Sunni Muslim Jamat Aamena Madressa Ebdatgah Waqf Committee , Tapi V. CIT (Exemption) Ahmedabad, Ahmedabad

ITA 705/SRT/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3262 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-02-2024
• Assessment Year: 2022-2023
• Appeal Filed On: 16-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH K. KABRA
• Keywords: Gift; Charitable institution; Opportunity of being heard
• Section: 12; 11; 12A; 12AA; 44AB; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.705/SRT/2023 (Hybrid Hearing) Sunni Muslim Jamat Aamena Madressa Ebdatgah Waqf Committee, Amena Nagar, Near Talav, Vyara, Dist – Tapi, 394650. Vs. The CIT(Exemption), Ahmedabad èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ABCTS9253N (Appellant) (Respondent) Appellant by Shri Suresh K. Kabra, CA Respondent by Shri S. M. Keshkamat, CIT(DR) Date of Hearing 02/02/2024 Date of Pronouncement 26/03/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, is directed against the order passed by the Learned Commissioner of Income Tax (Exemption), Ahmedabad, [in short “the ld. CIT(E)”], wherein Learned CIT(E) rejected the application filed by assessee in Form No.10AB for registration under section 12AB of the Income Tax Act, 1961 (in short ‘the Act”), vide order dated 29.12.2022. 2. The grounds of appeal raised by the assessee are as follows: “1. The CIT(E) has erred on facts of the case and in law by rejecting the application for registration u/s 12A citing violation of section 13(1)(b). 3. Brief facts qua the issue are that an application for registration of the trust u/s 12AB of the I.T. Act, 1961 was filed electronically by the assessee-trust, on 15/06/2022 in Form No. 10AB under Rule 17A of the I.T. Rules, 1962. The ld CIT(E ) observed that Rule 17A(1) of the 2 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee Income Tax Rules prescribes the different forms to be filed for making application under various sub-clauses of clause (ac) of sub-section (1) of section 12A of the Act for registration of a charitable or religious trust on institution which stipulates as under. “17A.(1). An application under sub-clause (i) or sub-clause(ii) or sub- clause(iii) or sub-clause(iv) or sub-clause(v) or sub-clause(vi) of clause (ac)of subsection (1) of section 12A for registration of a charitable or religious trust or institution (hereinafter referred to as 'the applicant') shall be made in the following Form, namely: 1. Form No, 10A in case of application under sub-clause (i) or (vi) of clause (ac)of sub-section (1) of section 12A to the Principal Commissioner or Commissioner authorised by the Board; or 2. Form No. 10AB in case of application under sub-clause (ii) or (iii) or (iv) or (v) of clause (ac) of sub-section (1) of section 12A to the Principal Commissioner or Commissioner under the said clause.” 4. The ld CIT(E ) refers Rule 17A(2) of the Income Tax Rules which lists the documents, which shall be attached or submitted with the application made in Form Nos. 10A or 10AB under Rule 17A(1) of the Income Tax Rules, which stipulates as under: “(2) The application under sub-rule (1) shall be accompanied by the following documents, as required by Form Nos. 10A or 10AB, as the case may be, namely:— (a) where the applicant is created, or established, under an instrument, self- certified copy of such instrument creating or establishing the applicant; (b) where the applicant is created, or established, otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant; (c) self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be; (d) self-certified copy of existing order granting registration under section 12A or section 12AA or section 12AB, as the case may be; (e) self-certified copy of order of rejection of application for grant of registration (I) under section 12A or section 12AA or section 12AB, as the case may be, if any; (f) certified copy of order of rejection of application for grant of registration under section 12A or section 12AA or section 12 AB, as the case may be, if any; 3 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee (g) where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self- certified copies of the annual accounts of the applicant relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up; (h) where a business undertaking is held by the applicant as per the provisions of sub-section (4) of section 11 and the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of such (h) business undertaking relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up and self- certified copy of the report of audit as per the provisions of section 44AB for such period; (i) where the income of the applicant includes profits and gains of business as per the provisions of sub-section (4A) of section 11 and the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of such business relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up and self-certified copy of the report of audit as per the provisions of section 44AB for such period; (j) self-certified copy of the documents evidencing adoption or modification of the objects; (k) note on the activities of the applicant.” 