P.M. Jagtap, A.M

1. This appeal filed by the assessee is directed against the order of learned C.I.T.-II, Thane whereby he rejected the application filed by the assessee for certificate u/s 80G.

2. The assessee in the present case is a Trust which filed an application for grant of certificate u/s 80G before the learned CIT-II, Thane on 21-04-2009 for a further period beyond 31-03-2009. The said application was accompanied by copy of trust deed, details of activities of the trust, list of trustees, certificate issued u/s 13(1)(c), copy of PAN Card, certificate from Charity Commissioner, accounts for the year ended 31-03-2005, 31-03-2006 and 31-3-2007 and copy of registration certificate issued u/s 12A. A copy of certificate issued earlier granting exemption u/s 80G upto 31-03-2009 was also filed by the assessee. From the perusal of the said documents, the learned CIT noted that the objects of the trust as per the memorandum of association were as under :

i) To provide the educational facilities to the Muslim boys and girls for their intellectual, physical vocational and religious development.

ii) To provide the educational opportunities to non Muslim boys and girls through the Schools run by Anjuman.

iii) To bring the unity among the Muslims for their social cultural and moral improvements.

iv) The Muslim non political association in Raigad District or Konakan area, working with the same aims and objectives as that of Anjuman should be contacted and sought their mutual cooperation to solve the common problems.

According to the learned CIT, objects 3 and 4 above were religious objects and there was an infringement of the provisions of section 80G(5)(iii) of the Income-tax Act, 1961. He, therefore, required the assessee to show cause as to why its application for grant of certificate u/s 80G for further extension should not be rejected. In reply, it was stated by the assessee that it has been duly registered u/s 12AA and was earlier granted exemption u/s 80G(5) till 31st March, 2009. It was submitted that the objects of the trust are continued to be the same and there is no change therein. It was further stated that the objects of the trust are charitable in nature within the meaning of section 2(15) and the same are of general public utility. It was submitted that what is required is that the section of the public who are beneficiaries must be well defined and identified. It was submitted that the objects of the trust comply with this requirement and there is also no dispute as to the genuineness of the activities conducted by the trust which runs several schools in the villages and backward areas of the district. It was submitted that the students of the said schools are from all castes and creed irrespective of any particular religion. It was also submitted that the primary and dominant purpose of the trust is charitable and other objects are merely ancillary or incidental to the primary object. It was contended that the assessee trust thus is entitled for renewal of certificate granted earlier u/s 80G(5). In support of this contention, reliance was placed by the assessee on the following judicial pronouncements :

i) CIT V/s Andhra Chamber of Commerce : 55 ITR 722

ii) CIT V/s Gujarat Maritime Board : 295 ITR 561 (SC)

iii) CIT V/s Ahmedabad Rana Caste Association : 88 ITR 354 .

3. The learned CIT found that the case laws relied upon by the assessee trust were distinguishable on facts. He also found no merit in the submissions made on behalf of the assessee in support of its application for renewal of 80G certificate and rejected the said application for the following reasons given in paragraph No. 6 of his impugned order :

Clause (iii) and (iv) require the Trust to work for the advantage of a particular religious community viz. Muslim community. The objects restrict the operation of the Trust to Muslim community. The provisions of Sec. 80G(5)(iii) are clear that the institution or fund is not expressed to be for the benefit of any particular religious community or caste. Therefore clause (iii) and (iv) of the objects are in contravention to the provision of Sec. 80G(5)(iii), hence the Trust becomes ineligible for claiming exemption u/s 80G of the I.T. Act. This view is duly supported by the decision of Honble Supreme Court in the case of CIT V/s Kamla Town Trust : (1996) 217 ITR 699(SC). In this case it has been held by Honble Supreme Court that a Trust cannot be said to be for public charitable purpose if one of the objects of it was not a public charitable nature.

Aggrieved by the order of learned CIT, the assessee has preferred this appeal before the Tribunal.

