Sri. Maramma Temple Seva Trust, Bangalore V. CIT, Bangalore

ITA 818/BANG/2015

• Counselvise Citation: 81821114 RSA 2015
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 29-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Charitable institution; Benefit of exemption
• Section: 12A; 12AA; 11

Judgement Text

ITA.818/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO818/BANG/2015 (ASSESSMENT YEAR : NA) SRI MARAMMA TEMPLE SEVA TRUST, NO.11, MARAMMA TEMPLE STREET, 1 ST MAIN ROAD, VYALIKAVAL, BENGALURU 560 003 .. APPELL ANT PAN : AANTS4131R V. COMMISSIONER OF INCOME-TAX (E), BENGALURU .. RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI. SUDHAKAR RAO, CIT DR-I HEARD ON : 21.10.2015 PRONOUNCED ON : 30.10.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE, ITS GRIEVANCE IS THAT CIT (EXEMPTIONS), BENGALURU VIDE HIS ORDER DT.27.03.201 5 DENIED THE REGISTRATION SOUGHT BY IT U/S.12AA OF THE INCOME-TA X ACT, 1961 (THE ACT IN SHORT). ITA.818/BANG/2015 PAGE - 2 02. NOBODY APPEARED FOR THE ASSESSEE AT THE TIME OF HEARING. THOUGH A VAKALATHNAMA IN FAVOUR OF Y. K. RAGHAVENDRA RAO & R AGHAVAN M, ADVOCATES, BANGALORE, IS AVAILABLE ON RECORD, NO AUTHORISED PE RSON FROM THE SAID OFFICE WAS THERE WHEN THE CASE WAS CALLED UP FOR HEARING. 03. LD. DR STRONGLY SUPPORTING THE ORDER OF THE CI T STATED THAT THE ACT DID NOT CONTEMPLATE GRANT OF REGISTRATION TO A TRUST HA VING MIXED OBJECTS, SOME OF WHICH ARE CHARITABLE AND SOME OF WHICH ARE RELIGIOU S. 04. WE HAVE PERUSED THE ORDER AND HEARD THE CONTENT IONS OF THE LD. DR. MAIN OBJECTS OF THE TRUST AS IT APPEARS AT PARA 3 O F THE TRUST DEED DATED 8 TH NOVEMBER 2004, IS REPRODUCED HERE UNDER : 3. OBJECTS OF THE TRUST: - THE OBJECTS FOR WHICH THE TRUST IS ESTABLISHED ARE: A. TO CONSTRUCT & RENOVATION OF SREE MARAMMA TEMPLE, C OUNTRIES, ORPHANAGES AND ALLIED BUILDINGS FOR THE DEITIES WHI CH ARE WORSHIPED BY LARGE NUMBER OF DEVOTEES AND DISCIPLES TO PROVIDE T EMPORARY SHELTER OF THE NEEDS ETC, BY RAISING FUNDS BY WAY OF SUBSCRIPTIONS , DONATIONS, GRANTS, ETC, AND ACCEPT THE ARTICLE/ORNAMENTS (GOLD, SILVER, ETC ) DONATED TO THE TEMPLES. B. TO PROMOTE BETTER SOCIAL UNDERSTANDING AND AMITY AM ONG DIFFERENT COMMUNITIES. C. TO MAKE A COMPARATIVE STUDY OF PHILOSOPHICAL PREACH ING AND RELIGIOUS PRINCIPLES OF 'HINDU DHARMA' AND BRING TOGETHER PER SONS WHO HAVE FAITH IN HINDUISM AND HINDU PHILOSOPHY. D. TO TAKE MORE EFFECTIVE STEPS TO IMPLEMENT THE TEACH ING OF GREAT NOBLE AND LEARNED TO SOCIAL UPLIFTMENT AND COMMUNITY AND COMM UNITY UNDERSTANDING. E. TO ENCOURAGE AND ORGANIZE THE STUDY COURSE, SEMINAR S, PUBLISH, JOURNALS, MAGAZINES LIBRARIES FOR EXPANDING TEACHING ON HINDU ISM AND TO INVITE LEADING RELIGIOUS HEADS AND TO HONOR THEM. ITA.818/BANG/2015 PAGE - 3 F. TO MAINTAIN RIGHT OF DELEGATE SHIP IN OTHER PHIL OSOPHICAL ORGANIZATIONS AND SOCIETIES. G. TO LOOK AFTER THE GENERAL ADMINISTRATION OF THE TEMPLE. TO P ERFORM THE DAILY POOJA TO THE DEITIES AND TO ARRANG E SPECIAL POOJAS ON FESTIVAL DAYS. H. TO CONDUCT CLASSES FOR YOGA, MUSIC, SANSKRIT, DRAMA AND VEDAS, ETC., FOR THE BENEFIT OF TRUST MEMBERS, THEIR FAMIL IES AND THE GENERAL PUBLIC OF THE AREA. I. TO ESTABLISH AND TO RUN A BABY SITTING, NURSERY, PR IMARY, HIGH SCHOOLS, CBSC, ICSE SCHOOLS, COLLEGE, TECHNICAL INS TITUTIONS, ADULT EDUCATION, COMMERCE TRAINING COLLEGE, COMPUTE R EDUCATION, SELF EMPLOYMENT, EVENING COLLEGE, VOCATI ONAL TRAINING CENTER, ETC. J. TO CONDUCT HEALTH AWARENESS PROGRAMMES CAMP, ORGANI ZE CAMPS BLOOD DONATIONS CAMPS, ETC. K. TO HELP THE POOR, ORPHANS, PHYSICALLY AND MENTALLY HANDICAPPED PEOPLE, WIDOWS AND OTHER DISABLED PERSONS, BY PROVI DING MONETARY OR ANY OTHER KIND OF ASSISTANCE EITHER BY PAYMENT I N CASH OR IN KIND SUPPLY OR CLOTH, FOOD, SHELTER, MEDICAL FACILI TIES AND THE LIKE FREE OF COST. L. TO PROVIDE FOR ENCOURAGE AND PROMOTE WELFARE OF THE SOCIETY AND TO UNDERTAKE VARIOUS FORMS OF SOCIAL WELFARE ME ASURES SUCH AS MEDICAL, WELFARE OF WOMEN, RUNNING AND MAINTENANCE OF HOME FOR THE AGED, ORPHANAGES, SHELTERS FOR THE HOME-LESS ST REET CHILDREN ETC., LOOKING AFTER AND UPLIFTING THE SOCIAL AND EC ONOMIC STATUS OF THE MENTALLY RETARDED AND HANDICAPPED PERSONS AND SUCH OTHER MEASURES. M. EDUCATION, AWARENESS CREATION AND ORGANIZATION B UILDING OF THE POOR BOTH URBAN AS WELL AS RURAL WITH SPECIAL EMPHA SIS TO WOMEN AND CHILDREN. ITA.818/BANG/2015 PAGE - 4 N. CREATING CONSCIOUSNESS ON THE IMPORTANCE OF LITE RACY AND PROVIDING FUNCTIONAL LITERACY TO THE PEOPLE ESPECIA LLY TO THE MARGINALIZED SECTION OF THE SOCIETY. O. ALTERNATIVE TECHNOLOGY TO THE URBAN, RURAL POOR ARTISANS AND PEASANTS TO IMPROVE THEIR SKILLS AND PROMOTE SELF H ELP DEVELOPMENTS. 05. NO DOUBT SOME OF THE OBJECTS ARE CHARITABLE IN NATURE, WHEREAS SOME OTHERS ARE RELIGIOUS IN NATURE. HOWEVER THE CLASS OF BENEFICIARIES ARE UNDOUBTEDLY PUBLIC OR A WIDE SECTION OF PUBLIC. WE FIND THAT A SIMILAR ISSUE HAD COME UP BEFORE THE COCHIN BENCH OF THIS TRIBUNA L IN THE CASE OF CALICUT ISLAMIC CULTURAL SOCIETY V. ACIT [(2009) 88 SOT 148]. OBSERVATIONS OF THE TRIBUNAL ON THIS ISSUE AS IT AP PEAR AT PARAS 16 TO 30 OR THE ORDER IS REPRODUCED HEREUNDER : 15. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES . WE HAVE ALSO CAREFULLY CONSIDERED ALL THE FACTS AS WELL AS PRECEDENTS RELIED ON BY BOTH THE PARTIES. FROM THE ARGUMENTS ADVANCED BY BOTH THE PARTIES, THE CONTROVERSY IN BOTH THESE CASES IS COM MON, I.E., THE ALLOWABILITY OF THE EXEMPTION TO BOTH THESE ASSESSE ES AS CLAIMED BY THEM UNDER S. 11(1)(A)OF THE ACT. TO MAKE THE SU MMARY OF THE CONTROVERSY, WE CAN GIVE THE REASONS IN BOTH THESE CASES FOR DENYING THE CLAIM OF THE ASSESSEES UNDER S. 11(1)(A ) OF THE ACT. 16. NOW WE TAKE UP THE REASONS GIVEN BY THE AO IN THE CASE OF CALICUT ISLAMIC CULTURAL SOCIETY (ITA NO. 729/COCH/ 2006) : (I) THE ACTIVITY OF THE SOCIETY IS PARTLY RELIGIOUS AND PARTLY CHARITABLE. ITA.818/BANG/2015 PAGE - 5 (II) THE OBJECT OF THE ASSESSEE IS PARTLY CHARITABL E AND PARTLY RELIGIOUS BECAUSE ON THE VERIFICATION OF BOOKS OF A CCOUNT IT WAS NOTED BY THE AO THAT ASSESSEE SPENT AMOUNT ON CONDU CTING THE MOSQUE AND ALSO ASSESSEE WAS CONDUCTING CHARITABLE INSTITUTIONS LIKE CALICUT ORPHANAGE AND CALICUT HIGHER SECONDARY SCHOOL FOR THE HANDICAPPED. (III) THERE WERE MANY CHARITABLE INSTITUTIONS RUN B Y THE ASSESSEE TRUST. (IV) IF THE ASSESSEE IS PARTLY ENGAGED IN THE ACTIV ITY WHICH IS A RELIGIOUS AND PARTLY CHARITABLE, THEN IN VIEW OF TH E DECISION OF THE HONBLE HIGH COURT OF JAMMU & KASHMIR IN THE CASE O F GHULAM MOHIDIN TRUST (SUPRA) ASSESSEE CANNOT BE GIVEN THE BENEFIT OF EXEMPTION UNDER S. 11(1)(A) OF THE ACT. 17. NOW WE REFER TO IN A SUMMARY WAY THE REASONS FOR D ENYING THE EXEMPTION TO ANOTHER ASSESSEE, I.E., MARKAZU SS AQUAFATHI SSUNNIYA (ITA NO. 641/COCH/2006). THE ASSESSEE IS D OING BOTH RELIGIOUS AND CHARITABLE ACTIVITIES AS PER THE RULE S AND REGULATIONS OF THE ASSESSEE SOCIETY. AS PER THE OBJ ECT OF THE ASSESSEE TRUST IT IS TO ESTABLISH, DEVELOP AND MANA GE MADRASSA, MOSQUE, PALLIDARZ, ARABIC COLLEGE, CENTRE FOR THE O RPHANS AND DESTITUTE, JOB TRAINING INSTITUTE, SCHOOLS, HOSPITA LS, NURSERIES, ETC. IF THE ASSESSEE IS ENGAGED INTO PARTLY CHARITABLE A ND PARTLY RELIGIOUS ACTIVITIES, THEN IN VIEW OF THE DECISION OF THE HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF GHULAM MO HIDIN TRUST (SUPRA), ASSESSEE CANNOT CLAIM THE EXEMPTION UNDER S. 11(1)(A) OF THE ACT. 18. IN SHORT, IT IS NOT THE CASE OF THE AO OR THE CIT( A) THAT BOTH THE ASSESSEES ARE EITHER NOT FULLY OR PARTLY ENGAGE D IN THE NON- RELIGIOUS OR THE NON-CHARITABLE ACTIVITIES. IN FACT , FROM THE ASSESSMENT ORDER, WE FIND THAT THE AO HAS UNDISPUTE DLY ACCEPTED THE FACT THAT, MORE PARTICULARLY IN THE CASE OF CAL ICUT ISLAMIC CULTURAL SOCIETY (SUPRA), THE ASSESSEE IS NOT CONST ITUTED ONLY FOR THE BENEFITS OF THE BACKWARD COMMUNITY ALONE BUT FO R THE BENEFIT OF THE ENTIRE PUBLIC AS SUCH. MOREOVER, IN THE INST ITUTIONS RUN BY THE ASSESSEE, MORE PARTICULARLY THE EDUCATIONAL INS TITUTIONS, THE ITA.818/BANG/2015 PAGE - 6 MEMBERS OF THE OTHER COMMUNITY ARE ALSO ADMITTED. T HE ASSESSEE IS ALSO GIVING SUPPORT TO THE POOR. IN THE SAME WAY , IN THE CASE OF ANOTHER ASSESSEE, IT IS NOT THE CASE OF THE AO THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT OTHERWISE THAN RELIGIOUS AND C HARITABLE ACTIVITIES. IT IS INTERPRETED THAT AS PER THE WORDS USED IN S. 11(1)(A) OF THE ACT, FOR ANY INSTITUTION OR TRUST I T MUST HAVE EITHER WHOLLY CHARITABLE OR WHOLLY RELIGIOUS ACTIVITIES. T HE ENTIRE CONTROVERSY IS REVOLVING AROUND THE INTERPRETATION OF S. 11(1)(A) OF THE ACT. 19. WE MAY REFER HERE S. 11(1)(A) OF THE ACT, WHICH HA S UNDERGONE THE INTERPRETATION BY BOTH THE AUTHORITIE S, WHICH READS AS UNDER : '11. (1) INCOME FROM PROPERTY HELD FOR CHARITABLE O R RELIGIOUS PURPOSES.SUBJECT TO THE PROVISIONS OF SS. 60 TO 63 , THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME : (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, W HERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOM E SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEE N PER CENT OF THE INCOME FROM SUCH PROPERTY;' 20. WE MAY REFER HERE THE OBSERVATIONS OF LORD DENNING LJ (QUOTE) : 'THE ENGLISH LANGUAGE IS NOT AN INSTRUMENT OF MATHE MATICAL PRECISION. OUR LITERATURE WOULD BE MUCH POORER IF I T WERE. THIS IS WHERE THE DRAFTSMEN OF ACTS OF PARLIAMENT HAVE OFTE N BEEN UNFAIRLY CRITICISED. A JUDGE BELIEVING HIMSELF TO B E FETTERED BY THE SUPPOSED RULE THAT HE MUST LOOK TO THE LANGUAGE AND NOTHING ELSE, LAMENTS THAT THE DRAFTSMEN HAVE NOT PROVIDED FOR TH IS OR THAT, OR HAVE BEEN GUILTY OF SOME OR OTHER AMBIGUITY. IT WOU LD CERTAINLY SAVE THE JUDGES TROUBLE IF THE ACTS OF PARLIAMENT W ERE DRAFTED WITH DIVINE PRESCIENCE AND PERFECT CLARITY. IN THE ABSENCE OF IT ITA.818/BANG/2015 PAGE - 7 WHEN A DEFECT APPEARS, A JUDGE CANNOT SIMPLY FOLD H IS HANDS AND BLAME THE DRAFTSMEN. HE MUST SET TO WORK ON THE CON STRUCTIVE TASK OF FINDING THE INTENTION OF PARLIAMENT, AND HE MUST DO THIS NOT ONLY FROM THE LANGUAGE OF THE STATUTE, BUT ALSO FRO M A CONSIDERATION OF THE SOCIAL CONDITIONS WHICH GIVE R ISE TO IT AND OF THE MISCHIEF WHICH IT WAS PASSED TO REMEDY, AND THE N HE MUST SUPPLEMENT THE WRITTEN WORD SO AS TO GIVE FORCE AN D LIFE, TO THE INTENTION OF LEGISLATURE. A JUDGE SHOULD ASK HIMSEL F THE QUESTION HOW, IF THE MAKERS OF THE ACT HAD THEMSELVES COME A CROSS THIS RUCK IN THE TEXTURE OF IT, THEY WOULD HAVE STRAIGHT ENED IT OUT. HE MUST THEN DO SO AS THEY WOULD HAVE DONE. A JUDGE MU ST NOT ALTER THE MATERIAL OF WHICH THE ACT IS WOVEN BUT HE CAN A ND SHOULD IRON OUT THE CREASES.' (UNQUOTE) 21. THE ABOVE OBSERVATIONS ARE QUOTED IN N.S. BINDRAS INTERPRETATION OF STATUTES (NINTH EDITION, PAGE NO. 15). IN SHORT, THE ENGLISH LANGUAGE CANNOT BE TREATED AS INSTRUMEN T OF MATHEMATICS PRECISION. NOW THE QUESTION IS CAN IT B E SAID THAT IT IS THE INTENTION OF THE LEGISLATURE AS PER THE LANG UAGE USED IN CL. (A) TO S. 11(1) OF THE ACT THAT SAVE THE