Income Tax Appellate Tribunal - Jaipur
Shri Jain Swetamber Tapagchch Sangh, ... vs Commissioner Of Income Tax - Exemption, ... on 21 May, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 34/JP/2018
Shri Jain Swetamber Tapagachch cuke The CIT (Exemption),
Sangh, Vs. Jaipur.
C/o Shri Rikhab Chand Sacheti,
Sacheti House, Lakhan Kotri,
Ajmer- 305001.
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s Assessee by : Shri Sanjeev Jain (C.A.)
jktLo dh vksj ls@ Revenue by : Smt. Roli Agarwal (CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 03/05/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 21/05/2018
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(E)-2, Jaipur dated 14.112017 wherein the assessee has challenged the rejection of its application seeking registration u/s 12AA of the I.T. Act.
2. Briefly stated, the assessee moved an application before the ld. CIT(E) on 22.05.2017 seeking registration u/s 12AA of the I.T. Act in the requisite Form 10A along with the copy of its trust deed stating the objects of the assessee's society. The ld. CIT(E) referring to the object 2 ITA No. 34/JP/2018 Shri Jain Swetamber Tapagachch Sangh Vs. CIT(E) clause of the assessee's trust deed stated that the samiti/trust has been created for the benefit of a particular religious community i.e. Jain Dharm. As the samiti is working for the benefit of a particular community, it violates the provisions of section 13(1)(b) of the Act and a charitable organization will lose the exemption u/s 11 if the income of utilized for the benefit of any particular religious community. It was further held by the ld. CIT(E) that after introduction of Section 12AA of sub-section (4), it is imperative to examined u/s 13(1)(b) of the Act at the stage of registration itself. It was observed by the ld. CIT(E) that 12AA(4) of the Act has been introduced to avoid misuse of the provisions of section 13(1) of the Act on long term basis. In the case of present assessee, the benefit to a particular community is imbibed in the objects itself, which is permanent document of the trust and therefore, the benefit to a particular religious community is not an issue on year to year basis rather it is a permanent feature in the case of the applicant. The ld. CIT(E) has referred to the decision of Hon'ble Supreme Court in case of CIT vs. Palghat Shadi Mahal Trust 254 ITR 212 where section 13(1) was held applicable where the trust was created for construction of a Shadi Mahal and establishing other institutions for educational, social and economic advancement of Muslim community. The ld. CIT(E) further referred to the decision of the Coordinate Bench of this Tribunal in case Shree Multan Jain Shwetamber Sabha vs. CIT(E) (ITA No. 1060/JP/2016 order dated 30.05.2017) where the denial of registration u/s 12AA was confirmed as the dominant object of the assessee was for the purpose of safeguarding and benefiting the interest of the Jain community. It was accordingly held by the ld. CIT(E) that the objects of the assessee 3 ITA No. 34/JP/2018 Shri Jain Swetamber Tapagachch Sangh Vs. CIT(E) society are for the benefit of a particular religious community, which is a very limited and small group and not public at large, and referring to the provisions of section 2(15) and in particular, clause relating to "advancement of general public utility", it was held by the ld. CIT(E) that the said clause is intended to serve public at charitable falling under the head "advancement of any other general public utility" which is totally missing in the case of applicant society. In light of above, given that the object of the assessee trust/society is for the benefit of particular community and taking into consideration, the provisions of Section 12AA(4) of the Act, the application of the assessee society for seeking registration u/s 12AA was rejected.
3. Being aggrieved the assessee is as appeal before us. During the course of hearing, the ld. AR referred to the object clause of the assessee trust and admitted that the objects of the assessee society are purely religious in nature and there is no denial of the said fact. Further, our reference was drawn to the provisions of Section 13(1)(b) of the Act which has been invoked by the ld. CIT(E) and it was submitted by the ld AR that the said provisions reads as under:
"Nothing contained in section 11 or 12 of the Act shall operate so as to exclude from the total income of the previous year of the person in receipt thereof-
(a) .........
(b) .........
