2015 (11) TMI 428 - AT - Income Tax

Tribunal grants appeal for trust with mixed charitable and religious objects under Income-tax Act.

The Tribunal allowed the appeal, ruling that the denial of registration under Section 12AA of the Income-tax Act was incorrect due to the mixed charitable ... Registration sought by it u/s.12AA denied - mixed objects of religious and charitable nature - Held that:- No doubt some of the objects are charitable in nature, whereas some others are religious in nature. However the class of beneficiaries are undoubtedly public or a wide section of public. We find that a similar issue had come up before the Cochin Bench of this Tribunal in the case of Calicut Islamic Cultural Society v. ACIT [2008 (7) TMI 621 - ITAT COCHIN] wherein held once the registration is granted to the assessee by the CIT, AO cannot go into probing the objects and the purposes of the trust or institution and that is within the exclusive domain and jurisdiction of the CIT. What AO can do that he can at the most investigate the matter within the four corners of s. 13 of the Act. In this case the AO has gone with investigating and probing the basic objects of the trust by entering into shoes of the CIT and such exercise is not permissible. There can be mixed objects of religious and charitable nature - if the trusts are partly religious and partly charitable, so long as no part of the income or corpus can be utilised for a purpose which is not either charitable or religious, exemption under s. 11(1)(a) will be applicable to the assessee. See CIT v. Barkate Saifiyah Society [1993 (11) TMI 13 - GUJARAT High Court] - Decided in favour of assessee. Issues Involved:1. Denial of registration under Section 12AA of the Income-tax Act, 1961.2. Mixed objects of the trust - charitable and religious.3. Applicability of Section 11(1)(a) of the Income-tax Act, 1961.4. Interpretation of charitable and religious purposes under the Act.5. Precedents and legal interpretations regarding mixed objects of trusts.Detailed Analysis:1. Denial of Registration under Section 12AA:The primary issue in the appeal was the denial of registration sought by the assessee under Section 12AA of the Income-tax Act, 1961. The CIT (Exemptions), Bengaluru, denied the registration on the grounds that the trust had mixed objects, some of which were charitable and some religious, which the Act did not contemplate for granting registration.2. Mixed Objects of the Trust - Charitable and Religious:The trust deed outlined various objects, including the construction and renovation of temples, promotion of social understanding, comparative study of Hindu Dharma, conducting classes for Yoga, Music, Sanskrit, and providing health awareness programs. While some objects were charitable, others were religious. The CIT argued that the Act did not support registration for trusts with mixed objects.3. Applicability of Section 11(1)(a):The Tribunal referred to a similar case decided by the Cochin Bench in Calicut Islamic Cultural Society v. ACIT, where it was held that if a trust has mixed activities (partly charitable and partly religious), it cannot be denied the benefit of Section 11(1)(a) of the Act. The Tribunal emphasized that the class of beneficiaries was public or a wide section of the public, which aligned with the requirements of Section 11(1)(a).4. Interpretation of Charitable and Religious Purposes:The Tribunal discussed the interpretation of charitable and religious purposes under the Act. It noted that the definition of 'charitable purpose' under Section 2(15) of the Act is inclusive and covers a wide range of activities, including relief of the poor, education, and medical relief. The Tribunal also highlighted that the law recognizes no purpose as charitable unless it is of a public character. It cited the Supreme Court's observation that there is no line of demarcation in the Hindu system between religion and charity, as charity is regarded as part of religion.5. Precedents and Legal Interpretations:The Tribunal referred to several precedents, including the judgment of the Hon'ble Gujarat High Court in CIT v. Barkate Saifiyah Society, which dealt with the issue of mixed objects of religious and charitable nature. The Tribunal noted that the Gujarat High Court had held that if a trust is partly religious and partly charitable, and no part of the income or corpus is utilized for non-charitable or non-religious purposes, the trust is entitled to exemption under Section 11(1)(a) of the Act.Conclusion:The Tribunal concluded that the assessee could not be denied registration under Section 12AA of the Act based on the mixed nature of its objects. It set aside the order of the CIT and directed the CIT to grant the registration sought by the assessee under Section 12AA. The appeal of the assessee was allowed.Order Pronouncement:The order was pronounced in the open court on the 30th day of October, 2015.