PROVISIONS OF SS. 60 TO 63 OF THE ACT FOR CLAIMING THE INCOME EXEMPT WHICH IS DER IVED FROM THE PROPERTY HELD UNDER THE TRUST WHICH MUST WHOLLY FOR THE CHARITABLE OR WHOLLY RELIGIOUS PURPOSES. IF THE INS TITUTION OR TRUST ARE ENGAGED INTO THE MIXED OBJECT WHICH ARE PARTLY RELIGIOUS AND PARTLY CHARITABLE OR AS PER THE CASE OF THE AO AS W ELL AS THE CIT(A) THE INSTITUTION OR TRUST IS HAVING THE MIXED ACTIVITIES OF CHARITY AS WELL AS RELIGION THEN THE EXEMPTION CANN OT BE CLAIMED. THE ARGUMENT OF THE LEARNED SENIOR COUNSEL IS THAT THERE IS A VERY THIN LINE OF DEMARCATION BETWEEN THE CHARITY AND RE LIGION. EVERY RELIGION IS HAVING THE PRINCIPLES OF THE CHARITY AN D MANY CHARITABLE PURPOSES MAY NOT HAVE THE PRINCIPLES OF RELIGION, THOUGH THE RELIGION IS THE QUESTION OF FAITH. IT IS TO BE MENTIONED HERE THAT 'CHARITABLE PURPOSE' IN S. 2(15) OF THE A CT MAKING THE INCLUSIVE DEFINITION AND TRYING TO MAKE THE CHARITA BLE PURPOSE MORE ELABORATE BUT THERE IS NO DEFINITION OF THE 'R ELIGIOUS PURPOSE' UNDER THE ACT. NO DOUBT THE LAW RECOGNISES NO PURPOSE AS CHARITABLE UNLESS IT IS OF THE PUBLIC CHARACTER. IN SHORT, IT SHOULD BE FOR THE BENEFIT OF THE COMMUNITY OR THE S ECTION OF THE COMMUNITY AS HELD IN THE CASE OF AHMEDABAD RANA CAS TE ITA.818/BANG/2015 PAGE - 8 ASSOCIATION (SUPRA) BY THE HONBLE SUPREME COURT. A S FAR AS RELIGIOUS PURPOSE IS CONCERNED MEANS RELIGIOUS PURP OSE WITHIN THE MEANING OF PERSONAL LAW APPLICABLE TO THE ASSES SEE AS HELD BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF BAI HIRBAI RAHIM ALOO PAROO & KESARBAI DHARAMSEY KAKOO CHARITA BLE & RELIGIOUS TRUST VS. CIT (1968) 68 ITR 821 (BOM). TH ERE ARE INNUMERABLE EXAMPLES WHERE THERE WILL BE VERY THIN LINE OF DEMARCATION BETWEEN THE PURPOSES TO IDENTIFY WHICH ARE THE CHARITABLE PURPOSES OR WHICH ARE THE RELIGIOUS PURP OSES. IN BOTH THESE APPEALS, IT IS NOT THE CASE OF THE DEPARTMENT EITHER THAT ANY OF THE BARS PROVIDED UNDER S. 13 OF THE ACT ARE APP LICABLE TO BOTH THESE ASSESSEES AS PER THE INTERPRETATION GIVEN BY THE AO AS WELL BY THE CIT(A). AS PER THE PROVISIONS OF S. 11(1)(A) OF THE ACT, IT REQUIRES THAT THERE SHOULD BE NEXUS BETWEEN THE PRO PERTY HELD UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES AND THE INCOME UNDER CONSIDERATION. THE INTERPRETATION GIVEN BY THE AO AS WELL AS BY THE CIT(A) IS THAT THE PURPOSE SHO ULD BE WHOLLY CHARITABLE OR WHOLLY RELIGIOUS. WE ARE AFRAID, WHET HER SUCH INTERPRETATION CAN BE ACCEPTED. IN OUR OPINION, SAI D INTERPRETATION GIVEN BY BOTH THE AUTHORITIES IS ONL Y ACADEMIC. WHEN THE LEGISLATURE HAS CATEGORICALLY DEFINED THE PURPOSES LIKE RELIGIOUS AND CHARITABLE AND IF THE ASSESSEE IS ENG AGED AS PER THEIR OBJECTS IN MIXED ACTIVITIES, WHICH ARE PARTLY CHARITABLE AND PARTLY RELIGIOUS, IT CANNOT BE SAID THAT S. 11(1)(A ) OF THE ACT DOES NOT CONTEMPLATE SUCH SITUATION. 22. ANOTHER ASPECT TO BE CONSIDERED HERE IN BOTH THESE CASES IS THAT BOTH THESE ASSESSEES HAVE BEEN GRANTED REGISTR ATION UNDER S. 12A OF THE ACT. THE ARGUMENT OF THE LEARNED DEPARTM ENTAL REPRESENTATIVE IS THAT PRIOR TO INSERTION OF S. 12A A OF THE ACT, NO MUCH MORE INVESTIGATION WAS DONE BY THE CIT AND IT WAS JUST AN EMPTY FORMALITY TO GRANT REGISTRATION IN THE OLD S. 12A OF THE ACT. WE ARE UNABLE TO ACCEPT THE SAID ARGUMENT FOR THE R EASON THAT IN S. 12A OF THE ACT ALSO THE APPLICATION OF THE MIND BY THE CIT WAS INVOLVED. DURING THE COURSE OF ARGUMENT IT WAS BROU GHT TO OUR NOTICE THAT THOUGH THE EXEMPTION IS REFUSED TO BOTH THE ASSESSEES, REGISTRATION GRANTED UNDER S. 12A STAND AS IT IS. ITA.818/BANG/2015 PAGE - 9 23. IN OUR OPINION, ONCE THE REGISTRATION IS GRANTED T O THE ASSESSEE BY THE CIT, AO CANNOT GO INTO PROBING THE OBJECTS AND THE PURPOSES OF THE TRUST OR INSTITUTION AND THAT I S WITHIN THE EXCLUSIVE DOMAIN AND JURISDICTION OF THE CIT. WHAT AO CAN DO THAT HE CAN AT THE MOST INVESTIGATE THE MATTER WITH IN THE FOUR CORNERS OF S. 13 OF THE ACT. IN THIS CASE THE AO HA S GONE WITH INVESTIGATING AND PROBING THE BASIC OBJECTS OF THE TRUST BY ENTERING INTO SHOES OF THE CIT AND SUCH EXERCISE IS NOT PERMISSIBLE. 24. BOTH THE SENIOR COUNSELS RELIED ON THE PLETHORA OF DECISIONS TO EMPHASIZE THAT THE CONCEPT OF CHARITABLE PURPOSE IS VERY MUCH WIDE. IN THE CASE OF H.H. SIR SHAHAJI THE CHHATRAPA TI MAHARAJASAHEB OF KOLHAPUR (SUPRA), WHICH IS A CASE UNDER THE GT ACT, WHILE INTERPRETING THE PHRASE 'CHARITABLE P URPOSES' OCCURRING IN S. 5(1)(VI) OF THE GT ACT, THE HONBLE HIGH COURT OF BOMBAY HELD THAT THE CHARITABLE PURPOSES INCLUDES T HE PUBLIC RELIGIOUS PURPOSES ALSO. THE OTHER PRECEDENT RELIED BY THE LEARNED SENIOR COUNSELS, MORE PARTICULARLY, ANDHRA CHAMBER OF COMMERCES CASE (SUPRA), SOCIAL SERVICE CENTRES CA SE (SUPRA), IS ON THE PROPOSITION THAT EVEN THE EXPENDITURE MAD E ON THE MOSQUE OR ON THE CHURCH CONSTITUTE EXPENDITURE ON T HE CHARITABLE PURPOSE FOR THE GENERAL PUBLIC UTILITY. THE MAIN TH RUST OF THE ARGUMENTS OF THE LEARNED SENIOR COUNSELS IS THAT TH E CONCEPT OF THE CHARITY IS SO WIDE, IT ALSO INCLUDES EVEN THE R ELIGIOUS PURPOSE, WHICH ARE FOR THE BENEFIT OF THE SOCIETY OR GENERAL PUBLIC. IN BOTH THE CASES, IT IS NOT THE CASE OF THE AO THAT THESE TWO INSTITUTIONS ARE THE PRIVATE RELIGIOUS TRUSTS. IN THE CASE OF YO GIRAJ CHARITY TRUST (SUPRA), THE HONBLE SUPREME COURT HAS HELD T HAT PRIMARY OR DOMINANT PURPOSE OF THE TRUST OR INSTITUTION IS TO BE SEEN. THE IDENTICAL VIEW HAS BEEN TAKEN IN THE CASE OF ANDHRA CHAMBER OF COMMERCE (SUPRA) BY THE HONBLE SUPREME COURT THAT IF THE PRIMARY PURPOSE IS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, IT WILL REMAIN CHARITABLE EVEN IF AN INCID ENTAL ENTRY INTO THE POLITICAL DOMAIN. IN SUM AND SUBSTANCE, THE DOM INANT AND PRIMARY OBJECTS ARE DECISIVE TO DECIDE THE NATURE OR CHARACTER OF THE INSTITUTION. ITA.818/BANG/2015 PAGE - 10 25. IN THE CASE OF GHULAM MOHIDIN TRUST (SUPRA), BY RE FERENCE TWO QUESTIONS OF LAW WERE REFERRED FOR THE ESTEEMED OPINION OF THE HONBLE HIGH COURT. BOTH THE QUESTIONS ARE AS U NDER : '1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT THAT THE TRUST WAS NOT ENTITLED TO CLAIM EXEMPTION FROM TAX UNDER S. 11 OF THE IT ACT FOR TH E INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST ? 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE OBJECTS OF THE TRUST PROVIDING FOR PROMOTION OF SCIENCE AN D TECHNOLOGY AND MUSLIM THEOLOGY AMONG MUSLIM INTELLI GENTSIA, WAS HIT BY THE PROVISIONS CONTAINED IN CLS. (A) AND (B) OF SUB-S. (1) OF S. 13 ?' 25.1 THE FACTS OF THE SAID CASE CAN BE STATED AS UNDER : THE ASSESSEE CLAIMED THE EXEMPTION OF ITS ENTIRE IN COME UNDER S. 11 OF THE ACT. AO REJECTED THE CLAIM OF THE ASSESSE E ON THE GROUND THAT THE TRUST WAS NOT CHARITABLE TRUST AND IT WAS HIT BY THE PROVISION CONTAINED IN S. 13(1)(B) OF THE ACT. THE REASON FOR REJECTION OF THE ASSESSEES CLAIM WAS THAT INCOME W AS NOT APPLIED FOR CHARITABLE PURPOSES BUT ONLY FOR CONSTRUCTION O F BUILDING FOR COMMERCIAL PURPOSES, WHICH WAS NOT ONE OF THE OBJECTS OF THE TRUST. THE AAC HELD THAT TRUST WAS PARTLY CHARITABL E AND PARTLY RELIGIOUS. WHEN THE MATTER REACHED BEFORE THE TRIBU NAL, AFTER EXAMINING CLS. 13 AND 14 OF THE INSTRUMENT OF TRUST , TRIBUNAL HELD THAT THE TRUST WAS PARTLY CHARITABLE AND PARTLY REL IGIOUS AND THERE WAS NO APPORTIONMENT OF INCOME BETWEEN THE TWO OBJECTS OF THE TRUST AND IT WAS LEFT TO THE EXCLUSIVE DISCRETION O F THE TRUSTEE TO SPEND WHATEVER THEY LIKE ON ANY OBJECTS AND HENCE THE ASSESSEE WAS NOT ENTITLED TO CLAIM EXEMPTION UNDER S. 11 OF THE ACT. THE MATTER WAS CARRIED TO THE HONBLE HIGH COURT BY WAY OF REFERENCE. THE OPERATIVE PART OF THE OBSERVATION OF THE HONBLE HIGH COURT IS AS UNDER : 'THE RATIO OF THE ABOVE DECISION SQUARELY APPLIES T O THE FACTS OF THE PRESENT CASE. IN THIS CASE ALSO THE OBJECTS OF THE ASSESSEE TRUST CONTAINED IN CLS. 13 AND 14 OF THE INSTRUMENT OF TR UST CLEARLY SHOW ITA.818/BANG/2015 PAGE - 11 THAT THE DOMINANT PURPOSE OF THE TRUST IS PROMOTION OF MUSLIM THEOLOGY AMONG THE MUSLIM INTELLIGENTSIA. ANOTHER O BJECT IS PROMOTION OF SCIENCE AND TECHNOLOGY BUT THAT TOO AM ONG THE MUSLIM INTELLIGENTSIA. SIMILARLY, IN CL. 14 OF THE INSTRUMENT OF TRUST WHICH CONFERS POWERS ON THE TRUSTEES TO GIVE FINANCIAL ASSISTANCE BY WAY OF EX GRATIA GRANTS OR LOANS ON E ASY TERMS TO SCHOLARS OF EDUCATIONAL INSTITUTIONS TO ENABLE THEM TO PROSECUTE THEIR FURTHER STUDIES AND RESEARCH IN SCIENCE AND T ECHNOLOGY, IT IS SPECIFICALLY PROVIDED THAT THE SELECTION FOR SUCH G RANTS HAS TO BE CONFINED TO MUSLIMS ONLY. THE TRUSTEES, HOWEVER, HA VE BEEN GIVEN A DISCRETION TO EXTEND THIS BENEFIT TO SUCH OTHER C OMMUNITIES AS IN THEIR OPINION, ARE BACKWARD IN THIS REGARD. IT IS O BVIOUS THAT THE AUTHOR OF THE TRUST FELT, AS INDICATED IN CL. 14 OF THE INSTRUMENT OF TRUST THAT THE MUSLIMS OF THE STATE AND SOME OTHER SECTIONS OF THE POPULATION HAD LAGGED BEHIND IN THIS PARTICULAR BRA NCH OF LEARNING AND IT WAS TO IMPROVE THAT SITUATION THAT POWER WAS CONFERRED ON THE TRUSTEES TO GRANT FINANCIAL ASSIST ANCE BY WAY OF EX GRATIA GRANTS, ETC., TO SCHOLARS TO ENABLE THEM TO PROSECUTE THEIR FURTHER STUDIES. THIS ASSISTANCE TOO, AS INDI CATED ABOVE, IS INTENDED TO PROMOTE SCIENCE AND TECHNOLOGY AND MUSL IM THEOLOGY AMONG THE MUSLIM INTELLIGENTSIA, WHICH IS THE MAIN AND DOMINANT OBJECT OF THE TRUST. IN SUCH A SITUATION, S. 13(1)( B) OF THE ACT IS ATTRACTED AND THE ASSESSEE TRUST IS NOT ENTITLED TO EXEMPTION IN RESPECT OF ITS INCOME UNDER S. 11 OF THE ACT. CLAUS E (A) OF S. 13(1) OF THE ACT WILL ALSO BE ATTRACTED IN THIS CASE BECA USE THE INCOME HAS BEEN DERIVED BY THE ASSESSEE FROM PROPERTY HELD UNDER TRUST, WHICH DOES NOT ENURE FOR THE BENEFIT OF THE PUBLIC. MOREOVER, EVEN IF WE HOLD THAT THE OBJECT IS NOT ON LY PROMOTION OF MUSLIM THEOLOGY AMONGST THE MUSLIM INTELLIGENTSIA, BUT ALSO PROMOTION OF SCIENCE AND TECHNOLOGY AMONG THEM, THE INCOME OF THE TRUST WOULD NOT BE EXEMPT UNDER S. 11 OF THE AC T BECAUSE THE LAW IS WELL-SETTLED THAT IF THERE ARE SEVERAL OBJECTS OF THE TRUST, SOME OF WHICH ARE CHARITABLE AND SOME NON-CHARITABL E, AND THE TRUSTEES IN THEIR DISCRETION ARE TO APPLY THE INCOM E TO ANY OF THE OBJECTS , THE WHOLE TRUST WOULD FAIL AND NO PART OF ITS INC OME WOULD BE EXEMPT FROM TAX. THE REASON IS THAT IN SUC H A CASE NO DEFINITE PART OF THE PROPERTY OR ITS INCOME IS ALLO CATED FOR CHARITABLE PURPOSES AND IT WOULD BE OPEN TO THE TRU STEES TO APPLY ITA.818/BANG/2015 PAGE - 12 ITS INCOME TO ANY OF THE NON-CHARITABLE OBJECTS OR RELIGIOUS PURPOSES. IN THE INSTANT CASE, THE TRUSTEES ARE AT LIBERTY TO APPLY THE WHOLE OF THE INCOME FOR THE PROMOTION OF MUSLIM THEOLOGY AMONG THE MUSLIM INTELLIGENTSIA.' 