SAMRAS FOUNDATION CHARITABLE TRUST, MUMBAI v. ITO DIT (E), MUMBAI

ITA 4682/MUM/2009 | misc
Pronouncement Date: 30-07-2010 | Result: Allowed

Appeal Details

RSA Number 468219914 RSA 2009
Bench Mumbai
Appeal Number ITA 4682/MUM/2009
Duration Of Justice 11 month(s) 19 day(s)
Appellant SAMRAS FOUNDATION CHARITABLE TRUST, MUMBAI
Respondent ITO DIT (E), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 30-07-2010
Date Of Final Hearing 20-07-2010
Next Hearing Date 20-07-2010
Assessment Year misc
Appeal Filed On 10-08-2009
Judgment Text
1 ITA NO. 4682/MUM/2009 SAMRAS FOUNDATION CHARITABLE TRUST IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI R S PADVEKAR JM & SHRI RAJENDRA SINGH AM ITA NO. 4682/MUM/2009 SAMRAS FOUNDATION CHARITABLE TRUST 2 DHANRAJ NIWAS MAIN KASTURBA ROAD BORIVALI (E) MUMBAI 66 VS THE INCOME TAX OFFICER DIT(E) MUMBAI (APPELLANT) (RESPONDENT) PAN AATSO34OM ASSESSEE BY: SHRI SATISH MODY REVENUE BY: SHRI SUMEET KUMAR O R D E R PER R S PADVEKAR: IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE I MPUGNED ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTION) MUMBAI P ASSED U/S 12AA OF THE I T ACT DATED 23.7.2009 REFUSING TO GRANT REGISTRATI ON FOR THE PURPOSE OF SEC. 11 OF THE I T ACT. 2 WE HAVE HEARD THE PARTIES. AFTER EXAMINING THE O BJECTS OF THE TRUST THE LD DIT(EXEMPTION) FOUND THAT THE ASSESSEES TRU ST HAS MIXED OBJECTS PARTLY RELIGIOUS AND PARTLY CHARITABLE. IN THE O PINION OF THE DIT(EXEMPTION) AS PER THE LANGUAGE USED IN SEC. 11 THE TRUST OR INSTITUTION SHOULD HAVE EITHER ONLY RELIGIOUS OBJECT OR ONLY CH ARITABLE OBJECTS AND IF THE ASSESSEE TRUST OR INSTITUTION IS HAVING MIXED OBJE CTS THEN IT IS NOT QUALIFIED FOR GETTING REGISTRATION U/S 12A FOR THE PURPOSE OF SEC. 11. THE OPERATIVE 2 ITA NO. 4682/MUM/2009 SAMRAS FOUNDATION CHARITABLE TRUST PART OF THE FINDINGS OF THE DIT (EXEMPTION) GIVEN I N PARA 9 OF HIS ORDER ARE AS UNDER: 9. AS REGARDS TO THE POINT THAT WHETHER THIS ISSUE CAN BE TAKEN UP AT THE STAGE OF REGISTRATION PROCEEDINGS IT IS POINTED OUT THAT WITH THE INTRODUCTION OF SECTION 12AA W.E.F 01.4.1997 THE RE QUIREMENTS FOR REGISTRATION HAVE CHANGED. THE DECISION RELIED UPO N BY THE ASSESSEE IN THE CASE OF CHRIST EVANGELISTIC ASSOCIATION (246 IT R 532) IS IN RESPECT OF OLD PROVISION. SECTION 12AA (1)(A) PROVIDES THAT TH E COMMISSIONER AFTER SATISFYING HIMSELF ABOUT THE OBJECT OF THE TRUST O R INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES HE SHALL PASS ORDER FOR REGISTRATION. IT CLEARLY SHOWS THAT THE COMMISSIONER SHOULD EXAMINE THE OBJECT OF THE TRUST. WHAT IS TO BE EXAMINED HAS NOT BEEN MENTIONE D. FURTHER SECTION 12A HAS THE CAPTION CONDITION FOR APPLICATION OF S EC. 11 AND 12. THE CAPTION HAS ALSO BEEN INSERTED BY THE FINANCE ACT 2007 W.E.F 1.6.2007. SECTION 12A PROVIDES THAT THE PROVISIONS OF SEC.11 AND SEC.12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TRUST OR INS TITUTION UNLESS THE