Rano Jain, A. M.-The appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Exemptions), Chandigarh dated 27.2.2015, passed under section 12AA of the Income Tax Act, 1961 (in short 'the Act').
2. Briefly, the facts of the case are that an application under section 12A of the Act was filed before the Commissioner of Income Tax-II, Chandigarh on 19.8.2014. The Commissioner of Income Tax rejected the application of the assessee for registration under section 12AA vide his order dated 27.2.2015, stating that he was of the view that the trust is not engaged in any form of charitable activities as is envisaged in section 2(15) of the Act and this view was formed considering the specific religious purposes of the objects mentioned in the trust deed of the assessee.
3. Aggrieved by this, the assessee has come up in appeal before us. The learned counsel for the assessee stated before us that Sri Guru Har Rai Ji is a religious and charitable trust, which was founded on 5.9.2011 and was registered with the Sub Registrar. The trustees of the trust are very well known in religious circles and are famous Ragis. The assessee trust is holding mass marriages on the last Saturday of October every year for the poor persons and eye camp was held in February, 2014 and also on many earlier occasions. The trust on application from the poor and needy provide them with monetary aid for ailing, marriages, school fees for the poor and deserving students, etc. Free ration is also provided to the poor who have no earning member in the family and are below poverty line. It was argued that the application for registration under section 12AA of the Act has been rejected by the Commissioner of Income Tax (Exemptions) on a wrong premise that the activities of the trust are for the propagation of religious teachings and singing only. This is also a wrong inference arrived at by the Commissioner of Income Tax that the founders are given absolute powers to run the trust as per their will. The finding given by the Commissioner of Income Tax that it is a totally private trust and its purpose is to propagate religious teachings, is also wrong. Further, it was stated that at the time of granting registration under section 12AA of the Act, the only issue to be seen by the Commissioner of Income Tax is whether the objects are of charitable in nature and the activities are genuine. No other factor can be looked at this stage. Reliance was placed on the judgment of the Hon'ble Jurisdictional Punjab & Haryana High Court in the case of CIT Vs. B.K.K.Memorial Trust (2013) 29 Taxmann.com 286 (P&H) for the proposition that at the stage of granting registration, objects of the trust only had to be considered by the Commissioner.
4. The learned D.R. relied on the order of the Commissioner of Income Tax and stated that from the perusal of the objects of the trust, it is seen that the objects are only for the furtherance of a particular religious community, therefore, registration under section 12AA of the Act has rightly been denied by he Commissioner of Income Tax.
5. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. On perusal of the order of the Commissioner of Income Tax (Exemptions), we see that the Commissioner of Income Tax started with reproducing the objects of the trust in his order at page 1 para 3. The first objection raised by him for denial of registration is that the trust is formed mainly for the propagation of religious teachings and singing. This is based on the objects of the trust at Sr.Nos.1, 6, 7 and 8, which read as under :
1) To impart free Gurmat Sangeet
6) To construct buildings and run institutions
Therein for the spread of teachings enshrined in the holy Guru Granth Sahib.
7) To organize a Kirtan Darbar once a year.
8) To organize free Gurmat camps periodically At various places in India.
6. On the basis of these objects, the Commissioner of Income Tax concluded that these are purely religious in nature and on that basis, he further concluded that the trust is formed mainly for the religious purpose. On going through the above said objects of the trust, we see that these relate to imparting free Gurmat Sangeet, holding Kirtan Darbar, organizing Gurmat camps and to construct buildings, etc. The purpose of the trust is to run institution to spread teachings of Holy Guru Granth Sahib. At first, we observe that these objects nowhere point to the propagation of religious teachings and singing. Even if singing or teachings of specific kind are promoted through these objects, nowhere from other objects of the trust it is coming out that these teachings are to be given to a particular community only. The teachings of the Guru Granth Sahib are meant for each and every community and cannot be said to be for the propagation of a particular religious tenet. After observing such, we also emphasize that for granting registration under section 12AA of the Act, there is no bar on any trust which as per the Commissioner of Income Tax (Exemptions) cannot be given registration because of its being religious in nature. The only condition at the time of granting registration by the Commissioner of Income Tax (Exemptions) is to see whether the objects are of charitable in nature and the activities are genuine in nature. By holding that some of the objects of the trust are religious in nature, it cannot be inferred that these are not charitable in nature.