26. IN OUR OPINION, BOTH THE AUTHORITIES HAVE MISINTER PRETED THE JUDGMENT IN THE CASE OF GHULAM MOHIDIN TRUST (SUPRA ). IN THAT CASE IT WAS HELD THAT AS PER THE OBJECTS OF THE TRUST IT WAS PARTLY CHARITABLE AND PARTLY RELIGIOUS BUT AS FAR AS THE P RESENT THESE TWO CASES ARE CONCERNED, NOWHERE IT IS THE CASE OF THE AO THAT IN BOTH THESE CASES THE OBJECTS OF THE ASSESSEE ARE PARTLY NON-CHARITABLE OR PARTLY NON-RELIGIOUS. FURTHER, IN THAT CASE THER E WAS NO PROPER APPORTIONMENT OF THE INCOME BETWEEN THE TWO OBJECTS OF THE TRUST AS IT WAS LEFT TO THE EXCLUSIVE DISCRETION OF THE T RUSTEES TO SPEND WHATEVER THEY LIKE. IN SHORT, IT WAS AN ARBITRARY D ISCRETION GIVEN TO THE TRUSTEES TO APPLY THE INCOME FOR THE NON-CHA RITABLE AND NON-RELIGIOUS PURPOSES. MOREOVER, IN THAT CASE IT W AS HELD THAT S. 13(1)(B) OF THE ACT IS ATTRACTED AS THE TRUST WAS I NTENDED TO PROMOTE SCIENCE AND TECHNOLOGY AND MUSLIM THEOLOGY AMONG MUSLIM INTELLIGENTSIA, WHICH WAS THE MAIN AND DOMIN ANT OBJECT OF THE TRUST. IN THE PRESENT TWO CASES IT IS NOT THE C ASE OF THE AO. IN OUR OPINION, THE PRINCIPLES LAID DOWN BY THE HONBL E HIGH COURT OF JAMMU & KASHMIR HAS NO APPLICATION AS FAR AS THE FACTS OF THE PRESENT THESE TWO CASES ARE CONCERNED. 27. WE MAY MENTION HERE THAT THE AO HIMSELF HAS ACCEPT ED THAT AS PER THE BYE LAWS AND REGULATIONS OF THE ASSESSEE S, EVEN THE PERSONS HAVING FAITHS OF OTHER RELIGIONS WERE GIVEN BENEFITS. NOWHERE, IT IS THE CASE OF THE AO THAT THE INCOME I S APPLIED FOR PRIVATE RELIGIOUS PURPOSES NOT FOR THE BENEFIT OF T HE PUBLIC OR TRUST IS CREATED FOR THE BENEFIT OF ONLY MUSLIM COMMUNITI ES. 28. IT IS WELL-SETTLED PRINCIPLE OF THE BINDING FORCE OF THE PRECEDENT THAT IT IS APPLICABLE AS FAR AS THE FACTS OF THAT PARTICULAR CASE ARE CONCERNED. EVEN IF THERE ARE GENERAL OBSER VATIONS THEN THE SAME ARE TO BE INTERPRETED IN THE CONTEXT IN WH ICH THEY ARE MADE. ITA.818/BANG/2015 PAGE - 13 29. THE LEARNED DEPARTMENTAL REPRESENTATIVE TRIED TO A RGUE THAT PRIOR TO INTRODUCTION OF S. 12AA OF THE ACT, I.E., PRIOR TO 1ST APRIL, 1997 S. 12A WAS A MERE FORMALITY UNDER WHICH THE CI T HAS GRANTED THE REGISTRATION TO BOTH THESE ASSESSEES. I F WE EXAMINE THE SCHEME OF S. 12A OF THE ACT, WHICH WAS APPLICABLE P RIOR TO INTRODUCTION OF S. 12AA, IT CANNOT BE SAID THAT IT WAS A MERE FORMALITY. GETTING A REGISTRATION IS ONE OF THE CON DITIONS FOR CLAIMING THE BENEFITS OF SS. 11 AND 12 OF THE ACT. FROM THE LANGUAGE USED BY THE LEGISLATURE AND SCHEME OF THE S. 12A, IT WILL NOT BE WRONG TO SAY THAT PROCEEDINGS CONTEMPLATED U NDER S. 12A OF THE ACT ARE IN THE NATURE OF QUASI JUDICIAL PROC EEDINGS AND CIT HAS TO DECIDE WHETHER THE APPLICANT TRUST OR INSTIT UTION ARE ELIGIBLE TO GET THE BENEFITS OF S. 11 OR 12 AND FOR DECIDING THE ELIGIBILITY CIT HAS TO EXAMINE THE BYE LAWS AND OBJECTS OF THE TRUST. IN OUR OPINION, EVEN UNDER S. 12A OF THE ACT , GRANTING REGISTRATION WAS NOT MERELY EMPTY FORMALITY AND OUR VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN HIRALAL BHAGWATI VS. CIT (2000) 161 CTR (GUJ) 40 1 : (2000) 246 ITR 188 (GUJ), WHICH IS APPROVED BY THE HONBLE SUPREME COURT IN ASSTT. CIT VS. SURAT CITY GYMKHANA (2008) 216 CTR (SC) 23 : (2008) 170 TAXMAN 612 (SC). 30. FOR THE REASONS STATED ABOVE, WE ARE OF THE OPINIO N THAT BOTH THESE ASSESSEES ARE ELIGIBLE TO CLAIM THE EXEMPTION UNDER S. 11 OF THE ACT. WE THEREFORE CANCEL THE ORDER OF THE CIT(A ) AND DIRECT THE AO TO GIVE BENEFITS OF S. 11 TO BOTH THESE ASSE SSEES BY TREATING THEIR INCOME AS EXEMPT 06. THE ABOVE VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. BARKATE SAIFIYAH S OCIETY [(1995) 213 ITR 0492]. PARA 6 TO 21 OF THE JUDGMENT SQUARELY DEALS WITH THE ISSUE AS TO WHETHER THERE CAN BE MIXED OBJECTS OF RELIGIOUS AND CHARITABLE NATURE, WHICH IS REPRODUCED HEREUNDER : ITA.818/BANG/2015 PAGE - 14 6. FOR DETERMINING THE CONTROVERSY, FIRST WE WOULD REF ER TO THE RELEVANT PART OF THE PROVISION OF S. 11 WHICH READS AS UNDER : 'INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGI OUS PURPOSES.(1) SUBJECT TO THE PROVISIONS OF SS. 60 T O 63, THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOM E (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA ; AND, WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOM E SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF TWENTY -FIVE PER CENT. OF THE INCOME FROM SUCH PROPERTY ; (B) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST I N PART ONLY FOR SUCH PURPOSES, THE TRUST HAVING BEEN CREATED BEFORE THE COMMENCEMENT OF THIS ACT, TO THE EXTENT TO WHICH SU CH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA ; AND, WHERE ANY SUCH INCOME IS FINALLY SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO SET APART IS NOT IN E XCESS OF TWENTY- FIVE PER CENT. OF THE INCOME FROM SUCH PROPERTY.' 7. THE PHRASE 'RELIGIOUS PURPOSE' INCLUDES RELIEF OF T HE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT (SIC ). HOWEVER, THE PHRASE CHARITABLE PURPOSE IS DEFINED U NDER S. 2(15) OF THE ACT WHICH READS AS UNDER : '(15) `CHARITABLE PURPOSE' INCLUDES RELIEF OF THE P OOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF ANY OTHER OB JECT OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING O N OF ANY ACTIVITY FOR PROFIT ;' 8. IT IS TO BE NOTED THAT DEFINITION OF THE PHRASE 'CH ARITABLE PURPOSE' IS INCLUSIVE AND IT COVERS A WIDER FIELD T HAN THE FIELD COVERED BY THE WORDS 'RELIGIOUS PURPOSE'. FURTHER, IN SOME CASES, EVEN A RELIGIOUS ACTIVITY BY A PARTICULAR SE CT WOULD BE A ITA.818/BANG/2015 PAGE - 15 CHARITABLE ACTIVITY ; FOR SOME, SUPPLY OF FODDER TO ANIMALS AND CATTLE IS A RELIGIOUS OBJECT, WHILE TO OTHERS IT MA Y BE A CHARITABLE PURPOSE, ACCORDING TO HINDU RELIGIOUS ACTIVITY. SIM ILARLY, KHAIRAT UNDER THE MOHAMEDAN LAW WOULD BE CONSIDERED TO BE A RELIGIOUS ACTIVITY. THE SAID ACTIVITIES MAY BE FOR A CHARITAB LE PURPOSE TO SOME. HENCE, IN MANY CASES, BOTH THE PURPOSES MAY B E OVERLAPPING. THE PURPOSES MAY HAVE BOTH THE ELEMENT S, CHARITY AS WELL AS RELIGIOUS. 9. WHILE DEALING WITH WHAT IS 'RELIGIOUS' OR 'CHARITAB LE PURPOSE' IT IS OBSERVED BY THE SUPREME COURT IN THE CASE OF RAMCHANDRA SHUKLA VS. SHREE MAHADEOJI, AIR 1970 SC 458, THAT T HERE IS NO LINE OF DEMARCATION IN THE HINDU SYSTEM BETWEEN REL IGION AND CHARITY. INDEED, CHARITY IS REGARDED AS PART OF REL IGION. WHILE DISCUSSING THIS ASPECT, THE SUPREME COURT HAS FURTH ER OBSERVED AS UNDER (AT PAGE 464) : 'HINDU PIETY FOUND EXPRESSION IN GIFTS TO IDOLS TO RELIGIOUS INSTITUTIONS AND FOR ALL PURPOSES CONSIDERED MERITO RIOUS IN THE HINDU SOCIAL AND RELIGIOUS SYSTEM. THEREFORE, ALTHO UGH COURTS IN INDIA HAVE FOR A LONG TIME ADOPTED THE TECHNICAL ME ANING OF CHARITABLE TRUSTS AND CHARITABLE PURPOSES WHICH THE COURTS IN ENGLAND HAVE PLACED UPON THE TERM `CHARITY' IN THE STATUTE OF ELIZABETH, AND, THEREFORE, ALL PURPOSES WHICH ACCOR DING TO ENGLISH LAW ARE CHARITABLE WILL BE CHARITABLE UNDER HINDU LAW, THE HINDU CONCEPT OF CHARITY IS SO COMPREHENSIVE TH AT THERE ARE OTHER PURPOSES IN ADDITION WHICH ARE RECOGNISED AS CHARITABLE PURPOSES. HENCE, WHAT ARE PURELY RELIGIOUS PURPOSES AND WHAT RELIGIOUS PURPOSES WILL BE CHARITABLE PURPOSES MUST BE DECIDED ACCORDING TO HINDU NOTIONS AND HINDU LAW. 10. AS OBSERVED BY MUKHERJEA IN HINDU LAW AND RELIGIOUS AND CHARITABLE TRUSTS, SECOND EDN., PAGE 11, THERE IS N O LINE OF DEMARCATION IN THE HINDU SYSTEM BETWEEN RELIGION AN D CHARITY. INDEED, CHARITY IS REGARDED AS PART OF RELIGION, FO R, GIFTS BOTH FOR RELIGIOUS AND CHARITABLE PURPOSES ARE IMPELLED BY T HE DESIRE TO ACQUIRE RELIGIOUS MERIT. ACCORDING TO PANDIT PRANNA TH SARASWATI, THESE FELL UNDER TWO HEADS, ISTHA AND PURTA. THE FO RMER MEANT SACRIFICES, AND SACRIFICIAL GIFTS AND THE LATTER ME ANT CHARITIES. ITA.818/BANG/2015 PAGE - 16 AMONG THE ISTHA ACTS ARE VEDIC SACRIFICES, GIFTS TO THE PRIESTS AT THE TIME OF SUCH SACRIFICES, PRESERVATIONS OF VEDAS , RELIGIOUS AUSTERITY, RECTITUDE, VAISVADEV SACRIFICES AND HOSP ITALITY. AMONG THE PURTA ACTS ARE CONSTRUCTION AND MAINTENANCE OF TEMPLES, TANKS, WELLS, PLANTING OF GROVES, GIFTS OF FOOD, DH ARAMSHALAS, PLACES FOR DRINKING WATER, RELIEF OF THE SICK, AND PROMOTION OF EDUCATION AND LEARNING. (CF. PANDIT PRANNATH SARASW ATI'S HINDU LAW OF ENDOWMENTS, 1897, PAGES 26- 27). ISTHA AND P URTA ARE IN FACT REGARDED AS THE COMMON DUTIES OF THE TWICE BOR N CLASS. (CF. PANDIT SARASWATI, PAGE 27).' 11. IN VIEW OF THE AFORESAID DISCUSSION, IT CAN BE SAID THAT A TRUST CAN BE EITHER FOR RELIGIOUS PURPOSES OR FOR CHARITA BLE PURPOSES OR IT CAN BE FOR BOTH CHARITABLE AND RELIGIOUS PURPOSE S. 12. AN IDENTICAL DEFINITION OF THE PHRASE 'CHARITABLE P URPOSE' WAS CONSIDERED BY THE SUPREME COURT IN THE CASE OF FAZL UL RABBI PRADHAN VS. STATE OF WEST BENGAL, AIR 1965 SC 1722, IN THE CONTEXT OF THE WEST BENGAL ESTATES ACQUISITION ACT, 1953. UNDER S. 2(C) OF THE ACT, 'CHARITABLE PURPOSE' WAS DEFINE D TO MEAN AS INCLUDING THE RELIEF OF POOR, MEDICAL RELIEF OR THE ADVANCEMENT OF EDUCATION OR OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE DEFINITION OF 'RELIGIOUS PURPOSE' UNDER S. 2(N) IS AS UNDER : '2(N) `RELIGIOUS PURPOSE' MEANS A PURPOSE CONNECTED WITH RELIGIOUS WORSHIP, TEACHING OR SERVICE OR ANY PERFO RMANCE OF RELIGIOUS RITES ;' (PAGE 1724). 13. UNDER S. 6 OF THE SAID ACT, EXEMPTION IS GIVEN TO C ORPORATIONS AND INSTITUTIONS ESTABLISHED EXCLUSIVELY FOR A RELI GIOUS OR A CHARITABLE PURPOSE OR BOTH. THE COURT OBSERVED THAT THE WORD 'EXCLUSIVELY' LIMITS THE EXEMPTION TO TRUSTS, ENDOW MENTS OR OTHER LEGAL OBLIGATIONS WHICH COME SOLELY WITHIN CHARITAB LE OR RELIGIOUS PURPOSES. WITH REGARD TO THE DEFINITION OF 'CHARITA BLE PURPOSES', THE COURT OBSERVED THAT IT FOLLOWS, THOUGH NOT QUIT E, THE WELL- KNOWN DEFINITION OF CHARITY GIVEN BY LORD MACNAGHTE N IN COMMISSIONERS FOR SPECIAL PURPOSES OF THE INCOME-TA X VS. JOHN FREDERICK PEMSEL [1891] AC 531 (HL) WHO HELD AS UND ER : ITA.818/BANG/2015 PAGE - 17 'NO DOUBT THE POPULAR MEANING OF THE WORDS `CHARITY ' AND `CHARITABLE' DOES NOT COINCIDE WITH THEIR LEGAL MEA NING ; AND NO DOUBT IT IS EASY ENOUGH TO COLLECT FROM THE BOOKS A FEW DECISIONS WHICH SEEM TO PUSH THE DOCTRINE OF THE COURT TO THE EXTREME, AND TO PRESENT A CONTRAST BETWEEN THE TWO MEANINGS IN A N ASPECT ALMOST LUDICROUS. BUT STILL IT IS DIFFICULT TO FIX THE POINT OF DIVERGENCE, AND NO ONE AS YET HAS SUCCEEDED IN DEFI NING THE POPULAR MEANING OF THE WORD `CHARITY'. THE LEARNED COUNSEL FOR THE CROWN DID NOT ATTEMPT THE TASK. EVEN THE PARAPH RASE OF THE MASTER OF THE ROLLS IS NOT QUITE SATISFACTORY' (PAG E 583) 14. IT IS FURTHER HELD AS UNDER (AT PAGE 583) : 'I THINK THEY WOULD BE SURPRISED TO LEARN THAT THE SUBSTANTIAL CAUSE OF THEIR MISSIONARY ZEAL WAS AN INTENTION TO ASSIST THE POVERTY OF HEATHEN TRIBES. HOW FAR THEN, IT MAY BE ASKED, DOES THE POPULAR MEANING OF THE WORD `CHARITY' CORRESPOND WI TH ITS LEGAL MEANING ? `CHARITY' IN ITS LEGAL SENSE COMPRISES FO UR PRINCIPAL DIVISIONS ; TRUSTS FOR THE RELIEF OF POVERTY ; TRUS TS FOR THE ADVANCEMENT OF EDUCATION ; TRUSTS FOR THE ADVANCEME NT OF RELIGION ; AND TRUSTS FOR OTHER PURPOSES BENEFICIAL TO THE C OMMUNITY, NOT FALLING UNDER ANY OF THE PRECEDING HEADS.' 15. THEREAFTER, THE COURT HELD THAT FOR SATISFYING THE TEST FOR CHARITABLE PURPOSE, THERE MUST ALWAYS BE SOME ELEME NT OF PUBLIC BENEFIT. 