IT : Even if benefit of trust is restricted to members of a particular religion, who are members of a particular church, it would be a charitable institution under section 2(15), eligible for registration under section 12A
■■■
[2013] 34 taxmann.com 30 (Cochin - Trib.)
IN THE ITAT COCHIN BENCH
Fathima Matha Charitable Trust
v.
Commissioner of Income-tax, Kottayam*
N.R.S. GANESAN, JUDICIAL MEMBER
AND B.R. BASKARAN, ACCOUNTANT MEMBER
AND B.R. BASKARAN, ACCOUNTANT MEMBER
IT APPEAL NO. 30 (COCH.) OF 2012
MARCH 28, 2013
Section 2(15), read with sections 12A and 12AA, of the Income-tax Act, 1961 - Charitable purpose [Public, connotation of] - Whether for registration under section 12A, it is not necessary that object of trust should be to benefit whole of mankind or all persons in a country or State and it is sufficient if intention is to be benefit a section of public as distinguished from a specified individual - Held, yes - Whether, therefore, where benefit of assessee-trust was restricted to a particular religion, who were members of a particular church, trust would be a charitable institution under section 2(15), eligible for registration under section 12A - Held, yes - Whether, where assessee trust did not appear to do any charitable activity as it collected money from members of church, deposited it in bank and refunded it to lady members along with interest at time of marriage and details of collection and meeting of day-to-day expenses were not available, further examination was required before granting registration under section 12A - Held, yes [Para 10] [Matter remanded]
FACTS
| ■ | The assessee-trust sought registration under section 12AA. Since one of the objects of the trust restricted the benefits to members of a particular religion, that too to the members of a particular church, the Administrative Commissioner held that the activity of the trust was not of charitable nature and, thus, denied registration under section 12AA. | |
| ■ | On appeal, the assessee contended that though the assistance on occasion of marriage of girls was restricted only to the members of the parish/church, other charitable activities were extended to entire general public. |
HELD
| ■ | Admittedly, one of the objects of the assessee trust restricts the utilization of the funds to provide assistance to girls belonging to the Parish on the occasion of their marriage. As clarified by the assessee only members of the Parish are eligible for assistance on the occasion of marriage. The question that arises for consideration is where the benefit of the trust was restricted to a particular religion, who were members of a particular church, whether the institution would be a charitable institution within the meaning of section 2(15). [Para 5] | |
| ■ | Section 12AA empowers the Commissioner to grant or refuse registration after making necessary enquiry to satisfy about the genuineness of the activity of the trust or institution. Section 12AA(1)(a) also empowers the Commissioner to make such other enquiry as he may deem necessary to find out the genuineness of the activity of the trust or institution. In the present case, the Administrative Commissioner, in exercise of his powers found that the object of the trust was to provide assistance on the occasion of marriage of particular church members and not to the entire section of the people. Accordingly, the Commissioner doubted the genuineness of the activities of the trust. [Para 6] | |
| ■ | In the case before us, the judgment of the Apex Court in the case of Ahmedabad Rana Cast Association v. CIT [1971] 82 ITR 704 (SC) and the Allahabad High Court in the case of CIT v. Bharatiya Khatri Sewa Trust [1994] 205 ITR 96/[1992] 65 Taxman 531 was not brought to the notice of the Administrative Commissioner while deciding the matter. From the impugned order of the Administrative Commissioner, it appears that an enquiry was conducted through the Additional Commissioner, who filed a report saying that money was collected from members of the church and the same was deposited in the assessee's bank account. At the time of marriage, the money was refunded to the respective lady member along with its interest. From the above, it appears that the taxpayer is not doing any charitable activity other than collecting money from the members of the church and depositing the same in the bank account of the assessee trust. At the time of marriage of the lady members it was refunded along with interest. Moreover, copy of the report said to be filed by the Additional Commissioner is not available on record. The details of collection of money and how it was deposited and how the taxpayer institution met its day to day affairs are not available on record. When the taxpayer collected money from the members of the church and deposited the same in the bank account and refunded the same alongwith interest, it is not known from where the assessee is getting money for meeting its day-to-day expenses. It is also not known whether the taxpayer is receiving any deposits or donation from third parties to meet the regular day-to-day activities. In the absence of any details, the matter needs to be re-examined by the Administrative Commissioner and bring on record the entire activity of the assessee trust. [Para 10] | |
| ■ | Accordingly, the impugned order of the Administrative Commissioner is set aside and the issue of registration under section 12AA is restored to the file of the Administrative Commissioner for reconsideration. The Administrative Commissioner shall re-examine the issue in the light of the judgment of the Apex Court and High Court referred (supra) and decide the same in accordance with law after providing reasonable opportunity of hearing to the assessee. [Para 11] | |
| ■ | In the result, the appeal of the taxpayer is allowed for statistical purpose. [Para 12] |
CASE REVIEW
CIT v. Bhartiya Khatri Sewa Trust [1994] 205 ITR 96/[1992] 65 Taxman 531 (All) (para 7), Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704 (SC) (para 8) and Shiya Dawoodi Bohra Jamat v. CIT [2011] 133 ITD 271/15 taxmann.com 154 (Ahd.) (para 9) followed.
CASES REFERRED TO
CIT v. Bhartiya Khatri Sewa Trust [1994] 205 ITR 96/[1992] 65 Taxman 531 (All) (para 3), Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704 (SC) (para 3), Shiya Dawoodi Bohra Jamat v. CIT [2011] 133 ITD 271/15 taxmann.com 154 (Ahd.) (para 3) and CIT v. Surji Devi Kunji Lal Jaipuria Charitable Trust (No.1) [1990] 186 ITR 728/53 Taxman 112 (All.) (para 7)
Jose Kappan for the Appellant. Smt. S. Vijayaprabha for the Respondent.
ORDER
N.R.S. Ganesan, Judicial Member - This appeal of the taxpayer is directed against the order of the Administrative Commissioner dated 25-01-2012 rejecting registration u/s 12AA of the Act.
2. Shri Jose Kappan, the ld. representative for the taxpayer submitted that the taxpayer trust was established with various objects. According to the ld. representative, one of the objects was to provide assistance on the occasion of marriage of girls belonging to Karikulam Parish. The ld. representative clarified that Karikulam is a place in the State of Kerala and 'parish' means the people attached to Karikulam church. According to the ld. representative, though the assistance on the occasion of marriage of girls is restricted to members of Karikulam Parish only, the other charitable activities are extended to entire general public. Therefore, according to the ld. representative, it cannot be said that the benefit of the trust was restricted to only a section of the people.
3. The ld. representative further submitted that the Allahabad High Court in CIT v. Bhartiya Khatri Sewa Trust [1994] 205 ITR 96/[1992] 65 Taxman 531 (All) held that the benefit of the trust shall be to a section of the public and not to any specified individuals. The ld. representative has also placed reliance on the judgment of the Apex Court in Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704 (SC) and submitted that it is not necessary that the object of the trust should be beneficial to the whole mankind or all persons in a state and it is sufficient if the object is for the benefit of a section of the public. It is sufficient that if the object is for the benefit of a section of public. The ld. representative has also placed reliance on the decision of the Allahabad Bench of this Tribunal in Shiya Dawoodi Bohra Jamat v. CIT [2011] 133 ITD 271/15 taxmann.com 154 (Ahd.) and submitted that when the benefit of the trust was available to a section of the public and not to some specified individuals registration u/s 12AA cannot be denied. According to the ld. representative, in the case of the taxpayer trust, the benefit of the trust was extended to entire members of the Karikulam Parish. Therefore, the Administrative Commissioner is not correct in rejecting the application for registration u/s 12AA of the Act.
4. On the contrary, Smt. S Vijayaprabha, the ld. DR submitted that one of the objects of the trust restricts the taxpayer to confine the benefits only to the members of Karikulam Parish. Therefore, it cannot be said that the benefits is be extended to a section of the public. According to the ld. representative, when the benefit of the trust was restricted to a particular religion, that too, to the members of a particular church, viz. Karikulam Parish, it cannot be said that the activity of the trust is of charitable nature.
5. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, one of the objects of the taxpayer trust restricts the utilisation of the funds to provide assistance to girls belonging to Karikulam Parish on the occasion of their marriage. As clarified by the ld. representative for the taxpayer, only members of the Karikulam Parish are eligible for assistance on the occasion of marriage. The question arises for consideration is when the benefit of the trust was restricted to a particular religion, who are members of a particular church, can we say that the institution would be a charitable institution within the meaning of section 2(15) of the Act?
6. We have also gone through the provisions of section 12AA of the Act. Section 12AA empowers the Commissioner of Income-tax to grant or refuse registration after making necessary enquiry to satisfy about the genuineness of the activity of the trust or institution. Section 12AA(1)(a) also empowers the Commissioner to make such other enquiry as he may deem necessary to find out the genuineness of the activity of the trust or institution. In the case before us, the Administrative Commissioner in exercise of his powers found that the object of the trust was to provide assistance on the occasion of marriage of particular church members and not to the entire section of the people. Accordingly, the Commissioner doubted the genuineness of the activities of the trust.
7. We have carefully gone through the judgment of the Allahabad High Court in Bhartiya Khatri Sewa Trust (supra). In the case before the Allahabad High Court, one of the objects of the trust was to spend money on the marriage of girls belonging to khatri community. The Allahabad High Court, after placing reliance on its earlier judgment in CIT v. Surji Devi Kunji Lal Jaipuria Charitable Trust (No.1) [1990] 186 ITR 728/53 Taxman 112 (All.)found that though marriage of children is considered as one of the obligatory actions of Hindus and is a religious duty of a high order; giving financial and other help on the occasion of marriage is regarded as a part of religious charitable activities. Therefore, the Allahabad High Court found that the taxpayer was eligible for registration as charitable institution.
8. We have also carefully gone through the judgment of the Apex Court in the case of Ahmedabad Rana Caste Association (supra). In the case before the Apex Court, the beneficiaries of the association were the members of the Rana caste or community, who are natives of Ahmedabad and other members of the community accepted by the caste according to its old custom and usage and staying in Ahmedabad. The Apex Court found that the mere fact that a person of Rane community, who was not an original native of Ahmedabad had to prove his credentials according to the custom and usage of that community to get admitted into that community did not introduce a personal element which would detract from the impersonal nature of the common quality. The Apex Court further found that to serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. Therefore, the Court further found that the section of the community sought to be benefited must be sufficiently definite and identifiable by some common quality of a public or impersonal nature. Accordingly, the Apex Court remanded back the matter to the file of the High Court for reconsideration.
9. We have also carefully gone through the decision of the Allahabad Bench of this Tribunal in Shiya Dawoodi Borha Jamat (supra). In the case before the Ahmedabad Bench, a charitable trust was established for the benefit of Shiya Dawoodi Bohra community. The Allahabad Bench of this Tribunal found that it could not be said that the taxpayer trust was established for private religious purpose. Accordingly, it was held that the trust was eligible for registration.
10. In the case before us, the judgment of the Apex Court and the Allahabad High Court was not brought to the notice of the Administrative Commissioner while deciding the matter. From the impugned order of the Administrative Commissioner, it appears that an enquiry was conducted through the Additional Commissioner, who filed a report saying that money was collected from members of the Karikulam church and the same was deposited in the taxpayer's bank account. At the time of marriage, the money was refunded to the respective lady member along with its interest. From the above, it appears that the taxpayer is not doing any charitable activity other than collecting money from the members of the Karikulam church and deposited the same in the bank account of the taxpayer trust. At the time of marriage of the lady members it was refunded along with interest. Moreover, copy of the report said to be filed by the Additional Commissioner is not available on record. The details of collection of money and how it was deposited and how the taxpayer institution meets its day to day affairs are not available on record. When the taxpayer collected money from the members of the Karikulam church and deposited the same in the bank account and refunded the same alongwith interest, where from the taxpayer is getting money for meeting its day-to-day expenses? It is also not known whether the taxpayer is receiving any deposits or donation from third parties to meet the regular day-to-day activities. In the absence of any details, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Administrative Commissioner and bring on record the entire activity of the taxpayer trust.
11. Accordingly, the impugned order of the Administrative Commissioner is set aside and the issue of registration u/s 12AA of the Act is restored to the file of the Administrative Commissioner for reconsideration. The Administrative Commissioner shall re-examine the issue in the light of the judgment of the Apex Court and High Court referred supra and decide the same in accordance with law after providing reasonable opportunity of hearing to the taxpayer.
12. In the result, the appeal of the taxpayer is allowed for statistical purpose.
Regards
Prarthana Jalan
__._,_.___
No comments:
Post a Comment