2019 (4) TMI 561 - AT - Income Tax

Tribunal advises trust to amend objectives for charitable benefits, excluding commercial activities.

The Tribunal partly allowed the appeal, advising the trust to amend its objectives to ensure charitable benefits for all society and exclude commercial ... Registration u/s 12AA - fulfillment of condition u/s 13(1)(b) - benefit of any particular reli­gious community or caste - activities on both religious and charitable in nature having mixed objects - charitable activity or not? - HELD THAT:- we find that there are objects which are for the particular religious community i.e. Christianity and particularly followers of Hope Unlimited Church are in clauses such as clauses (c); (g); (j) and (m). The other objects such as (a),(b), (d), (e), (f), (h), (i) and (l) are general in nature and are not limited to any particular community or religion and the activities mentioned therein are clearly charitable in nature. The objectives like (b) and (k) are commercial in nature. Therefore, it cannot be said that all the objectives of the assessee are charitable in nature or that the religious objects are both religious and charitable in nature. The assessee, therefore, has been held to be not eligible for registration u/s 12AA. The assessee trust can modify its objectives clearly indicating that charitable benefits are meant for all sections across society and that they are not restricted only to Christian community and also only to the followers of “Hope Unlimited Church” and also to exclude the commercial activities intended to be carried out by the assessee and thereafter, seek registration u/s 12AA. As regards the objection of the CIT (E) that the assessee has filed the application manually instead of electronically as required by the CBDT vide Circular No.10/18, we direct the assessee to now file the application electronically and on such filing after the amendment of clauses, the CIT (E) shall consider the application afresh on merits. - Decided partly in favour of assessee for statistical purposes. Issues Involved:1. Eligibility for registration under section 12AA of the Income Tax Act.2. Filing of Form No.10A manually instead of electronically.Detailed Analysis:Issue 1: Eligibility for Registration under Section 12AAThe primary issue revolves around whether the assessee trust, which has both religious and charitable objects, is eligible for registration under section 12AA of the Income Tax Act. The CIT (Exemptions) rejected the application on the grounds that the trust's objects were mixed, i.e., both religious and charitable, which according to him, the Act does not permit for exemption.The assessee argued that the trust's objects, although religious and charitable, were not exclusively for any particular religious community and cited the Supreme Court's decision in CIT vs. Dawoodi Bohra Jamat, which held that trusts with mixed objects could still be granted registration under section 12AA. The assessee also contended that the provisions of section 13(1)(b) were not attracted in their case.The Revenue, however, supported the CIT (Exemptions)'s decision, arguing that the trust's objectives were primarily for the benefit of the Christian community, particularly followers of 'Hope Unlimited Church,' and therefore, it was not eligible for registration under section 12AA. The Revenue cited various judicial precedents, including the decisions of the Hon'ble Kerala High Court in A.Y Broadcast Foundation and the Hon'ble Allahabad High Court in Agarwal Sabha, to support their stance.The Tribunal examined the trust deed and found that the objects of the trust were indeed both charitable and religious. It noted that certain objects were specifically for the Christian community, while others were general and charitable. The Tribunal referenced the Supreme Court's decision in Dawoodi Bohra Jamat, which stated that a trust with both charitable and religious activities could still be eligible for exemption if the charitable activities were not restricted to a particular community.The Tribunal concluded that the trust's objects were not entirely charitable and that some were religious and restricted to a particular community. It suggested that the trust could modify its objectives to clearly indicate that the charitable benefits were meant for all sections of society and not restricted to the Christian community or followers of 'Hope Unlimited Church.' The Tribunal also noted that commercial activities should be excluded from the trust's objectives to qualify for registration under section 12AA.Issue 2: Filing of Form No.10A Manually Instead of ElectronicallyThe second issue was the rejection of the application because the assessee filed Form No.10A manually instead of electronically, as required by CBDT Circular No.10/2018 dated 19.02.2018. The assessee argued that they were unaware of the electronic filing requirement when they submitted the form manually on 28.03.2018. They contended that the CIT (Exemptions) did not provide an opportunity to rectify this defect by issuing a defective notice.The Tribunal directed the assessee to file the application electronically and instructed the CIT (Exemptions) to reconsider the application on its merits after the necessary amendments to the trust's objectives.ConclusionThe Tribunal partly allowed the assessee's appeal for statistical purposes. It suggested that the trust amend its objectives to ensure that charitable benefits are meant for all sections of society and exclude commercial activities. The Tribunal also directed the assessee to file the application electronically, after which the CIT (Exemptions) should reconsider the application afresh.