(c) in case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income 4 ITA No. 34/JP/2018 Shri Jain Swetamber Tapagachch Sangh Vs. CIT(E) thereof if the trust or institution is created or established for the benefit of any particular religious community or caste."
4. It was submitted by the ld AR that the said clause is not applicable in the case of the assessee trust as the assessee trust is not a created for charitable purpose but it is purely religious trust and thus, the ld CIT(A) was wrong in invoking the said provisions in the instant case.
5. Further, the ld AR referred to the provisions of Section 11(1)(a) of the Act and submitted that the said section provides that income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India. Further, he referred to Rule 17A which provides that an application under clause (aa) of sub-section (1) of Section 12A for registration of a charitable or religious trust or institution shall be made in Form 10A and drawing reference to the same, it was submitted that section 12A therefore, emphasis registration of not just a charitable trust but also a trust which is wholly religious in nature.
6. As far as the definition of charitable purpose as defined in section 2(15) of the Act is concerned, the ld. AR admitted that it is not a claim of the assessee society that it is carrying out any charitable activity. Accordingly, there is basis for the ld. CIT(E) to refer to the provisions of section 2(15) and in a particular to the clause relating to advancement of any object of general public utility.
5 ITA No. 34/JP/2018Shri Jain Swetamber Tapagachch Sangh Vs. CIT(E)
7. Further, referring to the decision of the Coordinate Bench of the Tribunal, which has been relied upon by the ld CIT(E), in case of Shree Multan Jain Shwetamber Sabha (supra) wherein the rejection of registration u/s 12AA was confirmed, the ld. AR submitted that the Hon'ble Rajasthan High Court vide its decision in D.B. ITA No. 219/2017 dated 05.12.2017 has decided the matter in favour of the assessee and has remitted the matter back to the approving authority for passing a fresh order taking into consideration the legal proposition so laid down by the Hon'ble High Court.
8. The ld. DR is heard who has relied on the findings and the order of the ld. CIT(E).
9. We find that an exactly identical issue came up for consideration before the Hon'ble Rajasthan High Court in case of Shree Multan Jain Shwetamber Sabha vs. CIT(E) (Supra) wherein the Hon'ble High Court referring to the catena of decisions right from the Hon'ble Supreme Court decision in case of CIT vs Dawoodi Bohara Jamat 364 ITR 31 (SC) in case of trust with composite objects for both religious and charitable and non-applicability of section 13(1)(b), earlier decisions of the Hon'ble Rajasthan High Court in case of CIT vs JSB Shikshan Sansthan (DB Appeal No. 172/JP/2017 dated 7.11.2017) where it was held that 12AA(4) shall come into operation after the registration is carried out in consonance with the objects of the trust and not at the time of registration, decision of the Hon'ble Rajasthan High Court in case of CIT vs Shri Digamber Jain Mandir (DB Appeal No. 21/JP/2017 dated 14.02.2017) where the order of the Tribunal was confirmed in 6 ITA No. 34/JP/2018 Shri Jain Swetamber Tapagachch Sangh Vs. CIT(E) directing grant of registration under section 12AA despite violation of section 13(1)(b) of the Act and other decisions, it was held as under:
"8. In our considered opinion, we remit matter back to the authority to consider the law on subject and will reconsider independently, in view of observation made by us, will independently consider the law declared by the Supreme Court and also while remitting matter back, we restrained from passing order of registration, keeping the power of authority intact their independent power to grant registration. We are remitting back the matter to the authority."
10. In the instant case, where the assessee society has challenged the very applicability of section 13(1)(b) being a purely religious society, in light of the above decision of the Hon'ble Rajasthan High Court, we deem it appropriate to remand the matter back to the file of the ld. CIT(E) who shall decide the matter afresh after taking into consideration the aforesaid decision of the Hon'ble Rajasthan High Court.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 21/05/2018.
Sd/- Sd/-
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 21/05/2018.
7 ITA No. 34/JP/2018
Shri Jain Swetamber Tapagachch Sangh Vs. CIT(E) *Santosh vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Jain Swetamber Tapagachch Sangh, Ajmer.
2. izR;FkhZ@ The Respondent- CIT(E), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA No. 34/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar