M/s Ashadeep Sewa Prakalp Trust, V. The CIT-II,

ITA 721/IND/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8683 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 26-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Benefit of exemption; Set aside
• Section: 12A; 12AA; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE (S.M.C.I) BENCH : INDORE BEFORE SHRI BHAVNESH SAINI, J.M. PAN NO. : AABTA3690F I.T.A.NO. 721/IND/2007. U/S 12AA(1)(B)(II) ASHADEEP SEWA PRAKALP TRUST, COMMISSIONER OF INCOM E-TAX-I, 41, D/D, SLICE-11, SCHEME NO. 78, ARANYA, VS. INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : WRITTEN SUBMISSION BY SHRI ABHISHEK PARWAL, C. A. RESPONDENT BY : SHRI V.K. KARAN, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. CIT-I,INDORE, DATED 26 TH SEPTEMBER, 2007, REJECTING THE APPLICATION U/S 12A A OF THE INCOME-TAX ACT, 1961. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE APPLIED FOR REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961, WHICH WAS RECEIVED BY THE LD. COMMISSIONER ON 29 TH MARCH, 2007. THE LD. COMMISSIONER ISSUED LETTERS TO THE ASSESSEE SEEKING FURTHER QUER Y INTO THE MATTER. IN COMPLIANCE THERETO, THE ASSESSEE FURNISHED THE DETA ILS. FROM THE DETAILS -: 2 :- 2 SO FURNISHED, IT WAS SEEN THAT INVESTMENT CLAUSE CO NTAINED IN THE TRUST DEED WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 11(5) OF THE INCOME-TAX ACT, 1961. THE TRUST WAS ASKED TO AMEND THE TRUST DEED ACCORDINGLY. IN RESPONSE, THE ASSESSEES REPRESENTA TIVE ATTENDED THE PROCEEDINGS BEFORE THE LD. COMMISSIONER AND FURNISH ED COPY OF THE RESOLUTION PASSED BY THE TRUST INCORPORATING THE CL AUSE OF DISSOLUTION, BUT NOTHING WAS MENTIONED REGARDING INVESTMENT CLAU SE. THE LD. COMMISSIONER, THEREFORE, NOTED THAT INVESTMENT CLAU SE OF THE TRUST DEED IS NOT IN CONFORMITY WITH THE PROVISIONS OF SECTION 11(5) OF THE ACT AND THAT TRUST DEED IS NOT AMENDED AS PER DIRECTION. TH EREFORE, THE APPLICATION FOR REGISTRATION WAS ACCORDINGLY REJECT ED. 3. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSION IS FILED BY S HRI ABHISHEK PARWAL, C. A. , ON BEHALF OF THE ASSESSEE. DETAILED PAPER BOOK IS ALSO FILED ON RECORD IN SUBMISSION OF THE WRITTEN SUBMIS SION. 4. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE FINDING OF THE LD. COMMISSIONER AS WELL AS WRITTEN SUBMISSION FILED BY THE LEARNED COUNSEL FOR THE ASS ESSEE AND THE DETAILS FURNISHED IN THE PAPER BOOK. -: 3 :- 3 5. IT IS STATED IN THE WRITTEN SUBMISSION THAT THE ASS ESSEE IS A SOCIAL ORGANIZATION REGISTERED AS A PUBLIC TRUST UN DER THE M.P. PUBLIC TRUST ACT, 1951, AND IS ENGAGED IN SOCIAL ACTIVITIE S FOR NOBLE CAUSE AND STRIVES CONTINUOUSLY TO ACHIEVE SOLE MOTTO OF HEALT HY BODY, HAPPY LIFE. IT IS FURTHER STATED THAT THE ASSESSEE TRUST IS CARRYING ON THE FOLLOWING ACTIVITIES :- - RUNNING A HOSPITAL, AT CONCESSIONAL RATES, THAT IS FULLY EQUIPPED WITH ULTRA MODERN EQUIPMENTS AND BOASTS OF AN EFFICIENT TEAM OF DOCTORS AND NURSING STAFF. ( RECENTLY THE HOSPITAL HAS BEEN GRANTED THE PRESTIGI OUS ISO 9001:2008 CERTIFICATION FOR ITS QUALITY MANAGEMENT SYSTEM AND IT IS THE FIRST HOSPITAL IN T HE ENTIRE CENTRAL INDIA REGION TO GET ONE.) - PROVIDING MEDICAL SERVICES THROUGH VARIOUS HEALTH CAMPS THAT ARE ORGANIZED TO TARGET DIFFERENT DISEAS ES. - PROVIDING ECONOMIC MEALS TO THE PEOPLE WHO ARE BELOW THE POVERTY LINE BY RUNNING ANNA KSHETRA. - RUNNING PATHOLOGICAL LABORATORY WHERE ALL TYPES OF PATHOLOGICAL TESTS ARE PERFORMED AT SUBSIDIZED RATE S. -: 4 :- 4 - ARRANGING EDUCATIONAL PROGRAMMES FOR GENERAL AWARENESS AND SPREADING CONSCIOUSNESS & KNOWLEDGE. - PROVIDING SOCIAL & ECONOMIC ASSISTANCE TO THE WEAKER SECTION OF THE SOCIETY. 6. IT IS FURTHER EXPLAINED THAT THE REGISTRATION U/S 12A WAS SOUGHT SO THAT THE BENEFIT CAN BE AVAILED TO BETTER SERVE THE DISTRESSED AND WEAK SECTION OF THE SOCIETY. ALL THE REQUISITE DOCUMENTS IN SUPPORT OF THE REGISTRATION APPLICATIONS WERE FILED AND TRUST DEED WAS AMENDED BY INTRODUCING THE DISSOLUTION CLAUSE AS SUGGESTED BY THE OFFICE OF THE LD. COMMISSIONER. IT IS FURTHER EXPLAINED THAT THE PROC ESS SERVER OF THE OFFICE OF THE LD. COMMISSIONER, HOWEVER, WANTED TO ACCEPT NOTICE OF THE HEARING ON THE BACK DATE, WHICH WAS REFUSED. AL L THE BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE LD. COMMISSIONER A ND ALL THE DETAILS ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSE SSEE TRUST IN PURSUANCE OF THE OBJECT WERE FURNISHED. COPY OF THE RESOLUTIO N AMENDING THE DISSOLUTION CLAUSE WAS ALSO FURNISHED. IT IS ALSO E XPLAINED THAT THEREAFTER SEVERAL INQUIRIES WERE MADE ABOUT THE FATE OF THE R EGISTRATION APPLICATION AND ULTIMATELY THROUGH THE IMPUGNED ORD ER, IT CAME TO THE -: 5 :- 5 NOTICE THAT THE REGISTRATION APPLICATION HAS BEEN R EJECTED BECAUSE OF NON-COMPLIANCE OF THE DIRECTION REGARDING INVESTMEN T CLAUSE. IT IS STATED THAT LATER ON RECEIVING THE IMPUGNED ORDER A ND DISCOVERING THAT THE INVESTMENT CLAUSE SHALL NOT PROPER AND IT DID N OT RESTRICT INVESTMENT ONLY IN TRUSTED SECURITIES OR IN THE LINE WITH THE PROVISIONS OF SECTION 13(1)(D), THE ASSESSEE TRUST AMENDED THE SAME ALSO. IT IS FURTHER MENTIONED THAT ALL THE INVESTMENTS MADE BY THE ASSE SSEE TRUST WERE IN TRUSTED SECURITIES AS DIRECTED BY SECTION 13 OF TH E INCOME-TAX ACT, 1961. IT WAS, THEREFORE, PRAYED THAT THE ASSESSEE I S ELIGIBLE FOR GRANT OF REGISTRATION, BECAUSE IT HAS COMPLIED WITH ALL THE CONDITIONS AS CONTEMPLATED U/S 12A/12AA OF THE INCOME-TAX ACT, 19 61. IT WAS FURTHER SUBMITTED THAT THE LD. COMMISSIONER ERRED I N REFUSING REGISTRATION ON THE EXTRANEOUS GROUND WITHOUT CONSI DERING MATERIAL FACT THAT THE ASSESSEE WAS GENUINE TO CHARITABLE TRUST A ND HAS NOT VIOLATED ANY PROVISION OF SECTIONS 11,12 & 13 OF THE INCOME- TAX ACT, 1961. IT WAS, THEREFORE, REQUESTED THAT THE REGISTRATION MAY BE GRANTED TO THE ASSESSEE TRUST U/S 12A/12AA OF THE INCOME-TAX ACT, 1961, W.E.F. MARCH, 2007. -: 6 :- 6 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED UPON THE ORDER OF THE LD. COMMISSIONER AND S UBMITTED THAT SINCE NECESSARY CLAUSE WAS NOT INCORPORATED IN THE TRUST DEED AS PER SECTION 11(5) OF THE INCOME-TAX ACT, 1961. THEREFORE, THE L D. COMMISSIONER WAS JUSTIFIED IN REFUSING TO GRANT REGISTRATION TO THE ASSESSEE. 8. I HAVE CONSIDERED WRITTEN SUBMISSION OF THE ASSESSE ES COUNSEL AND ALL THE DETAILS FURNISHED IN THE PAPER BOOK AS WELL AS CONSIDERED THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESENTATI VE. SECTION 12A OF THE INCOME-TAX ACT, 1961, PROVIDES THAT PROVISIONS OF SECTION 11& SECTION 12 SHALL NOT APPLY IN RELATION TO THE INCOM E OF ANY TRUST OR INSTITUTION UNLESS THE ASSESSEE MADE AN APPLICATION FOR GRANT OF REGISTRATION. SECTION 12AA OF THE INCOME-TAX ACT, 1 961, PROVIDES PROCEDURE FOR REGISTRATION AND PROVIDES THAT THE LD . COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND GENUINENESS OF THE ACTIVITIES OF THE TRUST AT THE TIME OF CONSIDERATIO N OF THE REGISTRATION APPLICATION. THE LD. COMMISSIONER ON SATISFYING THA T THE OBJECTS OF THE TRUST AND ITS GENUINENESS OF THE ACTIVITIES, SHALL PASS AN ORDER IN WRITING, REGISTERING THE TRUST AND IN CASE HE IS NOT SO SATI SFIED, SHALL PASS AN ORDER IN WRITING REFUSING TO GRANT REGISTRATION TO THE TR UST. -: 7 :- 7 9. SECTION 11(5) OF THE INCOME-TAX ACT, 1961, AS IS RE LIED UPON BY THE LD. COMMISSIONER FOR REJECTING THE REGISTRAT ION APPLICATION OF THE ASSESSEE PROVIDES - -: 8 :- 8 10. SECTION 11(5) OF THE INCOME-TAX ACT, 1961, MENTIONE D ABOVE REFERRED TO CLAUSE (B) SUB SECTION (2) OF THE SAME SECTION. SECTION 11(2)(B) OF THE INCOME-TAX ACT, 1961, PROVIDES ABOU T THE ACCUMULATION OF INCOME AND PROVIDES WHERE 85% OF THE INCOME REFE RRED TO IN THIS SECTION IS NOT APPLIED TO CHARITABLE OR RELIGIOUS P URPOSES DURING THE PREVIOUS YEAR, BUT IS ACCUMULATED OR SET APART EITH ER IN WHOLE OR IN PART, FOR APPLICATION, BUT SUCH PURPOSES IN INDIA, AS SUC H INCOME SO ACCUMULATED OR SET APART SHALL NOT BE INCLUDED IN T HE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON, IN RECEIPT OF THE INCO ME PROVIDED, THE MONEY SO ACCUMULATED OR SO SET APART IS INVESTED OR DEPOSITED IN THE FORM OR MODES SPECIFIED IN SUB SECTION (5) OF THE I NCOME-TAX ACT, 1961. -: 9 :- 9 11. CONSIDERING THE ABOVE PROVISIONS, IT IS CLEAR THAT AT THE TIME OF GRANT OF REGISTRATION, THE LD. COMMISSIONER SHALL H AVE TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND GENUINENESS OF I TS ACTIVITIES AT THE TIME OF CONSIDERATION OF REGISTRATION APPLICATION. THE PROVISIONS OF SECTION 11 NEED NOT TO BE TAKEN INTO CONSIDERATION AT THAT STAGE, BECAUSE THE SAME WOULD COME INTO OPERATION ONLY WHEN THERE IS ACCUMULATION OF THE FUND AS PER SECTION 11(2)(B) OF THE INCOME-T AX ACT, 1961. SUCH A STAGE WOULD ARISE ONLY WHEN THE REGISTRATION IS GRA NTED TO THE ASSESSEE AND THEREAFTER AT THE ASSESSMENT STAGE. THE DIVISIO N BENCH OF I.T.A.T., INDORE BENCH IN THE CASE OF DAWOODI BOHRA JAMAT, SA RANGPUR & OTHERS VS. CIT, UJJAIN, IN I.T.A.NO. 615/IND/2007 VIDE ORD ER DATED 28 TH MARCH, 2008, CONSIDERING THE IDENTICAL ISSUE HELD IN PARAS 24 TO 31 AS UNDER :- 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AN D THE MATERIAL AVAILABLE ON RECORD. SECTION 12A AND 12AANOF THE IN COMETAX ACT PROVIDES AS UNDER :- 12A. (1)] THE PROVISIONS OF SECTION 11 AND SECTION 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TR UST OR INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FUL FILLED, NAMELY: (A) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRU ST OR INSTITUTION IN THE PRESCRIBED FORM AND IN THE PRESC RIBED MANNER TO THE [***] COMMISSIONER BEFORE THE 1ST DAY OF JULY, 1973, OR BEFORE THE EXPIRY OF A PERIOD OF ONE YEAR -: 10 :- 10 FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, WHICHEVER IS LATE R AND SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA ] : [PROVIDED THAT WHERE AN APPLICATION FOR REGISTRA TION OF THE TRUST OR INSTITUTION IS MADE AFTER THE EXPIRY O F THE PERIOD AFORESAID, THE PROVISIONS OF SECTIONS 11 AND 12 SHA LL APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION , (I) FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION IF THE [***] COMMI SSIONER IS, FOR REASONS TO BE RECORDED IN WRITING, SATISFIE D THAT THE PERSON IN RECEIPT OF THE INCOME WAS PREVENTED FROM MAKING THE APPLICATION BEFORE THE EXPIRY OF THE PERIOD AFO RESAID FOR SUFFICIENT REASONS; (II) FROM THE 1ST DAY OF THE FINANCIAL YEAR IN WHI CH THE APPLICATION IS MADE, IF THE [***] COMMISSIONER IS N OT SO SATISFIED:] [PROVIDED FURTHER THAT THE PROVISIONS OF THIS CL AUSE SHALL NOT APPLY IN RELATION TO ANY APPLICATION MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007; (AA) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTIT UTION ON OR AFTER THE 1ST DAY OF JUNE, 2007 IN THE PRESCRIBED F ORM AND MANNER TO THE COMMISSIONER AND SUCH TRUST OR INSTIT UTION IS REGISTERED UNDER SECTION 12AA ;] (B) WHERE THE TOTAL INCOME OF THE TRUST OR INSTITU TION AS COMPUTED UNDER THIS ACT WITHOUT GIVING EFFECT TO [T HE PROVISIONS OF SECTION 11 AND SECTION 12 EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX IN ANY PREVIOUS YEAR], THE ACCOUNTS OF THE TRUST OR INSTITUTION FOR THAT YEAR HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXP LANATION BELOW SUB-SECTION (2) OF SECTION 288 AND THE PERSON IN RECEIPT OF THE INCOME FURNISHES ALONG WITH THE RETURN OF IN COME FOR THE RELEVANT ASSESSMENT YEAR THE REPORT OF SUCH AUD IT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH AC COUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCR IBED.] (C) [***] [(2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICATION IS MADE.] -: 11 :- 11 12AA. (1) THE [***] COMMISSIONER, ON RECEIPT OF A N APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UND ER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A , SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM TH E TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NEC ESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORD ER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTI ON, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APP LICANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. [(1A) ALL APPLICATIONS, PENDING BEFORE THE CHIEF CO MMISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) O F SUB-SECTION (1) BEFORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANS FERRED ON THAT DAY TO THE COMMISSIONER AND THE COMMISSIONER MAY PROCEED W ITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY.] (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE EXPIR Y OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS R ECEIVED UNDER CLAUSE (A) OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A .] [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANT ED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AND SUBSEQUENTL Y THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MA Y BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUC H TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONAB LE OPPORTUNITY OF BEING HEARD.] SECTION 13(1)(B) AND () OF THE IT ACT PROVIDES 13. (1) NOTHING CONTAINED IN SECTION 11 [OR SECTION 12 ] SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVI OUS YEAR OF THE PERSON IN RECEIPT THEREOF -: 12 :- 12 (A) XX XX (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 BENEF IT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; (C) IN THE CASE OF A TRUST FOR CHARITABLE OR RELIG IOUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOM E THEREOF (I) IF SUCH TRUST OR INSTITUTION HAS BEEN CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT AND UNDER THE TERMS OF THE TRUST OR THE RULES GOVERNING THE I NSTITUTION, ANY PART OF SUCH INCOME ENURES, OR (II) IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR THE INSTITUTION (WHENEVER CREATED OR ESTAB LISHED) IS DURING THE PREVIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PER SON REFERRED TO IN SUB-SECTION (3) THE ITAT, DELHI BENCH IN THE CASE OF AGGARWAL MITRA MANDAL TRUST V. DIRECTOR OF INCOMETAX (EXEMPTION); 293 ITR(AT) 259 CONSIDERING THE IDENTICAL QUESTION HELD WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT AN Y TRUST OR INSTITUTION SEEKING TO AVAIL OF THE BENEFIT OF THE PROVISIONS OF SECTIONS 11 AND 12 IS REQUIRED TO APPLY FOR REGISTR ATION UNDER SECTION 12A. THE PROCEDURE FOR REGISTRATION IS PRES CRIBED IN SECTION 12AA AND AS PER THE PROVISIONS OF SUB-SECTI ON (1) OF THAT SECTION, THE COMMISSIONER OF INCOME-TAX {DIT (EXEMP TION) IN THE PRESENT CASE} IS EMPOWERED TO SATISFY HIMSELF A BOUT THE OBJECT OF THE TRUST AND ABOUT THE GENUINENESS OF THE ACTIV ITIES OF THE TRUST OR INSTITUTION BEFORE GRANTING THE REGISTRATI ON UNDER SECTION 12A. ONCE THE COMMISSIONER OF INCOME-TAX HAS NOT DO UBTED THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE NOR D OUBTED ITS CHARITABLE OBJECT, HE CANNOT REFUSE TO GRANT REGIST RATION UNDER SECTION 12A. IN THE PRESENT CASE, THE REGISTRATION, HOWEVER, WAS REFUSED BY THE DIT (EXEMPTION) ON THE GROUND THAT A S PER THE OBJECT CLAUSE NOS. 3(1) AND 3(2), THE ASSESSEE-TRUS T WAS ESTABLISHED FOR THE BENEFIT OF PEOPLE BELONGING TO VAISH COMMUNITY ONLY WHICH WAS CLEARLY IN VIOLATION OF SE CTION 13(1)(B). HOWEVER, AS HELD BY THE HONBLE SUPREME C OURT IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION [1971] 82 ITR 704, -: 13 :- 13 AN OBJECT BENEFICIAL TO THE SECTION OF THE PUBLIC I S AN OBJECT OF GENERAL PUBLIC UTILITY AND TO SERVE A CHARITABLE PU RPOSE, IT IS NOT NECESSARY THAT THE OBJECT SHOULD BE TO BENEFIT THE WHOLE OF MANKIND OR ALL PERSONS IN A PARTICULAR COUNTRY OR S TATE. EXPLAINING FURTHER, IT WAS OBSERVED BY THE HONBLE APEX COURT THAT IT IS SUFFICIENT IF THE INTENTION IS TO BENEFI T A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPECIFIED INDIVIDUAL . RELYING ON THIS DECISION OF THE HONBLE SUPREME COURT IN THE C ASE OF AHMEDABAD RANA CASTE ASSOCIATION [1971]82 ITR 704, THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SURJI D EVI KUNJI LAL JAIPURIA CHARITABLE TRUST [1990] 186 ITR 728 HA S HELD THAT TRUST CREATED FOR GIVING MEDICAL AID, SOCIAL WELFAR E AND UPLIFTMENT OF POOR MEMBERS OF THE VAISH COMMUNITY IS, THEREFOR E, FOR RELIGIOUS AND CHARITABLE PURPOSES. TO THE SIMILAR E FFECT IS ANOTHER DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS PT. RAM SHANKER MISRA TRUST [1996] 222 ITR 252 W HEREIN IT WAS HELD THAT EXPENDITURE INCURRED BY A TRUST FOR T HE BENEFIT OF ONE COMMUNITY IS AN EXPENDITURE INCURRED ON A PUBLI C CHARITABLE OBJECT . THE PROPOSITION PROPOUNDED BY THE HONBLE SUPREME COURT AS WELL AS BY THE HONBLE ALLAHABAD HIGH COUR T IN THE AFORESAID JUDGMENTS CLEARLY SHOWS THAT THE OBJECTS OF THE ASSESSEE-TRUST AS INDICATED IN OBJECT CLAUSE NOS3(1 ) AND 3(2) OF ITS TRUST DEED WERE OF CHARITABLE NATURE AND SINCE THE POWERS OF THE COMMISSIONER OF INCOME-TAX/DIT (EXEMPTION) CONFERRE D UNDER SECTION 12AA WERE CONFINED TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST AS WELL AS NATURE OF ITS OBJECT BEING CHARITABLE, WE ARE OF THE VIEW THAT HE WAS NOT JUSTIFIED IN REFUSING TO GRANT REGISTRATION TO THE ASSESSEE-TRUST UNDER SECTION 12A MERELY ON THE GROUND THAT THE SAI D OBJECTS WERE VIOLATIVE OF THE PROVISIONS OF SECTION 13(1)(B ). AS HELD BY THE LUCKNOW BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF ST.DON BOSCO EDUCATIONAL SOCIETY VS. CIT [2 004] 90 ITD 477, THE COMMISSIONER OF INCOME-TAX UNDER SECTION 1 2AA IS EMPOWERED TO SATISFY HIMSELF ONLY ABOUT THE OBJECT OF THE TRUST AND ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST AND SUCH POWER DOES NOT EXTEND TO ELIGIBILITY OF THE TRUST/I NSTITUTION FOR EXEMPTION UNDER SECTION 11 READ WITH SECTION 13 WHI CH FALLS WITHIN THE DOMAIN OF THE ASSESSING OFFICER. TO THE SIMILAR EFFECT IS THE DECISION OF THE DELHI BENCH OF THE INCOME-TA X APPELLATE TRIBUNAL IN THE CASE OF ARYAN EDUCATIONAL SOCIETY V . CIT [2006] 281 ITR (AT) 72, WHEREIN IT WAS HELD THAT SO LONG A S THE PROVISIONS OF SECTIONS 11,12 AND 12A ARE COMPLIED W ITH, THE EXEMPTION CANNOT BE DENIED MERELY BECAUSE THERE IS ANY VIOLATION OF THE PROVISIONS OF SECTION 13. -: 14 :- 14 AS ALREADY NOTED, THE PROCEDURE FOR REGISTRATION LA ID DOWN IN SECTION 12AA REQUIRES THE COMMISSIONER OF INCOME-TA X TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES AND OBJ ECT OF THE TRUST OR INSTITUTION AND AS SUCH, THE SCOPE OF HIS POWERS IS LIMITED IN THIS REGARD TO MAKE SUCH ENQUIRIES, AS HE MAY DEEM FIT, TO SATISFY HIMSELF IN RESPECT OF THESE TWO ASPECTS. AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION [1971] 82 ITR 704, AN OBJECT BENEFICIAL TO THE SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILIT Y AND TO SERVE A CHARITABLE PURPOSE, IT IS SUFFICIENT IF THE INTENTI ON IS TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPECI FIED INDIVIDUAL. THIS DECISION OF THE HONBLE APEX COURT FOLLOWED SU BSEQUENTLY BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SUR JI DEVI KUNJI LAL JAIPURIA CHARITABLE TRUST (NO.1) [1990] 186 ITR 728 AND IN THE CASE OF CIT V. PT. RAM SHANKER MISRA TRUST [199 6] 222 ITR 252 TO HOLD THAT THE EXPENDITURE INCURRED BY A TRUS T FOR THE BENEFIT OF ONE COMMUNITY IS AN EXPENDITURE INCURRED ON A PUBLIC CHARITABLE OBJECT, STILL HOLDS THE FIELD NOTWITHSTA NDING THE PROVISIONS CONTAINED IN SECTION 13(1)(B) SINCE THE DEFINITION OF THE TERM CHARITABLE PURPOSE GIVEN IN SECTION 2(15 ) CONTINUES TO REMAIN THE SAME. THE PROVISIONS OF SECTION 13(1) AR E THUS NOT DIRECTLY RELEVANT IN THIS REGARD. ON THE OTHER HAND , THE SAID SECTION BEGINS WITH THE WORDS NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM T HE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON WHICH CLEARLY ENVISAGES OPERATION OF SECTION 11 OR SECTION 12 BEFORE THE PR OVISIONS OF SECTION 13 CAN BE APPLIED OR INVOKED IN A GIVEN CAS E. IT ALSO SHOWS THAT THE SAID PROVISIONS CAN BE APPLIED OR IN VOKED ONLY AT THE TIME OF COMPUTATION OF TOTAL INCOME OF THE PREV IOUS YEAR OF THE PERSON WHO IS CLAIMING EXEMPTION UNDER SECTION 11 OR SECTION 12. BOTH THESE SITUATIONS CONTEMPLATED IN SECTION 1 3 CAN ARISE ONLY AND ONLY IF REGISTRATION UNDER SECTION 12A IS GRANTED TO THE SAID PERSON. IF THE SAME IS NOT GRANTED AND THE PER SON IS REFUSED THE REGISTRATION UNDER SECTION 12A, HE WOULD NOT BE ENTITLED TO CLAIM ANY BENEFIT AVAILABLE UNDER SECTION 11 OR 12 AND THERE WILL BE NO OCCASION TO THE ASSESSING OFFICER TO INVOKE O R APPLY SECTION 13 IN HIS CASE. THIS POSITION WOULD NOT ONLY BE CON TRARY TO THE SCHEME OF THE ACT AS LAID DOWN IN SECTIONS 11, 12, 12A, 12 AA AND 13 BUT THE SAME MAY ALSO CAUSE PREJUDICE/HARDS HIP TO THE PERSONS IN CERTAIN CASES. FOR INSTANCE, THE OBJECTS FOR WHICH THE ASSESSEE-TRUST IN THE PRESENT CASE IS ESTABLISHED, AS INDICATED IN OBJECT CLAUSES NO. 3(1) AND 3(2), NO DOUBT ARE FOR THE BENEFITS OF A PARTICULAR COMMUNITY, VIZ., VAISH. NEVERTHELESS, AS PER OBJECT CLAUSE 3(4), IT WAS ALSO ESTABLISHED TO RUN SCHOOLS , COLLEGES, HOSPITALS ETC. FOR THE BENEFIT OF PUBLIC AT LARGE. IN THIS SITUATION, IF THE REGISTRATION APPLIED FOR UNDER SECTION 12A IS N OT GRANTED TO IT -: 15 :- 15 FOR VIOLATION OF THE PROVISIONS OF SECTION 13(1)( B) AND IT IS ULTIMATELY FOUND THAT THE ASSESSEE-TRUST ACTUALLY A CCOMPLISHED THE OBJECTS AS INDICATED IN CLAUSE NO. 3(4) ONLY FOR TH E BENEFIT OF PUBLIC AT LARGE WITHOUT THERE BEING ANY ACTIVITY UN DERTAKEN AS PER OBJECT CLAUSE NO. 3(1) AND 3(2), IT WOULD BE DEPRIV ED OF ANY BENEFITS WHICH OTHERWISE WERE AVAILABLE TO IT UNDER SECTION 11 OR SECTION 12. THIS CERTAINLY IN NOT THE LEGISLATIVE I NTENTION AS REFLECTED IN THE SCHEME LAID DOWN IN SECTIONS 11, 12, 12A, 12AA AND 13. ON THE CONTRARY, THE PHRASEOLOGY OF SECTION 13, AS ALREADY DISCUSSED, MAKES IT EXPLICITLY CLEAR THAT T HE SAID PROVISIONS BECOME OPERATIVE OR RELEVANT ONLY AT THE STAGE OF ASSESSMENT WHEN THE ASSESSING OFFICER IS REQUIRED T O EXAMINE THE CLAIM OF THE ASSESSEE FOR BENEFITS UNDER SECTION 11 OR SECTION 12 WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YEAR. THE APPLICATION OF SECTION 13 THUS F ALLS WITHIN THE EXCLUSIVE DOMAIN OF THE ASSESSING OFFICER AND THE P ROVISIONS CONTAINED THEREIN CAN BE INVOKED BY HIM WHILE FRAMI NG THE ASSESSMENT AND NOT BY THE COMMISSIONER OF INCOME-TA X WHILE CONSIDERING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA. KEEPING IN VIEW THE REASONS GIVEN ABOVE, WE ARE OF THE VIEW THAT THE ACTION OF THE LEARNED DIT (EXEMPTION) IN REFUSI NG TO GRANT REGISTRATION TO THE ASSESSEE-TRUST ON THE GROUND OF VIOLATION OF THE PROVISIONS OF SECTION 13(1)(B) WAS NOT JUSTIFIED ES PECIALLY WHEN HE HAD NOT DOUBTED EITHER THE GENUINENESS OF THE ACTIV ITIES OF THE ASSESSEE-TRUST OR THE NATURE OF ITS OBJECT BEING CH ARITABLE. IN THAT VIEW OF THE MATTER, WE SET ASIDE HIS IMPUGNED ORDER AND DIRECT THAT REGISTRATION APPLIED FOR BY THE ASSESSEE-TRUST UNDER SECTION 12A BE GRANTED TO IT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ITAT, CHENNAI BENCH C' THIRD MEMBER IN THE CASE OF PEOPLE EDUCATION & ECONOMIC DEVELOPMENT SOCIETY ( PEEDS) V. ITO; 104 TTJ(CHENNAI) (TM ) 467 HELD ENQUIRY INTO THE OBJECTS OF INSTITUTION CANNOT BE MADE UNDER S. 12A. AT THE STAGE OF FILING AN APPLICATION FOR REGISTRATION UNDER S.12A.CIT IS NOT SUPPOSED TO EXAMINE THE APPLICATION OF INCOME ASPECT. ALL THAT HE MAY EXAMINE IS WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENTS OF S.12A R/W R. 17A AND WHETHER -: 16 :- 16 FORM NO. 10A HAS BEEN PROPERLY FILLED UP. HE MAY ALSO SEE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR NOT. AT THIS STAGE, IT IS NOT A SINE QUA NON TO EXAMINE THE APPLICATION ASPECT OF INCOME. --NEW LIFE IN CHRIST EVANGELISTIC ASSOCIATION (NLC) VS. CIT (2001) 165 CTR (MAD) 446 : (2000) 246 ITR 532 (MAD) AND ASSTT. CIT VS. PEARE LAL SHARMA MEMORIAL TRUST SOCIETY (2001) 70 TTJ (DEL) 197 : (2001) 77 ITD 50 (DEL) RELIED ON. HON'BLE HIGH COURT OF MADHYA PRADESH HIGH COURT IN THE CASE OF SARAFA ASSOCIATION VS. CIT; 294 ITR 262 HEL D THAT THE COMMISSIONER WAS REQUIRED TO EXAMINE THE DEED AS A WHOLE AND CONSIDER THE EFFECT OF VARIOUS BALANCE SHEETS O N RECORD. THE COMMISSIONER SHOULD SATISFY HIMSELF ABOUT GENUI NENESS OF THE ACTIVITIES OF THE TRUST. HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT V GUJARAT MARIYIMR BOSTF; 289 ITR 139 HELD THE ASSESSEE, A STATUTORY BODY CREATED BY THE GUJARAT MARITIME BOARD ACT, 1981, WAS ENGAGED IN THE ACTIVITIES OF DEVELOPMENT AND MAINTENANCE OF PORTS IN THE STATE OF GUJARAT. THE COMMISSIONER REFUSED REGISTRATION OF THE ASSESSEE UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961, ON THE GROUND THAT THE ASSESSEE COULD NOT BE CONSIDERED A LAWFUL TRUST WITHIN THE MEANING OF THE TERM TRUST USED UNDER SECTIONS 11, 12 AND 13 AS IT WAS CREATED AS A LOCAL AUTHORITY WITHIN THE MEANING OF PERSON FOR THE PURPOSE OF THE ACT. THE TRIBUNAL HELD THAT THERE WAS NO MENTION OF EITHER TRUST OR INSTITUTION IN THE DEFINITION OF PERSON IN SECTION 2(31) AND MERELY BECAUSE WITHIN THE DEFINITION OF PERSON IT WAS TERMED A LOCAL AUTHORITY, IT WOULD NOT BE A BAR TO ITS REGISTRATION AND THAT THE ASSESSEE