The Commissioner Of Income Tax, (Exemption), Bhopal (M.p v. Shree Vimalnath Jain Swetamber Mandir Trust, Nakoda Bhairav Nagar,Pachpedi Naka, Raipur (C.g

(Tax Case No.31/2019) 2025:CGHC:15238-DB AFR TAXC No. 31 of 2019 (Arising out of order dated 16-1-2019 passed by the Income TaxAppellate Tribunal, Raipur Bench, Raipur in ITA No.50/RPR/2018) The Commissioner of Income Tax, (Exemption), Bhopal (M.P.) ... Appellant versus Shree Vimalnath Jain Swetamber Mandir Trust, Nakoda Bhairav Nagar,Pachpedi Naka, Raipur (C.G.) ... Respondent For Appellant :Mr. Ajay Kumrani, Advocate.For Respondent :Mr. Sumit Nema, Senior Advocate through videoconferencing with Mr. Anand Dadariya, Advocate.For Respondent :Mr. Sumit Nema, Senior Advocate through videoconferencing with Mr. Anand Dadariya, Advocate. -Division Bench: Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Sanjay Kumar Jaiswal, JJ. Order On Board(01/04/2025) Sanjay K. Agrawal, J. 1. This tax appeal preferred under Section 260A of the Income TaxAct, 1961 (for short, ‘the Act’) was admitted for hearing on 15-3-Act, 1961 (for short, ‘the Act’) was admitted for hearing on 15-3- 2023 by formulating the following substantial questions of law: - “1.Whether on facts & circumstances of the case, ITAT iscorrect in directing the CIT(E) to grant the registration u/s (Tax Case No.31/2019) 12 AA of that Act irrespective of the findings by the CIT(E)that the activities of the trust is not entirely charitable forpublic at large? 2.Whether on facts and in circumstances of the case andin law, the ITAT is correct in not considering the findings ofthe CIT(E) that trust has received huge donations as corpusfund but in the copy of donations receipts produced itrevealed that there is no specific purpose or any details ofdonors mentioned in the copy of the receipt book?” 2. The assessee / respondent herein has applied for registration under Section 12AA of the Act and in order to verify the objectsand activities of the assessee / respondent and to ascertain thefulfillment of the conditions mentioned in Section 12AA, theassessee was given an opportunity of hearing by issuing notice inresponse to which the assessee filed written submission andthereafter, the assessee was asked to submit some more details,however, the competent authority i.e. the learned Commissioner ofIncome Tax (Exemption), Bhopal, by order dated 28-3-2018,rejected the application of the assessee seeking registration underSection 12AA of the Act. Feeling aggrieved against the order dated28-3-2018 passed by the CIT(E), the assessee preferred appealbefore the Income Tax Appellate Tribunal, Raipur Bench, Raipurand the ITAT by its order dated 16-1-2019 allowed the appealholding that the objects of the assessee Trust are both charitableand religious in nature, therefore, the assessee Trust is entitled forregistration under Section 12AA of the Act. The order of the ITATgranting registration under Section 12AA of the Act to the assessee (Tax Case No.31/2019) / respondent herein is called in question by the appellant hereinunder Section 260A of the Act. 3. Mr. Ajay Kumrani, learned counsel appearing for the appellantherein / Revenue, would submit that the ITAT was absolutelyunjustified in granting the application for registration in favour ofthe assessee by holding that the objects and purposes of theassessee Trust are both charitable and religious in nature, whereasit is only religious in nature and, therefore, the appeal deserves tobe allowed. herein / Revenue, would submit that the ITAT was absolutelyunjustified in granting the application for registration in favour ofthe assessee by holding that the objects and purposes of theassessee Trust are both charitable and religious in nature, whereasit is only religious in nature and, therefore, the appeal deserves tobe allowed. 3. Mr. Ajay Kumrani, learned counsel appearing for the appellantherein / Revenue, would submit that the ITAT was absolutelyunjustified in granting the application for registration in favour ofthe assessee by holding that the objects and purposes of theassessee Trust are both charitable and religious in nature, whereasit is only religious in nature and, therefore, the appeal deserves tobe allowed. herein / Revenue, would submit that the ITAT was absolutelyunjustified in granting the application for registration in favour ofthe assessee by holding that the objects and purposes of theassessee Trust are both charitable and religious in nature, whereasit is only religious in nature and, therefore, the appeal deserves tobe allowed. 4. Mr. Sumit Nema, learned Senior Counsel appearing through videoconferencing for the assessee / respondent herein, would supportthe impugned order and submit that the ITAT has clearly recordeda finding that the objects of the assessee Trust are both charitableand religious in nature, therefore, the ITAT has rightly granted theapplication for registration in favour of the assessee under Section12AA of the Act.conferencing for the assessee / respondent herein, would supportthe impugned order and submit that the ITAT has clearly recordeda finding that the objects of the assessee Trust are both charitableand religious in nature, therefore, the ITAT has rightly granted theapplication for registration in favour of the assessee under Section12AA of the Act. 5. We have heard learned counsel for the parties and considered theirrival submissions made herein-above and also went through thematerial available on record minutely and thoroughly as well.rival submissions made herein-above and also went through thematerial available on record minutely and thoroughly as well. 6. Section 12AA(1)(b)(i) of the IT Act states as under: - “12AA. Procedure for registration.—(1) The PrincipalCommissioner or Commissioner, on receipt of anapplication for registration of a trust or institution made (Tax Case No.31/2019) under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A, shall— (a) xxxxxxxxx (b) after satisfying himself about the objects of the trustor institution and the genuineness of its activities asrequired under sub-clause (i) of clause (a) andcompliance of the requirements under sub-clause (ii) ofthe said clause, he— (i) shall pass an order in writing registering the trustor institution; (ii) xxxxxxxxx and a copy of such order shall be sent to the applicant:” 7. A careful perusal of the aforesaid provision would show that thePrincipal Commissioner or the Commissioner has to satisfy himselfabout the objects of the trust or institution and the genuineness ofits activities as required under sub-clause (i) of clause (a) andcompliance of the requirements under sub-clause (ii) of the saidclause, and has to pass an order in writing registering the trust orinstitution and a copy of the order so passed will be sent to theapplicant. 8. The Supreme Court in the matter of Ananda Social andEducational Trust v. Commissioner of Income Tax and another1held that newly registered trust on basis of its objects, without anyactivity having been undertaken, is entitled for registration underSection 12AA of the Act, and observed as under: - (Tax Case No.31/2019) 7. A careful perusal of the aforesaid provision would show that thePrincipal Commissioner or the Commissioner has to satisfy himselfabout the objects of the trust or institution and the genuineness ofits activities as required under sub-clause (i) of clause (a) andcompliance of the requirements under sub-clause (ii) of the saidclause, and has to pass an order in writing registering the trust orinstitution and a copy of the order so passed will be sent to theapplicant. 8. The Supreme Court in the matter of Ananda Social andEducational Trust v. Commissioner of Income Tax and another1held that newly registered trust on basis of its objects, without anyactivity having been undertaken, is entitled for registration underSection 12AA of the Act, and observed as under: - (Tax Case No.31/2019) “9.Section 12-AA undoubtedly requires the Commissionerto satisfy himself about the objects of the trust or institutionand genuineness of its activities and grant a registration onlyif he is so satisfied. The said section requires theCommissioner to be so satisfied in order to ensure that theobjects of the trust and its activities are charitable since theconsequence of such registration is that the trust is entitledto claim benefits under Sections 11 and 12 of the Act. Inother words, if it appears that the objects of the trust and itsactivities are not genuine that is to say not charitable theCommissioner is entitled to refuse and in fact, bound torefuse such registration. 10.It was argued before us that the Commissioner isrequired to be satisfied about two things — firstly that theobjects of the trust and secondly, its activities are genuine. Ifthere have been no activities undertaken by the trust thenthe Commissioner cannot assess whether such activities aregenuine and therefore, the Commissioner is bound to refusethe registration of such a trust. 11.We have given our anxious consideration to the abovesubmissions made by Ms Aishwarya Bhati, the learned SeniorCounsel appearing for the appellant Director of Income Taxand find that it is not possible to agree with the same. Thepurpose of Section 12-AA of the Act is to enable registrationonly of such trust or institution whose objects and activitiesare genuine. In other words, the Commissioner is bound tosatisfy himself that the objects of the trust are genuine andthat its activities are in furtherance of the objects of the trust,that is equally genuine. 12.Since Section 12-AA pertains to the registration of thetrust and not to assess of what a trust has actually done, weare of the view that the term “activities” in the provisionincludes “proposed activities”. That is to say, aCommissioner is bound to consider whether the objects ofthe trust are genuinely charitable in nature and whether theactivities which the trust proposed to carry on are genuine inthe sense that they are in line with the objects of the trust. Incontrast, the position would be different where theCommissioner proposes to cancel the registration of a trustunder sub-section (3) of Section 12-AA of the Act. There theCommissioner would be bound to record the finding that an (Tax Case No.31/2019) activity or activities actually carried on by the trust are notgenuine being not in accordance with the objects of the trust.Similarly, the situation would be different where the trusthas before applying for registration been found to haveundertaken activities contrary to the objects of the trust.” 9. The principle of law laid down in Ananda Social and Educational Trust(supra) has been followed by Supreme Court with approvalin the matter of Commissioner of Income Tax Exemptions v. M/sInternational Health Care Education and Research Institute2 in which it has been held in paragraphs 14 and 15 as under: - (Tax Case No.31/2019) activity or activities actually carried on by the trust are notgenuine being not in accordance with the objects of the trust.Similarly, the situation would be different where the trusthas before applying for registration been found to haveundertaken activities contrary to the objects of the trust.” 9. The principle of law laid down in Ananda Social and Educational Trust(supra) has been followed by Supreme Court with approvalin the matter of Commissioner of Income Tax Exemptions v. M/sInternational Health Care Education and Research Institute2 in which it has been held in paragraphs 14 and 15 as under: - “14.We may agree to a certain extent with the learned ASGthat the very purpose for any assessee to seek registrationunder Section 12AA of the Act is to claim exemption underSections 10 and 11 respectively of the Act, as the case maybe. Therefore, before seeking registration, it is essential thatthe Trust should adduce cogent material to the satisfaction ofthe Commissioner that the activities are genuinely charitablein nature. 15.To the aforesaid extent there is no problem. We mayonly say that mere registration under Section 12-AAautomatically does not entitle any charitable trust to claimexemption under Section 10 and 11 respectively of the Act,1961. When a return is filed by any trust claimingexemption it is for the assessing officer to look into all thematerials and satisfy itself whether the exemption has beenclaimed genuinely or not. If the assessing officer is notconvinced it is always open for him to decline grant ofexemption.“ 10. In the case in hand, the ITAT after considering the submissions of parties, recorded a categorical finding in paragraph 6 of the orderthat objects of the assessee Trust are both charitable as well asreligious in nature and held as under: - 2Special Leave Petition (Civil) Diary No.19528/2018, decided on 11-2-2025 Soma “6.… We have perused the objects of the Trust placed in thepaper book. We find that the assessee Trust has objectswhich are both charitable and religious in nature. Therefore,it can safely be said that assessee Trust is a composite Trustand not purely for charitable purposes. It is the Trust forboth charitable and religious purposes. In suchcircumstances by applying the decision of the Hon’bleGujarat High Court in the case of Commissioner of IncomeTax Vs. Barkate Saifiyah Society (supra.), section 13(1)(b) isalso not applicable in the case of the assessee Trust herein.” 11. In view of the categorical finding recorded by the ITAT that the 2Special Leave Petition (Civil) Diary No.19528/2018, decided on 11-2-2025 Soma “6.… We have perused the objects of the Trust placed in thepaper book. We find that the assessee Trust has objectswhich are both charitable and religious in nature. Therefore,it can safely be said that assessee Trust is a composite Trustand not purely for charitable purposes. It is the Trust forboth charitable and religious purposes. In suchcircumstances by applying the decision of the Hon’bleGujarat High Court in the case of Commissioner of IncomeTax Vs. Barkate Saifiyah Society (supra.), section 13(1)(b) isalso not applicable in the case of the assessee Trust herein.” 11. In view of the categorical finding recorded by the ITAT that the purposes and objects of the assessee Trust are both charitable andreligious in nature, which could not be contradicted competentlyby learned counsel appearing for the appellant / Revenue duringthe course of argument before us, as such, the ITAT is absolutelyjustified in holding that the assessee Trust is entitled forregistration under Section 12AA of the Act, which is pure andsimple finding of fact based on the evidence available on recordand is neither perverse nor contrary to law. In that view of thematter, both the substantial questions of law are answered infavour of the assessee / respondent herein and against theRevenue / appellant herein. The present tax appeal is accordingly,dismissed leaving the parties to bear their own cost(s). religious in nature, which could not be contradicted competentlyby learned counsel appearing for the appellant / Revenue duringthe course of argument before us, as such, the ITAT is absolutelyjustified in holding that the assessee Trust is entitled forregistration under Section 12AA of the Act, which is pure andsimple finding of fact based on the evidence available on recordand is neither perverse nor contrary to law. In that view of thematter, both the substantial questions of law are answered infavour of the assessee / respondent herein and against theRevenue / appellant herein. The present tax appeal is accordingly,dismissed leaving the parties to bear their own cost(s). Sd/- Sd/-(Sanjay K. Agrawal) (Sanjay Kumar Jaiswal)JUDGEJUDGE