Shree Atmanand Jain Sabha, Yamunanagar V. CIT (Exemptions), Chandigarh

ITA 541/CHANDI/2015

• Counselvise Citation: [2016] 128 COUNSELVISE.COM (IT) 9768 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-11-2015
• Assessment Year: 2015-2016
• Appeal Filed On: 19-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Charitable institution
• Section: 12; 10; 11; 12A; 12AA; 11(1A); 13

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.541/CHD/2015 ASSESSMENT YEAR: 2015-16 SHREE ATMANAND JAIN SABHA VS. CIT(EXEMPTIONS) 102, YOGESH NAGAR CHANDIGARH GALI NO. 4 YAMUNANAGAR PAN NO. AANTS4148J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI LAKESH MALIK RESPONDENT BY : SHRI SUSHIL KUMAR DATE OF HEARING : 28/04/2016 DATE OF PRONOUNCEMENT : 12/07/2016 ORDER PER ANNAPURNA GUPTA A.M. THIS APPEAL IS AGAINST THE ORDER OF THE CIT (EXEMPT ION) CHANDIGARH, DT. 17/03/2015 REFUSING REGISTRATION U/S 12AA OF THE IN COME TAX ACT, 1961. 2. BRIEFLY STATED THE ASSESSEE SOCIETY FILED AN APP LICATION FOR GRANT OF REGISTRATION U/S 12AA, ON 15.09.2014. LD. CIT AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND PERUSING ALL DOCUMENTS PRODUCED BY THE ASSESSEE I.E. COPY OF BY-LAWS, PROOF OF REGISTRATION, BOOKS OF ACCOUNTS AND VOUCHERS, REJECTED THE APPLICATION FOR THE REASON THAT THE AS SESSEES CASE WAS HIT BY CLAUSE (A) & (B) OF SUB SECTION 1 OF SECTION 13 OF THE ACT, SINCE IT WAS EVIDENT FROM THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY T HAT IT HAD BEEN CONSTITUTED MERELY FOR THE BENEFIT OF JAIN SOCIETY AND NOT FOR THE BENEFIT OF GENERAL PUBLIC AT LARGE. 2 3. AGGRIEVED BY THE SAME, THE ASSESSEE FILED THE PR ESENT APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS:- 1) THE LEARNED CIT(EXEMPTIONS) HAS ERRED IN ARRIVIN G AT THE CONCLUSION THAT ALL THE AIMS AND OBJECTS OF THE SOCIETY ARE MERELY CONSTITU TED FOR BENEFIT OF THE JAIN SOCIETY ONLY AND NOT FOR THE BENEFIT OF THE GENERAL PUBLIC AT LARGE. 2) THE LEARNED CIT HAS FAILED TO ANALYSE THAT SHREE ATAMNAND JAIN SABHA RUNS JAIN MANDIR IN ITS PREMISES ALSO AND ONLY RELIGIOUS AND CULTURAL ACTIVITIES, PRAYERS IN MANDIR ARE CONDUCTED AS PER JAIN NORMS AND RELIEF T O THE POOR IN THE FORM OF LANGAR AND OTHER CHARITABLE ACTIVITIES CONDUCTED BY JAIN SABHA ARE FOR THE GENERAL PUBLIC AT LARGE IRRESPECTIVE OF CASTE, CREE D AND COLOUR. GURUDWARAS TOO PERFORMS PRAYERS OR SHABD KIRTANS AS PER SIKH NORMS BUT LANGER AND OTHER CHARITABLE ACTIVITIES ARE PERFORMED FOR GENERAL PUB LIC AT LARGE. 3) THE LEARNED CIT HAS WRONGLY INTERPRETED THE AIMS AND OBJECTS OF THE SOCIETY WHICH IN NO WAY SUGGESTS THAT THEY ARE MEANT ONLY F OR PROPAGATION OF JAIN RELIGION AND RENDERING HELP TO THE FOLLOWER OF JAIN RELIGION OR MEANT ONLY FOR JAIN COMMUNITY. 