IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH `B', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No. 1600/Hyd/2012
Assessment year 2012-13
M/s. Shanthi Sadan vs. The Director of Income-tax
Charitable Society, (Exemptions)
Hyderabad Hyderabad
PAN: AAHAS4430L
Appellant Respondent
Appellant by: Sri Chennubotlu
Respondent by: Sri D. Sudhakar Rao
Date of hearing: 07.11.2013
Date of pronouncement: 07.11.2013
ORDER
PER CHANDRA POOJARI, AM:
This appeal by the assessee is directed against the order of
the Director of income-tax (Exemptions) [DIT(E)], Hyderabad dated
25.9.20121 for A.Y. 2012-13.
2. The grievance of the assessee in this appeal is with regard to
non-granting of registration sought u/s. 12AA of Income-tax Act,
1961. The assessee applied for registration u/s. 12AA of the Act in
Form No. 10A on 9.3.2012 and the same was rejected by the DIT(E)
on the following reasons:
i) Memorandum of Trust Deed of the Society
contains objects in descriptive nature without
emphasising on any specific dominant object.
ii) The society has got religious object in addition to
charitable object.
iii) Assessee society has not commenced any activity
so as to carry on the objects for which it was
established.
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Being aggrieved by the order of the DIT(E), the assessee filed the
present appeal.
3. We have heard both the parties and perused the material on
record. We have carefully gone through the objects mentioned in
the Memorandum of Trust Deed of the assessee. The objects of the
assessee cannot be said descriptive and the objects mentioned in the
Trust Deed are in accordance with the provisions of section 2(15) of
the Act and there is no allegation by the DIT(E) that the objects
mentioned therein are not charitable nature and it cannot be said
that the objects mentioned in clauses 1 and 2 cannot be said that
they are of non-charitable in nature. Being so, in our opinion, this
reasons advanced by the DIT(E) are not proper to deny the
registration u/s. 12AA of the Act. For this purpose, we place
reliance on the judgement of Allahabad High Court in the case of
Fifth Generation Education Society vs. CIT (185 ITR 634) wherein it
was held that "The order impugned does not say that the objects of
the society are not charitable in nature; it merely says that they are
general in nature. Just because they are general, they do not cease
to be charitable. The Commissioner has also observed that no
activity has been carried on by the society. It is also not the
requirement of section 12A of the Act. Nor has section 80G any
relevance at this stage. The impugned order cannot, therefore, be
sustained and it is quashed.", we vacate the findings of the DIT(E)
on this issue.
4. The next reason is that the assessee's objects are mixed in
nature i.e., both charitable and religious. In our opinion,
requirement of the provision to grant registration u/s. 12AA is that
the society's object clause should not contain any non charitable
activities and there is no restriction in carrying on religious objects
along with charitable objects The assessee has liberty to carry on
religious activities along with charitable activities. This issue came
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M/s. Shanthi Sadan Charitable Society
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for consideration in the following cases and the courts held that the
assessee can carry on charitable activities along with religious
activities:
1) CIT v. Jaipur Charitable Trust (81 ITR 1) (Del).
2) Zenith Tin Works Charitable Trust v. ITO (102 ITR 119) (Bom).
3) CIT v. Ahmedabad Rana Caste Association (88 IATR 354) (Guj.)
4) CIT v. Chandra Charitable Trust (294 AITR 896) (Guj).
5) Addl. CIT v. AA Bibijiwala Trust (100 ITR 516) (Guj).
6) ACIT v. Barkate Saifiyah Society (213 ITR 492) (Guj).
7) Gulam Moihiuddin Trust v. CIT (248 IATR 587) (J&K).
8) Calicut Islamic Cultural Society v. ACIT (28 SOT 148).
5. Further, recently the Hyderabad Bench of the Tribunal in the
case of Rehoboth Mission v. DIT(E) in ITA No. 352/Hyd/2010 order
dated 26.5.2010 held as follows:
"6. We have gone through the provisions of sec.
13(1)(b) of the Act. There is nothing in the language of
this provision to suggest that an institution of mixed
objects is precluded from getting registration u/s 12AA
of the Act. It is also seen from the objects of the trust in
question that the assessee is carrying on no non-
charitable or non-religious activities. We place reliance
on the judgement of ACIT v. Barkate Saifiyah Society
213 ITR 492 (Guj) and CIT v. Chandra Charitable Trust
294 AITR 86 ( Guj), wherein it was held that a trust can
either be for religious purposes or for charitable
purposes or it can be for both. Only a trust which is for
religious purpose is excluded and debarred from
registration u/s 12AA of the Act. A trust whose object is
charitable as well as religious is not debarred from
registration. Further, in the case of New Life in Christ
Evangelistic Association v. CIT & Others 246 ITR 532
(Mad), wherein it was held that for granting or refusing
registration u/s 12A in relation to such trust, the only
condition precedent is that an application for
registration should be made in time and the accounts of
the institute should be audited. No enquiry about
objects of the trust can be made u/s 12A of the Act. We
have gone through all the judgements cited by the
learned counsel for the assessee. The facts of the case
in the case considered by the Gujarat High Court
squarely apply to the facts of the case on hand. The
department has not brought any contrary decision to
our notice. In our opinion, in the circumstances under
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consideration, the DIT(E) should not have rejected the
application of the assessee for registration u/s 12AA of
the Act on this reason. Commenting on the Honourable
Gujarat High Court decision, the DIT(E) has observed
that the Hon'ble High Court has introduced a new
concept known as "charitable religious trust."
According to him, trust has to be either wholly religious
or wholly charitable. Otherwise, it is not entitled for
registration and the Hon'ble Gujarat High Court did not
consider the word "or" which has been employed u/s
11(1)(a) and sec. 12 of the Act and the Hon'ble High
Court has interpreted sec. 13(1)(b) of the Act. We are
unable to agree with the DIT(E) as to how and why the
judgement of the Hon'ble Gujarat High Court is not
applicable to the facts of the present case. There is no
such bar since there is no jurisdictional High Court's
judgement on this issue, to the contrary and this
observation of the DIT(E) is unwarranted.
Consequently, we direct the DIT(E) to grant
registration to the assessee society subject to fulfilment
of other conditions, if any."
6. Considering the above findings of the Tribunal on earlier
occasion, we do not find any merit in the reason given by the DIT(E)
to reject the registration on this count.
7. The last reason given by the DIT(E) for rejecting the
registration is that the assessee has not commenced any activities at
the time of applying for registration. It was submitted by the AR
before us that the assessee society was registered with the State
Authorities on 16th February, 2012 and field application for
registration u/s. 12AA of the Act on 9th March, 2012, i.e., within 21
days of registering the society with the State Authorities. In the
meanwhile the assessee has not carried on any activities. But this
reason itself does not disentitle the assessee in seeking registration
u/s. 12AA of the Act. In the case of Society of Sisters of St. Anne,
Phirangipuram vs. DIT(E) (ITA No. 345/Hyd/2012 dated 27.9.2012)
the Tribunal held that that the assessee need not commence the
activities before seeking registration. The same view was also taken
in the case of Fifth Generation Education Society (cited supra).
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Being so, on this count also registration cannot be denied.
Accordingly, we direct the DIT(E) to grant registration u/s. 12AA of
the Act.
8. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 7th November, 2013
Sd/- Sd/-
(SAKTIJIT DEY) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated the 7th November, 2013
tprao
Copy forwarded to:
1. M/s. Shanthi Sadan Charitable Society, H. No. 3-2-55, St.
Ann's Convent, Mallapur, Hyderabad-500 072.
2. The Director of Income-tax (Exemptions), 3rd Floor, Aayakar
Bhavan, Hyderabad.
3. The ADIT(E)-I, Hyderabad.
4. The DR 'B' Bench, ITAT, Hyderabad
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