2025 (10) TMI 349 - AT - Income Tax

Refusal to register notified religious institution under Section 12A(1)(ac)(iii) improper; government notification and documents suffice

ITAT CHANDIGARH - AT held that refusal to register the notified religious institution under section 12A(1)(ac)(iii) was improper where no trust deed ... Rejection of application seeking registration u/s 12A(1)(ac)(iii) - CIT-DR stated that the assessee failed to furnish trust deed and therefore, the objects of the assessee-trust could not be verified by registering authority - assessee is a temple located in Village Damtal, Tehsil Nurpur, Distt. Kangra (commonly known as ‘Mandir Damtal’) and also known as ‘Shri Ram Thakur Ram Gopal Temple’ and ‘Shree Ram Gopal Temple Trust’ HELD THAT:- In order to establish bona fide nature of activities being carried out by the assessee-trust, the assessee had submitted authorization letters issued by District Magistrate permitting expenditure towards the marriage of underprivileged girls. The assessee had also furnished copies of proceedings books, resolutions and approvals for incurring charitable expenditure. Once the provisions of Sec.35 of HPPRICE become applicable, the provisions of any other enactment governing charitable or religious trusts including the charitable and Religious Trusts Act, 1920 automatically cease to apply. The assessee is a notified entity under Schedule-1 of HPPRICE Act. In such a case, the requirement of having a trust deed would not apply in the case of the assessee. The assessee, in fact, is not created by way of trust-deed rather it is a notified religious institution under statute. The assessee is governed by the provisions of statute and therefore, the question of furnishing of trust deed would not arise. The assessee is an ancient temple and its administration, in public interest, has been taken over by HP State Government. Upon notification under the statute, the Temple Trust ceases to exist and the governance of the institutions would stand governed solely in accordance with the provisions of HPPRICE Act, 1984. On these facts, in our considered opinion, the impugned registration could not be denied to the assessee simply because it failed to furnish the trust-deed. Assessee had filed sufficient documentary evidences to Ld. CIT(E) in support of its claim which are to be accepted. The decision of Sri Seetharamachandra Swamy Temple [2016 (7) TMI 847 - ITAT HYDERABAD] is on similar facts as held that certificate of registration with Endowments Department of State Government would constitute a document evidencing creation of trust. Therefore, the registration could not be denied for want of trust deed. Any institution registered under Sec.6 of AP Charitable and Hindu Religious Institutions and Endowments Act is deemed to be carrying on the charitable and religious activities. Similar is the decision of Temple Trust [2022 (9) TMI 920 - ITAT CHANDIGARH] which has identical facts took a view favoring the assessee. As decided in Dawoodi Bohra Masjid [2018 (2) TMI 1159 - GUJARAT HIGH COURT] held that where a religious trust was not created under an instrument, factum of existence of trust could also be established by producing documents evidencing creation of trust. We direct CIT(E) to grant impugned registration to the assessee-trust as per its application. ISSUES PRESENTED AND CONSIDERED 1. Whether registration under section 12A(1)(ac)(iii) can be refused solely because the applicant did not furnish a trust deed, where the institution is a religious endowment taken over and governed by a statutory scheme (Himachal Pradesh Hindu Public Religious Institutions and Charitable Endowments Act, 1984) and is administered under that statute. 2. Whether Rule 17A (requiring certified copy of instrument creating/establishing the trust, or where no instrument exists a self-certified document evidencing creation) mandates production of a trust deed in every case, or whether alternative statutory documents/notifications/registration with endowments authorities can satisfy the documentary requirement for registration under section 12A. 3. Whether documentary evidence such as government notification vesting administration under a State endowments law, provisional registration, authorization letters, proceedings, resolutions and approvals can establish the bona fide charitable/religious nature and existence of the institution for grant of registration under section 12A. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Effect of statutory takeover/endowment status on requirement of trust deed Legal framework: Rule 17A of the Income Tax Rules requires a certified copy of the instrument creating/establishing the trust, or where no instrument exists, a self-certified document evidencing creation/establishment of the trust. The endowments statute provides for takeover/administration by State authorities and contains a specific provision (Sec.35 as described) that, upon its applicability, other enactments governing charitable/religious trusts cease to apply. Precedent treatment: The Tribunal referred to decisions holding that registration/certificate from Endowments Department or documents evidencing creation under State endowment law can constitute evidence of creation where no trust deed exists. These decisions were followed (Hyderabad Tribunal; a Chandigarh Tribunal decision; Gujarat High Court in Dawoodi Bohra Masjid cited for the proposition that existence of a trust may be established by documents other than an instrument). Interpretation and reasoning: The Court reasoned that when an institution has been taken over and is governed by a statutory endowment scheme, it is not a trust created by a private instrument; instead it is a notified religious institution governed by statute. Consequently, the requirement of producing a trust deed is inapplicable because there is no private trust-instrument to produce. The statutory notification and governance under the endowments act effectively serve as the instrument evidencing creation/establishment for purposes of Rule 17A. Ratio vs. Obiter: Ratio - Where an institution is statutorily notified and governed under a State endowments act (such that the private trust instrument does not exist or ceases to govern), the absence of a trust deed is not a valid ground to refuse registration under section 12A; the statutory notification/registration under the endowments law suffices as the document evidencing creation/establishment. (Followed precedent as binding reasoning of relevant tribunals/high court in similar factual matrix.) Conclusion: Registration cannot be denied solely for non-production of a trust deed where the institution is an ancient temple/endowment taken over and governed by statute; statutory documents must be accepted as evidence of creation/establishment. Issue 2 - Scope and application of Rule 17A when no private instrument exists Legal framework: Rule 17A contemplates two possibilities - (a) a certified copy of the instrument creating the trust, or (b) where no instrument exists, a self-certified document evidencing creation/establishment. The rule thus contemplates alternative documentary proof when a trust deed is absent. Precedent treatment: Tribunal and High Court authorities have treated registration or certificate from endowments/State authorities as satisfying the 'document evidencing creation' requirement where no private instrument exists. Interpretation and reasoning: The Court interpreted Rule 17A purposively - the rule does not rigidly mandate a trust deed in all cases; it allows for documentary proof of creation in other forms. In the statutory takeover scenario, the notification/registration under the endowments act constitutes such documentary proof. The administrative records (provisional registration, authorizations, resolutions, approvals, and proceedings) corroborate the charitable activities and governance structure and therefore comply with Rule 17A's alternative limb. Ratio vs. Obiter: Ratio - Compliance with Rule 17A can be satisfied by statutory notifications and registration certificates under a State endowments/statutory regime where no private instrument exists; demand for a trust-deed in such cases is misplaced. Obiter - The Court's reference to the types of supporting documents (authorizations for charitable expenditure, proceedings books, resolutions) is persuasive guidance on acceptable evidence but ancillary to the primary holding. Conclusion: Rule 17A's requirement is met by appropriate statutory documentation and administrative records when a private instrument is absent; the registering authority must accept such documents and not reject registration solely for non-production of a trust deed. Issue 3 - Sufficiency of documentary evidence to establish bona fide charitable/religious activities Legal framework: Section 12A registration requires satisfaction of bona fide charitable/religious nature of activities. Documentary proof is required to verify objects, activities and governance. Precedent treatment: Authorities have accepted endowments department registration and other official records as proving existence, objects and administration of religious/charitable institutions. Interpretation and reasoning: The Court examined the record: government takeover notification under the endowments act, provisional registration for relevant assessment years, authorization letters from District Magistrate permitting specific charitable expenditure, and internal proceedings/resolutions approving expenditure. These documents, taken together, establish both the statutory governance framework and the execution of charitable objects. The Court found that these materials adequately demonstrated the bona fide nature of activities and rendered the strict requirement of a trust deed unnecessary in the statutory context. Ratio vs. Obiter: Ratio - A combination of statutory notification/registration plus administrative approvals and records can constitute sufficient proof of bona fide charitable/religious activities for registration under section 12A. Obiter - Specific examples of acceptable documents provided may assist other tribunals/authorities but are supportive rather than novel legal pronouncements. Conclusion: The supplied statutory and administrative documents were sufficient to establish the institution's objects and activities; the registering authority erred in rejecting the application for want of a trust deed. Remedial Direction and Outcome The Court directed the registering authority to grant registration under section 12A(1)(ac)(iii) on the basis of the statutory notification/registration and supporting administrative records. The appeal was allowed accordingly.