4. BEFORE US, THE LD. AR VEHEMENTLY REFUTED THE FIN DING OF THE LD. CIT THAT THE ASSESSEE SOCIETY WAS FORMED SOLELY FOR THE PURPOSE OF BENEFITTING THE JAIN SOCIETY. LD. AR DREW OUR ATTENTION TO POINT NO. 2 T O 9 OF THE AIMS AND OBJECTS OF THE SOCIETY AT PB14 AND STATED THAT ALL THESE OBJE CTS WERE FOR THE BENEFIT OF PUBLIC AT LARGE. LD. AR STATED THAT IT WAS ONLY THE OBJECT AT POINT NO. 1 WHICH APPEARED TO BENEFIT A PARTICULAR COMMUNITY I.E. JAI N. BUT, THE LD. AR STATED, THIS DID NOT MEAN THAT THE SOCIETY WAS CONSTITUTED MEREL Y FOR THE BENEFIT OF JAIN COMMUNITY. LD. AR ARGUED THAT ONE OUT OF TEN OBJECT S, COULD NOT MAKE A SOCIETY TO BE CONSTITUTED PREDOMINANTLY FOR THE BET TERMENT OF A PARTICULAR COMMUNITY. LD. AR FURTHER RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. COMMISSIONER OF INCOME TAX VS. DAWOODI BOHARA JAMAT (2014) 364 ITR 31 IN SUPPORT OF ITS CONTENTIONS. LD. AR ALSO RELIED U PON THE DECISION OF THE PUNE BENCH OF THE ITAT IN THE CASE OF SHREE JAIN SHWETAMBER MURTIPUJAK SANGH VS. CIT(1) IN ITA NO. 1353/ PN/201 4 IN SUPPORT OF ITS CONTENTION. 5. LD. DR ON THE OTHER HAND POINTED OUT THAT IN VIE W OF THE VIOLATION OF THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT, THE ASSE SSEE WAS NOT ENTITLED TO CLAIM REGISTRATION U/S 12A OF THE ACT. 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITY BELOW. 7. THE ONLY ISSUE IN THE PRESENT CASE IS WHETHER TH E ASSESSEE IS ENTITLED TO REGISTRATION U/S 12A R.W.S. 12AA OF THE ACT SINCE O NE OF ITS OBJECTS APPEARS TO BE SPECIFICALLY FOR THE BENEFIT OF THE JAIN COMMUNITY WHICH IS IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT. AT THIS JUNCTURE IT IS IMPERATIVE TO UNDERSTAND THE SCOPE OF THE POWERS GRANTED BY THE LEGISLATURE TO THE COMMISSIONER FOR THE PURP OSE OF GRANTING REGISTRATION U/S 12A OF THE ACT.THE PROCEDURE TO BE FOLLOWED BY THE COMMISSIONER FOR GRANTING OR REFUSING APPLICATION FOR REGISTRATION M ADE UNDER SECTION 12A IS LAID DOWN U/S 12AA OF THE ACT. ACCORDING TO THE PROCEDUR E SO LAID DOWN, THE COMMISSIONER SHALL CALL FOR DOCUMENTS AND INFORMATI ON AND CONDUCT AN ENQUIRY TO SATISFY HIMSELF OF THE GENUINENESS OF THE TRUST BY REACHING A SATISFACTION WITH REGARDS TO THE CHARITABLE OR RELIGIOUS NATURE OF T HE OBJECTS AND THE AUTHENTICITY OF THE ACTIVITIES OF THE TRUST. THE COMMISSIONER TH US HAS TO SATISFY HIMSELF ABOUT THE EXISTENCE OF TWO CONDITIONS BEFORE GRANTING REG ISTRATION U/S 12A : 1)THE OBJECTS OF THE TRUST/INSTITUTION ARE CHARITAB LE. 2)THE ACTIVITIES CARRIED OUT BY THE TRUST/INSTITUTI ON ARE GENUINE. FURTHER THE EXPRESSION CHARITABLE PURPOSE HAS BEE N DEFINED UNDER SECTION 2(15) OF THE INCOME TAX ACT, 1961 AS FOLLOWS:- SECTION 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, YOGA, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING WATER-SHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES O R OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CAR RYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIV ITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT A PPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TWENTY FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR; 