Gujarat High Court
Commissioner Of Income Tax ... vs Samast Sindhin Samaj Suraksha ... on 28 June, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, A.J. Shastri
O/TAXAP/449/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 449 of 2016
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COMMISSIONER OF INCOME TAX (EXEMPTIONS)....Appellant(s)
Versus
SAMAST SINDHIN SAMAJ SURAKSHA FOUNDATION....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.J. SHASTRI
Date : 28/06/2016
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 04.01.2016 raising following question:
"Whether the Income Tax Appellate Tribunal is right in law and on facts in allowing registration to the assessee disregarding the fact that the assessee trust is hit by proviso to section 13(1)(b) of the Act, as the trust is not created for the benefit of general public but it is created for the benefit of a particular religious community i.e. "Sindhi"?
2. The respondent-assessee is an institution created under the Trust Deed dated 23.07.2012. Main object of the Trust is a social welfare and promotion of educational activities. The Trust applied for registration under Section 12AA of the Income Tax Page 1 of 4 HC-NIC Page 1 of 4 Created On Sat Jul 02 01:09:26 IST 2016 O/TAXAP/449/2016 ORDER Act, 1961 ['the Act' for short]. The Commissioner of Income Tax noticed that, as per the article of association, this Trust is created for the benefit of Sindhi Community. All the charitable objects mentioned in the memorandum are for the benefit of the said community alone. He was, therefore, of the opinion that, the Trust is not created for the benefit of general public. Invoking the provisions of Section 13(1)(b) of the Act, he was of the opinion that the Trust was not eligible for benefits under Sections 11 and 12 of the Act. He, therefore, rejected the application of the Trust for registration under Section 12AA of the Act.
3. This order was carried in appeal by the assessee before the Tribunal. The Tribunal, by the impugned order, allowed the appeal making following observations:
"7. The plea of the ld. Counsel is indeed well taken. The restriction placed under section 13(1)(b) is restricted to a situation in which a trust is set up or created for "the benefit of a particular that, in order to be hit by the disabling provision under section 13(1)(b), Sindhi Community should be found to be a "religious community". That is not the case here. As learned counsel rightly points out there is a subtle distinction between a "community" and a "religious community". No doubt, Sindhi Community is a community but then it is not a religious community inasmuch as it follows Hindu religion and is an integral part of the same. It is not a caste either. As a matter of fact, Sindhis are a socio economic group of people originating from Sindhi, a province of modern day Pakistan, and after 1947 partition of India and Pakistan, many Sindhi Hindus migrated to India9 and that explains Sindhi Community in India. By no stretch of logic, such a socio economic group, belonging to a particular geographic location, can be said to be Page 2 of 4 HC-NIC Page 2 of 4 Created On Sat Jul 02 01:09:26 IST 2016 O/TAXAP/449/2016 ORDER a religious community. Ld. Commissioner was thus indeed in error in rejection the registration application of the assessee.
8. For the reasons, set out above, we uphold the grievance of the assessee. We have also noted that no other reasons have been assigned for the rejection of registration except for the reason set out above and which is found to be unsustainable in law. We, therefore, direct the Commissioner to grant the registration u/s. 12AA."
4. From the above materials on record, it can be seen that the objects of the Trust included social welfare and promotion of educational activities. It may be that such activities was to be carried out for the purpose of members of Sindhi community. Section 13(1)(b) of the Act provides that nothing contained in Section 11 or 12 would operate so as to exclude from the total income of the previous year of the person in receipt thereof in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of the Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste. In this context, one may refer to the decision of Supreme Court in case of Commissioner of Income Tax, Gujarat III vs. Ahmedabad Rana Caste Association reported in 140 ITR 1. It was the case, in which, the Income Tax authorities had proceeded on the basis that the objects for which the respondent-association was constituted, contained certain clauses which permitted the respondent to apply the income to purposes which are not wholly charitable. When the issue ultimately reached the High Court, it held that the objects of the Page 3 of 4 HC-NIC Page 3 of 4 Created On Sat Jul 02 01:09:26 IST 2016 O/TAXAP/449/2016 ORDER Trust were of public utility. The purpose was to promote unity and brotherhood among the members of the community which was Rana caste. The High Court held that the purposes of the association were charitable in nature and were useful and beneficial to Rana community and which promote the welfare of the said community and, therefore, would be objects of general public utility and would be covered by the statutory definition. It was observed that the community is nothing but a conglomeration of the members and a purpose, which is calculated to bring about complete development of all aspects of life of every member of the community, would certainly be an immense benefit to the community. The view of the High Court was approved by the Supreme Court. In the present case also, the activities of the Trust were to be carried out for the benefit of the entire Sindhi Community. As is well known, during and after partition of the country, large number of settlers in the Sindhi Region had migrated to India, who are referred to as Sindhi Community. They form number of socio economic groups of the people and may also belong to different sub castes of Hindu religion.
5. We see no error in the view of the Tribunal and the tax appeal is, therefore, dismissed.
(AKIL KURESHI, J.) (A.J. SHASTRI, J.) Jyoti Page 4 of 4 HC-NIC Page 4 of 4 Created On Sat Jul 02 01:09:26 IST 2016