AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 428
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.... Ld. DR. Main objects of the trust as it appears at para 3 of the trust deed dated 8th November 2004, is reproduced here under : 3. OBJECTS OF THE TRUST: - The objects for which the trust is established are: a. To construct & renovation of Sree Maramma Temple, Countries, Orphanages and allied buildings for the deities which are worshiped by large number of devotees and disciples to provide temporary shelter of the needs etc, by raising funds by way of subscriptions, donations, grants, etc, and accept the article/ornaments (Gold, Silver, etc) donated to the temples. b. To promote better social understanding and amity among different communities. c. To make a comparative study of philosophical preaching and religious principles of "Hindu Dharma" and bring together persons who have faith in Hinduism and Hindu Philosophy. d. To take more effective steps to implement the teaching of great noble and learned to social upliftment and community and community understanding. e. To encourage and organize the study course, seminars, publish, journals, magazines libraries for expanding teaching on Hinduism and to invite leading religious heads and to honor them. f. To maintain right of ....
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.... all the facts as well as precedents relied on by both the parties. From the arguments advanced by both the parties, the controversy in both these cases is common, i.e., the allowability of the exemption to both these assessees as claimed by them under s. 11(1)(a)of the Act. To make the summary of the controversy, we can give the reasons in both these cases for denying the claim of the assessees under s. 11(1)(a) of the Act. 16. Now we take up the reasons given by the AO in the case of Calicut Islamic Cultural Society (ITA No. 729/Coch/2006) : (i) The activity of the society is partly religious and partly charitable. (ii) The object of the assessee is partly charitable and partly religious because on the verification of books of account it was noted by the AO that assessee spent amount on conducting the mosque and also assessee was conducting charitable institutions like Calicut Orphanage and Calicut Higher Secondary School for the handicapped. (iii) There were many charitable institutions run by the assessee trust. (iv) If the assessee is partly engaged in the activity which is a religious and partly charitable, then in view of the decision of the Hon'ble High Court of Jammu....
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.... income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property;" 20. We may refer here the observations of Lord Denning LJ (quote) : "The English language is not an instrument of mathematical precision. Our literature would be much poorer if it were. This is where the draftsmen of Acts of Parliament have often been unfairly criticised. A Judge believing himself to be fettered by the supposed rule that he must look to the language and nothing else, laments that the draftsmen have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the Judges trouble if the Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it when a defect appears, a Judge cannot simply fold his hands and blame the draftsmen. He must set to work on the constructive task of finding the intention ....
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....sessee as held by the Hon'ble High Court of Bombay in the case of Bai Hirbai Rahim Aloo Paroo & Kesarbai Dharamsey Kakoo Charitable & Religious Trust vs. CIT (1968) 68 ITR 821 (Bom). There are innumerable examples where there will be very thin line of demarcation between the purposes to identify which are the charitable purposes or which are the religious purposes. In both these appeals, it is not the case of the Department either that any of the bars provided under s. 13 of the Act are applicable to both these assessees as per the interpretation given by the AO as well by the CIT(A). As per the provisions of s. 11(1)(a) of the Act, it requires that there should be nexus between the property held under the trust wholly for charitable or religious purposes and the income under consideration. The interpretation given by the AO as well as by the CIT(A) is that the purpose should be wholly charitable or wholly religious. We are afraid, whether such interpretation can be accepted. In our opinion, said interpretation given by both the authorities is only academic. When the legislature has categorically defined the purposes like religious and charitable and if the assessee is engaged as p....
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....the case of the AO that these two institutions are the private religious trusts. In the case of Yogiraj Charity Trust (supra), the Hon'ble Supreme Court has held that primary or dominant purpose of the trust or institution is to be seen. The identical view has been taken in the case of Andhra Chamber of Commerce (supra) by the Hon'ble Supreme Court that if the primary purpose is advancement of objects of general public utility, it will remain charitable even if an incidental entry into the political domain. In sum and substance, the dominant and primary objects are decisive to decide the nature or character of the institution. 25. In the case of Ghulam Mohidin Trust (supra), by reference two questions of law were referred for the esteemed opinion of the Hon'ble High Court. Both the questions are as under : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right that the trust was not entitled to claim exemption from tax under s. 11 of the IT Act for the income derived from the property held under the trust ? 2. Whether, on the facts and in the circumstances of the case, the objects of the trust providing for promotion of science and technology and....
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....ions of the population had lagged behind in this particular branch of learning and it was to improve that situation that power was conferred on the trustees to grant financial assistance by way of ex gratia grants, etc., to scholars to enable them to prosecute their further studies. This assistance too, as indicated above, is intended to promote science and technology and Muslim theology among the Muslim intelligentsia, which is the main and dominant object of the trust. In such a situation, s. 13(1)(b) of the Act is attracted and the assessee trust is not entitled to exemption in respect of its income under s. 11 of the Act. Clause (a) of s. 13(1) of the Act will also be attracted in this case because the income has been derived by the assessee from property held under trust, which does not enure for the benefit of the public. Moreover, even if we hold that the object is not only promotion of Muslim theology amongst the Muslim intelligentsia, but also promotion of science and technology among them, the income of the trust would not be exempt under s. 11 of the Act because the law is well-settled that if there are several objects of the trust, some of which are charitable and som....
