THE COMMISSIONER OF INCOME TAX, (EXEMPTION) V. SHREE VIMALNATH JAIN SWETAMBER MANDIR TRUST

TAXC/31/2019

AI Insights

The case revolves around the appeal by the Commissioner of Income Tax, (Exemption), Bhopal against the decision of the ITAT, which allowed the registration of Shree Vimalnath Jain Swetamber Mandir Trust under Section 12AA of the Income Tax Act. The primary contention was whether the Trust's activities, which are partly religious, qualify for registration under the said section, which typically applies to charitable organizations. The ITAT had previously determined that the Trust's objectives encompass both charitable and religious purposes, thus meriting registration. The High Court, after reviewing the arguments and evidence, concurred with the ITAT's decision and dismissed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 700118 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 01-04-2025
• Assessment Year: misc
• Other Referred Cases: Ananda Social and Educational Trust v. Commissioner of Income Tax and another, Commissioner of Income Tax Exemptions v. M/s International Health Care Education and Research Institute
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: SUMIT NEMA; ANAND DADARIYA
• Assessee Lawyers: AJAY KUMRANI
• Keywords: Charitable Trust; Income Tax; Income tax appellate tribunal; Registration under section 12AA; Religious Trust
• Section: 12AA; 260A

Judgement Text

"Page 1 of 7 (Tax Case No.31/2019) 2025:CGHC:15238-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 31 of 2019 (Arising out of order dated 16-1-2019 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur in ITA No.50/RPR/2018) The Commissioner of Income Tax, (Exemption), Bhopal (M.P .) ... Appellant versus Shree Vimalnath Jain Swetamber Mandir Trust, Nakoda Bhairav Nagar, Pachpedi Naka, Raipur (C.G.) ... Respondent For Appellant : Mr. Ajay Kumrani, Advocate. For Respondent : Mr. Sumit Nema, Senior Advocate through video conferencing with Mr. Anand Dadariya, Advocate. Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Sanjay Kumar Jaiswal, JJ. Order On Board (01/04/2025) Sanjay K. Agrawal, J. 1. This tax appeal preferred under Section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) was admitted for hearing on 15-3- 2023 by formulating the following substantial questions of law: - “1. Whether on facts & circumstances of the case, ITAT is correct in directing the CIT(E) to grant the registration u/s SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2025.04.03 15:05:42 +0530 Page 2 of 7 (Tax Case No.31/2019) 12 AA of that Act irrespective of the findings by the CIT(E) that the activities of the trust is not entirely charitable for public at large? 2. Whether on facts and in circumstances of the case and in law, the ITAT is correct in not considering the findings of the CIT(E) that trust has received huge donations as corpus fund but in the copy of donations receipts produced it revealed that there is no specific purpose or any details of donors mentioned in the copy of the receipt book?” 2. The assessee / respondent herein has applied for registration under Section 12AA of the Act and in order to verify the objects and activities of the assessee / respondent and to ascertain the fulfillment of the conditions mentioned in Section 12AA, the assessee was given an opportunity of hearing by issuing notice in response to which the assessee filed written submission and thereafter, the assessee was asked to submit some more details, however, the competent authority i.e. the learned Commissioner of Income Tax (Exemption), Bhopal, by order dated 28-3-2018, rejected the application of the assessee seeking registration under Section 12AA of the Act. Feeling aggrieved against the order dated 28-3-2018 passed by the CIT(E), the assessee preferred appeal before the Income Tax Appellate Tribunal, Raipur Bench, Raipur and the ITAT by its order dated 16-1-2019 allowed the appeal holding that the objects of the assessee Trust are both charitable and religious in nature, therefore, the assessee Trust is entitled for registration under Section 12AA of the Act. The order of the ITAT granting registration under Section 12AA of the Act to the assessee Page 3 of 7 (Tax Case No.31/2019) / respondent herein is called in question by the appellant herein under Section 260A of the Act. 3. Mr. Ajay Kumrani, learned counsel appearing for the appellant herein / Revenue, would submit that the ITAT was absolutely unjustified in granting the application for registration in favour of the assessee by holding that the objects and purposes of the assessee Trust are both charitable and religious in nature, whereas it is only religious in nature and, therefore, the appeal deserves to be allowed. 4. Mr. Sumit Nema, learned Senior Counsel appearing through video conferencing for the assessee / respondent herein, would support the impugned order and submit that the ITAT has clearly recorded a finding that the objects of the assessee Trust are both charitable and religious in nature, therefore, the ITAT has rightly granted the application for registration in favour of the assessee under Section 12AA of the Act. 5. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the material available on record minutely and thoroughly as well. 6. Section 12AA(1)(b)(i) of the IT Act states as under: - “12AA. Procedure for registration.—(1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made Page 4 of 7 (Tax Case No.31/2019) under clause (a) or clause (aa) or clause (ab) of sub- section (1) of section 12A, shall— (a) xxx xxx xxx (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, he— (i) shall pass an order in writing registering the trust or institution; (ii) xxx xxx xxx and a copy of such order shall be sent to the applicant:” 7. A careful perusal of the aforesaid provision would show that the Principal Commissioner or the Commissioner has to satisfy himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, and has to pass an order in writing registering the trust or institution and a copy of the order so passed will be sent to the applicant. 8. The Supreme Court in the matter of Ananda Social and Educational Trust v. Commissioner of Income Tax and another1 held that newly registered trust on basis of its objects, without any activity having been undertaken, is entitled for registration under Section 12AA of the Act, and observed as under: - 1 (2020) 17 SCC 254 Page 5 of 7 (Tax Case No.31/2019) “9. Section 12-AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the objects of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under Sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. 10. It was argued before us that the Commissioner is required to be satisfied about two things — firstly that the objects of the trust and secondly, its activities are genuine. If there have been no activities undertaken by the trust then the Commissioner cannot assess whether such activities are genuine and therefore, the Commissioner is bound to refuse the registration of such a trust. 11. We have given our anxious consideration to the above submissions made by Ms Aishwarya Bhati, the learned Senior Counsel appearing for the appellant Director of Income Tax and find that it is not possible to agree with the same. The purpose of Section 12-AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the objects of the trust are genuine and that its activities are in furtherance of the objects of the trust, that is equally genuine. 12. Since Section 12-AA pertains to the registration of the trust and not to assess of what a trust has actually done, we are of the view that the term “activities” in the provision includes “proposed activities”. That is to say, a Commissioner is bound to consider whether the objects of the trust are genuinely charitable in nature and whether the activities which the trust proposed to carry on are genuine in the sense that they are in line with the objects of the trust. In contrast, the position would be different where the Commissioner proposes to cancel the registration of a trust under sub-section (3) of Section 12-AA of the Act. There the Commissioner would be bound to record the finding that an Page 6 of 7 (Tax Case No.31/2019) activity or activities actually carried on by the trust are not genuine being not in accordance with the objects of the trust. Similarly, the situation would be different where the trust has before applying for registration been found to have undertaken activities contrary to the objects of the trust.” 9. The principle of law laid down in Ananda Social and Educational Trust (supra) has been followed by Supreme Court with approval in the matter of Commissioner of Income Tax Exemptions v. M/s International Health Care Education and Research Institute2 in which it has been held in paragraphs 14 and 15 as under: - “14. We may agree to a certain extent with the learned ASG that the very purpose for any assessee to seek registration under Section 12AA of the Act is to claim exemption under Sections 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature. 15. To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption under Section 10 and 11 respectively of the Act, 1961. When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.“ 10. In the case in hand, the ITAT after considering the submissions of parties, recorded a categorical finding in paragraph 6 of the order that objects of the assessee Trust are both charitable as well as religious in nature and held as under: - 2 Special Leave Petition (Civil) Diary No.19528/2018, decided on 11-2-2025 Page 7 of 7 (Tax Case No.31/2019) “6. … We have perused the objects of the Trust placed in the paper book. We find that the assessee Trust has objects which are both charitable and religious in nature. Therefore, it can safely be said that assessee Trust is a composite Trust and not purely for charitable purposes. It is the Trust for both charitable and religious purposes. In such circumstances by applying the decision of the Hon’ble Gujarat High Court in the case of Commissioner of Income Tax Vs. Barkate Saifiyah Society (supra.), section 13(1)(b) is also not applicable in the case of the assessee Trust herein.” 11. In view of the categorical finding recorded by the ITAT that the purposes and objects of the assessee Trust are both charitable and religious in nature, which could not be contradicted competently by learned counsel appearing for the appellant / Revenue during the course of argument before us, as such, the ITAT is absolutely justified in holding that the assessee Trust is entitled for registration under Section 12AA of the Act, which is pure and simple finding of fact based on the evidence available on record and is neither perverse nor contrary to law. In that view of the matter, both the substantial questions of law are answered in favour of the assessee / respondent herein and against the Revenue / appellant herein. The present tax appeal is accordingly, dismissed leaving the parties to bear their own cost(s). Sd/- Sd/- (Sanjay K. Agrawal) (Sanjay Kumar Jaiswal) JUDGE JUDGE Soma "