CONDITION OF REGISTRATIONS FULFILLED. A COMBINED RE ADING OF SEC.12A AND 12AA SHOWS THAT THE COMMISSIONER HAS TO EXAMINE ABO UT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES IN RESPECT OF SEC.12A ALSO I.E. AS TO THE CONDITIONS FOR APPLICAB ILITY OF SEC.12 AND SE.12. IT IS IMPORTANT TO POINT OUT THAT HONBLE M ADHYA PRADESH HIGH COURT IN THE CASE OF SHRI DHAKAD SAMAJ DHARMASHALA BHAWAN TRUST VS CIT REPORTED AT 302 ITR 321 HAS HELD SINCE SECTIO N 11 OF THE INCOME TAX ACT 1961 PROVIDES FOR EXEMPTION TO THE TRUST REGISTERED UNDER THE ACT IT IS PRIMARILY THE PURPOSE OF SEC.11 THAT WIL L DOMINATE OR PREVAIL OVER OTHER CONSIDERATION. IT CLEARLY SHOWS THAT IN THE REGISTRATION PROCEEDING U/S 12AA OF THE ACT WHAT IS TO BE ANALY SED IN RESPECT OF THE OBJECTS OF THE TRUST IS THAT IT SHOULD BE SUCH THAT SECTION 11 IS ALLOWABLE. AS PER SEC.11 THERE COULD BE TWO KINDS OF TRUSTS W HICH COULD CLAIM EXEMPTION; IT COULD EITHER BE RELIGIOUS OR CHARITAB LE. IT IS BECAUSE IN SEC.11 OF THE ACT THE WORD USED IS CHARITABLE OR RE LIGIOUS PURPOSE. HENCE THE MIXED OBJECTS CONTAINING CHARITABLE AND RELIGIOUS OBJECTS CANNOT BE GIVEN REGISTRATION. 3 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO W THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE ITAT COCHIN BENCH 3 ITA NO. 4682/MUM/2009 SAMRAS FOUNDATION CHARITABLE TRUST IN THE CASE OF CALICUT ISLAMIC CULTURAL SOCIETY VS ACIT KOZHIKODE (2009) 28 SOT 148 (COCHIN). WE HAVE HEARD THE LD DR ALSO. 4 IDENTICAL ISSUE HAS BEEN DECIDED BY THE COCHIN BE NCH OF THE TRIBUNAL IN THE CASE OF CALICUT ISLAMIC CULTURAL SOCIETY ( SUPRA ) BY INTERPRETING THE LANGUAGE USED IN SEC. 11(1)(A) OF THE ACT AND AFTER CONSIDERING ALSO THE DECISION OF THE HONBLE HIGH COURT OF J&K IN THE CA SE OF GHULAM MOHIDIN TRUST VS CIT (248 ITR 587) HELD AS UNDER: 21.THE ABOVE OBSERVATIONS ARE QUOTED IN N.S. BINDR AS INTERPRETATION OF STATUTES (NINTH EDITION PAGE NO. 15). IN SHORT TH E ENGLISH LANGUAGE CANNOT BE TREATED AS INSTRUMENT OF MATHEMATICS PRECISION. NOW THE QUESTION IS CAN IT BE SAID THAT IT IS THE INTENTION OF THE LEGISLATURE AS PER THE LANGUAGE USED IN CL. (A) TO S. 11(1) OF THE ACT THAT SAVE THE PROVISIONS OF SS. 60 TO 63 OF THE ACT FOR CLAIMING THE INCOME EXEMPT WHICH IS DERIVED FROM TH E PROPERTY HELD UNDER THE TRUST WHICH MUST WHOLLY FOR THE CHARITABLE OR WHOLL Y RELIGIOUS PURPOSES. IF THE INSTITUTION OR TRUST ARE ENGAGED INTO THE MIXED OBJ ECT WHICH ARE PARTLY RELIGIOUS AND PARTLY CHARITABLE OR AS PER THE CASE OF THE AO AS WELL AS THE CIT(A) THE INSTITUTION OR TRUST IS HAVING THE MIXED ACTIVITIES OF CHARITY AS WELL AS RELIGION THEN THE EXEMPTION CANNOT BE CLAIMED. THE ARGUMENT OF THE LEARNED SENIOR COUNSEL IS THAT THERE IS A VERY THIN LINE OF DEMARC ATION BETWEEN THE CHARITY AND RELIGION. EVERY RELIGION IS HAVING THE PRINCIPLES O F THE CHARITY AND MANY CHARITABLE PURPOSES MAY NOT HAVE THE PRINCIPLES OF RELIGION THOUGH THE RELIGION IS THE QUESTION OF FAITH. IT IS TO BE MENTIONED HER E THAT 'CHARITABLE PURPOSE' IN S. 2(15) OF THE ACT MAKING THE INCLUSIVE DEFINITION AND TRYING TO MAKE THE CHARITABLE PURPOSE MORE ELABORATE BUT THERE IS NO D EFINITION OF THE 'RELIGIOUS PURPOSE' UNDER THE ACT. NO DOUBT THE LAW RECOGNISES NO PURPOSE AS CHARITABLE UNLESS IT IS OF THE PUBLIC CHARACTER. IN SHORT IT SHOULD BE FOR THE BENEFIT OF THE COMMUNITY OR THE SECTION OF THE COMMUNITY AS HELD I N THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION (SUPRA) BY THE HONBLE SUPRE ME COURT. AS FAR AS RELIGIOUS PURPOSE IS CONCERNED MEANS RELIGIOUS PURP OSE WITHIN THE MEANING OF PERSONAL LAW APPLICABLE TO THE ASSESSEE AS HELD BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF BAI HIRBAI RAHIM ALOO PAROO & KESARBAI DHARAMSEY KAKOO CHARITABLE & RELIGIOUS TRUST VS. CIT (1968) 6 8 ITR 821 (BOM). THERE ARE INNUMERABLE EXAMPLES WHERE THERE WILL BE VERY THIN LINE OF DEMARCATION BETWEEN THE PURPOSES TO IDENTIFY WHICH ARE THE CHAR ITABLE 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 UND ER S. 13 OF THE ACT ARE APPLICABLE TO BOTH THESE ASSESSEES AS PER THE INTER PRETATION 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 HEL D UNDER THE TRUST WHOLLY 4 ITA NO. 4682/MUM/2009 SAMRAS FOUNDATION CHARITABLE TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES AND THE INCOME UNDER CONSIDERATION. THE INTERPRETATION GIVEN BY THE AO AS WELL AS BY THE CI T(A) IS THAT THE PURPOSE SHOULD BE WHOLLY CHARITABLE OR WHOLLY RELIGIOUS. WE ARE AFRAID WHETHER SUCH INTERPRETATION CAN BE ACCEPTED. IN OUR OPINION SAI D INTERPRETATION GIVEN BY BOTH THE AUTHORITIES IS ONLY ACADEMIC. WHEN THE LEG ISLATURE HAS CATEGORICALLY DEFINED THE PURPOSES LIKE RELIGIOUS AND CHARITABLE AND IF THE ASSESSEE IS ENGAGED AS PER THEIR OBJECTS IN MIXED ACTIVITIES W HICH ARE PARTLY CHARITABLE AND PARTLY RELIGIOUS IT CANNOT BE SAID THAT S. 11( 1)(A) OF THE ACT DOES NOT CONTEMPLATE SUCH SITUATION. ................................................... ........................................ 26. IN OUR OPINION BOTH THE AUTHORITIES HAVE MISIN TERPRETED THE JUDGMENT IN THE CASE OF GHULAM MOHIDIN TRUST (SUPRA). IN THAT CASE IT WAS HELD THAT AS PER THE OBJECTS OF THE TRUST IT WAS PARTLY CHARITAB LE AND PARTLY RELIGIOUS BUT AS FAR AS THE PRESENT THESE TWO CASES ARE CONCERNED N OWHERE IT IS THE CASE OF THE AO THAT IN BOTH THESE CASES THE OBJECTS OF THE ASSE SSEE ARE PARTLY NON- CHARITABLE OR PARTLY NON-RELIGIOUS. FURTHER IN THA T CASE THERE WAS NO PROPER APPORTIONMENT OF THE INCOME BETWEEN THE TWO OBJECTS OF THE TRUST AS IT WAS LEFT TO THE EXCLUSIVE DISCRETION OF THE TRUSTEES TO SPEN D WHATEVER THEY LIKE. IN SHORT IT WAS AN ARBITRARY DISCRETION GIVEN TO THE TRUSTEE S TO APPLY THE INCOME FOR THE NON-CHARITABLE AND NON-RELIGIOUS PURPOSES. MOREOVER IN THAT CASE IT WAS HELD THAT S. 13(1)(B) OF THE ACT IS ATTRACTED AS THE TRU ST WAS INTENDED TO PROMOTE SCIENCE AND TECHNOLOGY AND MUSLIM THEOLOGY AMONG MU SLIM INTELLIGENTSIA WHICH WAS THE MAIN AND DOMINANT OBJECT OF THE TRUST . IN THE PRESENT TWO CASES IT IS NOT THE CASE OF THE AO. IN OUR OPINION THE P RINCIPLES LAID DOWN BY THE HONBLE HIGH COURT OF JAMMU & KASHMIR HAS NO APPLIC ATION AS FAR AS THE FACTS OF THE PRESENT THESE TWO CASES ARE CONCERNED. 27. WE MAY MENTION HERE THAT THE AO HIMSELF HAS ACC EPTED THAT AS PER THE BYE LAWS AND REGULATIONS OF THE ASSESSEES EVEN THE PERSONS HAVING FAITHS OF OTHER RELIGIONS WERE GIVEN BENEFITS. NOWHERE IT IS THE CASE OF THE AO THAT THE INCOME IS APPLIED FOR PRIVATE RELIGIOUS PURPOSES NO T FOR THE BENEFIT OF THE PUBLIC OR TRUST IS CREATED FOR THE BENEFIT OF ONLY MUSLIM COMMUNITIES. 28. IT IS WELL-SETTLED PRINCIPLE OF THE BINDING FOR CE OF THE PRECEDENT THAT IT IS APPLICABLE AS FAR AS THE FACTS OF THAT PARTICULAR C ASE ARE CONCERNED. EVEN IF THERE ARE GENERAL OBSERVATIONS THEN THE SAME ARE TO BE INTERPRETED IN THE CONTEXT IN WHICH THEY ARE MADE. 29. THE LEARNED DEPARTMENTAL REPRESENTATIVE TRIED T O 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 TH E ACT WHICH WAS 5 ITA NO. 4682/MUM/2009 SAMRAS FOUNDATION CHARITABLE TRUST APPLICABLE PRIOR TO INTRODUCTION OF S. 12AA IT CAN NOT BE SAID THAT IT WAS A MERE FORMALITY. GETTING A REGISTRATION IS ONE OF THE CON DITIONS FOR CLAIMING THE BENEFITS OF SS. 11 AND 12 OF THE ACT. FROM THE LANG UAGE USED BY THE LEGISLATURE AND SCHEME OF THE S. 12A IT WILL NOT BE WRONG TO S AY THAT PROCEEDINGS CONTEMPLATED UNDER S. 12A OF THE ACT ARE IN THE NAT URE OF QUASI JUDICIAL PROCEEDINGS AND CIT HAS TO DECIDE WHETHER THE APPLI CANT 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 TRUS T. 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 HO NBLE HIGH COURT OF GUJARAT IN HIRALAL BHAGWATI VS. CIT (2000) 161 CTR (GUJ) 40 1 : (2000) 246 ITR 188 (GUJ) WHICH IS APPROVED BY THE HONBLE SUPREME COU RT IN ASSTT. CIT VS. SURAT CITY GYMKHANA (2008) 216 CTR (SC) 23 : (2008) 170 T AXMAN 612 (SC). 30. FOR THE REASONS STATED ABOVE WE ARE OF THE OPI NION THAT BOTH THESE ASSESSEES ARE ELIGIBLE TO CLAIM THE EXEMPTION UNDER S. 11 OF THE ACT. WE THEREFORE CANCEL THE ORDER OF THE CIT(A) AND DIRECT THE AO TO GIVE BENEFITS OF S. 11 TO BOTH THESE ASSESSEES BY TREATING THEIR INCOME AS EXEMPT. AS THE FACTS OF THIS CASE ARE IDENTICAL WITH THE FA CT IN THE CASE OF CALICUT ISLAMIC CULTURAL SOCIETY ( SUPRA ) FOLLOWING THE DECISION OF THE TRIBUNAL WE DIRECT THE DIT(EXEMPTION) TO GRANT REGISTRATION TO THE ASSESSEE WITHIN SIXTY DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. 5 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED ON THE 30 TH DAY OF JULY 2010. SD/- SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER (R S PADVEKAR ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH JULY 2010 RAJ* 6 ITA NO. 4682/MUM/2009 SAMRAS FOUNDATION CHARITABLE TRUST COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI