Calicut Islamic Cultural Society vs. Asst. CIT
A.Y. : 2003-04. Dated 31.07.2008.
Section 11 read with Section 12A — An Institution or Trust
having mixed activities of charity as well as religion cannot be denied
exemption u/s.11(1)(a).
The assessee was an Islamic Society registered under the
Societies Registration Act, 1860 as a charitable society. Its claim for
exemption of income u/s.11 was not allowed by the Assessing Officer on the
ground that the activities of the assessee were partly religious and partly
charitable in nature and, thereby, they were not eligible for claiming
exemption of their income u/s.11(1)(a).
The CIT (A) confirmed the order of the Assessing Officer.
The Tribunal, relying on the decisions in the following
cases, held that the assessee was entitled to exemption u/s.11 :
a. Hiralal Bhagwati vs. CIT, (2000) 246 ITR 188 (Guj.)
b. CIT vs. Surat City Gymkhana, (2008) 170 Taxman
612 (SC)
The Tribunal noted as under :
1. The assessee was not constituted only for the benefit
of the backward community but for the benefit of the entire public.
Moreover, in the institutions run by the assessee, more particu-larly the
educational institutions, members of other communities were also admitted.
They were also giving support to the poor.
2. The entire controversy was thus revolving around the
interpretation of Section 11(1)(a). It was interpreted that as per the words
used in Section 11(1)(a), any institution or trust must perform either
wholly charitable or wholly religious activities.
3. The interpretation given by the Assessing Officer as
well as by the CIT(A) that the purpose should be wholly charitable or wholly
religious was only academic. When the Legislature has categorically defined
the purposes like religious and charitable and if the assessee is engaged as
per their objects in mixed activities, which are partly charitable and
partly religious, it cannot be said that Section 11(1)(a) does not
contemplate such a situation.
4. Once registration is granted to the assessee by the
CIT u/s.12A, the Assessing Officer cannot probe into the objects and the
purpose of the trust or institution — that is within the exclusive domain
and jurisdiction of the Commissioner. What the Assessing Officer can do at
the most is that he can investigate into the matter within the four corners
of Section 13. In the instant case, the Assessing Officer had gone ahead
with investigating and probing the basic objects of the trust by entering
into the shoes of the Commissioner and such exercise was not permissible.
In view of the above, the assessee was allowed the benefits
of Section 11.
