Diocese Of Pune (Cni),, Pune vs Assessee

Diocese of Pune (CNI) 1A, Stavely Road, Red Bungalow, Camp, Pune - 411001 .... Appellant

PAN: AABTD3514D

Vs.

The Commissioner of Income Tax-I, Pune .... Respondent

Appellant by : Shri S.N. Doshi Respondent by : Shri Adarsh Kumar Modi

Date of hearing : 19-01-2015 Date of pronouncement : 31-03-2015

ORDER

PER SUSHMA CHOWLA, JM:

This appeal filed by the assessee is against the order of CIT-I, Pune dated

22.05.2014 passed under section 12AA(1)(b)(ii) of the Income-tax Act, 1961 read with

rule 17A of the Income Tax Rules, 1962.

2. The assessee has raised the following grounds of appeal:-

1. On the facts and in the circumstances of the case the ld. Commissioner of Income Tax has erred in holding that the activities carried on by the trust were meant for members of the Christian community and thus it is established for the benefit of specific religious community attracting the provisions of section 13(1)(b) and therefore no purpose will be served by granting registration u/s.12A.

2. The above ground of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.

3. The assessee vide present appeal is aggrieved by non-grant of registration

under section 12A of the Act.

2 ITA No.1352/PN/2014

Diocese of Pune (CNI)

4. The brief facts of the case are that, the assessee was created vide a Deed of

Trust dated 01.08.2014. It was registered under the Bombay Public Trusts Act, 1950

vide Certificate of Registration issued by the Asst. Charity Commissioner, Pune

Region, Pune on 17.04.2007. The Commissioner requisitioned the assessee to

furnish certain documents and details i.e. the evidences of charitable activities carried

out by the Trust in the last three years, proof of filing of return of income. It was also

brought to the notice of the assessee that the objects at serial Nos.2, 4, 5, 6 and 7

appear to be for the benefit of a particular religious community in contravention of

section 13(1)(b) of the Act and it was also requisitioned as to how these could be

considered as charitable. The Commissioner further from the details of the activities

carried out for financial years 2010-11, 2011-12 and 2012-13 noted that the activities

were also for the benefit of a particular religious community in contravention of

section 13(1)(b) of the Act. The assessee vide written submissions dated 15.04.2014

regarding objects at serial Nos.2, 4, 5, 6 and 7 submitted that reference to the

Christian community should not be interpreted to mean that these are benefiting any

religious community or caste. It was further explained by the assessee that Christian

was a kind of pattern of living by obeying the philosophy of Bible, which does not

speak about any caste. It was further contended that the word community should not

be mis-understood as religion. It was further submitted that clauses 4, 5 and 6 in

addition to Christian, also benefitted the deserving men and women and also public at

large. Regarding the activities carried on, it was also explained that these were

benefitting all the members of the public at large. The Commissioner was of the view

that the objects at serial Nos.2, 4, 5, 6 and 7 were not charitable in the strict sense of

the term and, instead, were religious and if these objects were considered carefully,

then there was no doubt that the same were meant for the benefit of specific religious

community i.e. the community of Christianity. Further, reference was made to the

Preamble given in the report and activities and also from the activities actually

conducted during the past few years, established that the prime thrust of the trust was

to provide for the benefit of a particular religious community. The Commissioner has

reproduced preamble and the activities carried on by the assessee in financial years

2009-10 to 2012-13, which are reproduced at pages 2 to 4 of the order passed under 3 ITA No.1352/PN/2014 Diocese of Pune (CNI)

section 12A of the Act. The assessee placed reliance on various case laws, which

has been distinguished by the Commissioner, even the ratio laid down by the Hon'ble

Supreme Court in CIT Vs. Dawoodi Bohra Jamat, (2014) 364 ITR 31 (SC). The

Commissioner was of the view that under section 13(1)(b) of the Act, where the

charitable trust or institution is established for the benefit of any specific religious

community or caste, the benefits of sections 11 and 12 of the Act would not be

available to such a trust or institution, in the light thereof, the grant of registration

under section 12A of the Act would serve no purpose. Consequently, the application

moved by the assessee for grant of registration under section 12A of the Act was

rejected.

5. The assessee is in appeal against the said order of Commissioner.

6. The learned Authorized Representative for the assessee after taking us

through facts of the case pointed out that the trust was registered under Bombay

Public Trusts Act, 1950 and was both a charitable and religious trust. The contention

of the learned Authorized Representative for the assessee was that the assessee

was a public charitable trust as it was registered under Bombay Public Trusts Act,

1950. It was further contented by the learned Authorized Representative for the

assessee that the trust was not established for Christian community only, but for the

public at large. Further, reliance was placed on the ratio laid down by the Hon'ble

Supreme Court in CIT Vs. Dawoodi Bohra Jamat (supra).

7. The learned Departmental Representative for the Revenue placing reliance on

the order of Commissioner pointed out that the assessee was a charity of North

Indian and as per the object Nos.1 to 6, the aim was to propagate one of the

communities and hence, was not eligible for claim of registration under section 12A of

the Act. It was further contented by the learned Departmental Representative for the

Revenue that one of the objects being for the benefit of a particular community, was

deleted consequent to the order of Asst. Charity Commissioner, Pune Region, Pune

dated 10.04.2007.

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Diocese of Pune (CNI)

8. We have heard the rival contentions and perused the record. The assessee

trust was created as per the Deed of Trust dated 01.08.2004. It was registered under

the Bombay Public Trusts Act, 1950 vide Certificate of Registration issued by the

Asst. Charity Commissioner, Pune Region, Pune on 17.04.2007. The assessee also

registered under the Societies Registration Act, 1860. The objects of the trust are as

under:-

2. Generally to do all such other deeds and things as may be deemed incidental or conductive to the attainment and fulfillment of all or any of the objects mentioned herein as a minority institution established and administered under Christian management to conduct its activities.

3. To provide Ambulance facility to people in large.

4. To establish and to administer Educational Institutions imparting education in medical, Technical, Dental, Computer, to needy & deserving and also Physically handicapped, Mentally retarded, deaf and dumb, students and to establish primary, high school, higher secondary, degree course and post-degree education for needy and deserving Christian students in particular and others in general.

5. To establish Hostels, Libraries, Computer Centers for Christian boys and girls in particular and other deserving & needy boys and girls in general.

6. To establish centers to propagate, co-ordinate and to secure the rights guaranteed under Act and 30(1) and 16(4) of the constitution of Indian to the Religious and Linguistic Minorities & the socially and educationally backward classes of India.

7. To establish Christian Schools and Colleges.

8. To print and publish monthly, weekly, delities in any languages.

9. The first object of the society which was to proclaim by Word and deed the

gospel of Jesus Christ, who is the Lord Master of the Church, for the salvation and

good of all mankind through unity, witness and service educational, medical social,

agriculture and other services, and also through worship and other activities of the

Church which promote spiritual growth, self reliance, social justice and moral

regeneration, irrespective of caste, creed or colour, has been deleted by the order of

Asst. Charity Commissioner, Pune Region, Pune dated 10.04.2007. A copy of the

said order is placed at pages 32 to 34 of the Paper Book. Under the said order, it has

also been held that the objects of the society are of general public utility and all within

section 9 of BPT Act, 1950. Further, since the society is registered under the

Societies Registration Act, 1860 and therefore, is a public trust within the meaning of

Public Trust under section 2(13) of the Bombay Public Trusts Act, 1950. Perusal of 5 ITA No.1352/PN/2014 Diocese of Pune (CNI)

the objects of the trust reflect that though some of the objects are for the benefit of

Christian community in particular, but for others in general, hence, the objects are

strictly not for the Christian community in particular, but are both for the purposes of

Christian community and other public at large. The object No.3 i.e. the provision of

Ambulance facility to people at large cannot be said to only for the benefit of Christian

community. In the above said facts and circumstances, where the trust has been

created both for the charitable and religious purposes, the issue arise whether it is

entitled for registration under section 12A of the Act.

10. We find that the Hon'ble Gujarat High Court in CIT Vs. Chandra Charitable

Trust (2007) 294 ITR 86 (Guj) which has been referred to by Pune Bench of the

Tribunal in JITO-Pune Chapter Vs. CIT-I, Pune, ITA No.2167/Pune/2013, dt.