16. HENCE THE WORDS 'TRUST FOR CHARITABLE PURPOSE' WOUL D INCLUDE EVEN TRUST FOR ADVANCEMENT OF RELIGION. AT THIS STA GE, WE WOULD NOTE THAT THE DEFINITION OF CHARITABLE PURPOSE UNDE R THE IT ACT GOES MUCH FURTHER THAN THE DEFINITION OF CHARITY TO BE DERIVED FROM THE ENGLISH CASES BECAUSE IT SPECIFICALLY INCL UDES MEDICAL RELIEF AND EMBRACES ALL OBJECTS OF GENERAL PUBLIC UTILITY SUBJECT ONLY TO THE CONDITION IMPOSED BY THE RESTRICTIVE WO RDS 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFI T'. WHILE DEALING WITH S. 11, A DIVISION BENCH OF THIS COURT IN THE C ASE OF ADDL. CIT VS. A. A. BIBIJIWALA TRUST [1975] 100 ITR 516 (GUJ) , HAS OBSERVED AS UNDER (AT PAGE 523) : ITA.818/BANG/2015 PAGE - 18 'SIMILARLY, IN THE CASE BEFORE US ALSO, THE PROPERT Y IS SETTLED UPON WAKF, THAT IS, FOR PURPOSES WHICH ARE CONSIDERED TO BE RELIGIOUS, PIOUS OR CHARITABLE ACCORDING TO THE NOTIONS OF MEM BERS OF THE DAWOODI BOHRA COMMUNITY AND FURTHER THE INCOME IN T HE CORPUS OF THESE PROPERTIES SETTLED UPON TRUST MUST BE USED FOR DAWAT PURPOSES, THAT IS, FOR THE BENEFIT OF THE DAWOODI B OHRA COMMUNITY. THOUGH THE WORDS OF CLS. 6, 7 AND 8 ARE VERY WIDE IN TERMS, IN FACT, THAT APPARENTLY WIDE DISCRETION OF THE MULLAJI SAHEB IS BOUND DOWN BY THE TWO FACTORS, NAMELY, THA T THIS IS A WAKF, A DEDICATION BY A MUSSALMAN OF PROPERTY FOR P URPOSES WHICH, ACCORDING TO THE NOTION OF MUSSALMANS, ARE P IOUS, RELIGIOUS OR CHARITABLE, AND, SECONDLY, IT MUST BE USED FOR DAWAT PURPOSES, THAT IS, FOR PURPOSES WHICH GO TO BENEFIT THE DAWOODI BOHRA COMMUNITY. WITH THESE TWO LIMITATIONS OPERATI NG ON HIM, EVEN THE APPARENTLY WIDE DISCRETION CONFERRED UPON THE MULLAJI SAHEB AS DAI-UL-MUTLAK FOR THE TIME BEING IS CONFIN ED WITHIN THE FOUR CORNERS OF THESE TWO OVERRIDING FACTORS AND IN VIEW OF THESE TWO OVERRIDING FACTORS IT MUST BE HELD THAT THE PRO PERTIES IN QUESTION SETTLED BY THE TWO DEEDS OF 12TH JAN., 193 7, WERE SETTLED UPON TRUST FOR CHARITABLE OR RELIGIOUS OBJECTS AND WERE, THEREFORE, ENTITLED TO EXEMPTION UNDER S. 11(1)(A) OF THE ACT OF 1961. WE MUST MAKE IT CLEAR THAT THE REAL CONTROVERSY BETWEE N THE PARTIES IS REGARDING EXEMPTION UNDER S. 11(1)(A) OF THE ACT OF 1961 AND NOT WHETHER THE TRUSTS ARE WHOLLY RELIGIOUS OR WHOLLY C HARITABLE. EVEN IF THE TRUSTS ARE PARTLY RELIGIOUS AND PARTLY CHARI TABLE, SO LONG AS NO PART OF THE INCOME OR CORPUS CAN BE UTILISED FOR A PURPOSE WHICH IS NOT EITHER CHARITABLE OR RELIGIOUS, THERE IS NO DOUBT THAT THE EXEMPTION UNDER S. 11(1)(A) WILL BE AVAILABLE T O THE ASSESSEE. IN THE INSTANT CASE, WE FIND THAT, IN SPITE OF THE APPARENTLY WIDE LANGUAGE OF THE CLAUSES OF THE DEED OF TRUST, IN FA CT READING THE TRUST DEED AS A WHOLE, IT TRANSPIRES, PARTICULARLY IN THE LIGHT OF THE DECISION OF THE BOMBAY HIGH COURT IN ADVOCATE-GENER AL OF BOMBAY VS. YUSUF ALI, AIR 1921 BOM 338, THAT THE AP PARENTLY WIDE DISCRETION HAS TO BE EXERCISED WITHIN THE FOUR CORNERS OF THE WAKF AND FOR DAWAT PURPOSES. WHAT ARE DAWAT PURPOSE S, HAVE BEEN DESCRIBED BY MARTEN J., AT PAGE 1102, IN ADVOC ATE-GENERAL OF BOMBAY VS. YUSUF ALI, AIR 1921 BOM 338, AND, IN OUR OPINION, IT IS ONLY WITHIN THE FOUR CORNERS OF DAWAT PURPOSE S AS RECOGNISED ITA.818/BANG/2015 PAGE - 19 BY THE DAWOODI BOHRA COMMUNITY THAT THE MULLAJI SAH EB CAN USE THE CORPUS OR THE INCOME OF THIS FUND'. 17. FROM THE AFORESAID DECISION IT CAN BE HELD THAT IF THE TRUSTS ARE PARTLY RELIGIOUS AND PARTLY CHARITABLE, SO LONG AS NO PART OF THE INCOME OR CORPUS CAN BE UTILISED FOR A PURPOSE WHICH IS NOT EITHER CHARITABLE OR RELIGIOUS, EXEMPTION UNDER S. 11(1)(A) WILL BE APPLICABLE TO THE ASSESSEE. 18. KEEPING IN MIND THE AFORESAID DISCUSSION, NOW WE WI LL REFER TO THE RELEVANT PORTION OF S. 13 WHICH CARVES OUT A N EXCEPTION TO THE AFORESAID PROVISIONS. IT READS AS UNDER : 'SEC. 11 NOT TO APPLY IN CERTAIN CASES.(1) NOTHING CONTAINED IN S. 11 OR S. 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THERE OF : (A) ANY PART OF THE INCOME FROM THE PROPERTY HELD U NDER A TRUST FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENURE FOR THE BENEFIT OF THE PUBLIC ; (B) IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMEN CEMENT OF THIS ACT, ANY INCOME THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIG IOUS COMMUNITY OR CASTE ; (C) IN THE CASE OF A TRUST FOR CHARITABLE OR RELIGI OUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOME THE REOF (I) IF SUCH TRUST OR INSTITUTION HAS BEEN CREATED O R ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT AND UNDER THE TERMS OF THE TRUST OR THE RULES GOVERNING THE INSTITUTION, ANY PART OF SU CH INCOME ENURES, OR (II) IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION (WHENEVER CREATED OR ESTABLISHED) IS DU RING THE PREVIOUS YEAR USED OR APPLIED, ITA.818/BANG/2015 PAGE - 20 DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSO N REFERRED TO IN SUB-S. (3) ; . . . (D) IN THE CASE OF A TRUST FOR CHARITABLE OR RELIGI OUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOME THE REOF, IF FOR ANY PERIOD DURING THE PREVIOUS YEAR (I) ANY FUNDS OF THE TRUST OR INSTITUTION ARE INVES TED OR DEPOSITED AFTER THE 28TH DAY OF FEBRUARY, 1983, OTHERWISE THA N IN ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SUB-S. ( 5) OF S. 11 ; OR (II) ANY FUNDS OF THE TRUST OR INSTITUTION INVESTED OR DEPOSITED BEFORE THE 1ST DAY OF MARCH, 1983, OTHERWISE THAN I N ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SUB-S. (5) OF S. 11 CONTINUE TO REMAIN SO INVESTED OR DEPOSITED AFTER T HE 30TH DAY OF NOVEMBER, 1983 ; OR (III) ANY SHARES IN A COMPANY (NOT BEING A GOVERNME NT COMPANY AS DEFINED IN S. 617 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR A CORPORATION ESTABLISHED BY OR UNDER A CENTRAL, STAT E OR PROVINCIAL ACT) ARE HELD BY THE TRUST OR INSTITUTIO N AFTER THE 30TH DAY OF NOVEMBER, 1983.' 