Gujarat High Court
Commissioner Of Income Tax-Iii vs Dawoodi Bohra Masjid & ... on 4 August, 2016
Author: Ks Jhaveri
Bench: Ks Jhaveri, G.R.Udhwani
O/TAXAP/1993/2009 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 1993 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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COMMISSIONER OF INCOME TAX-III....Appellant(s)
Versus
DAWOODI BOHRA MASJID & KABRASTAN....Opponent(s)
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Appearance:
MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1
MR MANISH J SHAH, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
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O/TAXAP/1993/2009 JUDGMENT
Date : 04/08/2016
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this appeal under section 260A of the Income-tax Act, 1961, the appellant-revenue has challenged the order of the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") whereby the Tribunal after considering the evidence on record has allowed the appeal preferred by the assessee.
2. While admitting the appeal, this court has framed the following substantial question of law:
"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Dawoodi Bohra Community is a Public Trust for the benefit of public at large and consequently, the said Trust is entitled to registration under section 12A(a) r.w.s. 12AA of the Act?"
This court ordered to hear this matter with Tax Appeal No. 1187 of 2006.
3. Tax Appeal No. 1187 of 2006 came up for consideration before this court on 28.11.2014 and the same was allowed where this court has held as follows:
"3. The assessee is a trust run by one Dr. Syedna Mohammed Burhanuddin Saheb, Mumbai and was formed vide trust deed dated 24.04.2003. After examining the trust deed, the Assessing Officer rejected the application filed by the assessee in form Page 2 of 6 HC-NIC Page 2 of 6 Created On Wed Aug 10 00:57:58 IST 2016 O/TAXAP/1993/2009 JUDGMENT no. 10A for registration u/s 12A of the Act. On appeal before the CIT(A), the CIT (Appeals) concluded that the Trust is a private religious trust established for the benefit of Dawoodi Bohra Community, thus disentitling itself for being registered u/s 12A(a).
4. On appeal before the ITAT, by impugned order, ITAT has held that as the trust shows that it is public charitable trust, registration should be granted. Being aggrieved and dissatisfied with the impugned order passed by the ITAT, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law.
5. Mr. Manish Shah, learned advocate appearing on behalf of the respondent assessee has submitted that as such the issue involved in the present Tax Appeal is now not res integra in view of the decision of the Honble Supreme Court in the case of Commissioner Of Income Tax vs. Dawoodi Bohra Jamat reported in (2009) 314 ITR 309 wherein considering the case of the same trust - assessee, according to the Honble Supreme Court, the determination of the nature of trust as wholly religious or wholly charitable or both charitable and religious under the Act was not a question of fact. It was a question which required examination of legal effects of the proven facts and documents, that is, the legal implication of the objects of the respondent- 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 u/s. 11 or 12. It is the analysis of these objects in the backdrop of fiscal Page 3 of 6 HC-NIC Page 3 of 6 Created On Wed Aug 10 00:57:58 IST 2016 O/TAXAP/1993/2009 JUDGMENT jurisprudence which would illuminate the purpose behind the creation or establishment of the trust for either religious or charitable or both religious and charitable purpose.
5.1 The Supreme Court in the said decision held that the High Court had erred in refusing to interfere with the observations of the Tribunal in respect of the character of the trust. Having said so, the Supreme Court proceeded to examine the question, whether the Courts below were justified in coming to the conclusion that the respondent-trust was a public religious trust and therefore, outside the purview of section 13(1) (b) and eligible for exemption u/s. 11 of the Act. The Supreme Court held that in the present case, the objects of the respondent-trust were based on religious tenets under the Quran according to the religious faith of Islam. As already noticed, the perusal of the objects and purposes of the respondent-trust clearly demonstrated that the activities of the trust though both charitable and religious were not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraphs, 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. In that view of the matter, the Supreme Court held that the respondent-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 respondent-trust Page 4 of 6 HC-NIC Page 4 of 6 Created On Wed Aug 10 00:57:58 IST 2016 O/TAXAP/1993/2009 JUDGMENT and thereby, it would be eligible to claim exemption u/s. 11 of the Act.
6. Having heard Mr. Parikh, learned advocate appearing on behalf of the Department and Mr. Shah, learned advocate appearing on behalf of the assessee and the question posed for consideration by us reproduced hereinabove and considering the decision of the Honble the Supreme Court in the case of Dawoodi Bohra Jamat (Supra), the question, which is raised in the present appeal is required to be answered in favour of the assessee. We are not giving any elaborate reasons for the same as in the case of very same assessee i.e. Dawoodi Bohra Jamat (Supra), it is held by Honble the Supreme Court that respondent-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 respondent-trust and thereby, it would be eligible to claim exemption u/s. 11 of the Act. Even otherwise there are concurrent finding of facts with which we also concur and therefore no elaborate reasons are required."
4. In view of above, without giving elaborate reasons, we are of the opinion that the issue is required to be answered in favour of the assessee and against the revenue. Accordingly, we answer the issue in favour of the assessee and the revenue. The order passed by the Tribunal on 29.4.2009 is upheld. The appeal is dismissed. No order as to costs.
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