Pune ITAT Grants Additional Opportunity To 'Lady Of Hope Church' To Establish Genuineness Of Its Charitable Activity

The ITAT directed the applicant to file all the relevant documents/evidence as and would be called for by the office of CIT(E). The Bench stated that this is the final opportunity given to the applicant trust, it must abide by all the hearing notices before the office of CIT(E).

The Bench of the ITAT comprising of Partha Sarathi Chaudhury (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) observed that “Whether trust is doing anything for commercial in nature, these are the issues to be seen at the time of assessment and not at the time of granting registration. The CIT(E) must come up with a speaking order as to the activities performed by the applicant trust and given those activities whether they are genuine or not, meaning thereby he must conduct adequate examination and verification of facts and form his opinion accordingly and at the same time, he must mention regarding the applicant trust whether it is also abiding with the existing laws in force, these areas are not at all discussed and adjudicated in the order of CIT(E). The power of granting registration is always with the Department as per the statute, however, this power has to be exercised while analysing all the documents and examining the charitable activities of the applicant trust in terms with section 12AA of the Act.” (Para 6)

As per the brief facts of the case, the CIT(E) cancelled the provisional registration granted to the assessee trust and also rejected the registration of the said applicant trust u/sec. 12AB. The CIT(E) provided several reasons for rejecting the registration and cancellation of the provisional registration of the trust. The CIT(E) stated that as per the object clause of the trust, it is only for the benefit of the Christian community i.e. Roman Catholics, and not for the entire society at large. The CIT(E) further stated that the Archbishop of Mumbai has been given enormous power for taking essential decisions about the functioning of the applicant trust which therefore suggests that it is for the benefit of one particular community of the society. The third reason canvassed by the CIT(E) for not granting registration is that the said applicant trust has been receiving rental income by way of leasing a plot of land and according to the CIT(E), it appears that this transaction is commercial. For these three reasons, the provisional registration was cancelled and the application for regular registration was denied.

The Bench noted that CIT(E) has culled out certain specific clauses of the trust deed as appearing in his order, but has not considered the entire trust deed as a whole.

The Bench observed that the CIT(E) should have examined the entire trust deed in totality vis-à-vis the charitable activities conducted by the applicant trust to examine whether the applicant trust is only catering to the benefit of the Christian community or whether it is providing benefit to the entire target group community at large.

The Bench observed after reading the trust deed that there are clauses that talk of providing financial benefits like scholarships etc. (to any deserving persons). So, these aspects have to be examined by the CIT(E) along with examining the actual charitable activities performed by the applicant trust which is missing in the order of the CIT(E).

The Bench further observed that in terms of section 12AA, the CIT(E) must be satisfied with the genuineness of the activities performed by the applicant trust and to see whether the applicable laws for the time being in force are followed by such applicant trust while discharging their charitable activities.

Therefore, under the light of natural justice, ITAT allowed the assessee's appeal for statistical purposes.

Counsel for Appellant/Taxpayer: Mahendra Gohel

Counsel for Respondent/Department: Keyur Patel

Case Title: Our Lady of Hope Church verses CIT (Exemption)

Case Number: ITA No.1239/PUN/2023

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