19. BY READING THE AFORESAID SECTION, IT IS CLEAR THAT IT CARVES OUT AN EXCEPTION TO S. 11 OR 12 BY PROVIDING THAT IN TH OSE CASES WHICH ARE COVERED BY CLS. (A), (B), (C) AND (D), THE PROV ISIONS OF S. 11 OR 12 SHALL NOT OPERATE. BROADLY SPEAKING, IT IS DIVID ED INTO THREE CATEGORIES AND EXCEPTION IS CARVED OUT IN THE CASE OF PRIVATE RELIGIOUS TRUSTS, CHARITABLE TRUSTS AND CHARITABLE OR RELIGIOUS TRUSTS IF THE CONDITIONS MENTIONED IN CLS. (A), (B) , (C) AND (D) ARE SATISFIED. FIRSTLY, ANY PART OF THE INCOME FROM THE PROPERTY HELD UNDER A TRUST FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENURE FOR THE BENEFIT OF THE PUBLIC IS NOT TO BE EXCLUDED AS PROVIDED UNDER S. 11. THAT MEANS THE BENEFIT OF S. 11 WOULD NOT BE GIVEN TO A TRUST WHICH IS A PRIVATE RELIGIOUS TRUST WHICH DO ES NOT ENURE FOR THE BENEFIT OF THE PUBLIC (AS PER CL. (5)). SECONDL Y, ANY INCOME OF A TRUST FOR CHARITABLE INSTITUTION IS CREATED OR ESTA BLISHED AFTER THE COMMENCEMENT OF IT ACT (SIC). IN EACH CASE THE AUTH ORITY IS REQUIRED TO FIND OUT WHETHER THE TRUST FOR CHARITAB LE PURPOSES IS ITA.818/BANG/2015 PAGE - 21 ESTABLISHED FOR THE BENEFIT OF A PARTICULAR RELIGIO US COMMUNITY OR CASTE. IF IT IS SO ESTABLISHED, THEN THE PROVISIONS OF S. 11 WOULD NOT BE APPLICABLE. THIRDLY, CLS. (C) AND (D) CARVE OUT AN EXCEPTION IN THE CASE OF A TRUST FOR CHARITABLE OR RELIGIOUS PUR POSES OR A CHARITABLE OR RELIGIOUS INSTITUTION. IT PROVIDES FO R CERTAIN CASES IN WHICH ANY INCOME THEREOF ENURES, OR IS USED OR APPL IED, DIRECTLY OR INDIRECTLY, FOR THE BENEFIT OF ANY PERSON REFERR ED TO IN SUB-S. (3). IN CLS. (C) AND (D) THE LEGISLATURE WANTED TO INCLUDE TRUSTS FOR CHARITABLE AND RELIGIOUS PURPOSES, AND THIS IS SPEC IFICALLY PROVIDED BY USING THE PHRASE 'TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES.' IN CLS. (C) AND (D), THELEGISLATURE HAS USED THE PHRASE TRUST FOR CHARITABLE PURPOSES OR CHARITABLE INSTITU TION. IT DOES NOT DEAL WITH A TRUST FOR RELIGIOUS PURPOSES. IT ONLY D EALS WITH A TRUST FOR CHARITABLE PURPOSES OR CHARITABLE INSTITUTIONS WHICH ARE ESTABLISHED FOR GIVING RELIEF TO THE POOR OR MEDICA L RELIEF OR FOR EDUCATION OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. CLAUSES (C) AND (D) WOULD BE APPLICABLE TO A TRUST WHICH IS EITHER FOR CHARITABLE PURPOSES OR RELIGIOUS PURPOSES OR PA RTLY CHARITABLE PURPOSES AND PARTLY RELIGIOUS. HENCE IT CAN BE STAT ED THAT IF A CHARITABLE TRUST IS ESTABLISHED ONLY FOR THE BENEFI T OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE, THEN THE P ROVISIONS OF S. 11 WOULD NOT BE APPLICABLE. BUT IN THE CASE OF A TR UST OR AN INSTITUTION FOR RELIGIOUS PURPOSES WHEREIN CERTAIN ACTIVITIES CAN BE TERMED AS CHARITABLE ACTIVITIES FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE, CL. (B) WOULD NOT BE APPLICABLE. 20. MR. SHELAT, LEARNED COUNSEL FOR THE REVENUE, VEHEME NTLY SUBMITTED THAT BY GIVING THIS INTERPRETATION TO CL. (B) OF S. 13(1), THE SAID CL. (B) CAN BE MADE NUGATORY BY MERELY USI NG THE WORDS IN TRUST DEEDS THAT THE TRUST WAS ESTABLISHED FOR R ELIGIOUS AND CHARITABLE PURPOSES. HE, THEREFORE, SUBMITTED THAT THE AUTHORITY IS REQUIRED TO DETERMINE THE PREDOMINANT PURPOSE OF TH E TRUST AND IF THE PREDOMINANT PURPOSE IS A CHARITABLE PURPOSE IT IS DIFFICULT TO ACCEPT THE SAID CONTENTION MAINLY BECAUSE IT IS NOW HERE PROVIDED IN THE SECTION THAT IN EACH CASE THE AUTHORITY SHAL L FIND OUT THE PREDOMINANT PURPOSE OF THE TRUST. FURTHER, AS STATE D EARLIER, IN THE THREE DIFFERENT CLAUSES, NAMELY, (A), (B) AND ( C) OF SUB-S. (1) OF S. 13, THE LEGISLATURE HAS USED DIFFERENT PHRASES. CLAUSE (A) AS, STATED EARLIER, DEALS WITH A TRUST FOR PRIVATE RELI GIOUS PURPOSES. ITA.818/BANG/2015 PAGE - 22 CLAUSE (B) DEALS WITH A TRUST FOR CHARITABLE PURPOS ES OR A CHARITABLE INSTITUTION, CLAUSES (C) AND (D) DEAL WI TH A TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION. FROM THIS DIFFERENT PHRASEOLOGY USED B Y THE LEGISLATURE IN CLS. (A), (B) AND (C), IT CAN BE INF ERRED THAT THE LEGISLATURE INTENDED TO COVER ONLY TRUSTS FOR CHARI TABLE PURPOSES UNDER CL. (B). THAT MEANS, IF A TRUST IS COMPOSITE, THAT IS, FOR RELIGIOUS AND CHARITABLE PURPOSES, THEN IT WOULD NO T BE COVERED. IT IS ALSO APPARENT THAT IF THE TRUST IS ONLY FOR R ELIGIOUS PURPOSES, CL. (B) WOULD NOT BE APPLICABLE. 21. IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, T HE TRIBUNAL HAS RIGHTLY HELD THAT S. 13(1)(B) APPLIES ONLY TO T RUSTS WHICH WERE PURELY FOR CHARITABLE PURPOSES AND THE ASSESSEE-TRU ST WAS CHARITABLE AS WELL AS RELIGIOUS IN NATURE AND THE A SSESSEE WAS ENTITLED TO EXEMPTION UNDER S. 11. HENCE, QUESTION NO. 1 IS ANSWERED IN THE AFFIRMATIVE IN FAVOUR OF THE ASSESS EE AND AGAINST THE REVENUE. 07. IN VIEW OF THE ABOVE LEGAL POSITION, WE ARE OF THE OPINION THAT ASSESSEE COULD NOT HAVE BEEN DENIED REGISTRATION SO UGHT BY IT U/S.12AA OF THE ACT. ORDER OF THE LD. CIT IS SET ASIDE. CIT I S DIRECTED TO GRANT THE REGISTRATION SOUGHT BY THE ASSESSEE U/S.12AA OF THE ACT. 08. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH DAY OF O CTOBER, 2015. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTA NT MEMBER MCN* ITA.818/BANG/2015 PAGE - 23 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR