2006 (12) TMI 123

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....oner of Income-tax, has been affirmed in appeal before the Tribunal, 2. This appeal has been admitted by this court by order dated November 23, 2004, on the following substantial question of law: "Whether the Tribunal was justified in holding that the appellant-trust is not entitled to claim the registration under section 12A of the Income-tax Act, thereby not entering into claim for exemption available under section 11 of the Act?" 3. The appellant claiming to be a trust on the basis of the trust deed (annexure P/1), applied on September ii, 2002, to the Commissioner of Income-tax, Ujjain, in Form No. 10A for registration under section 12A of the Act along with a copy of the registered trust deed and audited accounts for the past years.....

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....person in receipt of the income. The income referred to is the 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. We may pause here to observe that purpose of section 11 is to exempt such income as is held for charitable or religious purposes. 6. Learned counsel for the appellant has submitted that registration requested by the appellant has been declined by the Commissioner of Income-tax only on the g....

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....d in section 13(1) (b) is removed and the authorities below should have considered the case of the appellant-trust in the light of Explanation 2, providing for a special provision in their case. The Tribunal observed in paragraph 8 of its decision that considering the totality of the facts and circumstances of the case, as discussed, it was of the view that aims and object of the trust are also not composite, i.e., religious as well as charitable and the provisions of section 13(1) (b) will be applicable as held by the Tribunal in the case of Barkate Saifiyah Society upheld by the hon'ble Gujarat High Court ([1995] 213 ITR 492) that section 13(1)(b) of the Act applies to trust which were purely for charitable purposes. 7. While it is true ....

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....blished after the commencement of the Act, the income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste, shall be excluded. Reference to the religious community or caste will have to be read ejusdem generis with the purposes for which the exemption is to be granted under section 11 which is charitable or religious purpose. Thus, even though the bar contained in clause (b) of sub-section (1) of section 13 may not be attracted in view of Explanation 2 providing that in the case of scheduled castes, backward classes, scheduled tribes or women and children, it will not be deemed to be created or established for the benefit of a religious community or caste, within the me....