Spirit and Truth Foundation, Guntur Dist., Guntur V. CIT, (Exemptions), Hyd, Hyderabad

ITA 861/HYD/2015

• Counselvise Citation: [2016] 128 COUNSELVISE.COM (IT) 9763 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2016
• Assessment Year: 2015-2016
• Appeal Filed On: 25-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T. VENKATA REDDY
• Keywords: Charitable institution; Benefit of exemption
• Section: 10; 12A; 12AA; 13; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 861/HYD/2015 ASSESSMENT YEAR: 2015-16 SPIRIT AND TRUTH FOUNDATION, GUNTUR DISTRICT. PAN AALAS 4867 M VS. COMMISSIONER OF INCOME-TAX, (EXEMPTIONS), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. CHENNUBOTLU REVENUE BY : SHRI T. VENKATA REDDY DATE OF HEARING 07-06-2016 DATE OF PRONOUNCEMENT 29-06-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) , HYDERABAD FOR AY 2015-16. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A SOCIETY AND HAS FILED AN APPLICATION IN FORM NO.10A ON 24.1 0.2014, BEFORE COMMISSIONER OF INCOME TAX, GUNTUR, SEEKING REGISTR ATION U/S.12AA OF THE INCOME TAX ACT, 1961 (REFERRED TO AS 'THE AC T' IN SHORT). LATER, FOLLOWING CHANGE IN JURISDICTION OVER THE CASE, CON SEQUENT UPON CBDT'S NOTIFICATION NO.65/2014 DT.13.11.2014 (F.NO. 187/38/2014 (ITA-I) U/S 120(1)&(2) OF THE LT. ACT, 1961 (SO NO. 2754(E) PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY PART-II, SEC .3(II) ON 22.10.2014 & SUBSEQUENT NOTIFICATION IN THIS REGARD, THE SAID APPLICATION WAS RECEIVED ON TRANSFER. THUS, A NOTICE WAS ISSUED TO THE ASSESSEE VIDE 2 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. LETTER DT.20.01.2015, FIXING THE CASE FOR HEARING O N 23.02.2015 AND ASKING THE ASSESSEE TO PRODUCE ITS ORIGINAL MEMORAN DUM OF ASSOCIATION (MOA) FOR VERIFICATION AND FURNISH DETA ILED INFORMATION ON SPECIFIC POINTS. 3. THE CIT(E) NOTED THAT AS PER THE MOA IN THE CAS E OF THE ASSESSEE, IT HAS GOT 16 OBJECTS. CIT(E) RAISED QUER Y ON THE NATURE OF THE OBJECTS AND CLASSIFICATION OF THE SAME UNDER DI FFERENT HEADS SUCH AS MEDICAL RELIEF, EDUCATION & RELIEF OF POOR ETC. ASSESSEE FILED REPLY FILED VIDE LETTER DT.23.02.2015, WHEREIN IT WAS SUB MITTED THAT OBJECT NO. 4 FALLS UNDER RELIGIOUS, OBJECTS NOS.5, 8, 12 & 15 FALL UNDER EDUCATION. IT WAS STATED THAT OBJECT NO.16 FALLS UN DER MEDICAL AND OBJECT NOS.6, 9 & 14 FALL UNDER RELIEF OF THE POOR. IT WAS SUBMITTED THAT THE REMAINING OBJECT NOS. 1, 2, 3, 7, 11 & 13 FALL UNDER GENERAL PUBLIC UTILITY. CIT(E) OBSERVED THAT THE EXPLANATIO N IS NOT SATISFACTORY AND HENCE, NOT ACCEPTABLE. THE CIT(E) OBSERVED THAT IN FACT, FROM THOSE 16 OBJECTS AS PER THE MOA, (ENGLISH TRANSLATI ON OF WHICH WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS) , IT IS NOTICED THAT THE DOMINANT OBJECTS IN THE CASE OF THE ASSESSEE A RE NOT ASCERTAINABLE. THE FIRST TWO OBJECTS WHICH ARE IMPO RTANT, DO NOT CONFIRM TO THE REQUIREMENT OF CHARITABLE PURPOSE AS PER THE TERM DEFINED U/S 2(15) OF THE ACT. THE SAME ARE REPRODUC ED AS UNDER: 1. TO STRIVE FOR ESTABLISHING DISCIPLINE END UTILI TY AMONG THE MEMBERS. 2. STRIVING WITH ALL MEMBERS FOR CREATING NEW INDI A, FOR WELFARE OF THE NATION AND FOR ESTABLISHING A SYSTEM WHERE EVERYBODY IS EQUAL WITHOUT ANY DISCRIMINATION. 3.1 THE CIT(E) NOTED THAT EVEN FROM THE NEXT OBJECT CLAUSE 3, WHERE IT IS MENTIONED, TO ENCOURAGE CULTURAL ACTIVI TIES AND FINE ARTS AND FOR DEVELOPING THE SAME, THE ACTUAL ACTIVITY TH E ASSESSEE INTENDS TO UNDERTAKE IN THAT REGARD, IS NOT ASCERTAINABLE. HAVING REGARD TO SUCH MAIN OBJECTS AS MENTIONED IN CLAUSE (1), (2) & (3), THE ASSESSEE IN THIS CASE, IS NOT ELIGIBLE FOR REGISTRATION U/S. 12AA. FURTHER, FROM THE COPIES OF INCOME & EXPENDITURE A/C IN THE CASE OF T HE ASSESSEE FOR 3 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. THE PRECEDING THREE ACCOUNTING YEARS ENDED ON 31.03 .2012, 31.03.2013 & 31.03.2014, IT IS NOTICED THAT THE ASS ESSEE HAS CLAIMED EXPENDITURE OF RS.9,600/- EACH TOWARDS 'WINE & CHAR ITY' DURING THE LAST TWO YEARS AND A SUM OF RS.10,200/- FOR SUCH PURPOSE DURING THE YEAR ENDED ON 31.03.2014. IT IS NOT KNOWN AS TO HOW SUCH EXPENSES IS FOR CHARITABLE PURPOSES. FURTHER, AS PER THE COPIES OF ACCOUNTS FOR THE YEAR ENDED 31.03.2012, IT IS NOTICED THAT A SUM OF RS.55,000/- IS SHOWN AS INCOME, FROM 'DONATION FOR CHURCH'. WHEN S UCH AMOUNT IS SHOWN AS DONATION FOR CHURCH HOW CAN IT BE SAID TH AT THE ASSESSEE WAS ENGAGED IN CHARITABLE ACTIVITY DURING THE YEAR. RATHER FROM THE NATURE OF SUCH INCOME IT SHOWS THE ASSESSEE IS FOR RELIGIOUS PURPOSES. FURTHER, FROM A SEPARATE NOTE ON ACTIVITI ES FURNISHED DURING THE PROCEEDINGS, IT IS NOTICED THAT THE ASSESSEE IS MAINLY FOR DEVELOPMENT OF CHRISTIANITY. IN THIS CONTEXT, IT IS PERTINENT TO REPRODUCE THE FIRST PART OF THE SAID REPORT, WHICH IS AS UNDER: SINCE THE INCEPTION OF SPRIT & TRUTH FOUNDATION WE COULD ABLE TO SPREAD OVER THE CHRISTIANITY AND DEVOTION AMONG THE FARMERS, VILLAGES ALL CIRCLES OF THE VILLAGERS AND DOING HAR D WORK IN THE DEVELOPMENT OF CHRISTIANITY WITHOUT HAVING THE VIEW OF BUSINESS AND OUT OF WHICH PROFIT MOTO ETC., 3.2 THE CIT(E) OBSERVED THAT FROM SUCH REPORT ON AC TIVITIES, WHICH IS SIGNED BY ITS PRESIDENT SRI PEETAR PAUL, IT CLEA RLY SHOWS THAT THE DOMINANT ACTIVITY IN THE CASE OF THE ASSESSEE SOCIE TY IS SPREADING OF CHRISTIANITY, WHICH IS OF RELIGIOUS NATURE. UNDER T HESE CIRCUMSTANCES, THE ACTUAL PURPOSES AND ALSO THE MAIN OBJECT IN THE CASE OF THE ASSESSEE ARE NOT VERIFIABLE, AND HENCE, HAVING REGA RD TO THE PROVISIONS CONTAINED IN SEC.12AA(1(B) OF THE ACT RE AD WITH SUB- CLAUSES (I) & (II) THERE UNDER, THE ASSESSEE IN TH IS CASE, IN CIT(E)S VIEW, IS NOT ELIGIBLE FOR REGISTRATION U/S.12AA. 3. 3 IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT(E) REJECTED THE APPLICATION FILED BY THE ASSESSEE IN FORM NO. 10 SE EKING REGISTRATION U/S 12AA OF THE ACT. AS SUCH, THE OTHER APPLICATION IN FORM N0. 10G FILED BY THE ASSESSEE FOR APPROVAL U/S.80G(5)(VI) I S ALSO REJECTED. 4 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. 4. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD G ROSSLY ERRED IN REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961. 2. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIO NS) HYDERABAD, HAS ERRED IN REJECTING THE APPLICATION O N THE GROUND THAT THE DOMINANT OBJECTS OF THE SOCIETY ARE NOT AS CERTAINABLE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIO NS) HYDERABAD GROSSLY ERRED IN REJECTING THE APPLICATIO N OF THE APPELLANT ON THE GROUND THAT THE SOCIETY IS FOR REL IGIOUS PURPOSE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIO NS) HYDERABAD HAS ERRED IN REJECTING THE APPLICATION ON THE GROUND THAT THE MAIN OBJECTS ARE NOT VERIFIABLE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIO NS) HYDERABAD HAS FAILED TO APPRECIATE THE FACT THAT TH E OBJECTS OF THE SOCIETY ARE VERY MUCH CHARITABLE AND RELIGIOUS IN NATURE BESIDES HAVING OBJECTS OF GENERAL PUBLIC UTILITY, W HICH ARE VERY MUCH ASCERTAINABLE IN NATURE. 6. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIO NS) HYDERABAD HAS ERRED IN GOING THROUGH THE NATURE OF THE EXPENSES WHICH FALLS WITHIN THE JURISDICTION OF ASSESSING OF FICER. 7. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS)HYDERABAD FAILED TO APPRECIATE THE FACT THAT THE SOCIETY IS HAVING MIXED OBJECTS AND ELIGIBLE FOR RE GISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADV ANCED AT THE TIME OF HEARING THE APPEAL, THE APPELLANT PRAYS THA T THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD M AY BE DIRECTED TO REGISTER THE SOCIETY U/S 12AA OF THE IN COME TAX ACT, 1961 5. BEFORE US, THE LD. AR OF THE ASSESSEE FILED WRIT TEN SUBMISSIONS WHEREIN THE AIMS AND OBJECTS OF THE SOCIETY AS MENT IONED IN THE MEMORANDUM OF THE SOCIETY ARE AS UNDER: A) TO STRIVE FOR ESTABLISHING DISCIPLINE AND UNITY AMONG THE MEMBERS. 5 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. B) STRIVING WITH ALL MEMBERS FOR CREATING NEW INDIA , FOR WELFARE OF THE NATION AND FOR ESTABLISHING A SYSTEM WHERE EVERYBOD Y IS EQUAL WITHOUT ANY DISCRIMINATION. C) TO ENCOURAGE CULTURAL ACTIVITIES AND FINE ARTS A ND FOR DEVELOPING THE SAME. D) TO STRIVE FOR ESTABLISHING TEMPLES, ASHRAMS (MUT TS) AND SATSANGAS AND ALSO STRIVING FOR RELIGIOUS HARMONY. E) TO ESTABLISH ADULT SCHOOLS, BALWADI CENTERS AND TO STRIVE FOR DEVELOPING THE SAME. F) TO ESTABLISH STITCHING AND WEAVING CLASSES AND T O ESTABLISH COTTAGE INDUSTRIES FOR THE BENEFIT OF WOMEN AND TO STRIVE F OR DEVELOPING THE SAME. G) TO CONDUCT SPORTS AND GAMES COMPETITIONS FOR DEV ELOPING MENTAL ABILITY OF THE PEOPLE. H) TO ESTABLISH A LIBRARY IN THE VILLAGE AND TO STR IVE FOR DEVELOPMENT OF SCIENCE. I) TO STRIVE FOR BANNING DOWRY AND TO ENCOURAGE INT ER-CASTE MARRIAGES. J) TO STRIVE FOR ENCOURAGING FAMILY PLANNING. K) TO FACILITATE TRAINING IN AGRICULTURE, ANIMAL BR EEDING, MILK, POULTRY, FISHERIES INDUSTRIES AND TO STRIVE FOR DEVELOPMENT OF THE SAME. I) TO STRIVE FOR ESTABLISHING PRIMARY, MIDDLE, HIGH ER EDUCATION AND TECHNICAL EDUCATION ESTABLISHMENT AND TO STRIVE FOR THE DEVELOPMENT OF THE SAME. M) TO UNDERTAKE THE PROGRAM OF PLANTATION OF TREES AND STRIVE FOR THE DEVELOPMENT OF TREES. 6 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. N) TO STRIVE FOR HOUSING, ROADS, WATER SOURCES DEVE LOPMENT, ELECTRICITY, SANITATION PROGRAMMES IN THE VILLAGE. 0) TO STRIVE FOR THE WELFARE OF PHYSICALLY HANDICAP PED PEOPLE BY ESTABLISHING ASHRAMS FOR THEM. P) TO STRIVE FOR ENS URING GOOD HEALTH TO THE CATTLE BY PROVIDING MEDICAL FACILITIES IN TH E VILLAGES. LD. AR SUBMITTED THAT ALL THE ABOVE OBJECTS FALL WI THIN THE DEFINITION OF SECTION 2 (15) OF THE INCOME TAX ACT. 5.1 THE LD. AR STATED THAT THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD HAS NOT COMMENTED ANYTHING A DVERSELY ABOUT THE CHARITABLE NATURE OF THE OBJECTS OF THE S OCIETY. THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD S IMPLY STATED THAT THE DOMINANT OBJECTS OF THE SOCIETY ARE NOT AS CERTAINABLE ON ONE HAND AND ON THE OTHER HAND THE DOMINANT ACTIVITY IN THE CASE OF THE ASSESSEE SOCIETY IS SPREADING OF CHRISTIANITY, WHIC H IS OF RELIGIOUS NATURE. THE ASSESSEE NEVER SAID THAT THE SOCIETY IS FULLY AND WHOLLY CHARITABLE. THE FACT IS THAT THE SOCIETY IS HAVING MIXED OBJECTS I.E., BOTH CHARITABLE, RELIGIOUS AND OBJECTS OF GENERAL P UBLIC UTILITY. FROM THE INCOME AND EXPENDITURE ACCOUNT, IT CAN BE SEEN THAT SOME OF THE EXPENDITURE, LIKE FUNERAL EXPENSES, MEDICAL HELP TO THE POOR FALLS UNDER THE OBJECTS OF 'RELIEF OF THE POOR' AND EXPEN SES LIKE DISTRIBUTION OF SCHOOL BAGS, FEEDING OF POOR SCHOOL CHILDREN FALLS UNDER THE OBJECTS OF 'EDUCATION' AND EXPENSES LIKE WINE A ND CHARITY FALLS UNDER THE OBJECTS OF 'RELIGIOUS'. WHEN THIS IS THE ACTUAL FACTS, THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD H AS PICKED UP ONE HEAD OF EXPENDITURE PERTAINING TO RELIGIOUS ACT IVITY AND QUESTIONED HOW THAT EXPENDITURE FALLS UNDER CHARITA BLE NATURE. THE ASSESSEE ALSO AGREES THAT THE EXPENDITURE PICKED UP BY THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD W ILL NOT FALL UNDER CHARITABLE ACTIVITY BUT FALLS UNDER THE RELIG IOUS ACTIVITY. 5.2 THE LD. AR STATED THAT NOW IT IS A SETTLED LAW THAT THE COMMISSIONER WHILE GRANTING REGISTRATION U/S 12AA R EAD WITH SECTION 7 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. 12A OF THE INCOME TAX ACT, 1961, THE COMMISSIONER I S ONLY REQUIRED TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST A ND GENUINENESS OF THE ACTIVITIES AND HAS NOT TO GO FURTHER. HERE IN T HE PRESENT CASE, THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERAB AD HAS NOT COMMENTED ANY THING ADVERSELY ABOUT THE CHARITABLE NATURE OF THE OBJECTS AND THE ACTIVITIES OF THE SOCIETY. HIS COMM ENTS AND REASON FOR REJECTING THE 10A APPLICATION IS THAT THE DOMINANT OBJECTS ARE NOT ASCERTAINABLE AND THE DOMINANT OBJECTS ARE RELIGIOU S. 5.3 LD. AR STATED THAT NO WHERE IN THE ACT IT IS ME NTIONED OR STIPULATED THAT THE SOCIETY HAS TO SPELL OUT ITS DO MINANT OBJECTS. ALL IT REQUIRES TO DO IS TO SPELL OUT ITS OBJECTS, AND IN THE PRESENT CASE THE SOCIETY HAS DONE THE SAME. 5.4 THE LD. AR RELIED ON THE DECISION IN THE CASE O F DIRECTOR OF INCOME TAX VS. GARDEN CITY EDUCATIONAL TRUST -IT AP PEAL NO.57 OF 2004, WHEREIN THE KARNATAKA HIGH COURT HELD AS UNDE R: 'IT IS NOT THE FINDING OF THE CIT THAT THE ASSESSEE -ASSESSEE HAD NOT COMPLIED WITH ANY OF THE PROCEDURAL REQUIREMENT S. THE TRIBUNAL IS FULLY JUSTIFIED IN OBSERVING THAT THE M ANNER OF APPLICATION OF FUNDS AND AS TO WHETHER THE ASSESSEE -ASSESSEE CAN CLAIM THE BENEFIT OF EXEMPTION IN TERMS OF SECT ION 11 AND 12 IS A QUESTION WHICH HAS TO BE EXAMINED BY THE ASSES SING OFFICER AT THE STAGE WHEN IT IS URGED AND NOT BY THE CIT WH EN SUCH QUESTION IS NOT BEFORE THE CIT. IT IS HEREBY CLARIF IED AND EMPHASIZED THAT WHILE REGISTRATION IN ACCORDANCE WI TH THE PROVISIONS OF SECTION 12A BY ITSELF, WILL NOT AUTOM ATICALLY CONFER THE BENEFITS OF SECTION 11 AND 12 ON A TRUST, BUT T HE TRUST WILL GET THE BENEFIT ONLY ON COMPLYING WITH THE REQUIREMENTS OF SECTIONS 11 AND 12 OF THE ACT, WHICH COMPLIANCE CAN BE EXAMI NED BY THE ASSESSING AUTHORITY, WHILE PROCESSING THE RETURN FI LED BY THE TRUST. 5.5 LD. AR STATED THAT HENCE IT IS NOT IN THE PURVI EW OF THE ID. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD T O CHECK AND VERIFY THE EXPENSES AT THE TIME OF GRANTING THE REG ISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961, WHICH ACT FALLS UNDER THE PURVIEW OF THE ASSESSING OFFICER. EVEN FOR ARGUMENT SAKE, IF THE C HECKING OF THE EXPENSES AND INCOME FALLS UNDER THE PURVIEW OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD, AT THE TIME OF G RANTING THE 8 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. REGISTRATION U/S 12AA OF THE INCOME TAX ACT, THEN A LSO THE INCOME POINTED OUT BY THE COMMISSIONER OF INCOME TAX (EXEM PTIONS) FALLS UNDER 'RELIGIOUS NATURE' WHICH WAS ONE OF THE OBJEC TS OF THE SOCIETY. AS FAR AS THE EXPENDITURE PICKED UP BY THE COMMISSI ONER OF INCOME TAX (EXEMPTIONS) IS CONCERNED ALSO FALLS UNDER THE 'RELIGIOUS NATURE', WHICH IS ALSO ONE OF THE OBJECTS OF THE SOCIETY. TH E APPELLANT NEVER SAID THAT THOSE INCOME AND EXPENDITURE FALLS UNDER CHARITABLE ACTIVITY OR CHARITABLE NATURE. HENCE IT IS NOT THE QUESTION OF CHARITABLE OR RELIGIOUS BUT THE QUESTION IS WHETHER THE SOCIETY H AVING MIXED OBJECTS OF CHARITABLE AND RELIGIOUS CAN BE GRANTED REGISTRA TION U/S 12AA OF THE INCOME TAX ACT, 1961. 5.6 LD. AR SUBMITTED THAT NOW IT IS A SETTLED LAW T HAT A SOCIETY WITH CHARITABLE OBJECTS OR WITH RELIGIOUS OBJECTS OR WIT H MIXED OBJECTS OF CHARITABLE AND RELIGIOUS IS ELIGIBLE FOR REGISTRATI ON U/S 12AA OF THE INCOME TAX ACT. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE HYDERABAD BENCH OF INCOME TAX APPELLATE TRIBUNAL IN ITA NO.352/HYD/2010, WHEREIN IT WAS HELD AS UNDER: 'WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 13(L) (B) OF THE ACT. THERE IS NOTHING IN THE LANGUAGE OF THIS PROVISION TO SUGGEST THAT AN INSTITUTION OF MIXED OBJECTS IS PRECLUDED FROM G ETTING REGISTRATION U/S 12AA OF THE ACT. IT IS ALSO SEEN F ROM THE OBJECTS OF THE TRUST IN QUESTION THAT THE ASSESSEE IS CARRY ING ON NO NON- CHARITABLE OR NON-RELIGIOUS ACTIVITIES. WE PLACE RE LIANCE ON THE JUDGEMENT OF ACIT V. BARKATE SAIJIYAH SOCIETY 213 I TR 492 (GUJ) AND CIT V. CHANDRA CHARITABLE TRUST 294 AITR 86 (GU J), WHEREIN IT WAS HELD THAT A TRUST CAN EITHER BE FOR RELIGIOU S PURPOSES OR FOR CHARITABLE PURPOSES OR IT CAN BE FOR BOTH. ONLY A T RUST WHICH IS FOR RELIGIOUS PURPOSE IS EXCLUDED AND DEBARRED FROM REG ISTRATION U/S 12AA OF THE ACT. A TRUST WHOSE OBJECT IS CHARITABLE AS WELL AS RELIGIOUS IS NOT DEBARRED FROM REGISTRATION. FURTHE R, IN THE CASE OF NEW LIFE IN CHRIST EVANGELISTIC ASSOCIATION V CIT & OTHERS 246 ITR 532 (MAD), WHEREIN IT WAS HELD THAT FOR GRANTIN G OR REFUSING REGISTRATION U/S 12A IN RELATION TO SUCH TRUST, THE ONLY CONDITION PRECEDENT IS THAT AN APPLICATION FOR REGISTRATION S HOULD BE MADE IN TIME AND THE ACCOUNTS OF THE INSTITUTE SHOULD BE AUDITED. NO ENQUIRY ABOUT THE OBJECTS OF THE TRUST CAN BE MADE U/S 12A OF THE ACT. WE HAVE GONE THROUGH ALL THE JUDGEMENTS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE FACTS OF THE CASE IN THE CASE OF CONSIDERED BY THE GUJARAT HIGH COURT SQUARE LY APPLY TO 9 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. THE FACTS OF THE CASE ON HAND. THE DEPARTMENT HAS N OT BROUGHT ANY CONTRARY DECISION TO OUR NOTICE. IN OUR OPINION , IN THE CIRCUMSTANCES UNDER CONSIDERATION, THE DIT (E), SHO ULD NOT HAVE REJECTED THE APPLICATION OF THE ASSESSEE FOR REGIST RATION U/S 12AA OF THE ACT ON THIS REASON . ........ (EMPHASIS SUPP LIED) 5.7 IN ADDITION TO THE ABOVE THE LD. AR RELIED ON T HE FOLLOWING CASE LAWS: 1. CIT V JAIPUR CHARITABLE TRUST 811TR 1 (DEL) 2. ZENITH TIN WORKS CHARITABLE TRUST V ITO 102 ITR 119 (BOMBAY) 3. CIT V AHMEDABAD RANA CASTE ASSOCIATION 88 IATR 354 (GUJ) 4. CIT V CHANDRA CHARITABLE TRUST 294 AITR 86 (GUJ ) 6. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF THE CIT(E) AS WELL AS RELIED ON THE DECISION OF THE ITAT COCHIN B ENCH IN THE CASE OF TELLICHERRY MINORITY WELFARE TRUST VS. CIT, ITA NO. 137/COCH./2009, DATED 29/04/2011. 7. CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES A ND PERUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDER OF CI T(E) AND CASE LAWS SUBMITTED BEFORE US. THERE IS NO DISPUTE THAT THE A SSESSEE HAS MIXED OBJECTS THEREOF CHARITABLE AS WELL AS RELIGIOUS. B UT THE FACT IS THAT THE CIT(E) HAS REFUSED TO GRANT REGISTRATION BECAUSE HE HAS ANALYSED ONLY THREE INITIAL OBJECTS OF THE SOCIETY AND CAME TO THE CONCLUSION THAT THE OBJECTS ARE NOT ASCERTAINABLE AND GOING FU RTHER HE OBSERVED THAT ASSESSEE HAD RECEIVED CERTAIN DONATIONS AND ME T SOME EXPENDITURE, WHICH ARE PURELY RELIGIOUS. HE OBSERVE D THAT THIS TRUST IS ESTABLISHED MAINLY FOR PROMOTING A PARTICULAR RELIG ION. IN THE PRESENT CASE, CIT(E) HAS NOT DISPUTED THE FACT THAT THE TRU ST CAN HAVE MIXED OBJECTS. CIT(E) HAS OBJECTED TO THE OBJECTS WHICH A RE NOT ASCERTAINABLE. OTHERWISE ALSO, THE CONCEPT OF MIXED OBJECTS ARE ALREADY SETTLED ISSUE, AS HELD IN THE CASE OF ACIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [1980] 121 ITR 1 (S C). THE HONBLE APEX COURT HAS HELD THAT IF THE PRIMARY PURPOSE AND PREDOMINANT OBJECT OF A TRUST ARE TO PROMOTE WELFARE OF THE GEN ERAL PUBLIC, THE 10 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. PURPOSE WOULD BE CHARITABLE PURPOSE, ANY OTHER OBJE CT WHICH MIGHT NOT BE CHARITABLE, BUT WHICH IS ANCILLARY OR INCIDE NTAL TO THE DOMINANT PURPOSE, WOULD NOT PREVENT TRUST OR INSTITUTION FRO M BEING A CHARITABLE TRUST. ALSO, AS HELD BY THE HONBLE SUPREME COURT I N THE CASE OF CIT VS. DAWOODI BOHARH JAMAT, CIVIL APPEAL NO. 2492 OF 2014 OBSERVED, IN CERTAIN CASES ACTIVITIES OF THE TRUST MAY CONTAI N ELEMENTS OF BOTH RELIGION AND CHARITABLE AND THUS, BOTH THE PURPOSE MAY BE OVERLAPPING. MORE SO, WHEN THE RELIGIOUS ACTIVITY C ARRIED ON BY A PARTICULAR SECTION OF PEOPLE WOULD BE A CHARITABLE ACTIVITY FOR OR TOWARDS OTHER MEMBERS OF THE COMMUNITY OR ALSO PUBL IC AT LARGE. FROM THE ABOVE DECISION OF THE HONBLE APEX COURT, THE T RUST CAN HAVE MIXED OBJECTS AND AS LONG AS IT GIVES BENEFITS TO P UBLIC AT LARGE NOT CONFINED TO ONE PARTICULAR GROUP OR COMMUNITY, WILL REMAIN AS CHARITABLE PURPOSE. IN THE GIVEN CASE, NO DOUBT THE TRUST HAS MIXED OBJECTS BUT WHAT IS IMPORTANT, CAN IT BE DISTINGUIS HABLE. LD. CIT(E) HIMSELF OBSERVED THAT THE TRUST HAS INCURRED EXPEND ITURE TOWARDS CHARITABLE AS WELL AS RELIGION. HE EVEN DISTINGUISH ED THE INCOME AS WELL AS RELEVANT EXPENDITURE. 8. COMING TO THE ASCERTAINABILITY OF THE OBJECT, IN OUR VIEW, WE HAVE GONE THROUGH THE OBJECTS AND FOUND THAT CERTAI N INSTITUTIONS FORMULATE THEIR OBJECTS IN SUCH A FASHION THAT THEY TRY TO ADDRESS IN GLOBAL LEVEL, THEN COMES DOWN TO THEIR MAIN OBJECTS . IN THE GIVEN CASE ALSO, IT APPEARS UNASCERTAINABLE BUT THEY TRY TO CO VER OVERALL GENERAL OBJECTS, WHICH MAY NOT LOOK ASCERTAINABLE. BUT IN O UR CONSIDERED VIEW, CIT(E) SHOULD HAVE LOOKED AT THE WHOLE OBJECT S AND APPRECIATED THE OVERALL ASPECTS ARE CHARITABLE PURPOSE IN THE C REATION OF THE TRUST. AS LONG AS IT IS BENEFICIAL TO THE SOCIETY, IT SHOU LD BE APPRECIATED. 9. WITH REGARD TO OBJECTS OF THE RELIGIOUS PURPOSE, WHEREVER THE OBJECTS OR ACTIVITIES WHICH ARE CONTRAVENING THE PR OVISIONS OF SECTION 13(1)(B), THE RELEVANT INCOME AND EXPENDITURE CAN B E ELIMINATED AT THE STAGE OF ASSESSMENT, IT SHOULD NOT BE CONSIDERE D AT THE STAGE OF GRANTING REGISTRATION. AT THIS STAGE, CIT(E) SHOUL D APPRECIATE THE 11 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. PURPOSE AND OBJECTS RELEVANT FOR CHARITABLE PURPOSE . MERE PRESENCE OF CERTAIN RELIGIOUS OBJECTS SHOULD NOT PRECLUDE TH E OFFICER TO DOUBT THE FUNCTIONS OF THE TRUST. 10. LD. DR RELIED ON THE CASE OF TELLICHERRY MINORI TY WELFARE TRUST (SUPRA). IN THIS CASE, ASSESSEE A CHARITABLE AND RE LIGIOUS TRUST, APPLIED FOR REGISTRATION U/S 12A. IN ONE OF THE CLA USES OF THE TRUST DEED ENTITLED ASSESSEE TO ENGAGE INTO ANY OTHER ACT IVITIES WHICH THE TRUST DEEMS BENEFICIAL TO THE MINORITIES AND OTHER BACKWARD CLASSES. IN THIS CASE, THE TRIBUNAL HAS FOUND THAT THE BENEF ITS WERE ATTRIBUTABLE TO A PARTICULAR RELIGIOUS MINORITIES, WHICH CONTRAV ENED THE PROVISIONS OF SECTION 13(1)(B). HENCE, DENIED THE REGISTRATION . WHEREAS, IN THE PRESENT CASE, THE OBJECTS ARE CLEARLY DISTINGUISHA BLE AND BENEFICIAL TO OVERALL COMMUNITIES AND NOT RESTRICTED TO A PARTICU LAR COMMUNITY. THE RELEVANCE IS THAT THE RELIGIOUS ACTIVITIES CAN BE I DENTIFIED AND EXCLUDED FROM EXEMPTION. 11. AS EXPLAINED ABOVE, CIT(E) SHOULD BE CONSIDERIN G ONLY THE CHARITABLE SIDE OF THE INSTITUTION AND GRANT THE RE GISTRATION. OF COURSE, HE CHOOSES OR EXPECTS THE TRUST WILL MISUSE THE REG ISTRATION, HE IS AT ABSOLUTE LIBERTY TO GRANT CONDITIONAL REGISTRATION BY IMPOSING CONDITIONS LIKE, IT IS ELIGIBLE TO CLAIM THE EXEMPT ION ONLY ON CHARITABLE ACTIVITIES, SEPARATE BOOKS TO BE MAINTAINED, BOTH BOOKS BE SUBJECT TO AUDIT ETC. 12. WITH THE ABOVE OBSERVATIONS, WE REMIT THE ISSUE BACK TO THE FILE OF CIT(E) WITH A DIRECTION TO GRANT REGISTRATION. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2016 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 29 TH JUNE, 2016 12 ITA NO. 861/H/15 SPIRIT AND TRUTH FOUNDATION, GUNTUR DT. KV COPY TO:- 1) SPIRIT AND TRUTH FOUNDATION, 3-159-1, KARAMPUDI (V) KARAMPUDI MANDAL, GUNTUR DIST., AP 522 614 2) CIT(E), 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYD. 3) CIT - I, HYDERABAD 4) ITO (EXEMPTIONS), WARD GUNTUR. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.