2019 (1) TMI 1129 - AT - Income Tax

Tribunal grants charity Trust registration emphasizing genuine activities over fund details.

Shree Vimalnath Jain Swetamber Mandir Trust Versus The Commissioner of Income Tax (Exemption) Bhopal (M.P)

The Tribunal allowed the appeal, setting aside the rejection of registration u/s.12AA by the Ld. CIT (Exemption). Emphasizing Trust objects over fund ... Rejection of application for granting registration u/s.12AA - objects of the Trust are only for benefit of Jain community and therefore, section 13(1)(b) of the Act is attracted - membership of the Trust is limited to the people who are Jain Swetamber - Donations, including corpus donations received in cash with no details of donors are mentioned in the receipt book - Held that:- We take guidance from the decision of the Rajasthan High Court in the case of CIT Vs. Vijay Vargiya Vani Charitable Trust (2015 (2) TMI 671 - RAJASTHAN HIGH COURT) wherein it has been held that at the time of granting registration u/s.12AA of the Act, the Ld. CIT(Exemption) should only look into the objects of the Trust. The issue regarding satisfaction of genuineness of the activities of the Trust is not a matter to be looked into at the time of granting registration u/s.12AA of the Act. That may be considered and decided accordingly at the time of assessment proceedings. As 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 Commissioner of Income Tax Vs. Barkate Saifiyah Society (1993 (11) TMI 13 - GUJARAT HIGH COURT), section 13(1)(b) is also not applicable in the case of the assessee Trust herein. In examination of facts on records, analyzing the judicial pronouncements placed before us, we, therefore, set aside the order of the Ld. CIT(Exemption) and direct the grant of registration u/s.12AA of the Act to the assessee. - decided in favour of assessee. Issues involved:1. Rejection of application for registration u/s.12AA of the Income Tax Act, 1961 by the Ld. CIT (Exemption) based on specific reasons.2. Interpretation of the objects of the Trust and applicability of section 13(1)(b) of the Act.3. Consideration of funds and sources of funds at the time of granting registration u/s.12AA.4. Analysis of relevant judicial pronouncements and decisions to determine the criteria for granting registration u/s.12AA.5. Examination of whether section 13(1)(b) of the Act applies to Trusts with charitable and religious objects.Detailed Analysis:1. The appeal arose from the rejection of the application for registration u/s.12AA by the Ld. CIT (Exemption) based on the reasons of limited membership to the Jain community and lack of donor details in receipt books.2. The Ld. AR argued that registration should focus on Trust objects, not fund applicability. Citing judicial decisions, it was emphasized that Trust objects are paramount at the registration stage, while section 13(1)(b) applicability is an assessment matter.3. The Ld. DR supported the Ld. CIT's decision based on unaccounted donations and Trust's Jain community focus.4. The Tribunal referred to judicial precedents emphasizing Trust objects as the key consideration for registration under section 12AA. The Tribunal highlighted that Trust activities' genuineness is an assessment matter, not a registration criterion.5. The Tribunal further analyzed the applicability of section 13(1)(b) and emphasized that Trusts with both charitable and religious objects are not solely charitable, thus exempt from section 13(1)(b).6. Relying on the Gujarat High Court decision, the Tribunal determined that the Trust's composite nature (charitable and religious objects) makes section 13(1)(b) inapplicable, leading to the grant of registration u/s.12AA to the Trust.7. After examining the facts and legal precedents, the Tribunal set aside the Ld. CIT's order and directed the grant of registration u/s.12AA to the assessee Trust.8. Consequently, the Tribunal allowed the assessee's appeal, pronouncing the order on January 16, 2019.