4 FOLLOWING PROVISO SHALL BE SUBSTITUTED FOR THE EXIS TING FIRST AND SECOND PROVISOS TO CLAUSE (15) OF SECTION 2 BY THE FINANCE ACT, 2015, W.E.F. 1-4-2016: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CAR RYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIV ITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, UNLESS- (I) SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY; AND (II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVI TIES DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PER CENT OF THE TOTAL RE CEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKING SUCH ACTIVITY OR ACTIVITIES, OF THAT PR EVIOUS YEAR; AS IS EVIDENT FROM THE ABOVE THE EXPRESSION IS EXPA NSIVE AND INCLUSIVE AND INCLUDES RELIEF TO THE POOR, EDUCATION, MEDICAL REL IEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. WHILE THE O THER PURPOSES NEED NO ELUCIDATION, THE OBJECT OF GENERAL PUBLIC UTILITY H AS BEEN A MATTER FOR INTERPRETATION BEFORE VARIOUS COURTS WHO HAVE HELD THE SAME TO HAVE WIDE CONNOTATIONS. IN CIT VS. GUJARAT MARTIME BOARD (200 7) 14 SCC 704 THE WORD GENERAL IN THE SAID EXPRESSION MEANT PERTAINING T O A WHOLE CLASS. THEREFORE, ADVANCEMENT OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM BENEFIT TO AN INDIVIDUAL OR GROU P OR INDIVIDUALS WOULD BE A CHARITABLE PURPOSE. THE SAID EXPRESSION WOULD PRIME FACIE INCLUDE ALL OBJECTS WHICH PROMOTE THE WELL BEING OF THE GENERAL PUBLIC. 8. KEEPING THE AFORESAID IN VIEW WE SHALL NOW TAKE INTO CONSIDERATION THE FACTS OF THE CASE AND EXAMINE WHETHER OR NOT THE OB JECTS OF THE ASSESSEE TRUST WERE CHARITABLE OR RELIGIOUS IN NATURE ENTITLING IT TO REGISTRATION U/S 12A OF THE ACT. THE AIMS AND OBJECTS OF THE SOCIETY AS ENUMERATED I N ITS MEMORANDUM PLACED AT PAPER BOOK PAGE NO. 14 ARE AS FOLLOWS:- AIMS AND OBJECTS OF THE SOCIETY: 1) THE OBJECT OF THE SOCIETY SHALL BE TO PROMOTE IN DIVIDUALLY AND JOINTLY THE ECONOMIC, SOCIAL, EDUCATIONAL, CULTURAL, RELIGIOUS AND WELFARE ACTIVITIES OF JAIN COMMUNITY. 2) TO MAKE CONTINUOUS EFFORTS TO INSPIRE PEOPLE OF JAIN COMMUNITY TO WORK FOR THE LARGER INTEREST OF THE NATION AND PEOPLE OF THE COU NTRY AT LARGE. 3) TO PROMOTE NATIONAL UNITY AND INTERNATIONAL PEAC E AND AMITY. 5 4) TO PROMOTE COMMUNAL AND SOCIAL HARMONY AND BROTH ERHOOD. 5) TO RENDER MEDICAL AID TO THE POOR AND NEEDY PERS ONS. 6) TO MAKE ARRANGEMENT TO RENDER ECONOMIC HELP IN T HE FIELD OF PRIMARY AND HIGHER EDUCATION TO THE NEEDY STUDENTS. 7) TO PROMOTE THE CULTURAL, LITERARY ARTISTIC, SCIE NTIFIC, SOCIAL AND RELIGIOUS ACTIVITIES AND FUNCTIONS. 8) TO ORGANISE BHANDARA, KIRTAN, SATSANG AND OTHER RELIGIOUS PROGRAMMES AND AWARENESS FOR THE PEOPLE. 