WAS AN INSTITUTION WITHIN THE MEANING OF SECTION 12AA(1). THE TRIBUNAL HELD THAT THE ASSESSEE HAD MADE THE APPLICATION ON NOVEMBER 13, 2002, AND SINCE THE COMMISSIONER WAS NOT SATISFIED WITH THE REASONS FOR THE DELAY IN FILING THE APPLICATION, TH E ASSESSEE WOULD BE ENTITLED TO REGISTRATION FROM APRIL 1, 2002 AND NOT FOR THE EARLIER PERIOD. ALTHOUGH THE COMMISSIONER HAD REFUSED REGISTRATION ON THE GROUND THAT THE ASSESSEE HAD NOT GIVEN ANY TECHNICAL DETAILS, VIZ., NAME AND -: 17 :- 17 ADDRESS OF THE ORIGINAL FOUNDER/AUTHOR/SETTLER OF THE TRUST PROPERTY, THE TRIBUNAL HELD THAT IT WAS NOT A CASE OF CREATION OF TRUST BY SOME INDIVIDUAL AND THUS THERE WAS NO SPECIFIC NAME OF ANY FOUNDER OR SETTLER OF THE TRUST. THE TRIBUNAL HELD THAT SECTION 12A DID NOT MAKE ANY DISTINCTION BETWEEN TRUSTS AND INSTITUTIONS CREATED BY PRIVATE INDIVIDUALS OR BY THE GOVERNMENT. THE TRIBUNAL WAS OF THE VIEW THAT IF AN ASSESSEE WAS AN INSTITUTION WHOSE OBJECT IS CHARITABLE AS DEFINED UNDER SECTION 2(15), THE TRUST/INSTITUTION WOULD BE ENTITLED TO REGISTRATION UNDER SECTION 12A. ALTHOUGH THE ASSESSEE EARNED INCOME FROM ITS ACTIVITY OF PROVIDING INFRASTRUCTURAL FACILITIES AN D ALSO FROM OTHER ANCILLARY ACTIVITIES SUCH AS RENTAL INCOME FROM LETTING OUT OF THE PROPERTY, SALE OF GOODS, ETC., WHICH MAY NOT BE EXEMPTED, THE TRIBUNAL HELD THAT WHETHER PART OF THE INCOME WAS EXEMPT OR NOT WAS IRRELEVANT FOR REGISTRATION OF THE INSTITUTION FOR WHICH THE COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE OBJECT OF THE INSTITUTION AND GENUINENESS OF THE ACTIVITIES OF TH E INSTITUTION AND NOT ABOUT THE NATURE OF THE INCOME. THE TRIBUNAL CONCLUDED THAT THE OBJECT OF THE ASSESSEE WAS TO MAINTAIN AND DEVELOP PORTS IN THE STATE OF GUJARAT WHICH WAS AN OBJECT OF GENERAL PUBLIC UTILITY AND DIRECTED THE COMMISSIONER TO REGISTER THE ASSESSEE UNDER SECTION 12A WITH EFFECT FROM APRIL 1, 2002. ON APPEAL. HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL AFTER DETAILED DISCUSSION HELD THAT UNDER THE REQUIREMENT OF SECTION 12A THE ASSESSEE WAS A CHARITABLE INSTITUTION AND WAS ENTITLED TO THE BENEFIT OF SECTION 12A WITH EFFECT FROM APRIL 1, 2002. THERE WAS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL. HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT V. AGRICULTURAL PRODUCE & MARKET COMMITTEE; 291 ITR 41 9 HELD THE DOMINANT OBJECT OF MARKET COMMITTEES IS TO REGULATE PROCUREMENT AND SUPPLY OF AGRICULTURAL AND OTHER PRODUCE AND TO MEET THE EXPENSES REQUIRED TO BE MET IN ACHIEVING THE SAID OBJECT, TH E LEGISLATURE HAS EMPOWERED THEN TO LEVY CESS/FESS. -: 18 :- 18 MOREOVER, THE SURPLUS REMAINING IN THE MARKET FUND IS PLOUGHED BACK FOR CARRYING OUT THE OBJECTS OF THE 1963 ACT. THUS, THE SURPLUS REMAINING IN THE MARKET FUND IS NEITHER DISTRIBUTED NOR ACCUMULATED AS PROFITS. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE MARKET COMMITTEES ARE ESTABLISHED WITH PROFIT MOTIVE SO AS TO DENY REGISTRATION UNDER SECTION 12A/12AA OF THE INCOME-TAX ACT, 1961. PRIOR TO APRIL 1, 1984, THE WORDS USED IN SECTION 2(15) OF THE ACT WERE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT. BY THE FINANCE ACT, 1983, WITH EFFECT FROM APRIL 1, 1984, THE LEGISLATURE HAS OMITTED THE WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT FROM SECTION 2(15) OF THE ACT. THUS, AFTER APRIL 1, 1984, EVEN IF THERE IS SOME PROFIT IN THE ACTIVITY CARRIED ON BY THE TRUST/INSTITUTION, SO LO NG AS THE DOMINANT OBJECT IS OF GENERAL PUBIC UTILITY, IT CANNOT BE SAID THAT THE SAID THE SAID TRUST/INSTITUTION IS NOT ESTABLISHED FOR CHARITABLE PURPOSES. THE EXPRESSION PROPERTY USED IN SECTION 11 OF THE ACT, IS OF WIDE AMPLITUDE AND IT INCLUDES THE BUSINESS UNDERTAKING ITSELF. THE WORD PROPERTY IN SECTION 11 INCLUDES IMMOVABLE AND MOVABLE PROPERTY LIKE MONEY, SHARES, SECURITIES ETC. THEREFORE, WHERE A TRUST/INSTITUTION FULFILS A LL THE CONDITIONS SET OUT IN SECTION 12A/12AA, REGISTRATION CANNOT BE DENIED ON THE GROUND THAT SOME CONDITIONS OF SECTIONS 11 AND 12 ARE NOT FULFILLED. THERE IS NO REQUIREMENT UNDER THE ACT THAT AN INSTITUTION CONSTITUTED FOR ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY MUST BE REGISTERED AS A TRUST. THE MARKET COMMITTEES ARE ENTITLED TO REGISTRATION UNDER SECTION 12A/12AA/ THE ITAT, DELHI BENCH, IN THE CASE OF POCKET TESTAM ENT LEAGUE (INDIA) V. DCIT (EXEMPTION) ;19 SOT 150 HAS HELD THE EXEMPTION UNDER SECTION 11(1)(A) IS AVAILABLE ON THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED FOR SUCH PURPOSES IN INDIA. THUS, EVEN IF THE INCOME IS EARNED BY TRUST, WHICH IS CHARITABLE AS WELL AS RELIGIOUS AND PART OF THE INCOME IS -: 19 :- 19 APPLIED FOR RELIGIOUS PURPOSED, EXEMPTION UNDER SECTION 11(1)(A) IS STILL AVAILABLE. 25. CONSIDERING THE ABOVE PROVISIONS AND THE DEC ISIONS REFERRED TO ABOVE, IT IS CLEAR THAT THE LD. CIT HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND GENUINEN ESS OF THE ACTIVITIES OF THE TRUST AT THE TIME OF CONSIDERATIO N OF REGISTRATION APPLICATION. REFUSAL TO GRANT REGISTR ATION TO THE TRUST ON THE GROUND OF VIOLATION OF SECTION 13(1)(B ) OR 13(1)() WAS NOT JUSTIFIED. IN THIS VIEW OF THE MATTER, THE GRANT OF REGISTRATION IS A STEPPING STONE. 26. THE LEARNED DEPARTMENTAL REPRESENTATIVE HO WEVER RELIED UPON THE FOLLOWING DECISIONS :- 1. SHRI MAHESHWARI AGRAWAL MARWARI PUNCHAYAT (SUPRA) IN WHICH THE ASSESSEE WAS REGISTERED UNDER SECTION 12A OF THE IT ACT AND THE ITO AT THE ASSESSMENT STAGE HELD THAT THE ASSESSEE COULD NOT CLAIM EXEMPTION IN VIEW OF SECTION 13(1)(B) OF THE ACT. IN THIS CASE ULTIMATELY IT WAS HELD THAT THE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE IT ACT FOR ITS ENTIRE INCOME. 2. DECISION OF THE HON'BLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF SHRI DHAKAD SAMAJ DHARAMSHALA BHAVWAN TRUST (SUPRA) IN WHICH IT WAS HELD IN THE ABSENCE OF ANY NEXUS WITH THE RELIGIOUS OR CHARITABLE PURPOSE BEING SHOWN, THE ASSESSEE TRUST IS NOT ELIGIBLE FOR REGISTRATION UNDER SECTION 12A IN RESPECT OF DHARMSHALA AT RELIGIOUS PLACE FOR STAY OF MEMBERS OF A PARTICULAR SAMAJ AND ALSO FOR NON-MEMBERS. IN THIS CASE THE LD. CIT REFUSED REGISTRATION TO THE TRUST UNDER SECTION 12A MAINLY ON THE REASONS THAT THE OBJECT OF THE TRUST IS TO ESTABLISH DHARAMSHALA ONLY FOR MEMBERS OF DHAKAD SAMAJ. DHAKAD SAMAJ IS NOT A BACKWARD CLASS AS IT IS NOT LIMITED TO DHAKAD COMMUNITY, BUT INCLUDES PERSONS FROM BRAHMIN, JAIN, MAHESHWARI AND KIRAR -: 20 :- 20 COMMUNITIES AND IT IS NOT A RELIGIOUS TRUST. IT WAS HELD THAT SECTION 11 PROVIDES FOR THIS EXEMPTION ONLY IF THE PROPERTY HELD IS FOR CHARITABLE OR RELIGIOUS PURPOSE. IT IS ONLY WHEN SUCH A PURPOSE IS SHOWN THAT REGISTRATION CAN BE GRANTED. 3. DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RATAN TRUST (SUPRA) IN WHICH THE DISPUTE RELATES TO INCOME RECEIVED IN EACH ASSESSMENT YEAR BY THE ASSESSEE FROM GOKULCHAND RATANCHAND WOOLEN MILLS PRIVATE LIMITED. THE ASSESSEE CLAIMED EXEMPTION IN RESPECT OF INTEREST INCOME UNDER SECTION 11. THE ITO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE BEING INCOME EXEMPT. THE ISSUE WAS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 4. DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF AMAN SHIV MANDIR TRUST (REGD.) (SUPRA). IN THIS CASE IT WAS HELD THAT NOTHING WAS SPENT DURING LAST 5 YEARS ON ANY CHARITABLE PURPOSE. THEREFORE, THE ASSESSEE WAS NOT GRANTED REGISTRATION UNDER SECTION 12A. 27. ALL THE ABOVE DECISIONS ARE CLEARLY DISTINGUISH ABLE ON FACTS BECAUSE MOST OF THE DECISIONS DID NOT PERTAIN TO REGISTRATION MATTER AND ONE OF THE DECISION THOUGH PERTAIN TO REGISTRATION MATTER, BUT EITHER THE ISSUE IS DIFFER ENT IN CASE OF SHRI DHAKAD SAMAJ DHARAMSHALA BHAVWAN TRUST IS NOT A RELIGIOUS TRUST. THERE IS NO REFERENCE TO PROVISION S OF SECTION 13(1)(B) OR SECTION 13(1)() FOR REFUSING TO GRANT REGISTRATION TO ASSESSEE TRUST. THESE DECISIONS ARE THEREFORE, CLEARLY DISTINGUISHABLE ON FACTS AND ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. THE LD. CIT ALSO REFERRED TO THE DEC ISION IN THE CASE OF GULAM MOINUDDIN TRUST IN WHICH THE ASSESSEE CLAIMED EXEMPTION OF INCOME UNDER SECTION 11 WHICH WAS REJECTED BY THE INCOMETAX OFFICER ON THE GROUND THA T IT WAS NOT CHARITABLE TRUST AND WAS HIT BY SECTION 13(1)(B ) OF THE ACT. IN THE CASE OF STATE OF KERALA V. M.P. SHANTI VERMA JAIN -: 21 :- 21 TRUST (SUPRA), THE ASSESSING OFFICER ASSESSED THE I NCOME OF THE TRUST AND DENIED EXEMPTION TO THE ASSESSEE AT T HE ASSESSMENT STAGE. IN THE CASE OF CIT V. PALAGHAT S HADI TRUST (SUPRA) IN WHICH THE ASSESSEE CLAIMED EXEMPTION UND ER SECTION 11 OF THE IT ACT WHICH WAS DENIED BY THE AS SESSING OFFICER AND THE TRIBUNAL CAME TO THE CONCLUSION THA T THE TRUST WAS ENTITLED TO EXEMPTION BY VIRTUE OF PROVISIONS O F SECOND EXPLANATION TO SECTION 13 OF THE IT ACT. THE HIGH COURT UPHELD THE FINDING. HON'BLE SUPREME COURT HELD THA T THE TRUST ATTRACTS THE PROVISIONS OF SECTION 13(1)(B) A ND AS SUCH NOT ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE I T ACT. THE LEARNED COUNSEL FOR THE ASSESSEE IS THEREFORE, JUS TIFIED IN CONTENDING THAT THE ISSUE OF REGISTRATION UNDER SEC TION 12A/12AA WAS NOT IN ISSUE IN THESE CASES. THEREFORE , THE SAME CANNOT BE APPLIED AT THIS STAGE IN REJECTING T HE CLAIM OF THE ASSESSEE FOR GRANT OF REGISTRATION. 