5. Therefore, a notice was issued to the assessee on 07/11/2022, with a request to furnish detailed note on the activities actually carried out by the trust as well as certain details/documents as mentioned therein. The above-mentioned inquiry about the actual activities of the trust is necessary in view of the mandatory provisions of the procedure for registration u/s 12AB of the Act, 1961, which is reproduced below: “12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,— 4 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee (a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of the said clause,- (i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about— (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),— (A) pass an order in writing registering the trust or institution for a period of five years; or (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard; (C) where the application is made under sub-clause (vi) of the said clause, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the trust or institution. 6. However, in response to the said notice, the assessee has not furnished any details in reply. Therefore, another notice on 28/11/2022, was issued by ld CIT(E ), to furnish pending details. In response to the said notice, the assessee has furnished its submission. In the present application filed in Form No. 10AB, the applicant has stated the nature of activities as “Religious cum charitable” and objects as “Religious & Education”. From perusal of objects of the applicant/assessee it is observed that following object/objects, which is otherwise charitable in nature, is/are for the benefit of any particular religious community or caste: “i.e. SUNNI MUSLIMS. Objective and Purpose of trust: The clause (6.1) & (6.4)) stipulates as “(6.1) To make all the possible efforts in the interest of the Sunni community brothers, prosperity and for the social, economic and religious education and knowledge, and (6.4) to maintain and preserve the 5 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee affection, sentiment and association among all the Muslim people of the community”. 7. Therefore, ld CIT(E ) noted that it is essential to analyse as to whether the provision of section 13(1 )(b) of the Act, is applicable to the assessee. Section 13(1) (a) of the Act stipulates that provisions of section 11 and 12 would not apply to an assessee, where any part of the income from the property held under a trust for private religious purposes which does not ensure for the benefit of the public. Therefore, the provision of section 13(1)(a) of the Act is applicable only when any part of income is from the property held under a trust for private religious purposes which does not ensure for the benefit of the public. 8. Further section 13(1)(b) of the Act, stipulates that provisions of section 11 and 12 would not apply 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. Therefore, the provision of section 13(1)(b) of the Act is applicable only in a case of charitable trust/institution created or established after commencement of this Act, if the trust/institution is created or established for the benefit of any particular religious community or caste. In the present Form No. 10AB filed, the assessee has stated the “Date of Incorporation/Creation/Registration” as 10.02.2017. 9. The ld CIT(E) observed that various courts have held that the provisions of section 13(1)(b) of the Act is not applicable in the case of a religious trust. The provision of section 13(1)(b) of the Act is applicable to a charitable trust, as has been settled by the Hon'ble Supreme Court in the case of CIT vs. Palghat Shadi Mahal Trust, reported in 120 Taxman 889, wherein in the case of a public charitable 6 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee trust, the Hon'ble Apex court held that where the benefit is available to Muslims from all over the world, none of whom except in Kerala are backward classes, the provision of section 13(1)(b) would be attracted and therefore the trust is not entitled for exemption u/s 11 of the Act. 10. Even some courts had held that in case of composite trust/institution, i.e. charitable cum religious, the provision of section 13(1)(b) of the Act is not applicable. However, the said controversy was resolved by the Hon'ble Supreme Court in the case of CIT vs Dawoodi Bohara Jamat, reported in 43 taxmann.com 243, wherein the Hon'ble Apex Court held that the provision of section 13(1)(b) of the Act is applicable even to a composite trust/institution and held as under: “45. From the phraseology in clause (b) of section 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 both religious and charitable purposes, then it would not be covered by clause (b). What is intended to be excluded from being eligible for exemption under Section 11 is a trust for charitable purpose which is established for the benefit of any particular religious community or caste.” Further, the Hon'ble Supreme Court in the said case of CIT vs Dawoodi Bohara Jamat (supra), which was composite in nature, after analysing the various objects of the trust, held that two of its objects provide for the activities completely religious in nature and restricted to the specific community of the assessee trust are objects with religious purpose only. However, the Hon'ble Apex Court held that other four objects of the assessee trust was charitable in nature and finally held that the trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that section 13(1)(b) of the Act would be attracted and hence the trust would be 7 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee eligible to claim exemption u/s 11 of the Act. In concluding para the Hon'ble Apex Court held has under: “50. In that view of the matter, we are of the considered opinion that the respondent-trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that Section 13(1)(b) of the Act would be attracted to the respondent-trust and thereby, it would be eligible to claim exemption under Section 11 of the Act.” 11. From the above referred objects of the assessee, the ld CIT(E) noted that it is not a religious trust, but it is religious cum charitable trust and above referred objects, which are in the nature of charitable is restricted to benefit of a particular religious community or caste “SUNNI MUSLIMS” and therefore as per law laid down by the Hon'ble Apex court in the above referred cases, the provision of section 13(1)(b) would be applicable and therefore the assessee would not be eligible for exemption u/s 11 of the Act. Therefore in the facts and circumstances of the case, the assessee cannot be granted registration u/s 12A of the Act. In view of the above, the assessee`s application filed in Form No. 10AB for the registration u/s 12AB of the IT Act, 1961 was rejected by ld CIT(E ). 12. Aggrieved by the order of ld. CIT(E), the assessee is in appeal before us. 13. The Ld. Counsel for the assessee, argued that assessee- trust has not been creating specific benefit for Muslims only, it has created benefit for general public also and therefore ld. CIT(E) should not have denied the registration. The ld Counsel took us through the objective and purpose of the trust, which are as follows: “Objective and purpose of Trust: 1. To make all the possible effort in the interest of the sunni community brothers, prosperity and for the social, economic and religious education and knowledge. 8 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee 2. To make all the possible beneficial acts in the interest of country safety, co-operation and the brotherliness among the community. 3. To maintain preserve the affection, sentiments and association among all the Muslim people of community. 4. To make effort for abolishing the social evils giving the guidance to the society as per the shariat for the social prosperity. 5. By forgetting the local discord and disputes and to resolve the issues and disputes at the local level. 6. To maintain the love affection and brotherliness with the people apart from the society. 7. In order to make the addition and improvement in the assets of the trust, to purchase the assets and to sell and let it out and to get them rectified. 8. To accumulate the Lillah Fund contribution for the Trust and to accept the gift of the immovable and the movable assets.” 14. The ld Counsel therefore contended that objects Nos. 4, 5 and 6 above, are not restricted to the caste “SUNNI MUSLIMS” and these objects are for other general public/persons. 15. On the other hand, learned Commissioner of Income Tax – Departmental Representative (ld. CIT-DR) for the Revenue relied on the findings of the ld. CIT(E). 16. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(E) and other material brought on record. We note that ld CIT(E ) denied the registration mainly on the reason that assessee, is not a religious trust, but it is religious cum charitable trust and ld CIT(E ) also gone through the objects, which are in the nature of charitable but the same is restricted to benefit of a particular religious community or caste “SUNNI MUSLIMS” and therefore the provision of section 13(1)(b) of 9 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee the Act, would be applicable to the assessee and therefore the assessee would not be eligible for exemption under section 11 of the Act. We have gone through the objects of the assessee-trust and noted that all the objects are not restricted to particular religious community or caste “SUNNI MUSLIMS”. For example, following objects of the trust are not restricted to “SUNNI MUSLIMS”: 4. To make effort for abolishing the social evils giving the guidance to the society as per the shariat for the social prosperity. 5. By forgetting the local discord and disputes and to resolve the issues and disputes at the local level. 6. To maintain the love affection and brotherliness with the people apart from the society. 17. In the following cases it was held that objects of the trust are charitable in nature, that is, various Courts have held the following objects also as charitable in nature: (i) CIT v. Kamla Town Trust [1996] 84 Taxman 248 (SC) – Objects of constructing colonies for poor workmen. (ii) CIT v. Bhartiya Khartri Sewa Trust [1992] 65 Taxman 531 (All.) – Marriage of girls belonging to a particular community. (iii) CIT v.Guryani Brij Balabh Kaur Trust 125 ITR 381 (P&H) – Repairs and maintenance of the samadhs of the ancestors of family Guru and holding of mela at samadhs. (iv) Smt.Ganeshi Devi Rami Devi Charity Trust v. CIT 71 ITR 696 (Cal). – Objects of installing the patasala to which admission is open to the public, though only Brahmin boys are the students. 18. Considering these facts and circumstances, we direct the ld. CIT(E) to reconsider the application of assessee regarding registration under section 12AB of the Income Tax Act, 1961 and grant the 10 ITA Nos.705/SRT/2023 Sunni Muslim Jamat Aamena Madress Waqf Committee registration to the assessee-trust in accordance with law. For statistical purpose, ground of appeal raised by assessee-trust is allowed. 19. In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced on 26/03/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 26/03/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat