Mixed Charitable-Religious Objects Do Not Bar Section 12AA Registration: Madras HC

CIT Vs Sahasra Linga Yoga Anjaeya Saptharishi Peedam Seva Trust (Madras High Court)

Summary: The Madras High Court dismissed the Revenue’s Tax Case Appeal challenging the Tribunal’s decision granting registration to the assessee trust under Section 12AA of the Income Tax Act, 1961. The substantial question was whether the Tribunal was right in holding that the assessee trust was entitled to registration under Section 12AA. The Department relied upon the Court’s earlier decision in The Commissioner of Income Tax-I, Madurai vs. Arulmigu Sri Kamatchi Amman Trust, Karaikudi, TCA No.643 of 2011, which the High Court treated as covering the issue.

The Tribunal had accepted the assessee’s claim for registration on the basis that its trust deed contained a mixture of religious and charitable objects. Referring to the operative portion of the earlier decision, the High Court noted that Section 11(1)(a) applies to income derived from property held under trust wholly for charitable or religious purposes. The earlier ruling held that Section 12AA does not make a disqualifying distinction between trusts created for charitable purposes and those created for religious purposes, and that the existence of charitable as well as religious objects does not by itself prevent an application for registration. Applying that ruling, the High Court answered the substantial question in favour of the assessee and dismissed the Revenue’s appeal without costs.