Tax Case (Appeal) v. Dawoodi Bohra Jamat Trust,Qutbi Masjit,Burhani Colony,Peelamedu,Coimbatore 641 014

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 14.12.2016 Coram: THE HONOURABLE MR. JUSTICE HULUVADI G. RAMESHANDTHE HONOURABLE DR. JUSTICE ANITA SUMANTH TAX CASE (APPEAL) No.608 of 2014The Commissioner of Income Tax,Coimbatore .. Appellant Versus Dawoodi Bohra Jamat Trust,Qutbi Masjit,Burhani Colony,Peelamedu,Coimbatore 641 014... RespondentPrayer : Tax Case Appeal filed under Section 260-A of theIncome Tax Act against the order of Income Tax AppellateTribunal, Madras “C” Bench, Chennai dated 7.5.2013 passed inI.T.A.No.1947/Mds/2012. Against the order of the office of thecommissioner of Income Tax 1 Coimbatore dated 21.09.2012 inC.No.127 (2511/12A/CIT-1 CBE 12/13 which was preferred againstthe order of the Income Tax Appellate Tribunal A Bench Chennaiin ITA No.634/MDS/2012 dated 15.05.2012, which was preferredagainst the order of the commissioner of Income Tax I Coimbatoredated 31.01.2012 in C.No.127(251) 12A CTTI/CBE/2011-2012. For Appellant .. Mr. J. Narayaswamy for Mr. T.R. Senthil Kumar For Respondent .. Mr. Sathish Parasaran Sr Counsel for Mrs.Arva Merchant JUDGMENT (Judgment of this Court was delivered by ANITA SUMANTH, J.) This Tax Case (appeal) is filed by the Department against anorder passed by the Income Tax Appellate Tribunal dated7.5.2013. 2. The substantial questions of law that arise forconsideration in this appeal are as follows; 1. Whether under the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wasright in holding that the assessee is entitledfor registration u/s.12AA of the Act?the case, the Income Tax Appellate Tribunal wasright in holding that the assessee is entitledfor registration u/s.12AA of the Act? 2. Whether on the facts and circumstances of thecase, the Tribunal was justified in holdingthat the giving of interest free loan toparticular community is a religious activitywithin the meaning of Section 2(15) of theIncome Tax Act, thereby entitling forregistration under section 12AA?” 3. The assessee/respondent is a religious trust. Anorder was passed by the Commissioner of Income Tax rejectingthe application filed by the assessee for grant ofregistration under section 12AA of the Income Tax Act (in short'Act'). In appeal before the Income Tax Appellate Tribunal, (inshort 'Tribunal') the matter was remanded to the file of theCommissioner of Income Tax for denovo adjudication by an orderdated 15.5.2012. An order was passed pursuant thereto by theCommissioner of Income Tax on 21.9.2012, where, after dueexamination of documents, the Commissioner noted that the Deedof Trust contained an object permitting the grant of interest-free loans to businessmen/women belonging to the Bohra Mohammedcommunity for furtherance of business interests. He was of theview that this was outside the ambit of religious activity andthe registration sought was rejected yet again. An appeal wasfiled before the Tribunal, which, vide order dated 7.5.2013allowed the same. 4. We have heard Mr.J.Narayanasamy appearing forthe appellant and Mr.Sathish Parasaran, learned Senior counselappearing for the respondent. 5. As noted by the Tribunal, the activity of grant ofloans to businessmen and women of the Bohra communityconstituted 'Qardan Hasana' which is acceptable and in fact encouraged as per the tenets of Islam practised by thecommunity. The objects in the Trust deed were thus infurtherance of religious activities and the Trust wasentitled to the grant of registration. 4. We have heard Mr.J.Narayanasamy appearing forthe appellant and Mr.Sathish Parasaran, learned Senior counselappearing for the respondent. 5. As noted by the Tribunal, the activity of grant ofloans to businessmen and women of the Bohra communityconstituted 'Qardan Hasana' which is acceptable and in fact encouraged as per the tenets of Islam practised by thecommunity. The objects in the Trust deed were thus infurtherance of religious activities and the Trust wasentitled to the grant of registration. 6. The Supreme Court in the case of CIT, Ujjain Vs.DawoodiBohra Jamaat (2014)364 ITR 31 (SC) has considered an identicalset of facts concluding that the activity of 'Qardan Hasana'constitutes religious activity. The Trust is thus entitled togrant of registration under section 12AA of the Act. We mayalso note that the specific object in the Trust Deed in thepresent case objected to by the Commissioner of Income Tax whichreads as follows: “4.4 To promote, propogate, foster andimplement the concept of Qardan Hasana among theDawoodi Bohras, in accordance with the tenets andprinciples of Dawat-e-Hadiyah.” is identical to the object considered by the Supreme Court asbelow;“C. For the betterment of the Dawoodi Bohracommunity to give and take Qardan Hasana according toFarma of Qurane Majid.” 7. In this view of the matter, there is no merit in thedepartmental appeal which stands dismissed on substantialquestion of law No.1. 8. Mr.Narayanasamy would fairly bring to our notice thatthe issue raised in substantial question of law No.2 does notarise from the orders of the lower authorities. The same standsrejected. The departmental appeal is dismissed. No costs. ToThe Asst. RegistrarIncome Tax Appellate Tribunal C BenchRajaji Bhavan Besant NagarChennai 90 https://hcservices.ecourts.gov.in/hcservices/ 2 The Commissioner of Income TaxCoimbatore 3 The Asst RegistrarIncome Tax Appellate Tribunal A BenchRajaji Bhavan, Besant NagarChennai 90 mg(CO)md(07/02/2017) TAX CASE (APPEAL) No.608 of 2014