Thursday, March 20, 2014

Explicit religious trust won't get registration; Madarsa with dual purpose of charity and religious gets registration

The Supreme Court held as under:
1)  The objects of trust providing for activities of religious nature and were restricted to the specific communities were objects with religious purpose only. However, other objects would not be purely religious in nature if such objects trace their source to the Holy Quran and resolve to abide by the path of godliness shown by Allah;
2)  The establishment of Madarsas or institutions to impart religious education to the masses would qualify as a charitable purpose under the head of education under the provisions of section 2(15). The Madarsas do not confine themselves to only dissipation of religious teachings but also contribute to the holistic education of an individual;
3)  Therefore, the objects of the trust exhibited the dual tenor of religious and charitable purposes and activities;
4)  From the phraseology in section 13(1)(b), it could be inferred that the Legislature intended to include only the trusts established for charitable purposes in such provision. That, however, would not mean that if a trust was a composite one, i.e., one for both religious and charitable purposes, it would not be covered by clause (b);
5)  What was intended to be excluded from being eligible for exemption under section 11 was a trust for charitable purpose which was established for the benefit of any particular religious community or caste;
6)  In the instant case, the objects of the trust were based on religious tenets under Quran according to religious faith of Islam. The perusal of the objects and purposes of the trust would clearly demonstrate that the activities of the trust, though, were both charitable and religious, yet were not exclusively meant for a particular religious community;

7)  The objects of trust did not channel the benefits to any community and, thus, would not fall under the provisions of section 13(1)(b).Thus, assessee was a charitable and religious trust which did not benefit any specific religious community and, therefore, it would be eligible to claim exemption under section 11.- CIT v. Dawoodi Bohara Jamat [2014] 43 243 (SC)