2003 (9) TMI 46 - HC - Income Tax

Inconsistent Exemption Decisions Remanded for Reconsideration

The court found the rejection of the petitioner's exemption application under section 80G to be unsustainable, especially when compared to the exemption ... Benefit of section 80G - Tax Practitioners' Benevolent Fund is the petitioner - It is not open to the Income-tax Department to apply different norms to different trusts having similar objects seeking grant of exemption under section 80G - Income-tax Officer was not justified in holding that none of the objects of the petitioner were charitable in nature inasmuch as the trust is meant for the benefit of a specific group of people, i.e., tax practitioners and their relatives, and the objects stated are vague thus disentitling the benefit of section 80G – We restore the petitioner's application under section 80G of the Income-tax Act, 1961, for reconsideration by the concerned authorities in accordance with law Issues:1. Rejection of exemption application under section 80G of the Income-tax Act for a public charitable trust.2. Comparison with another charitable trust granted exemption under section 80G.3. Interpretation of 'charitable purpose' under section 2(15) of the Income-tax Act.Issue 1: Rejection of exemption application under section 80G:The petitioner, a Tax Practitioners' Benevolent Fund, applied for exemption under section 80G of the Income-tax Act, which was rejected by the Income-tax Officer for not being charitable in nature. The rejection was based on the belief that the trust's objects were meant for a specific group of people, i.e., tax practitioners and their relatives, and that the objects stated were vague. The petitioner challenged this decision, arguing that the rejection was unjustified given the charitable nature of their trust's objectives, which included providing financial assistance to necessitous persons related to taxation.Issue 2: Comparison with another charitable trust granted exemption under section 80G:The petitioner pointed out that a similar charitable trust, the Chartered Accountants' Benevolent Fund, had been granted exemption under section 80G despite having almost identical objectives for the benefit of chartered accountants and their dependents. The petitioner argued that if the Chartered Accountants' Benevolent Fund could qualify for exemption, then the Tax Practitioners' Benevolent Fund should also be granted the same, as both trusts aimed to provide financial assistance to necessitous persons in their respective fields.Issue 3: Interpretation of 'charitable purpose' under section 2(15) of the Income-tax Act:The court analyzed the definition of 'charitable purpose' under section 2(15) of the Income-tax Act, which includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. The court emphasized that if the Chartered Accountants' Benevolent Fund could qualify for exemption under section 80G based on their objectives, which were similar to those of the Tax Practitioners' Benevolent Fund, then it was unreasonable for the respondent to deny the latter's exemption application. The court concluded that the rejection of the petitioner's application was unjustified and ordered a reconsideration of the exemption application in accordance with the law, directing the concerned authorities to make a fresh decision expeditiously.In conclusion, the court found the rejection of the petitioner's exemption application under section 80G to be unsustainable, especially when compared to the exemption granted to a similar charitable trust. The court emphasized the need for consistent application of norms and parameters for granting exemptions to trusts with similar objectives, ultimately allowing the writ petition in part and setting aside the original rejection order for reconsideration.