2012 (5) TMI 618 - AT - Income Tax

Court orders registration of religious trust under Income Tax Act section 12AA, emphasizing trust's religious nature.

The court directed the Commissioner to grant registration to the assessee trust under section 12AA of the Income Tax Act, emphasizing the trust's ... - Issues Involved: The judgment involves the refusal of registration u/s 12AA of the IT Act to the assessee by the ld. CIT, Gwalior, based on the contention that the objects of the trust were not solely religious in nature as claimed by the assessee.Issue 1: Refusal of Registration u/s 12AA:The assessee trust applied for registration u/s 12AA of the IT Act, asserting that its objects were for the advancement of lives of persons of a particular community with faith in a specific religion, qualifying it as a public religious trust. The ld. CIT rejected the application, citing the decision in the case of CIT vs. Palghat Shadi Mahal Trust, 254 ITR 212(SC), and deeming the trust ineligible for registration.Details: The assessee contended that its case was similar to the Dawoodi Bohra Jamat case, where registration was granted u/s 12AA by the ITAT, Indore Bench, and upheld by the Hon'ble M.P. High Court. The assessee argued that since the issue was identical and the departmental SLP was pending before the Supreme Court, registration should be granted. The ld. DR supported the CIT's decision.Issue 2: Consideration of Previous Judgments:The ITAT, Indore Bench had previously considered a similar case involving Dawoodi Bohra Jamat, where registration u/s 12AA was granted. The High Court upheld the ITAT's decision, emphasizing that the trust was solely religious in nature, and the provisions of section 13(1)(b) were not applicable as the trust was not established for charitable purposes.Details: The High Court dismissed the departmental appeal, affirming the ITAT's decision to grant registration to Dawoodi Bohra Jamat u/s 12AA. The High Court noted that the trust's objects were religious and not charitable, thus section 13(1)(b) did not apply. The issue being identical, the ITAT directed the ld. Commissioner to grant registration to the assessee based on the previous decisions.In conclusion, the judgment highlights the importance of the nature of trust objects in determining eligibility for registration u/s 12AA of the IT Act, drawing on precedents to support the decision to grant registration to the assessee in this case.