• Notification Date: 25-05-2023
• Notification No: N/A

Private Religious Trusts not eligible for Registration u/s 12AA of Income Tax Act

The Chennai bench of Income Tax Appellate Tribunal (ITAT) has recently held that private religious trusts are not eligible for registration under Section 12AA of the Income Tax Act, 1961. Assessee-Arulmigu Aathi Karumapuram Sellandiamman Kudipaattukararkal Seva Trust, constituted by a trust deed has filed an application in Form 10A for registration under Section 12AA of the Act on 20.06.2017. 

After examining the above objects in the trust deed, the CIT(E) issued a show cause notice to the assessee trust mentioning therein that the trust exists solely for a particular sect of the Hindu religion and therefore why it should not be treated as private religious trust. Certain clauses in the trust deed are on caste lines which are opposed to the public policy of the Government. After considering the submissions CIT(E) opined, as per the provisions of Section 11 of the Income Tax Act, the beneficiaries of the trust must be public at large and accordingly, private religious trusts are not entitled for exemption of income. 

Aggrieved by the order of the CIT(E) assessee filed appeal before the tribunal. N. Subramaniyan counsel for the assessee submitted that Assessee trust was helping to other temples namely, Vinayagar temple, Mariamman temple, Athanoor Amman, Periaamman, Perumal temple and Easwaran temple as common temples for all other people residing in those areas. All other six temples are public temples common to all people irrespective of caste or creed. 

Further, the counsel submitted that the entire activity of the trust has been carried out by receiving contributions from its own members and incur expenditure and there is no profit motive involved, thereby covered under the Doctrine of Mutuality and therefore, registration under section 12AA of the Income Tax Act shall be granted. 

M. Rajan, counsel for the revenue submitted that the assessee trust has no connection with other temples doing any charity as all other temples are under the control of the Hindu Religious and Charitable Endowments Department, Tamil Nadu and strongly supported the order passed by the CIT(E). The tribunal observed that assessee trust has been established exclusively to serve a particular sub sect of the Vellala Gounder community. Therefore, no registration under Section 12AA of the Income Tax Act can be granted. Also, It is very clear that six temples are under the control of the Hindu Religious & Charitable Endowments Department, Tamil Nadu and it is fully maintained by the Government of TamilNadu .Therefore the the argument of the assessee could not be accepted. Thus, assessee trust did not come under the purview of charitable trust or under the purview of public religious trust is only a private religious trust. 

Therefore, the two-member bench of V. Durga Rao, (Judicial Member) and G. Manjunatha, (Accountant Member) dismissed the appeal filed by the assessee.