Jamiat Sheikh Abdul Qadir Jilani Talim O Islah e Millat Trust., Saharanpur v. CIT, Muzaffarnagar

ITA 1318/DEL/2010 | misc
Pronouncement Date: 14-01-2011 | Result: Allowed

Appeal Details

RSA Number 131820114 RSA 2010
Bench Delhi
Appeal Number ITA 1318/DEL/2010
Duration Of Justice 9 month(s) 19 day(s)
Appellant Jamiat Sheikh Abdul Qadir Jilani Talim O Islah e Millat Trust., Saharanpur
Respondent CIT, Muzaffarnagar
Appeal Type Income Tax Appeal
Pronouncement Date 14-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 14-01-2011
Date Of Final Hearing 10-01-2011
Next Hearing Date 10-01-2011
Assessment Year misc
Appeal Filed On 25-03-2010
Judgment Text
I.T.A. NO.1318 /DEL/10 1/8 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.1318/DEL/2010 JAMIAT SHEIKH ABDUL CIT QADIR JILANI O ISLAH SAHARANPUR. MILLAT TRUST MOH. QUILA DEOBAND. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABTJ AABTJ AABTJ AABTJ- -- -2413 2413 2413 2413- -- -P PP P APPELLANT BY : SHRI P.S.SETHI C.A. RESPONDENT BY : SHRI A.K. MONGA SR. DR. ORDER PER A.K. GARODIA AM: THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER DATED 21.1.2 010 OF LD CIT MUZAFFARNAGAR PASSED BY HIM U/S 12AA OF THE IN COME TAX ACT 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE LD CIT MUZAFFARNAGAR HAS ERRED I LAW AND ON THE FACTS OF THE CASE IN REJECTING THE APPLICATION OF THE ABOVE TRUST FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT 1961. 2. THE LD CIT MUZAFFARNAGAR OBSERVED IN HIS ORDER DATED 21.01.2010 IN PARA 5 AS PER PARA 3.05 & 4.03 THE OB JECTS OF THE SOCIETY ARE RELIGIOUS DISCRIMINATORY ON THE BASIS OF TH E RELIGION . I.T.A. NO1.318/DEL/10 2/8 AND IT IS FOR THE BENEFIT OF A PARTICULAR RELIGION C OMMUNITY ONLY I.E. MUSLIMS. THIS OBSERVATION IS NOT BASED ON THE FACTS O F THE CASE. THE TRUST IS OF CHARITABLE NATURE FOR THE BENEF IT OF ALL SECTIONS OF SOCIETY WITHOUT ANY DISCRIMINATION OF RELIG ION OR CASE. EQUAL EMPHASIS MUST BE GIVEN TO OTHER CLAUSES OF OBJECT CLAUSE. SUCH AS 3.07. THE ABOVE TRUST AT PRESENT RUN A MAINS TREAM SCHOOL PROVIDING EDUCATION TO ALL SECTION OF SOCIETY. SO THE BENEFIT OF EDUCATION IS NOT RESTRICTED TO MUSLIM STUDEN T ONLY. 3. PARA 4.03 STATES ONLY THE COMPOSITION OF BOARD OF TRUS TEES IT IMPOSE DISTRACTION ONLY IN THE MATTER OF APPOINTMENT TRUSTEE. WHILE SECTION 13 (1)(B) SPOKES ABOUT THE BENEFITS OF TR UST TO TEST THE CHARITABLE NATURE OPEN TO ALL SECTION OF SOCIET Y. SO THE SECTION 13(1)(B) MUST BE APPLIED WITH REFERENCE TO TH E OBJECT OF TRUST AND NOT WITH REFERENCE TO THE COMPOSITION OF TR UST. 4. THE SECOND OBSERVATION OF HON'BLE LD CIT IS WITH RESPEC T TO CLAUSE 3.06. TO GIVE LOANS TO DESERVING PERSONS TO HELP THEM SETTLE IN LIFE ON SUCH TERMS AS THE TRUSTEES MAY THINK EX PEDIENT. THIS OBJECT IS ALSO IN THE NATURE OF HELP TO POOR. GEN ERALLY THE LOANS ARE GIVEN FREE OF INTEREST TO POOR PEOPLE. THIS IS IN THE NATURE OF CHARITABLE WORK AS FOR THE SMALL AMOUNT AND PETTY NEEDS THE POOR PEOPLE CANNOT AFFORD BANKING SYSTEM. SO THE MICRO LEVEL NEEDS ARE CATERED THROUGH THESE TYPES OF C HARITABLE TRUSTS NGO. THE CONDITION WILL NOT BE PREJUDICIAL TO THE NATURE OF CHARITABLE TRUST SO OUR TRUST IS COMPLYING THE TERMS AND CONDITIONS OF SECTION 13 (1)(B) AND OTHER RELEVANT P ROVISIONS OF ACT. SO THE REGISTRATION U/S 12AA OF INCOME TAX ACT 1961 SHOULD BE GRANTED TO US. CHARITABLE NATURE OF OUR TRUST IS E VIDENT AS PER BALANCE SHEETS AND OTHER RECORDS OF THE TRUST. . I.T.A. NO1.318/DEL/10 3/8 5. THE ASSESSEE HAS RESERVE THE RIGHT TO ADD AMEND. RESCIND A NY OF THE GROUNDS OF APPEALS GIVEN ABOVE. 6. ANY OTHER RELIEF WHICH YOUR HONOUR DEEM PROPER BE G RANTED TO THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED A N APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT 1961 ON 22.7.2009. THE TRUST WAS REGISTERED WITH THE REGISTRAR DEOBAND DISTRICT SAHARANPUR ON 9.9.2004. LD CIT HAS REPRODUCED CERTAI N CLAUSES FROM THE BYE LAWS OF THE TRUST I.E. REGARDING MAIN OBJECT AS PER PARA NO.3.01 3.06 & 4.03. ON THE BASIS OF THESE OBJECTS I T HAS BEEN OBSERVED BY THE LD CIT IN THE IMPUGNED ORDER THAT T HE OBJECTS OF THE SOCIETY ARE RELIGIOUS AND ON THE BASIS OF RELIGION AND IT IS FOR THE BENEFIT OF A PARTICULAR COMMUNITY ONLY I.E. MUSLIMS. THEREAFT ER LD CIT HAS REFERRED TO THE PROVISIONS OF SECTION 13 (1)(B) OF THE INCOME TAX ACT 1961. A FINDING IS GIVEN BY HIM THAT THE BYE LAWS HAS INFRINGED THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT AND ON THIS B ASIS HE HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATIO N U/S 12AA OF THE ACT. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEORE US. 4. IT IS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT AS PE R PARA NO.3.01 OF THE OBJECT OF THE TRUST THE OBJECT OF TH E TRUST IS TO WORK FOR DEVELOPMENT OF EDUCATION SCIENCE HEALTH FOR POOR P EOPLE FOR GENERAL AND MUSLIM IN PARTICULAR. IT IS SUBMITTED BY HIM THA T THIS MEANS THAT THE INTENTION OF THE TRUST WAS TO PROVIDE THESE SERVICE S TO ALL SECTIONS OF SOCIETY AND THE INCLUSION OF WORDS MUSLIM IN PARTIC ULAR DOES NOT EFFECT THE DOMAIN OBJECT OF THE TRUST TO HELP AND SER VICE TO THE GENERAL PUBLIC AND THEREFORE LD CIT WAS NOT JUSTIFIED IN REJ ECTING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. IN THIS REGARD RELIANCE WAS PLACED BYHIM ON THE FOLLOWING J UDGMENTS:- A) CIT V. TRUSTEES OF SETH MEGHJI MATHURADAS CHARITY TRUST 37 ITR 419. . I.T.A. NO1.318/DEL/10 4/8 B) CIT V. MOOSA HAJI AHMED 52 ITR 147. C) CWT V. TRUSTEES OF THE JP PARDIWALA CHARITY TRUST 58 I TR 46. D) TRUSTEES OF THE CHARITY FUND 36 ITR 513. E) CIT V. BOARD OF MUTWALLIS TO THE WAKF ESTATE EBRAHIM SOLAIMAN SALEJI 69 ITR 758. 5. REGARDING CLAUSE NO.4.03 OF THE TRUST WHICH SAYS THA T ONLY MUSLIMS WOULD BE APPOINTED AS THE TRUSTEES AND ANY MEMB ER CONVERTING TO ANY OTHER RELIGION WOULD CEASE TO BE A MEMBER OF THE TRUST IT IS SUBMITTED THAT AS PER THIS CLAUSE THERE IS R ESTRICTION ABOUT THE APPOINTING TRUSTEES OF THE TRUST AND IT IS NOT FOR THE BENEFIT GIVEN TO THE PUBLIC FOR TRUST. IT IS ALSO SUBMITTED THAT AS PER SE CTION 13 (1)( B) IF THE BENEFIT OF THE TRUST IS FOR A PARTICULAR RELIGION THEN ONLY SECTION 13(1)(B) WILL COME INTO OPERATION BUT NOT FOR RESTRI CTION ON APPOINTMENT OF TRUSTEES. 6. AS AGAINST THIS LD DR OF THE REVENUE SUPPORTED THE ORDER OF LD CIT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENTS CITED BY LD AR OF THE ASSESSEE. FIRST OF ALL WE REPRODUCE THE THREE CLAUSES OF THE TRUST DEED WHICH ARE REPRODUCED BY LD CIT IN HIS ORDER. 3.01. TO WORK FOR DEVELOPMENT OF EDUCATION SCIENC E HEALTH FOR PEOPLE FOR GENERAL AND MUSLIMS IN PARTICULAR. 3.06. TO GIVE LOANS TO DESERVING PERSONS TO HELP THEM SETTLE IN LIFE ON SUCH TERMS AS THE TRUSTEES MAY THINK EXPEDIENT. . I.T.A. NO1.318/DEL/10 5/8 4.03. ONLY MUSLIMS WOULD BE APPOINTED AS THE TRUSTEES AN Y MEMBER CONVERTING TO ANY OTHER RELIGION WOULD CEASE TO BE A MEMBER OF THE TRUST. 8. ON THE BASIS OF THESE THREE PARAS OF THE TRUST DEED LD CIT HAS COME TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT ARE AATTRACTED. WE THEREFORE REPRODUCE THE PR OVISIONS OF SECTION 13(1)(B) OF THE ACT WHICH ARE AS UNDER:- 13(1)(B):- (1) NOTHING CONTAINED IN SECTION 11. ( OR SECTION 12) SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME O F THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF: (B) IN THE CASE OF A TRUST CHARITABLE PURPOSES OR A CHA RITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMENCEM ENT OF THIS ACT ANY INCOME THEREOF IF THE TRUST OR INSTITUTIO N IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIO US COMMUNITY OR CASTE. 9. FROM THESE PROVISIONS OF SECTION 13(1)(B) IT IS SEEN THAT IF THE TRUST IS CREATED FOR THE BENEFIT OF A PARTICULAR REL IGIOUS/COMMUNITY OR CASTE THEN SUCH TRUST IS NOT ELIGIBLE FOR EXEMPTION U/ S 11 OR SECTION 12 OF THE ACT. THIS GOES TO SHOW THAT ONLY IF THERE IS RE STRICTION ON THE APPOINTMENT OF THE TRUSTEES FROM A PARTICULAR COMMUNI TY ONLY THE PROVISIONS OF SECTION 13(10(B) WILL NOT COME INTO OPER ATION UNLESS IT AMOUNTS TO RESTRICT THE BENEFIT OF THE TRUST TO ANY PA RTICULAR RELIGIOUS COMMUNITY OR CASTE. AS PER CLAUSE 3.01 OF THE TRUST DEE D REPRODUCED ABOVE THE BENEFIT ARE TO BE GIVEN FOR PEOPLE IN GE NERAL AND IN PARTICULAR MUSLIMS AND HENCE IT CANNOT BE SAID THAT T HE BENEFIT OF THE TRUST IS RESTRICTED FOR A PARTICULAR RELIGIOUS COMMUNI TY. SIMILARLY AS PER CLAUSE 3.06 REPRODUCED ABOVE THERE IS NO SUCH RESTRICT ION THAT THE . I.T.A. NO1.318/DEL/10 6/8 BENEFIT IS RESTRICTED TO A PARTICULAR COMMUNITY. CLAU SE NO.4.06 OF THE TRUST DEED AS REPRODUCED ABOVE IS NOT REGARDING THE B ENEFIT OF THE TRUST BUT IT IS REGARDING APPOINTMENT OF THE TRUSTEES AND AS PER THIS CLAUSE OF THE TRUST DEED ONLY MUSLIMS CAN BE APPOINTE D AS A TRUSTEE AND EVEN AFTER APPOINTMENT IF TRUSTEE IS CONVERTING TO ANY OTHER RELIGION HE WOULD CEASE TO BE A MEMBER OF THE TRUST. THIS CLAUSE OF THE TRUST DEED IS ALSO NOT PUTTING ANY RESTRICTION REGARDIN G BENEFIT TO A PARTICULAR RELIGIOUS OR COMMUNITY AND HENCE WE ARE NOT IN AGREEMENT WITH LD CIT THAT ON THE BASIS OF THESE THREE CLAUSES OF THE TRUST DEED THE PROVISIONS OF SECTION 13(1)(B) ARE ATTRACTED. NOW WE CONSIDER THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN T HE CASE OF CIT V. TRUSTEE OF SETH MEGHJI MATHURADAS (SUPRA). IN THIS CASE AS PER THE PROVISIONS OF THE TRUST DEED THE TRUSTEES WOULD UTILIZE EVEN WHOLE OF THE INCOME FOR THE BENEFIT OF THE MEMBERS OF THE COM MUNITY OF THE SETTLER AND PARTICULARLY FOR THE BENEFIT OF THE MEMB ERS OF THE FAMILY AND RELATIVES OF THE SETTLER. UNDER THESE FACTS HON'B LE BOMBAY HIGH COURT HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND THE RELEVANT PARA OF THIS JUDGMENT OF HON'BLE BOMBAY HIGH COURT I S REPRODUCED BELOW:- IN THIS REFERENCE MR. JOSHI WHO APPEARS ON BEHALF OF THE DEPARTMENT HAS FAIRLY INVITED OUR ATTENTION TO A REC ENT JUDGMENT OF THEIR LORDSHIPS OF THE SUPREME COURT IN CIVIL APP EAL NO.396 OF 1957. TRUSTEE OF THE CHARITY FUND V. CIT DECIDED ON 5 TH MAY 19959. BEFORE WE REFER TO THAT JUDGMENT IT MAY BE P ERTINENT TO OBSERVE THAT BY CLAUSE 1(D) OF THE TRUST DEED AFTER APPLYING THE INCOME TO CERTAIN PURPOSES THE TRUSTEES WERE DIRECTED TO UTILIZE THE BALANCE FOR PURPOSES WHICH WERE CHARITABLE IN SUCH SHARES AND PROPORTIONATE AS THE TRUSTEES IN THEIR ABSOLUTE AN UNFETTERED DISCRETION THOUGH FIT AND SUCH BALANCE WAS TO BE UTILI ZED FOR ANY ONE OR MORE OF THE FIVE PURPOSES SPECIFIED THEREIN EVI DENTLY . I.T.A. NO1.318/DEL/10 7/8 THERE WAS A DOMINANT CHARITABLE INTENTION EXPRESSED BY THE SETTLOR. THAT THE FIVE PURPOSES WHICH ARE SET OUT IN TH E DEED OF TRUST ARE CHARITABLE IN CHARACTER CANNOT IN OUR JUD GMENT BE DISPUTED AND EVEN BEFORE THE TAXING AUTHORITIES AND T HE TRIBUNAL THE ONLY CONTENTION SOUGHT TO BE RAISED WAS THAT THE DOMINANT CHARITABLE INTENTION WAS AFFECTED BY REASONS OF THE OB LIGATION WHICH WAS CAST UPON THE TRUSTEES TO PREFER THE MEMBERS O F THE COMMUNITY OF THE SETTLER AND IN PARTICULAR THE MEMBE RS OF THE FAMILY AND RELATIVES OF THE SETTLER TO OTHERS. IN OUR VIEW THIS PROVISO ONLY REQUIRES THE TRUSTEES IN UTILIZING THE FU NDS FOR CHARITABLE PURPOSES TO PREFER CERTAIN BENEFICIARIES (A PPLICATION OF THE FUNDS TO WHOM BEING ALSO FOR A CHARITABLE PURPOSE) ON THE GROUND THAT THEY BELONGED TO THE COMMUNITY OF THE SE TTLER AND IN PARTICULAR BECAUSE THEY WERE MEMBERS OF THE FAMILY OR RELATIVES OF THE SETTLER IT CANNOT BE SAID THAT BY REASON OF THI S PROVISO THE DOMINANT CHARITABLE INTENTION EXPRESSED BY THE SETTLE R WHICH AUTHORIZED THE TRUSTEES TO SELECT THAT THE QUESTION OF PREFERENCE AROSE. 10. HON'BLE BOMBAY HIGH COURT HAS FOLLOWED THE JUDGM ENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF TRUSTEES OF THE CHA RITY FUND V. CIT REPORTED IN 36 ITR 513 (SC). 11. SINCE IN THE PRESENT CASE WE HAVE SEEN THAT THE RE IS NO PROVISION IN THE TRUST DEED RESTRICTING THE BENEFITS OF THE TRUST TO ANY PARTICULAR RELIGIOUS COMMUNITY AND AT THE BEST THERE MAY BE SOME PREFERENCE IN FAVOUR OF MUSLIMS OUT OF ELIGIBLE PERSON S FOR BENEFITS IT CANNOT BE SAID THAT THE TRUST HAS BEEN CREATED OR ESTAB LISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CAST E. HENCE THE PROVISIONS OF SECTION 13 (1)(B) ARE NOT ATTRACTED. THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CI T V. TRUSTEES OF . I.T.A. NO1.318/DEL/10 8/8 SETH MEGHJI MATHURADAS (SUPRA) BECOMES DIRECTLY APPLIC ABLE AND RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE BOM BAY HIGH COURT WE HOLD THAT THE TRUST IS ELIGIBLE FOR REGISTRATION U/S 12 AA OF THE INCOME TAX ACT 1961. ACCORDINGLY WE DIRECT THE LD CIT M UZAFFARNAGAR TO GRANT REGISTRATION TO THE ASSESSEE TRUST U/S 12AA OF THE A CT. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOW ED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF JANUARY 2011. SD/- SD/- (I.P. BANSAL) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 14.1.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI).