Registration under section 12AA to be granted even if Trust have both charitable and religious objects

By | October 7, 2015

Where assessee trust could have both charitable and religious objects, registration under section 12AA was to be granted to assessee

Section 12AA

IN THE ITAT CHENNAI BENCH ‘D’

Gilgal Mission India

v.

Income-tax Officer

N.R.S. GANESAN, JUDICIAL MEMBER
AND A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER

IT APPEAL NO. 3067 (MDS.) OF 2014

JULY  10, 2015

A.S. Sriraman for the Appellant. Joe Sebastian for the Respondent.

ORDER

N.R.S. Ganesan, Judicial Member – This appeal of the assessee is directed against the order of the Commissioner of Income-tax-I, Madurai, dated September 23, 2014 rejecting the application of the assessee for registration under section 12AA of the Income-tax Act, 1961.

2. At the outset, it was noticed that there was a delay of seven days in filing the appeal. The assessee filed an application to condone the day. After hearing both sides, we find that there was sufficient cause for not filing the appeal within the period prescribed. Accordingly, the delay of seven days in filing the appeal is condoned and the appeal of the assessees is admitted.

3. Shri A. S. Sriraman, learned counsel for the assessee submitted that the assessee-trust was established by a deed of trust dated November 10, 2006 for charitable and religious purpose. The Commissioner of Income-tax rejected the application of the assessee for registration under section 12AA of the Act on the ground that the trust cannot have both charitable and religious objects. Referring to the judgment of the hon’ble Madras High Court in DIT (Exemptions) v. Seervi Samaj Tambaram Trust [2014] 362 ITR 199  learned counsel submitted the High Court found that the trust can have both religious and charitable objects. Therefore, according to learned counsel, the Commissioner of Income-tax is not justified in rejecting the application of the assessee.

4. On the contrary, Shri Joe Sebastian, the learned Departmental representative submitted that the assessee can establish a trust either for religious or charitable purpose. The assessee cannot have both charitable and religious objects in one trust. According to the learned Departmental representative, the assessee cannot extend its benefit to a particular caste or religion, therefore, the Commissioner of Income-tax has rightly rejected the application of the assessee.

5. We have considered the rival submissions on either side and also perused the material available on record. The Commissioner of Income-tax rejected the application of the assessee for registration under section 12AA of the Act on the ground that there cannot be twin objects, i.e., religious and charitable in nature. An identical issue was considered by the hon’ble Madras High Court in the case of Seervi Samaj Tambaram Trust (supra) and found that the trust can have twin objects. In fact, the hon’ble Madras High Court has observed as follows (page 201) :

“6. The very issue raised by the Revenue has been dealt with by a Division Bench of this court in the case of CIT v.Arulmigu Sri Kamatchi Amman Trust reported as [2012] 206 Taxman 69 ; [2014] 2 ITR-OL 191 (Mad). In the said case, the respondent/assessee sought for registration under section 12AA of the Income-tax Act on the ground that the object of the trust was religious. The Commissioner of Income-tax rejected the application on the ground that the trust was spending money in receipts towards religious and administrative purposes and the activities claimed to be carried on by the said trust were an admixture of both religious and charitable. The said trust filed an appeal before the Income-tax Appellate Tribunal. Following the decision in the case of Upper Ganges Sugar Mills Ltd. v. CIT reported in [1997] 227 ITR 578 (SC) and in the case of State of Kerala v. M.P. Shanti Verma Jain reported in [1998] 231 ITR 787 (SC), the Tribunal allowed the appeal. Challenging the same, the Revenue filed an appeal before this court contending that the Tribunal failed to appreciate the activities claimed to be carried on by the said assessee, which was an admixture of both religious and charitable in nature. Therefore, the Tribunal ought not to have interfered with the order of the Commissioner of Income-tax. The Division Bench of this court, after taking into consideration the provision under section 11(1)(a) of the Income-tax Act, which states that subject to the provisions of sections 60 to 63, the income derived from property held under trust wholly for charitable or religious purposes, to the extent of 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 income so accumulated or set apart is not in excess of fifteen per cent. of the income from such property shall not be included in the total income of the previous year of the person in receipt of the income. Thus, the Division Bench held (page 193 of 2 ITR-OL) : ‘from a reading of the above, it is clear that the income derived from the property held under trust wholly for charitable or religious purpose, shall not be included in the total income of the trust. Therefore, the said provision would be applicable to both trusts established with the object of charitable as well as religious purposes. Therefore, section 12AA of the Income-tax Act does not make any difference between the trusts created with the object of charitable and religious purposes and, even if the trust is not created with both the objects, law does not make any disqualification for the trust to make an application for registration. Therefore, the Tribunal has correctly applied the provision of law and allowed the appeal. . . ‘

7. The abovesaid decision squarely applies to the facts of the present case. Further, in the case of DIT (Exemptions) v.Chartered Accountants Study Circle reported in CDJ 2012 MHC 658 ; [2012] 347 ITR 321 (Mad), the Division Bench of this court, after taking note of the objects of the said trust, which among other things was to conduct periodical meetings on professional subjects and to achieve the said objects, the assessee was publishing books, booklets, etc., on professional subjects and selling the same only on the subjects related to audit and not on any other subject and after analysing the objects of the said trust, pointed out that the activities of the said trust in publishing and selling books of professional interest, which were meant to be used as a reference material even by the general public as well as the professionals in respect of bank audit, tax audit, etc., could not be construed to be one of commerce in nature. Further, it was pointed out that under section 12AA of the Income-tax Act, while considering the application, the Officer has to satisfy about the genuineness of the activity of the trust or the institution and for that reason, he may also make such enquiries as he deem it necessary in that behalf.”

6. In view of the above, this Tribunal is of the considered opinion that there is no justification in rejecting the application of the assessee. Accordingly, the Commissioner of Income-tax is directed to grant registration under section12AA of the Act to the assessee.

7. In the result, the appeal of the assessee is allowed.

 

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