9) TO CONSTRUCT AND MAINTAIN THE TEMPLE, DHARAMSHAL A AND TO UNDERTAKE OTHER CHARITABLE AND RELIGIOUS ACTIVITIES NECESSARY FOR F URTHERANCE OF OBJECTS OF THE SOCIETY. A PERUSAL OF THE ABOVE REVEALS THAT THE OBJECTS AT POINT NO. 2-9 ARE CHARITABLE IN NATURE AS DEFINED U/S 2(15) OF THE ACT, BEING EITHE R IN THE FIELD OF EDUCATION, RELIEF OF THE POOR, MEDICAL OR FOR ANY PURPOSE OF G ENERAL PUBLIC UTILITY. THE OBJECTS AT POINT NO. 2-4 AND 6-9 ARE IN THE INTERES T OF PUBLIC AT LARGE FOR PROMOTING UNITY, PEACE, BROTHERHOOD, COMMUNITY, AND SOCIAL HARMONY, CULTURAL AND OTHER ACTIVITIES. POINT NO. 5 STATES THE OBJEC T OF PROVIDING MEDICAL AID TO THE POOR. WHILE POINT NO. 6 IS IN RELATION TO THE F IELD OF EDUCATION. THUS THE OBJECTS STATED AT POINT NO. 2-9 ARE FOR CHARITABLE PURPOSE. MOREOVER WE FIND THAT EVEN THE LD. CIT HAS MADE NO ADVERSE OBSERVATION IN RELATION TO THE OBJECTS STATED AT POINT NO. 2-9. THE OBJECT OF THE SOCIETY STATED AT POINT NO. 1 SEEKS TO PROMOTE THE WELFARE OF A PARTICULAR COMMUNITY I.E. JAIN COMMUNITY. IT IS THIS VERY OBJECT WHICH THE LD. CIT HAS SINGLED OUT AS BEING I N VIOLATION OF THE PROVISION OF SECTION 13(1)(B) AND HENCE DENYING REGISTRATION U/S 12A TO THE ASSESSEE. IT IS THEREFORE TO BE EXAMINED WHETHER THE OBJECT WOULD Q UALIFY AS BEING CHARITABLE IN NATURE AS PER THE DEFINITION IN SECTION 2(15) OF THE ACT. THERE IS NO DOUBT THAT THE ACTIVITIES OUTLINED IN T HE OBJECT QUALIFY AS BEING IN THE NATURE OF UTILITY SERVICES BEING FOR THE PURPOSE OF PROMOTING ECONOMIC, SOCIAL, EDUCATIONAL, CULTURAL AND WELFARE ACTIVITIES OF THE JAIN COMMUNITY. BUT SINCE IT IS FOR THE BENEFIT OF A SPECIFIC COMMUNITY IT HAS TO B E SEEN WHETHER IT WOULD QUALIFY AS GENERAL PUBLIC UTILITY SERVICES AS STATED IN T HE DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT. 6 AS STATED ABOVE, THE EXPRESSION GENERAL HAS BEEN IN TERPRETED TO MEAN A WHOLE CLASS, PUBLIC OR A SECTION OF THE PUBLIC AS DISTING UISHED FROM AN INDIVIDUAL OR GROUP OF INDIVIDUALS. IN CASE OF AHMEDABAD RANA CA STE ASSOCIATION VS. CIT (1971) 82 ITR 704 (SC) THE SUPREME COURT HAS INTERP RETED THE TERM GENERAL LIKEWISE BY STATING AS FOLLOWS:- IT IS WELL-SETTLED BY NOW, AND THE HIGH COURT ALSO HAS RIGHTLY TAKEN THAT VIEW, THAT AN OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. TO SERVE A CHARITABLE PURPOSE IT IS NOT NE CESSARY THAT THE OBJECT SHOULD BE TO BENEFIT THE WHOLE OF MANKIND OR ALL PERSONS IN A PARTICULAR COUNTRY OR STATE. IT IS SUFFICIENT IF THE INTENTION TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPECIFIED INDIVIDUAL IS PRESENT. THIS COURT IN CIT VS. ANDHRA CHAMBER OF COMMERCE (1965) 55 ITR 722 (SC) : TC 23R.301 OVERRULED THE V IEW OF BEAUMONT C.J. IN CIT VS. GRAIN MERCHANTS' ASSOCIATION OF BOMBAY (1938) 6 ITR 427 (BOM) : TC23R.412 ON THE POINT. IT WAS, HOWEVER, OBSERVED THAT THE SECTION O F THE COMMUNITY SOUGHT TO BE BENEFITED MUST BE SUFFICIENTLY DEFINED AND IDENTIFI ABLE BY SOME COMMON QUALITY OF A PUBLIC OR IMPERSONAL NATURE. WHERE THERE WAS N O COMMON QUALITY UNITING THE POTENTIAL BENEFICIARIES INTO A CLASS THE TRUST MIGH T NOT BE REGARDED AS VALID. THE SUPREME COURT REITERATED THIS PROPOSITION IN DAWOODI BOHARA JAMAT (SUPRA) WHEREIN IT HELD