17.11.2014, had considered the issue of grant of registration under section 12A of the

Act, it was observed by the Hon'ble Gujarat High Court that where the objects of the

trust were not only to propagate Jainism or help and assist maintenance of temples,

Sadhus, Sadhvis, Shraviks and Shravaks, and other goals are also set out in the trust

deed, the trust was a charitable as well as religious trust and section 13(1)(b) of the

Act would not be applicable. The Hon'ble High Court has held as under:-

"5. The question, that what should be the principle adopted and whether Jainism is a lifestyle or a religion, would lose much of its importance in view of the judgment of this Court in the matter of CIT vs. Barkate Saifiyah Society (supra). If Jainism is accepted to be a religion and from the covenants of the trust deed it can be spelt out that not only to propagate Jainism or help and assist maintenance of the temple, Sadhus, Sadhvis, Shraviks and Shravaks, yet other goals are set in the trust deed, then the trust would become a charitable trust, so also a religious trust or it can be addressed as a charitable religious trust, and, if that be so, s. 13(1)(b) would not be applicable. Once the basic question is answered against the interests of the Revenue, then the other questions can conveniently be decided against the interests of the Revenue. The reference stands disposed of accordingly. No costs."

11. The Hon'ble Supreme Court in CIT Vs. Dawoodi Bohra Jamat, (2014) 364 ITR

31 (SC) had observed that the objects of trust as declared in the Trust Deed would

govern its right of exemption under sections 11 and 12 of the Act. The Hon'ble

Supreme Court also recognized the creation or establishment of trust for either

religious or charitable or both religious and charitable purposes. By looking at the

objects of the trust, it had to be determined whether the objects were wholly religious

or wholly charitable or both religious and charitable and it was held that on 6 ITA No.1352/PN/2014 Diocese of Pune (CNI)

consideration of the objects of the trust, the religious and charitable purposes and

activities of the trust could be determined. It was further held that section 11 of the

Act allows such trust with composite objects to claim exemption from tax as a

religious and charitable trust, subject to provisions of section 13 of the Act. Though

the objects of the trust were based on religious tenets but where the activities of the

trust for both charitable and religious were not exclusively meant for a particular

religious community, then it would not fall under the provisions of section 13(1)(b) of

the Act and it was further held that where the assessee was charitable and religious

trust, which did not benefit any specific religious community and hence, it could not

be held that the provisions of section 13(1)(b) of the Act would be attracted to the

assessee trust and therefore, it would be eligible to claim exemption under section 11

of the Act. The relevant observations of the Hon'ble Supreme Court are as under:-

"(i) that determination of the nature of the trust as wholly religious or wholly charitable or both charitable and religious under the Act is not a question of fact. It is a question which requires examination of the legal effects of the proven facts and documents, that is, the legal implication of the objects of the assessee-trust as contained in the trust deed. It is only the objects of a trust as declared in the trust deed which would govern its right of exemption under section 11 or 12. It is the analysis of these objects in the backdrop of fiscal jurisprudence which would illuminate the purpose behind creation or establishment of the trust for either religious or charitable or both religious and charitable purpose. Therefore, the High Court had erred in refusing to interfere with the observations of the Tribunal in respect of the character of the trust on the grounds that they were pure findings of fact.

(ii) That the objects of the assessee-trust were not indicative of a wholly religious purpose but were collectively indicative of both charitable and reli-

gious purposes. Although objects (c) and (f) which provided for activities completely religious in nature and restricted to the specific community of the assessee-trust were objects with religious purpose only, the fact that the other objects traced their source to the Holy Quran and resolved to abide by the path of godliness shown by Allah would not be sufficient to conclude that the entire purpose and activities of the trust were purely religious in colour. The objects reflected the intent of the trust as observance of the tenets of Islam, but did not restrict the activities of the trust to religious obligations only and for the benefit of the members of the community. The provision of food to the public on religious days of the community, the establishment of Madarsas and organisations for dissemination of religious education and rendering assist- ance to the needy and poor for religious activities would reflect the essence of charity. The activity of providing for food on certain specific occasions and other religious and auspicious events of the Dawoodi Bohra community did not restrict the benefit to the members of the community. Neither the religious tenets nor the objects as expressed limited the service of food on these occa- sions to members of the specific community. The establishment of Madarsas or institutions to impart religious education to the masses would qualify as a charitable purpose qualifying under the head of education under the provi- sions of section 2(15) of the Act. Similarly, assistance by the assessee-trust to the needy and poor for religious activities would not divest the trust of its altruist character. Therefore, the objects of the trust exhibited the dual tenor of religious and charitable purposes and activities. Section 11 of the Act allowed such trust with composite objects to claim exemption from tax as a religious 7 ITA No.1352/PN/2014 Diocese of Pune (CNI)

and charitable trust subject to the provisions of section 13. The Activities of the trust under such objects would, therefore, be entitled to exemption accordingly.

In re : trustees of the tribune [1939] 7 ITR 415 (PC) and In re : SOUTH PLACE ETHICAL SOCIETY; BARRALET V. ATTORNEY GENERAL [1980] 3 All ER 918; [1980] 1 WLR 1565; 54 Tax Cas 446 applied.

(iii) That the objects of the assessee-trust were based on religious tenets under the Quran according to the religious faith of Islam. The activities of the trust though both charitable and religious were not exclusively meant for a particular religious community. The objects did not channel the benefits to any community if not the Dawoodi Bohra community and thus, would not fall under the provisions of section 13(1)(b) of the Act. The assessee-trust was a charitable and religious trust which did not benefit any specific religious community and, therefore, it could not be held that section 13(1)(b) of the Act would be attracted to the assessee-trust and thereby, it would be eligible to claim exemption under section 11 of the Act."

12. In view of the above said proposition laid down by the Hon'ble Supreme Court,

the objects of the trust are to be looked into and those objects can be either

charitable or religious in nature or both charitable or religious in nature. The question

which arises for consideration before us is whether the trust whose objects were

religious as well as charitable would be entitled for registration under section 12A of

the Act. Looking at the objects of the trust, we find that one of the objects of the

assessee trust was to provide Ambulance facility to people at large. The object

Nos.2, 6 and 7 of the Trust, were admittedly relating to Christian community.

However, other object Nos.3, 4, 5 was to provide Ambulance facility to people at

large, to establish and administer educational institutions for needy and deserving

Christian students in particular and others in general, to establish hostels, libraries,

etc. for Christian boys and girls in particular and other deserving & needy boys and

girls in general. The objects of the assessee trust thus, reflect the activities to be

carried on for the purpose of Jain religion and also for the purpose of public at large.

In view thereof, it could not be held that the same are meant for the benefit of only

Jain religious community. We reverse the findings of the Commissioner in this

regard.

13. Now, coming to the second issue of grant of registration under section 12A of

the Act, where the trust was both charitable and religious. The Hon'ble Gujarat High

Court in CIT Vs. Chandra Charitable Trust (supra) had laid down that even where the

objects of the trust were not only to propagate the Jainism or help and assist

maintenance of temples, Sadhus, Sadhvis, Shraviks and Shravaks, and other goals 8 ITA No.1352/PN/2014 Diocese of Pune (CNI)

as set out in the trust deed, the trust was a charitable as well as religious trust and

section 13(1)(b) of the Act would not be applicable. Similar proposition has been laid

down by the Hon'ble Gujarat High court in CIT Vs. Barkate Saifiya Society (1995) 213

ITR 492 (Guj), wherein it was held that the exclusion from exemption under section

13(1)(b) of the Act applies only to charitable trust and charitable institution and if the

trust was charitable as well as religious in nature, the assessee would be entitled to

exemption under section 11 of the Act.

14. Similar proposition has also been laid down by the Hon'ble Supreme Court in

CIT Vs. Dawoodi Bohra Jamat (supra) while holding the trust eligible to claim

exemption under section 11 of the Act. In the totality of the above said facts and

circumstances, we hold that the assessee is a charitable religious trust and the

provisions of section 13(1)(b) of the Act would not be applicable. In view thereof, we

direct the Commissioner to grant registration to the assessee under section 12A of

the Act as charitable religious trust. The grounds of appeal raised by the assessee

are allowed.

15. In the result, the appeal of the assessee is allowed.

Order pronounced on this 31st day of March, 2015.

Sd/- Sd/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER

Pune, Dated: 31 s t March, 2015.

GCVSR

Copy of the order is forwarded to: - 1) The Assessee; 2) The Department; 3) The CIT-I, Pune; 4) The DR "B" Bench, I.T.A.T., Pune; 5) Guard File. By Order //True Copy// Assistant Registrar I.T.A.T., Pune