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....ntext in which they are made. 29. The learned Departmental Representative tried to argue that prior to introduction of s. 12AA of the Act, i.e., prior to 1st April, 1997 s. 12A was a mere formality under which the CIT has granted the registration to both these assessees. If we examine the scheme of s. 12A of the Act, which was applicable prior to introduction of s. 12AA, it cannot be said that it was a mere formality. Getting a registration is one of the conditions for claiming the benefits of ss. 11 and 12 of the Act. From the language used by the legislature and scheme of the s. 12A, it will not be wrong to say that proceedings contemplated under s. 12A of the Act are in the nature of quasi judicial proceedings and CIT has to decide whether the applicant trust or institution are eligible to get the benefits of s. 11 or 12 and for deciding the eligibility CIT has to examine the bye laws and objects of the trust. In our opinion, even under s. 12A of the Act, granting registration was not merely empty formality and our view is supported by the decision of the Hon'ble High Court of Gujarat in Hiralal Bhagwati vs. CIT (2000) 161 CTR (Guj) 401 : (2000) 246 ITR 188 (Guj), which is appr....
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....at definition of the phrase "charitable purpose" is inclusive and it covers a wider field than the field covered by the words "religious purpose". Further, in some cases, even a religious activity by a particular sect would be a charitable activity ; for some, supply of fodder to animals and cattle is a religious object, while to others it may be a charitable purpose, according to Hindu religious activity. Similarly, Khairat under the Mohamedan law would be considered to be a religious activity. The said activities may be for a charitable purpose to some. Hence, in many cases, both the purposes may be overlapping. The purposes may have both the elements, charity as well as religious. 9. While dealing with what is "religious" or "charitable purpose" it is observed by the Supreme Court in the case of Ramchandra Shukla vs. Shree Mahadeoji, AIR 1970 SC 458, that there is no line of demarcation in the Hindu system between religion and charity. Indeed, charity is regarded as part of religion. While discussing this aspect, the Supreme Court has further observed as under (at page 464) : "Hindu piety found expression in gifts to idols to religious institutions and for all purposes conside....
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....bject of general public utility. The definition of "religious purpose" under s. 2(n) is as under : "2(n) 'religious purpose' means a purpose connected with religious worship, teaching or service or any performance of religious rites ;" (page 1724). 13. Under s. 6 of the said Act, exemption is given to corporations and institutions established exclusively for a religious or a charitable purpose or both. The Court observed that the word "exclusively" limits the exemption to trusts, endowments or other legal obligations which come solely within charitable or religious purposes. With regard to the definition of "charitable purposes", the Court observed that it follows, though not quite, the wellknown definition of charity given by Lord Macnaghten in Commissioners for Special Purposes of the Income-tax vs. John Frederick Pemsel [1891] AC 531 (HL) who held as under : "No doubt the popular meaning of the words 'charity' and 'charitable' does not coincide with their legal meaning ; and no doubt it is easy enough to collect from the books a few decisions which seem to push the doctrine of the Court to the extreme, and to present a contrast between the two meanings in an aspect almost lud....
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...., religious or charitable, and, secondly, it must be used for Dawat purposes, that is, for purposes which go to benefit the Dawoodi Bohra community. With these two limitations operating on him, even the apparently wide discretion conferred upon the Mullaji Saheb as Dai-ul-Mutlak for the time being is confined within the four corners of these two overriding factors and in view of these two overriding factors it must be held that the properties in question settled by the two deeds of 12th Jan., 1937, were settled upon trust for charitable or religious objects and were, therefore, entitled to exemption under s. 11(1)(a) of the Act of 1961. We must make it clear that the real controversy between the parties is regarding exemption under s. 11(1)(a) of the Act of 1961 and not whether the trusts are wholly religious or wholly charitable. Even if the trusts are partly religious and partly charitable, so long as no part of the income or corpus can be utilised for a purpose which is not either charitable or religious, there is no doubt that the exemption under s. 11(1)(a) will be available to the assessee. In the instant case, we find that, in spite of the apparently wide language of the cla....
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....able or religious institution, any income thereof, if for any period during the previous year- (i) any funds of the trust or institution are invested or deposited after the 28th day of February, 1983, otherwise than in any one or more of the forms or modes specified in sub-s. (5) of s. 11 ; or (ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983, otherwise than in any one or more of the forms or modes specified in sub-s. (5) of s. 11 continue to remain so invested or deposited after the 30th day of November, 1983 ; or (iii) any shares in a company (not being a Government company as defined in s. 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act) are held by the trust or institution after the 30th day of November, 1983." 19. By reading the aforesaid section, it is clear that it carves out an exception to s. 11 or 12 by providing that in those cases which are covered by cls. (a), (b), (c) and (d), the provisions of s. 11 or 12 shall not operate. Broadly speaking, it is divided into three categories and exception is carved out in the case of private religious trust....