28. WE MAY ALSO MENTION THAT THE ASSESSEE IN THE PAPER BOOK AT PAGE 36 HAS FILED COPY OF ORDER OF TH E CIT- III,BARODA, IN THE CASE OF DAWOODI BOHRA JAMAT, KAW ANT, IN WHICH REGISTRATION WAS REFUSED BY THE CIT HAVING TH E SAME OBJECTS OF THE TRUST AS ARE OF THE ASSESSEE. HOWEV ER THE CIT VIDE ORDER DATED 4 TH SEPTEMBER, 2006 GRANTED REGISTRATION TO THE ASSESSEE TRUST BY FOLLOWING THE ORDER OF ITAT, AHMEDABAD BENCH, DATED 10 TH MARCH, 2006 HOLDING THAT THE ASSESSEE TRUST IS ENTITLED TO REGISTRATION UNDER SECTION 12A OF TH E ACT. A COPY OF THE SAME IS FILED AT PAGE 39 OF THE PAPER BOOK. 29. IN VIEW OF THE ABOVE FINDING, THOUGH IT IS NOT NECESSARY TO ENQUIRE INTO THE FINDING GIVEN WITH RE GARD TO APPLICABILITY OF PROVISIONS OF SECTION 13(1) OF TH E IT ACT, YET WE MAY NOTE THAT THE LD. CIT HAS MENTIONED THAT AMO UNTS ARE GIVEN TO AMIL BESIDES GIVING SALARY TO HIM. NO FIN DING HAS BEEN GIVEN AS TO WHETHER SALARY GIVEN TO AMIL WAS R EASONABLE AS REGARDS SERVICES RENDERED BY HIM FOR THE ASSESSE E INSTITUTION. THE CIT HAS ALSO NOT GIVEN ANY FINDIN G AS TO FOR WHAT PURPOSES, THE AMOUNT WAS GIVEN BY THE ASSESSEE TRUST TO AMIL AND WHERE THE AMOUNT HAS BEEN SPENT. AS PER T HE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE, THE AMOUNTS IN QUESTION WERE GIVEN TO AMIL FOR HIS SALA RY AS WELL AS THE AMOUNT WAS SPENT FOR ACHIEVING THE OBJECTS O F THE -: 22 :- 22 ASSESSEE TRUST. THE CIT HAS NOT GIVEN ANY SUCH FIN DING IN THE IMPUGNED ORDER. THE LEARNED COUNSEL FOR THE ASSESS EE HAS REFERRED TO PAGE 9 OF HIS WRITTEN SUBMISSIONS IN WH ICH EXPLANATION IS GIVEN WITH REGARD TO THE AMOUNT SPEN T FOR ACHIEVING THE OBJECTS OF THE ASSESSEE TRUST. IN TH E ABSENCE OF ANY SPECIFIC FINDING IN THE IMPUGNED ORDER WITH REG ARD TO THE AMOUNT SPENT BY AMIL FOR THE ASSESSEE TRUST, WE DO NOT FIND ANY JUSTIFICATION FOR INVOKING THE PROVISIONS OF SE CTION 13(1) OF THE ACT BECAUSE THE REVENUE SHALL HAVE TO PROVE WHILE INVOKING SUCH PROVISION AGAINST THE ASSESSEE TRUST THAT THE INCOME WAS DIRECTLY OR INDIRECTLY INCURRED FOR THE BENEFIT OF THE PERSON REFERRED TO IN SUB-SECTION (3) OF SECTIO N 13 OF THE ACT. NEVER-THE-LESS, THIS WAS NOT THE REQUIREMENT T O BE CONSIDERED AT THE ASSESSMENT STAGE AS IS HELD IN SE VERAL AUTHORITIES REFERRED TO ABOVE. 30. WE MAY ALSO NOTE THAT THOUGH THE LD. CIT CALLED FOR THE EXPLANATION OF THE ASSESSEE ON THE ISSUE OF NON-MEN TIONING OF THE CLAUSE THAT THE RECEIPTS OF THE TRUST WILL BE U SED FOR THE OBJECTS OF THE TRUST AND ON DISSOLUTION OF THE TRUS T, WHAT WILL HAPPEN TO THE PROPERTIES OF THE TRUST, YET DID NOT GIVE ANY FINDING ON THESE ISSUES. WE MAY NOTE THAT AS PER SE CTION 11 OF THE IT ACT, 1961, THE INCOME OF THE TRUST WOULD NOT FORM PART OF THE TOTAL INCOME WHEN THE SAME WAS APPLIED TO IT S OBJECTS AND PURPOSE. SIMILARLY, AS PER SECTION 14 OF THE M. P. PUBLIC TRUSTS ACT, THE PREVIOUS SANCTION OF THE REGISTRAR IS REQUIRED IN CASE OF SALE ETC. OF PROPERTY BELONGING TO A PUB LIC TRUST. AS PER SECTION 27(2)(D) OF THE SAME ACT, THE COURT CAN PROVIDE SCHEME OF MANAGEMENT OF THE TRUST PROPERTY. LIKEWI SE, THE SAFEGUARD IS PROVIDED BY EMPOWERING THE A.O. IN THI S REGARD IN SECOND PROVISO TO SECTION 11(3A) OF THE IT ACT. THESE ARE THE SUFFICIENT SAFEGUARDS PROVIDED UNDER THE IT ACT AS WELL AS UNDER THE M.P. PUBLIC TRUSTS ACT THEREFORE EVEN THO UGH THE LD. CIT DID NOT DECIDE THESE ISSUES BUT HER APPREHE NSION IN THE SHOW CAUSE NOTICE WAS MISCONCEIVED. 31. IN VIEW OF THE ABOVE FINDINGS, WE ARE OF THE VIEW THAT THE ASSESSEE IS A PUBLIC RELIGIOUS TRUST AND THAT T HE ACTION OF THE CIT IN REFUSING TO GRANT REGISTRATION TO THE AS SESSEE TRUST ON THE GROUND OF VIOLATION OF PROVISIONS OF SECTION S 13(1)(B) AND 13(1)() OF THE ACT IS NOT JUSTIFIED ESPECIALLY WHEN THE LD. -: 23 :- 23 CIT HAD NOT DOUBTED EITHER THE NATURE OF ITS OBJECT S OR GENUINENESS OF THE ACTIVITIES OF THE TRUST. IN THI S VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDER AND DIRECT THE LD. CIT, UJJAIN, TO GRANT REGISTRATION TO THE ASSESSEE TRUST UNDER SECTION 12A/12AA OF THE INCOMETAX ACT. 12. HON'BLE SUPREME COURT IN THE CASE OF SHRI DIGAMBER JAIN MANDIR REPORTED IN 310 ITR ( S.C.) NOTES NO.2, CONF IRMED THE VIEW THAT SECTIONS 11 & 12 NEED NOT BE SATISFIED AT GRAN T OF REGISTRATION. APPLICATION ON MONEY OR THAT TRUST IS RELIGIOUS WOU LD NOT DIS-ENTITLE THE ASSESSEE FROM CLAIMING A RELIEF. 13. CONSIDERING THE ABOVE DISCUSSION AND THE AIMS AND O BJECTS OF THE ASSESSEE TRUST, I AM OF THE VIEW THAT THE ASSES SEE IS A PUBLIC CHARITABLE TRUST AND THE ACTION OF THE LD. CIT IN R EFUSING TO GRANT REGISTRATION TO THE ASSESSEE TRUST ON THE GROUND OF VIOLATION OF PROVISIONS OF SECTION 11(5) OF THE INCOME-TAX ACT, 1961, IS NOT JUSTIFIED, ESPECIALLY WHEN THE LD. COMMISSIONER HAD NOT DOUBTE D EITHER THE NATURE OF ITS OBJECT OR GENUINENESS OF THE ACTIVITIES OF T HE ASSESSEE TRUST. APART FROM THAT, ASSESSEE HAS FILED APPROVAL OF REGISTRAR OF TRUST AT P.B.64 APPROVING AMENDMENT THAT FUNDS OF ASSESSEE TRUST SH ALL BE USED AS PER SECTION 13 AND 11(5) OF INCOME-TAX ACT, 1961, WITH APPROVAL OF MAJORITY OF TRUSTEES AND ACCOUNTS SHALL BE AUDITED. NO FURTHER ALTERATION -: 24 :- 24 IN TRUST DEED SHALL BE MADE WITHOUT APPROVAL OF CIT . THEREFORE, SOLE OBJECTION OF LD. CIT IS ALSO SATISFIED ON MERITS. IN THIS VIEW OF THE MATTER, I SET-ASIDE THE IMPUGNED THE ORDER AND DIRE CT THE LD. CIT-I, INDORE, TO GRANT REGISTRATION TO THE ASSESSEE TRUST U/S 12A/12AA OF THE INCOME-TAX ACT, 1961, W.E.F. IST DAY OF THE FINANCI AL YEAR IN WHICH REGISTRATION APPLICATION IS MADE I.E. 1.4.2006. 14. AS A RESULT, THE APPEAL OF THE ASSESSEE TRUST IS AL LOWED. THIS ORDER HAS BEEN PRONOUNCED ON 4 TH JUNE, 2009. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED :4 TH JUNE, 2009. CPU* 26D36