Religious Teaching Not a Bar: ITAT Allows 12A Exemption to Trust Running Madrasa:

Religious Teaching Not a Bar: ITAT Allows 12A Exemption to Trust Running Madrasa The assessee filed an appeal against the order of the CIT (Exemptions) dated 26.09.2024, rejecting its application for exemption under Section 12AB of the Income Tax Act. There was a delay of 138 days in filing the appeal, which the Tribunal condoned upon being satisfied with the assessee’s explanation that the order had come to notice only during return preparation in April 2025. The trust’s exemption application was rejected by CIT (E) primarily on two grounds: (1) that the trust ran madrasas and hence was religious in character, and (2) that photographic evidence indicated activities were conducted only for members of a specific community. Main issue before the Tribunal: Whether a trust can be excluded from Section 12AB registration because it operates madrasas or because of purportedly religiously exclusive photos? Tribunal's Decision: According to the ITAT, rejecting the exemption was unjustified. It pointed out that denying the exemption based solely on photos showing students dressed in a certain way lacked substance. The Tribunal stressed that the dress or community affiliation visible in the photos cannot override the institution's basic charitable nature. On the second ground, it cited the Supreme Court's Dawoodi Bohra Jamat judgment, which held that madrasas providing religious education fall under “education” as defined in Section 2(15) of the Act and don't disqualify a trust from claiming charitable status. The Tribunal found the facts in this case identical to those in the Supreme Court's judgment and noted that the Revenue couldn't distinguish between the two cases. As a result, the Tribunal set aside the CIT(E)’s order and directed the assessee to be granted exemption under Section 12A, stating that the trust couldn't be classified as religious merely for running a madrasa or showing members of a particular community participating in activities.  To Read the Full Judgment, Download PDF Given Below