4. The learned counsel for the assessee, at the outset, invited our attention to

the copy of letter dated 10-07-2007 issued by the learned CIT-II, Thane granting registration to the assessee trust u/s 12A with effect from 01-04-2006. He submitted that the registration so granted to the assessee trust has not been withdrawn till date. He then took us through the objects of the assessee trust to point out that the predominant purpose of the assessee trust is to provide education facilities and runs schools which are open to all the students. He submitted that with the same objects, the assessee trust was granted certificate u/s 80G(5) by the learned CIT-II, Thane upto 31-03-2009 but further extension of the said certificate beyond 31-03-2009 has been denied without there being any change in the objects. He then took us through the annual accounts of the assessee trust for four years ending 31-03-2006, 31-03-2007, 31-03-2008 and 31-03-2009 to show that majority of the funds were utilized by it for providing educational facilities to students belonging to all the religions. He contended that the predominant objects of the assessee trust thus is purely of a charitable nature and the learned CIT was not justified in rejecting the application of the trust for certificate u/s 80G(5) merely because some of the objects of the trust were meant to provide advantage to a particular religious community viz. Muslim community. He contended that the word "Muslim" by itself does not signify any religion and it is just an identification of a group of people. Relying on the decision of Honble Gujarat High Court in the case of Hiralal Bhagwat vs. CIT : 246 ITR 188, he contended that object beneficial to a section of public is an object of "general public utility". He also relied on the decision of coordinate bench of this Tribunal in the case of Muslim Bazm E-Ittihad-O-Tarraqq vs. CIT-II, Thane rendered vide an order dated 10th December, 2008 in ITA No. 5026/Mum/07 and submitted that the objects of the assessee trust in the said case were held to be for charitable purpose inspite of the fact that the same were for the benefit of Muslims.

5. The learned DR, on the other hand, strongly supported the impugned order of the learned CIT rejecting the application of the assessee trust for certificate u/s 80G(5). He submitted that the objects of the assessee trust are clearly of religious nature as pointed out by the learned CIT in his impugned order and the same have not been changed or amended by the assessee so far.

6. We have considered the rival submissions and also perused the relevant material on record. It is observed that the assessee was granted certificate u/s 80G(5) for the period 01-04-2006 to 31-03-2009 by the learned CIT with the same objects and the application of the assessee for further extension of the said certificate beyond the period of 31-03-2009 has been rejected by him without there being any change in the said objects on the basis of which certificate u/s 80G(5) was earlier granted. It is also observed that the assessee trust has been granted registration u/s 12A by the same learned CIT with effect from 01-04-2006 and as submitted by the learned counsel for the assessee, the registration so granted has not been withdrawn till date. It is also observed that the predominant object of the assessee trust is to provide educational facilities, inter alia, to non-muslim boys and girls through the schools run by Anjuman and as demonstrated by the learned counsel for the assessee from the annual accounts of the assessee trust for the relevant four years, it has spent majority of its funds for the said object. In the case of Hiralal Bhagwati (supra) cited by the learned counsel for the assessee, Honble Gujarat High Court has held that object beneficial to a section of public is an object of "general public utility" and it is not necessary that the object must be to serve the whole mankind or all persons living in a country. In the said case, registration u/s 12A was allowed to the assessee trust after a detailed examination of its objects and it was held by the Honble Gujarat High Court that once registration u/s 12A was granted, benefit of exemption u/s 80G could not be denied. In the case of Director of Income-tax vs. Bharat Diamond Bourse : 259 ITR 280 , it was held by the Honble Supreme Court that once the dominant objects are found to be of charitable nature, the assessee was rightly registered u/s 11 by treating it as an Institution established for charitable purpose within the meaning of section 2(15) of the Income-tax Act, 1961. In the case of Muslim Bazm E-Ittihad-O-Tarraqq (supra) cited by the learned counsel for the assessee, a similar issue had come up for consideration before the coordinate bench of this Tribunal wherein the objects of the trust were for the benefit of Muslims and it was held by the Tribunal following the decision of Honble Gujarat High Court in the case of CIT vs. Ahmedabad Rana Caste Association : 88 ITR 354 (affirmed by Honble Supreme Court in 140 ITR 1 ) that "object of general public utility" in section 2(15) of the Act can be restricted to a section of the society, even where such section is determined on the basis of religion. In the case of Ahmedabad Rana Caste Association (supra), the trust was created for the benefit of members of Rana community with the object of providing for doing all acts to bring about unity and brother-hood and complete development of all aspects of life of members of the community and it was held by the Honble Gujarat High Court that a purpose calculated to promote unity and brother-hood amongst members of the community is a purpose beneficial to the community and thereby charitable.

7. Keeping in view the legal position emanating from the judicial pronouncements discussed above including the decision of the Honble Apex Court and having regard to the relevant facts of the case, we are of the view that the assessee is eligible for grant of certificate u/s 80G(5) and the learned CIT is not justified in rejecting its application for the said certificate. We, therefore, set aside his impugned order and direct him to grant certificate to the assessee trust u/s 80G(5) as applied.

8. In the result, the appeal of the assessee is allowed.

Order pronounced on this 10th day of February, 2012.