TaxTMI 
TaxTMI 
2026 (7) TMI 1802
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....or the benefit of any particular religious community or caste. Since appellant is a religious-cum-charitable trust and does not work for any specific religious community, but for providing the teachings of Islam to the general public as a whole, hence provisions of section 13(1)(b) of the Act are inapplicable, accordingly, rejection of application for aforesaid reason is illegal and without jurisdiction. Further, evaluation under the provisions of section 13(1)(b) of the Act is not applicable at the time of grant of registration under section 12A r.w. section 12AB of the Act, but is applicable at the time of determination of income of a religious / charitable trust, in collaboration with section 11 and section 12 of the Act. 2. That Ld. CIT(E) has not mentioned single observation in respect of wrongful application of income by the appellant, i.e. activities of the trust were in accordance with the objects of the trust. None of the expenses incurred in fulfilling the objects of the appellant was doubted, hence Ld. CIT(E) is not justified to mention in the order that activities of the trust seem to be suspicious and non-genuine. Accordingly, rejection of application for afor....
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....substantial donations from public and other trusts and that huge expenditure had been incurred under various heads including travelling expenses, conveyance expenses, salary expenses, legal and professional charges and expenditure relating to Madrasas and associated activities. The Ld. CIT(E) further referred to certain bank transactions and receipts received by the assessee and formed a view that the activities of the assessee appeared to be confined towards propagation of a particular religion/community. The Ld. CIT(E), placing reliance upon the provisions of section 13(1)(b) of the Act and certain judicial precedents, concluded that the assessee was not eligible for registration under section 12AB of the Act and accordingly rejected the application filed by the assessee. 6. Against the order of the Ld. CIT(E) the assessee preferred an appeal before the Tribunal. 7. Before us, the Ld. AR for the assessee vehemently assailed the findings recorded by the Ld. CIT(E). The Ld. AR submitted that the assessee had furnished complete details before the Ld. CIT(E), including audited financial statements, income and expenditure accounts, details of activities, documentary evidence, ph....
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.... 13. To arrange meals and medical facilities by arranging and sponsoring such activities and educate people of cleanliness and to promote cleanliness in the society. 14. Managing and serving humans during natural disasters like floods, Earthquake, Draught. 15. To organize tree plantation activities and inculcates the sense of response the young students and people across India. 16. To support the deserving families for meeting their basic necessities relating to food, medical, hospitalization, temporary shelter provisions, wedding arrangements etc. 17. To make arrangements for holding Lectures, Seminars, Debates and Symposium on different Islamic topics." 9. Thereafter, the Ld. AR has drawn our attention to page 30 of the Paper Book where in clause (18), it was mentioned as under : "18. For achieving the above objects, the Trust shall do all such lawful acts and things as are incidental or conducive to the attainment of the above objects of the company including: - a) To receive voluntary contributions from any person or persons from India or outside India, after complying with the statutory formalities, by way of dona....
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....l and regulatory regime. j) The Trust will not carry out any activities with the intention of earning profit and will perform with service motive only." 10. Thereafter, the Ld. AR has drawn our attention to page 86 of the Paper Book and he has more particularly drawn our attention to third row wherein the activities were mentioned as 'Religious' and against Column No.5, 'Aims and Objects' it was mentioned as 'Religious Education'. The Ld. AR had drawn our attention to page 139 and 140 which is the note of tangible outcomes/social impart of the activities of the assessee, which are as under : --Note on Tangible Outcomes / Social Impact of Religious Expenditure Name of Trust: DAWAT-E-ISLAMI-HIND (JAMMU) PAN: AADTD5014G Subject: Tangible Outcomes and Social Impact Achieved from Religious Activities Our Trust is a religious organization dedicated to transforming lives through Islamic education, moral reformation, and social upliftment. The funds and donations received are wholly applied towards activities that result in visible, positive change in individuals and society. The tangible outcomes and impact of our Religious expenditure inclu....
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....rs of ethics, social behavior, and faith-based reforms. Conclusion The expenditure incurred by the Trust is fully dedicated to religious, educational, social, and moral upliftment of society. The outcomes are tangible, visible, and measurable through the transformation of individuals into responsible, spiritual, and ethical citizens." 11. The Ld. AR has drawn our attention to page 117 and 130 of the Paper Book wherein the 'Financial Income & Expenditure Account' for the year ending as on 31.03.2023 is available. It was submitted that the anonymous donation received by the assessee was Rs. 39,55,745/-, the donation from other Trusts was Rs. 1,06,18,000/-, and the general donation was Rs. 1,82,56,242/- and the bank interest was Rs. 88,909/-. On the expenditure side, as against the 'Salary Expenses', an amount of Rs.1,98,88,577/- was mentioned and 'Building Rent' was mentioned as Rs.13,21,666/-. 12. At the stage, the Bench has enquired from the Ld. AR as to whether the aspect of the expenses incurred by the assessee and the mode of payment made by the assessee as salary to its staff were verified by the Ld. CIT (E) or not ? 13. In reply to that, Ld. AR has f....
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....e conditions of registration, within a period of thirty days from the date of the said adoption or modification; (vi) in any other case, where activities of the trust or institution have - (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought; (B) commenced and no income or part thereof of the said trustor institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of Section 10, or Section 11 or Section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities and such trust or institution is registered under Section 12AB;] 15. The Ld. AR has also drawn our attention to the procedure being followed for fresh registration u/s 12AB of the Act and our at was drawn to Section 12AB of the Act which are to the following effect : 12AB. [Procedure for fresh registration. 12AB.(1)The Principal Commissioner or Commissioner, on receipt of an application made u....
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....ts/Institutions, as are material for purposes of achieving its objects. It was submitted that in the impugned order, the Ld. CIT (E) has merely referred to various violations and in para 3.3, 3.4 and 3.5, having reference to the various incomes and expenditures, has mentioned in paragraph 4 that the assessee has received the donation of Rs.56,18,000/- from Dawat-E-Islami Hind and said Dawat-E-Islami Hind has received donations from individuals to the amount of Rs.100/- to Rs.500/- and therefore, the Ld. CIT (E) has concluded that the activities of the Trust seems to be suspicious and non-genuine. Further, in para 4.1, 4.2 and 4.2.1, the Ld. CIT (E) has concluded that the Trust is created for implementation of teachings of the Islam only which is in violation of Section 13(1)(a)(b) of the Act and therefore, the Trust is not entitled to any registration and the application for registration has been rejected. 17. The Ld. AR further submitted that the provisions of section 13(1)(b) of the Act pertain to denial of exemption at the stage of assessment and the same could not be invoked as the sole basis for rejection of registration under section 12AB of the Act. It was argued that the....
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.... a careful perusal of the impugned order, it emerges that although the assessee had furnished detailed explanations supported by documentary evidence in response to the queries raised during the course of proceedings, the Ld. CIT(E) has not recorded any clear, specific and categorical finding demonstrating how the assessee had committed any "specified violation" within the meaning of section 12AB(4) of the Act read with the Explanation appended thereto. We further find that while making various observations regarding the receipts, donations and expenditure reflected in the accounts of the assessee, no definitive finding has been recorded as to whether any of such transactions resulted in violation of any provision of the Income-tax Act, 1961, or of any other law for the time being in force. In the absence of such findings, the conclusion reached by the Ld. CIT(E) lacks the requisite statutory foundation contemplated under the provisions governing cancellation or refusal of registration under section 12AB of the Act. 21. We also find considerable force in the contention advanced by the Ld. AR that the powers exercisable under section 12AB of the Act are circumscribed by the statu....
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....side and the matter is restored to his file for de novo adjudication in accordance with law. 24. While undertaking the fresh examination, the Ld. CIT(E) shall, inter alia, carry out the following inquiries and record specific findings thereon: (a) The financial statements of the assessee trust, the nature and character of its receipts, and the source, genuineness and circumstances relating to donations received from other trust(s)/institution(s); (b) The aims and objects of the donor trust(s) and ascertain whether the objects pursued by the assessee trust are identical, similar, ancillary or otherwise connected with those of the donor trust(s); (c) The application and utilization of funds by the assessee trust, the nature of activities actually carried out, and whether any expenditure has been incurred in contravention of any provision of the Income-tax Act, 1961, including but not limited to Sections 36, 37 and 40A of the Act. The Ld. CIT(E) shall further examine whether any violation of Section 13 of the Act is attracted on the facts of the case. Such examination assumes significance in view of the fact that, out of the total expenditure of Rs.3,29,1....