TaxTMI 
TaxTMI 
2014 (3) TMI 652
X X X X Extracts X X X X
X X X X Extracts X X X X
....LP (C) No. 9065/2010), Civil Appeal No. 2507/2014 (Arising out of SLP (C) No. 9066/2010), Civil Appeal No. 2508/2014 (Arising out of SLP (C) No. 10386/2010), Civil Appeal No. 2509/2014 (Arising out of SLP (C) No. 10387/2010), Civil Appeal No. 2510/2014 (Arising out of SLP (C) No. 10388/2010), Civil Appeal No. 2511/2014 (Arising out of SLP (C) No. 10389/2010), Civil Appeal No. 2512/2014 (Arising out of SLP (C) No. 10391/2010), Civil Appeal No. 2513/2014 (Arising out of SLP (C) No. 10393/2010), Civil Appeal No. 2514/2014 (Arising out of SLP (C) No. 10394/2010), Civil Appeal No. 2515/2014 (Arising out of SLP (C) No. 10395/2010), Civil Appeal No. 2516/2014 (Arising out of SLP (C) No. 10397/2010), Civil Appeal No. 2517/2014 (Arising out of SLP (C) No. 10398/2010), Civil Appeal No. 2518/2014 (Arising out of SLP (C) No. 10399/2010), Civil Appeal No. 2519/2014 (Arising out of SLP (C) No. 11794/2010), Civil Appeal No. 2520/2014 (Arising out of SLP (C) No. 11815/2010), Civil Appeal No. 2521/2014 (Arising out of SLP (C) No. 11817/2010), Civil Appeal No. 2522/2014 (Arising out of SLP (C) No. 11819/2010), Civil Appeal No. 2523/2014 (Arising out of SLP (C) No. 11821/2010), Civil Appeal No. 2524/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Appeal No. 2559/2014 (Arising out of SLP (C) No. 4769/2011, Civil Appeal No. 2560/2014 (Arising out of SLP (C) No. 8943/2011), Civil Appeal No. 2561/2014 (Arising out of SLP (C) No. 10279/2011), Civil Appeal No. 2562/2014 (Arising out of SLP (C) No. 10955/2011), Civil Appeal No. 2563/2014 (Arising out of SLP (C) No. 11615/2011), Civil Appeal No. 2564/2014 (Arising out of SLP (C) No. 11566/2011), Civil Appeal No. 2565/2014 (Arising out of SLP (C) No. 17035/2011), Civil Appeal No. 2566/2014 (Arising out of SLP (C) No. 24656/2011), Civil Appeal No. 2567/2014 (Arising out of SLP (C) No. 24657/2011), Civil Appeal No. 2568/2014 (Arising out of SLP (C) No. 24997/2011), Civil Appeal No. 2569/2014 (Arising out of SLP (C) No. 25990/2011), Civil Appeal No. 2570/2014 (Arising out of SLP (C) No. 26559/2011) and Civil Appeal No. 2571/2014 (Arising out of SLP (C) No. 27678/2011) HON'BLE H.L. DATTU AND A.K. SIKRI, JJ. For the Petitioner: Mr. Arijit Prasad, Adv. Mr. Rupesh Kumar, Adv. For the Respondent : Mr. Soli J. Sorabjee, Sr. Adv. Mr. R.P. Bhatt, Sr. Adv. JUDGMENT 1. Leave granted. These appeals arise out of the common judgment and order passed by the High Court of Madhya Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act to all the applicant- trusts. 4. Aggrieved by the aforesaid decision passed by the Tribunal, the Revenue approached the High Court under Section 260-A of the Act. The court primarily, is of the view that the decision of the Tribunal is rendered purely on the factual matrix of the case and therefore, it would be improper to disturb the finding of fact so arrived by the Tribunal. Secondly, the court has observed that the provisions of Section 13(1)(b) would not be applicable to the respondent-trust as the trust is not created or established for the benefit of any particular religious community or caste. Consequently the court has dismissed the appeal filed by the Revenue by judgment and order dated 22.06.2009. 5. Disturbed by the aforesaid, the Revenue is before us in these appeals. 6. We have heard the parties to the lis and carefully perused the judgment and order passed by the court. We have also looked into the objects and purposes of the trust which was the subject matter before the Commissioner as well as the Tribunal. 7. The lis herein relates to the entitlement of the respondent-trust for registration under the provisions of Section 12A read with Section 12....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under trust wholly for charitable or religious purpose for the purposes of Section 11 and 13 of the Act. 12. Section 12A provides for the conditions for applicability of Sections 11 and 12 of the Act. It prescribes two essential conditions which must be satisfied by a charitable/religious trust in order to claim exemption under the aforesaid Sections: firstly, that the person in receipt of the income has made an application for registration of the trust on or after 01.06.2007 in the prescribed form and manner to the Commissioner and such trust is registered under Section 12AA and secondly, where the total income of the trust exceeds the maximum amount which is not chargeable to income tax in any previous year, the accounts of the trust must be audited by a chartered accountant and the person in receipt of the income should furnish such audit report in the prescribed form along with the return of income. 13. Section 12AA lays down the procedure to be followed by the Commissioner for grant or refusal of application for registration made under Section 12A. According to procedure so laid down, the Commissioner shall call for documents and information and conduct an enquiry to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or availing benefit under Sections 11 and 12. Unless an institution is registered under the aforesaid provisions, it cannot claim the benefit of Sections 11 and 12. Section 13 enlists the circumstances wherein the exemption would not be available to a religious or charitable trust otherwise falling under Section 11 or 12 and therefore, requires to be read in conjunction with the provisions of Sections 11 and 12 towards determination of eligibility of a trust to claim exemption under the aforesaid provisions. 16. Keeping the aforesaid in view, we would now revert back to the facts of the present case. The objects of the respondent-trust as mentioned under the trust deed are as follows: "a. To arrange for nyaz and majlis (lunch and dinner) on religious occasion of the birth anniversary and Urs Mubarak of Awliya-e-Quiram (SA) and Saints of the Dawoodji Bohra community. b. To arrange for lunch and dinner on religious occasions and auspicious days of the Dawoodi Bohra community. c. For the betterment of the Dawoodi Bohra community to give and take Qardan Hasana according to Farma of Qurane Majid. d. To arrange for religious education and to establish Madarsa and such org....
X X X X Extracts X X X X
X X X X Extracts X X X X
....here a finding of fact is only assailed. This principle has been considered by the Privy Council in Wali Mohammad v. Mohammad Baksh, 57 IA 86, Secretary of State for India in Council v. Rameswaram Devasthanam, 61 I A 163 and Lakshmidhar Misra v. Rangalal, 76 IA 271 and this Court in Sree Meenakshi Mills Ltd. v. CIT, 1956 SCR 691. 20. In Wali Mohammad (supra), Sir Benod Mitter has referred to the earlier decision of Privy Council in Nafar Chandra Pal v. Shukur, (1917-18) 45 IA 183 and observed that no doubt questions of law and fact are often difficult to disentangle, but the proposition that proper legal effect of a proved fact is essentially a question of law is clearly established. However, the question whether a fact has been proved when evidence for and against has been properly admitted is necessarily a pure question of fact and thus cannot be looked into by the appellate court. 21. A reference to the observation of Lord Buckmaster in Nafar Chandra Pal (supra) as reiterated by this Court in Sree Meenakshi Mills (supra) at paragraph 19 is apposite: "Questions of law and of fact are sometimes difficult to disentangle. The proper legal effect of a proved fact is essent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he judgment and decree of the first appellate court was dismissed by the High Court holding that the finding of fact by the lower appellate court that the respondents were not gratuitous licensees did not call for interference and therefore, no substantial question of law arose for consideration. The appellants before the High Court were before this Court in appeals by special leave against the aforesaid judgment and order by the High Court. This Court opined that the rejection of appeals at the outset by the High Court on grounds that the case involved no substantial question of law was erroneous and what ought to have been looked into was whether it involved the question of fact or legal effect of proven facts or documents which in turn would be a question of law requiring adjudication by the High Court. This Court observed as follows: "11. Normally this Court will not, in exercise of jurisdiction under Article 136 of the Constitution of India, interfere with the finding of facts recorded by the first appellate court, which were not disturbed by the High Court in second appeal. But what should happen if the first appellate court reverses the findings of fact recorded by the tri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h charitable and religious purposes. It is expedient to comprehend the objects of the respondent-trust with reference to the construction of the expressions "charitable purpose" and "religious purpose." 28. The phrase charitable purpose is expansive and inclusive. The expression "charitable purpose" is defined in the dictionary clause of the Act under Section 2(15) as follows: ""charitable purpose" includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: Provided further that the first proviso shall not ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....particular for workmen of the company" negative the charitable purpose and therefore, the entire trust could not be considered to have been established wholly for charitable purpose. 32. In Abdul Sathar Haji Moosa Sait Dharmastapanam v. Commr. of Agri. Income Tax, (1974) 3 SCC 257, at page 259, this Court considered the question whether the appellant therein was a public charitable trust within the meaning of Section 4(b) of the Kerala Agricultural Income Tax Act, 1950. The 3/4th of the income of the bequest was primarily earmarked for the benefit of near relations of the testator only, it cannot be considered as a public charitable trust. While the rest one- fourth was concluded to form the valid charitable trust. (Trustees of Gordhandas Govindram Family Trust v. CIT). In CIT v. Andhra Chamber of Commerce; Ahmedabad Rana Caste Assn. v. CIT; Sole Trustee, Loka Shikshana Trust v. CIT and Yogiraj Charity Trust v. CIT and CIT v. Andhra Chamber of Commerce,[1965] 55 ITR 722 (SC), it was observed that objects for service and benefit to the general masses would indicate that they are meant for public purpose and thus, would create a public charitable trust. 33. Indubitably, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal has analysed the objects of the trust in the light of the holy scriptures and Quran and recorded its satisfaction as follows: "16...The objects of the assessee-trust reproduced above clearly refer to the religion and are supported by reference made to different pages of Holy Quran. The learned Counsel for the assessee referred to the true copies of several pages of Holy Quran written by two of the authors referred to above in which giving of food in days of hunger or orphan is considered as highly religious ceremony. Reference is also made that who will give to the people or poor then Allah will give them in return and, i.e., who will give loan then Allah will give double to them. Likewise, for helping the needy people for religious activities and to carry out religious activities or spend for good, spending wealth in the way of Allah, bestowing mercy, teaching were considered to be highly religious activities. On going through several true pages of Holy Quran written by the authors referred to above, we are satisfied that the learned Counsel for the assessee was justified in contending that all the objects of the assessee-trust are solely religious in nature becaus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for dissemination of religious education under object (d) and rendering assistance to the needy and poor for religious activities under object (e) would reflect the essence of charity. The objects (a) and (b) provide for arrangement for nyaz and majlis (lunch and dinner) on the religious occasion of the birth anniversary and Urs Mubarak of Awliya-e-Quiram (SA) and the Saints of the Dawoodji Bohra community and for arrangement of lunch and dinner on religious occasions and auspicious days of the Dawoodi Bohra community, respectively. Nyaz refers to the food a person makes and offers to others on any particular occasion on the occasion of the death of a saint and Majhlis implies a place of gathering or meeting. The activity of providing for food on certain specific occasions and other religious and auspicious events of the Dawoodi Bohra community do not restrict the benefit to the members of the community. Neither the religious tenets nor the objects as expressed limit the service of food on the said occasions only to the members of the specific community. Thus, the activity of Nyaz performed by the respondent- trust does not delineate a separate class but extends the benefit of free....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nvil of Section 13. 42. Thus, the second issue which arises for our consideration and decision is, whether the respondent-trust is a charitable and religious trust only for the purposes of a particular community and therefore, not eligible for exemption under Section 11 of the Act in view of provisions of Section 13(1)(b) of the Act. 43. In the instant case, the Tribunal has found on facts after analysing the objects of the trust that the respondent-trust is a public religious trust and its objects are solely religious in nature and being of the opinion that Section 13(1)(b) is solely meant for charitable trust for particular community, negated the possibility of applicability of Section 13(1)(b) of the Act at the outset. The High Court has also confirmed the aforesaid view in appeal and observed that Section 13(1)(b) would only be applicable in case of income of the trust for charitable purpose established for benefit of a particular religious community. In our considered view, the said view may not be the correct interpretation of the provision. 44. From the phraseology in clause (b) of section 13(1), it could be inferred that the Legislature intended to include only th....