AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 1080
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....are to be considered, even when the very basis and very object of creation of the trust was hit by the prohibition provided under Section 13(1) (b) of the I.T. Act.? 3. The brief facts of the case are as under:­ 3.1 The assesse trust has filed application for registration under Section 12A of the Act on 30.09.2005. The trust has been created by virtue of will date 12.10.1973 left by Shri Lalchand Hirachand Jhangiyani of Rajkot. As per provisions of Section 12A(a) of the Act, the assessee trust has to file application for registration within one year of its inception. But the assessee trust filed such application after 31 years. The assessee submitted that the trust has been created out of 'will' of Late Shri Lalchand Hirachand Khangiyani who wanted to establish a school and a maternity hospital. The funds for the said purpose was to be obtained by selling trust's land, property etc. On account of lack of fund, no construction of school premises or medical center could be taken up and no donation could also be obtained for this purpose. Thereafter, the assessee has filed application for condonation of delay praying that the assessee trust may be registered. ....
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....ion)(2000) 293 (AT) 259 (Del). 4. The Tribunal while allowing the appeal preferred by the assessee held as under:­ "I have also gone through the order of the CIT wherein the CIT has refused the registration on the ground that this Trust is created for the benefit of Sindhi Community and if this Trust is registered then it would give benefits to the Sindhi Community only. The Trust is created only for Sindhi Community and the beneficiaries are not public at large as per Section 2(15) of the Act. I have also perused paragraph no.22 of the Trust Deed wherein it has been specifically mentioned that aims and objects were to assist the Sindhi Community in providing education and medical aids to the Sindhi Community and if surplus fund/benefits are there it may be given to non­-sindhi Community also. From the above, I am of the view that this issue in controversy is squarely covered by the decision of the Delhi Bench of the Tribunal in the case of Aggarwal Mitra Mandal Trust vs. Director of Income Tax (Exemption (2007) 293 (AT) 259 (Del) wherein it has been held as under:­ "allowing the appeal, that the objection of the assessee, as indicated in the objects clau....
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....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 the benefit of a particular religious community. In our considered view, the said view may not be the correct interpretation of the provision. 43. From the phraseology in clause (b) of Section 13(1), it could be inferred that the legislature intended to include only the trusts established for charitable purposes. That however does not mean that if a trust is a composite one, that is, one for both religious and charitable purposes, then it would not be covered by clause (b). What is intended to be excluded from being eligible for exemption under Section 11 is a trust for charitable purpose which is established for the benefit of any particular religious community or caste. 44. Such trusts with composite objects would not be expelled out of the purview of Section 13(1)(b) per se. The section requires it to be established that such charitable purpose is not for the benefit of a particular religious community or caste. That is to say, it needs to be examined whether such religious charitable activity ....
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....naging the Trust, shows sympathy and is interested in their treatment. The Tribunal, in our opinion, was right in its conclusion that the dominant purpose of the Trust in the present case was propagation of Jain religion and to serve its followers and any part of agricultural income of the Trust spent in the State of Kerala also could not be treated as allowable item of the expenses." (emphasis supplied) 47. In the present case, the objects of the respondent Trust are based on religious tenets under the Quran according to religious faith of Islam. We have already noticed that the perusal of the objects and purposes of the respondent Trust would clearly demonstrate that the activities of the Trust though both charitable and religious are not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraphs, do not channel the benefits to any community if not the Dawoodi Bohra community and thus, would not fall under the provisions of Section 13(1)(b) of the Act. 48. In that view of the matter, we are of the considered opinion that the respondent Trust is a charitable and religious trust which does not benefit any specific....
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....rial that may be brought on record." 8. In view of the aforesaid position of law, which is applied by the Tribunal to the facts of the case, the relevant objects of the trust deed read as under:­ "Cl.20. Out of above trustee is not willing to work as trustee in the course any post of trustees become vacant, then any gentlemen should be appointed as trustee. Out of above trustees, four trustee should be from Sindhi community and one permanently from the non­-sindhi community. If the trust board is less than 5 trustees, then in any case, one trustee should be from non­-sindhi community (other community). Cl.22 The object of trust is to give help to Sindhi Community for education and medical. The income of my property vested to the trust should be utilized for the above object. It is my wish that a maternity hospital or school should be built in my property admeasuring 600 Sq.Yards. in New Jagnath Plot, Rajkot. For this purpose, I give right to the trust board for any change in property, renovation, seeking loan etc. to run above institution. I also wish that name of institution should be "Lal Kamla High School" or"Lal Kamla Maternity Hospital". Thi....