7. The second issue raised by the Commissioner of Income Tax (Exemptions) in his order whiling denying registration under section 12AA is that at Point No.8 of the Trust Deed, it has been provided that at the time of dissolution, the assets of the trust shall be transferred to another society. We have gone through the objects as stated in the Trust Deed of the assessee, which is a part of the Paper Book filed by the assessee at page No.1 onwards. The said clause of the Trust Deed reads as under:
"8. The Trust hereby created shall be irrevocable. However, the Founder reserves the right to dissolve the Trust in case the Trustees do not follow/ promote the aims and objects of the Trust. In such an event the assets remaining on the dissolution shall be transferred to another Society or Institution whose objects are similar to those of this Trust and that in no event shall the assets so remaining be disturbed amongst the Trustees."
8. On perusal of the same, we do not find anything wrong with this clause. It has been very categorically stated that if it is seen that the trustees are not following the aims and objects of the trust, in such an event the founders will dissolve the trust. However, on further perusing the said clause, we also observe that in the event of such dissolution, all the assets will be transferred to another society or institution, whose objects are similar to those of this trust and that in no event the assets so remaining will be distributed amongst the trustees. We see that as per this clause even at the time of dissolution, no benefit to a particular person will be given and the assets will be given to a similar trust only. Therefore, this clause does not hamper in any way the objects of the trust being charitable in nature.
9. Another objection raised by the Commissioner of Income Tax (Exemptions) while denying registration under section 12AA of the Act is that the assessee had not received any donation for corpus funds and whatever donations have been received by it, were used for purchase of assets. We do not understand by stating this what the Commissioner of Income Tax (Exemptions) wants to convey. Even if the assessee has not received any corpus funds, we see that it is receiving various donations, which are being used for its day-to-day activities. It cannot be anybody's case that if the donations are not received towards corpus funds, the activities of the trust become non-charitable or become non-genuine. Acquiring assets from the receipts cannot in any way hamper the objects of the trust being charitable.
10. After stating all these objections, the Commissioner of Income Tax (Exemptions) concluded that these objects tend to point out that it is a closely held private trust whose purpose is to propagate religious tenets of Gurbani through music or singing. This is not a right reason for denying registration under section 12AA of the Act. There is no bar under section 12A not to give registration to a religious trust. Even a religious trust having charitable objects can be given registration under section 12AA of the Act. As regards the activities being for furtherance of the cause for a particular community, proper care has been taken by the Income Tax Act in its provisions of sections 11 and 13 of the Income Tax Act. However, at a time of giving registration under section 12AA of the Act, these are not the relevant things to be seen. These matters are to be looked after by the Assessing Officer during the assessment proceedings on yearly basis while granting exemptions to the assessee under section 11 of the Act. In order to arrive at the true purpose of a trust, the objectives are to be considered as a whole. Nowhere from any of the objects of the assessee, it appears that it aims to provide any benefit to a specific person or persons.
11. Further, we are also in agreement with the submissions made by the learned counsel for the assessee that at the time of granting of registration, the only two factors, which are to be taken into consideration by the Commissioner of Income Tax (Exemptions) are charitable character of the objects of the trust and genuineness of the activities. Nowhere in his whole order, the Commissioner of Income Tax (Exemptions) has brought on record any evidence or material to show that the objects of the assessee trust are not charitable or the activities of the assessee trust are not genuine. In view of this, we direct the Commissioner of Income Tax (Exemptions) to grant registration under section 12AA of the Act to the assessee.
12. In the result, the appeal of the assessee is allowed.