Educational trust with Arabic and Islamic studies treated as charitable, not religious, for tax registration and approval.

A trust whose objects included education in Arabic and Islamic studies, including running a madarasa, was treated as a public charitable trust because the dominant object was education rather than religious worship or propagation. Reading the trust deed as a whole, the ITAT found no evidence of rituals, ceremonies, or other religious activity sufficient to characterise the trust as religious merely because it used Islamic terminology. The rejection of registration under section 12AB and approval under section 80G was also found unsustainable for want of proper opportunity and adequate evidence, so both benefits were allowed.

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Issues: Whether the assessee trust, whose objects included education in Arabic and Islamic studies and running a madarasa, was to be treated as a charitable trust or a religious trust, and whether it was entitled to registration under section 12AB and approval under section 80G.

Analysis: The trust deed was read as a whole and the dominant object was found to be education, including establishment of institutions, scholarships, libraries and allied educational ies. The record did not show any religious worship, rituals, ceremonies or propagation so as to characterise the trust as religious merely because it used Islamic or Arabic terminology. Academic instruction in Arabic language and Islamic studies was treated as education, not religious activity, and a madarasa was regarded as an educational institution. The rejection order also suffered from want of proper opportunity and did not rest on evidence sufficient to displace the charitable character of the trust.

Conclusion: The trust was held to be a public charitable trust and not a religious trust. The denial of registration under section 12AB and approval under section 80G was set aside, and the assessee was held entitled to both benefits.

Final Conclusion: The appeals succeeded in full, with the trust recognised for income-tax exemption purposes as a charitable educational trust rather than a religious trust.

Ratio Decidendi: Where the dominant purpose of a trust is education, academic instruction in religious texts or language does not by itself make the trust religious unless religious worship, rituals or propagation are shown to be its real activity.

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