLE TRUST AS CONTEMPLATED BY SECTION 13(1)(B) OR A CHARITABLE AS WELL AS RELIGIOUS TRUST CONTEMPLATED BY SECTION 13(1)(C). IT IS THEREFORE CONSIDERED APPROPRIATE TO RESTORE THE MATTER TO THE FILE OF THE LD . COMMISSIONER FOR DECID ING THE MATTER AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE - TRUST . HE WILL EXAMINE AS TO WHETHER THE ASSESSEE - TRUST IS A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION WITHIN THE MEANING OF CLAUSE (B) OF SUB - SECTION (1) OF SECTION 13. IF HE COMES TO CONCLUSION THAT THE ASSESSEE - TRUST IS A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION, IT IS ONLY THEN THAT THE ISSUE OF CREATION OF TRUST FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNIT Y OR CAST E WILL ARISE. IF HE COMES TO THE 6 ITA 49 /RJT/201 3 CONCLUSION THAT THE ASSESSEE TRUST HAS BEEN CREATED FOR CHARITABLE AS WELL AS RELIGIOUS PURPOSES, HE , IN THAT EVENT , WILL EXAMINE AS TO WHETHER THERE IS ANY STIPULATION IN THE TRUST DEED , BYE - LAWS, ETC., BY WHICH I T COULD BE INFERRED THAT THE INCOME OF THE TRUST WOULD BE APPLIED FOR THE BENEFIT OF ANY PERSON REFERRED TO SUB - SECTION ( 3 ) OF SECTION 13 . THE ORDER PASSED BY THE LD CIT IS THEREFORE SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE LD COMMISSIONER F OR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNIT Y OF HEARING TO THE ASSESSEE - TRUST. A PPEAL FILED BY THE ASSESSEE - TRUST IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. S 30 .0 5 . 2013 S ORDER PRONOUNCED ON 30 .05 . 201 3 SD/ - SD/ - ( . . W / T. K. SHARMA) ( . . T / D. K. SRIVASTAVA) H T / JUDICIAL MEMBER / ACCOUNTANT MEMBER RAJKOT: 30 .05 .2013 BT T / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - HAZRAT SAIYAD MAHEBUB RAHEMAN KADRI, AL ZILANI MAZAR SHARIF TRUST, PRATAPPARA, DARBARGADH COMPOUND, AMRELI. 2 . NR / RESPONDENT - CIT - III, RAJKOT 3 . I / CONCERNED CIT 4 . NHHI , I , / DR, ITAT, RAJKOT 5 . W / GUARD FILE. / BY ORDER , TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT