2015 (10) TMI 482 - AT - Income Tax

Appeals granted for charitable trust registration under Section 12AA based on amended deed

M/s. Sadiya Educational & Charitable Trust Versus Commissioner of Income Tax, Davangere.

The Tribunal allowed the appeals, directing the CIT to grant registration under Section 12AA based on the amended trust deed, which demonstrated that the ... Registration under Section 12AA refused - Held that:- Objects of the assessee trust are charitable in nature, coming under the provisions of Section 2(15) of the Act. The only objection of the ld. CIT for grant of Registration was that the objects of the Trust contained in Deed dt.4.6.2005 showed that the trust was set up for the benefit of a particular community. Whatever may be the correctness or otherwise of the said findings of the learned CIT, it is only the amended objects that have to be considered for purpose of grant of Registration. Thus, in our view, the objections of the ld. CIT with regard to the provisions of section 13(1)(b) of the Act, are therefore no longer relevant. In this view of the matter, the CIT is directed to accord the assessee trust Registration under Section 12AA of the Act. In any case, the grant of registration is only a step in the process for claim of exemption under Section 11 to 13 of the Act to enable the Assessing Officer to ensure that the assessee complies with the requirements contained therein to claim exemption. - Decided in favour of assessee. Issues Involved:1. Entitlement of the assessee to registration under Section 12AA of the Income Tax Act, 1961.2. Applicability of Section 13(1)(b) of the Act regarding the benefit of the trust being restricted to a particular religious community.3. Validity and effect of the Amendment Trust Deed dated 18.3.2013.Detailed Analysis:1. Entitlement of the Assessee to Registration under Section 12AA:The primary issue was whether the assessee trust was entitled to registration under Section 12AA of the Income Tax Act, 1961. The CIT had refused registration on the grounds that certain objects of the trust were for the benefit of a particular religious community, thus invoking Section 13(1)(b) of the Act. The Tribunal considered the arguments from both sides, including the assessee's contention that the trust's benefits were open to all persons without distinction of caste, community, or sex, as declared in clause 26 of the Trust Deed dated 4.6.2005. The Tribunal also reviewed the decision of the Hon'ble Apex Court in CIT v. Dawood Bohra Jamat, which emphasized that the upliftment of a community itself is an object of general public utility.2. Applicability of Section 13(1)(b):The CIT's refusal was based on the view that the trust's objects were for a specific religious community, thus falling under the mischief of Section 13(1)(b). The Tribunal referred to the Supreme Court's observation in the Dawood Bohra Jamat case, which stated that if the primary purpose of a trust is charitable and not restricted to a particular community, it would not be hit by Section 13(1)(b). The Tribunal noted that the predominant purpose of the trust's objects must be considered, and if they do not channel benefits to a particular community, the trust would not be affected by Section 13(1)(b). However, the Tribunal did not express an opinion on the predominant purpose of the original trust deed due to the amendment of the trust deed.3. Validity and Effect of the Amendment Trust Deed:The Tribunal examined the validity and effect of the Amendment Trust Deed dated 18.3.2013, which amended the aims and objects of the trust with retrospective effect from 4.6.2005. The Tribunal cited the Hon'ble Rajasthan High Court's decision in Laxminarain Lath Trust and the Hon'ble Supreme Court's decision in Kamala Town Trust, which supported the validity of such amendments. The Tribunal held that the CIT should have considered the amended trust deed, as it binds the author and trustees to administer the trust according to the amended terms. The Tribunal concluded that the amended objects were charitable in nature and directed the CIT to grant registration under Section 12AA.Conclusion:The Tribunal allowed the appeals, directing the CIT to grant registration under Section 12AA based on the amended trust deed, which demonstrated that the trust's objects were charitable and not restricted to a particular community. The Tribunal emphasized that the grant of registration is a step in the process for claiming exemption under Sections 11 to 13 of the Act, enabling the Assessing Officer to ensure compliance with the requirements for claiming exemption.