AS FOLLOWS IN PARA 30 & 33 OF ITS O RDER: 30. ACCORDING TO SECTION 2(15), THE EXPRESSION CHA RITABLE PURPOSE HAS BEEN DEFINED BY WAY OF AN INCLUSIVE DEFINITION SO AS TO INCLUDE RELIEF TO THE POOR, EDUCATION, MEDICAL RELIEF AND ADVANCEMENT OF ANY OT HER OBJECT OF GENERAL PUBLIC UTILITY. A CATENA OF DECISIONS OF THIS COURT WHICH HAVE INTERPRETED THE SAID PROVISION AND ESPECIALLY THE EXPRESSION ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY HAVE OBSERVED THAT THE SAID EXPRESSION IS OF THE WI DEST CONNOTATION. THE WORD GENERAL IN THE SAID EXPRESSION MEANS PERTAINING T O A WHOLE CLASS. (CIT V. GUJARAT MARITIME BOARD, (2007) 14 SCC 704). THEREFORE, ADVA NCEMENT OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM BENEFIT TO AN INDIVIDUAL OR A GROUP OF INDIVIDUALS WOULD BE A CHA RITABLE PURPOSE. (CIT V. AHMEDABAD RANA CASTE ASSM.) THE SAID EXPRESSION WOU LD PRIMA FACIE INCLUDE ALL OBJECTS WHICH PROMOTE THE WELL BEING OF THE GENERAL PUBLIC. IT CANNOT BE SAID THAT A PURPOSE WOULD CEASE TO BE CHARITABLE EVEN WH EN PUBLIC WELFARE IS INTENDED TO BE SERVED. 33. IN CIT V. ANDHRA CHAMBER OF COMMERCE; AHMEDABAD RANA CASTER ASSN. V. CIT; SOLE TRUSTEE, LOKA SHIKSHANA TRUST V. CIT AND YOGIRAJ CHARITY TRUST V. CIT AND CIT V. ANDHRA CHAMBER OF COMMERCE, [1965] 55 ITR 722 (S C), IT WAS OBSERVED THAT OBJECTS FOR SERVICE AND BENEFIT TO THE GENERAL MASS ES WOULD INDICATE THAT THEY ARE MEANT FOR PUBLIC PURPOSE AND THUS, WOULD CREATE A PUBLIC CHARITABLE TRUST. 9. IN THE PRESENT CASE THIS OBJECT MAY BE FOR THE B ENEFIT OF THE JAIN COMMUNITY, BUT IT MAY BE IN THE NATURE OF GENERAL P UBLIC UTILITY AND ONE SUCH OBJECT MAY NOT DISENTITLE ASSESSEE FOR GRANT OF REG ISTRATION BECAUSE ENTIRE FACTS AND OBJECTS HAVE TO BE SEEN. 7 THUS, WE HOLD THAT THE OBJECTS OF THE ASSESSEE TRUS T ARE MAINLY CHARITABLE IN NATURE. 10. THE ARGUMENT OF THE LD. DR THAT ONE OF THE OBJE CTS OF THE TRUST VIOLATES THE PROVISION OF SECTION 13(1)(B), BEING FOR THE BENEFI T OF A SPECIFIC RELIGIOUS COMMUNITY OR CASTE,AND THEREFORE THE ASSESSEE SHOUL D NOT BE GRANTED REGISTRATION U/S 12A, WE FIND HAS NO MERIT. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. C OMMISSIONER OF INCOME TAX VS. DAWOODI BOHARA JAMAT (2014) 364 ITR 31 HAS CLARIFIED THE PURPORT OF SECTION 13(1)(B), AS ONLY BEING FOR THE PURPOSE OF DENYING EXEMPTION UNDER SECTION 11 & 12 OF THE ACT AND THUS NOT COMING INTO PLAY AT AN E ARLIER STAGE OF GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT. THE APEX COURT HAS INTERPRETED THE PURPORT OF SECTION 13(1)(B) WHILE LUCIDLY DEALING W ITH THE SCHEME OF THE ACT VIS-- VIS CHARITABLE AND RELIGIOUS TRUSTS AT PARA 11-15 O F ITS ORDER AS FOLLOWS: 11. AT THE OUTSET, A BRIEF REFERENCE TO THE RELEVAN T PROVISIONS OF THE ACT WOULD BE APPOSITE. THE INCOME OF A CHARITABLE OR RELIGIOUS T RUST IS EXEMPT FROM TAXATION UNDER THE CORRELATED PROVISIONS OF SECTIONS 11, 12, 12A, 12AA AND 13. SECTION 11 DEALS WITH INCOME FROM TRUSTS FOR CHARITABLE AND RE LIGIOUS PURPOSES AND SETS OUT WHICH INCOME SHALL BE EXIGIBLE TO TAXATION. SECTION 11(1) RELATES TO APPLICATION OF INCOME TOWARDS THE OBJECTS OF THE TRUST AND EXEMPTS INCOME OF TRUSTS WITH OBJECTS WHOLLY CHARITABLE OR RELIGIOUS OR PARTS OF INCOME W HICH RELATE TO SUCH OBJECTS. SECTION 11(1A) PROVIDES FOR EXEMPTION OF CAPITAL GA INS DERIVED BY TRUSTS. SECTION 11(1B), SPEAKS OF FAILURE TO APPLY INCOME AS PER OP TION UNDER EXPLANATION (2) TO SECTION 11(1). SECTION 11(2) RELATES TO SETTING APA RT OR ACCUMULATION OF INCOME. SECTION 11(3) DEALS WITH CONSEQUENCES OF MISAPPLICA TION OF INCOME OR IMPROPER INVESTMENT. WHILE SECTION 11(3A) RELATES TO MODIFIC ATION OF PURPOSES SPECIFIED IN FORM NO. 10 UNDER SECTION 11(2), SECTIONS 11(4) & 1 1(4A) RELATE TO BUSINESS INCOME OF CHARITABLE TRUSTS. LASTLY, SECTION 11 (5) PROVID ES FOR THE PRESCRIBED MODES OF INVESTMENT IN REGARD TO THE SAID TRUSTS. 12. SECTION 12 PROVIDES THAT THE INCOME OF TRUSTS W HICH ARE CREATED WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE FROM VOLUNTARY CONT RIBUTIONS WOULD BE DEEMED AS INCOME FROM THE PROPERTY HELD UNDER TRUST WHOLLY FO R CHARITABLE OR RELIGIOUS PURPOSE FOR THE PURPOSES OF SECTION 11 AND 13 OF TH E ACT. 13. SECTION 12A PROVIDES FOR THE CONDITIONS FOR APP LICABILITY OF SECTIONS 11 AND 12 OF THE ACT. IT PRESCRIBES TWO ESSENTIAL CONDITIONS WHICH MUST BE SATISFIED BY A CHARITABLE/RELIGIOUS TRUST IN ORDER TO CLAIM EXEMPT ION UNDER THE AFORESAID SECTIONS: FIRSTLY, THAT THE PERSON IN RECEIPT OF THE INCOME H AS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST ON OR AFTER 01.06.2007 IN THE PRESCRIBED FORM AND MANNER TO THE COMMISSIONER AND SUCH TRUST IS REGISTERED UN DER SECTION 12AA AND SECONDLY, WHERE THE TOTAL INCOME OF THE TRUST EXCEE DS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX IN ANY PREVIO US YEAR, THE ACCOUNTS OF THE TRUST MUST BE AUDITED BY A CHARTERED ACCOUNTANT AND THE PERSON IN RECEIPT OF THE INCOME SHOULD FURNISH SUCH AUDIT REPORT IN THE PRESCRIBED FORM ALONG WITH THE RETURN OF INCOME. 8 14. SECTION 12AA LAYS DOWN THE PROCEDURE TO BE FOLL OWED BY THE COMMISSIONER FOR GRANT OR REFUSAL OF APPLICATION FOR REGISTRATIO N MADE UNDER SECTION 12A. ACCORDING TO PROCEDURE SO LAID DOWN, THE COMMISSION ER SHALL CALL FOR DOCUMENTS AND INFORMATION AND CONDUCT AN ENQUIRY TO SATISFY H IMSELF OF THE GENUINENESS OF THE TRUST AND UPON REACHING SATISFACTION OF THE CHA RITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND THE AUTHENTICITY OF THE ACTIVITIES OF THE TRUST, HE WOULD GRANT THE REGISTRATION. IF HE IS NOT SATISFIED OF THE AFORESA ID, THE REQUEST MADE IN THE APPLICATION MAY BE DECLINED. 15. SECTION 13 ENACTS A COMPLETE BAR TO THE AVAILAB ILITY OF EXEMPTION UNDER SECTION 11 IN RESPECT OF VARIOUS INCOMES ENUMERATED THEREIN. SECTION 11 DOES NOT APPLY WHEN THE PROVISIONS OF SECTION 13 ARE ATTRACT ED. SECTION 13(1)(B) IS RELEVANT FOR THE PURPOSE OF THIS CASE. THE SAME IS NOTICED: '13. SECTION 11 NOT TO APPLY IN CERTAIN CASES. (1) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 S HALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE P ERSON IN RECEIPT THEREOF (A) * * * * (B) IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT, ANY INCOME THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE;' THE PROVISION CONCEPTUALIZES THAT INCOME OF A CHARI TABLE TRUST CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIG IOUS COMMUNITY OR CASTE WOULD NOT BE ENTITLED FOR THE BENEFIT OF SECTION 11 OR 12 OF THE ACT. THUS, WHEN READ IN CONJUNCTION, WHILE UNDER SECTION 11 A TRUST WHICH I S ESTABLISHED FOR CHARITABLE PURPOSES TO BENEFIT A PARTICULAR RELIGIOUS COMMUNIT Y MAY BE A VALID CHARITABLE TRUST, UNDER SECTION 13(1)(B) SUCH TRUST WOULD NOT BE ENTITLED TO EXEMPTION AND CONSEQUENTLY, THE SAID INCOME WOULD BE EXIGIBLE TO TAX UNDER THE ACT. AS IS EVIDENT FROM THE ABOVE THE APEX COURT HAS CAT EGORICALLY HELD THAT A TRUST ESTABLISHED FOR CHARITABLE PURPOSES TO BENEFIT A PA RTICULAR RELIGIOUS COMMUNITY MAY BE A VALID CHARITABLE TRUST. AS FOR THE IMPLICA TION OF SECTION 13(1)(B) OF THE ACT, THE APEX COURT HELD THAT THE SAME WOULD RESULT IN DENIAL OF EXEMPTION UNDER SECTION 11 & 12 OF THE ACT. MEANING THEREBY T HAT PROVISION OF SECTION 13(1)(B) WOULD NOT BE COME INTO PLAY WHILE GRANTING REGISTRATION. THE ARGUMENT OF LD. DR IS NEGATED BY THIS OBSERVATION OF THE HO NBLE SUPREME COURT. IN VIEW OF THE ABOVE WE HOLD THAT THE OBJECTS OF TH E ASSESSEE SOCIETY ARE MAINLY CHARITABLE AS PER THE DEFINITION U/S 2(15) OF THE A CT. 11. BUT HAVING SAID SO, WE FIND THAT WHILE CONSIDER ING THE ASSESSEE SOCIETIES APPLICATION FOR GRANT OF REGISTRATION, THE LD. CIT HAS NOT LOOKED INTO THE ACTIVITIES OF THE TRUST AND GIVEN A FINDING ON THE SAME WHETHE R THEY ARE GENUINE OR NOT. 9 AS PER THE PROVISIONS OF SECTION 12AA, THE COMMISSI ONER HAS TO BE SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE SOCI ETY / TRUST ALSO BEFORE GRANTING REGISTRATION U/S12AA OF THE ACT. THE HONBLE ALLAHA BAD HIGH COURT IN THE CASE OF AGRAWAL SABHA (REGD) V CIT (2014) 365 ITR 244 (ALL) HAD UPHELD THE REJECTION OF GRANT OF REGISTRATION U/S 12AA, WHERE THE ASSESSEE HAD NOT BEEN ABLE TO SATISFY THAT AS PER THE ACTIVITIES OF THE TRUST IT EXISTED FOR THE BENEFIT OF THE GENERAL PUBLIC FOR A CHARITABLE OR RELIGIOUS PURPOSES. IN VIEW OF THE SAME, WE CONSIDER IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF THE CIT FOR THE LIMITED ASPECT OF EXAMINING THE GENUINE NESS OF THE ACTIVITIES OF THE ASSESSEE SOCIETY AND THEREAFTER DECIDING THE ISSUE OF GRANT OF REGISTRATION U/S 12AA OF THE ACT, AS PER LAW. THE ASSESSEE, WE MAY A DD, BE GRANTED FULL OPPORTUNITY OF HEARING AND PRODUCING ALL NECESSARY EVIDENCES IN SUPPORT OF ITS CONTENTION. 12. THE APPEAL OF THE ASSESSEE IS THEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12/07/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR