TaxTMI 
TaxTMI 
2014 (9) TMI 1021
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....ied. 3. On the facts and circumstances of the case and in law the learned Commissioner of Income Tax erred in passing the order without following the principles of natural justice. 4. The learned Commissioner of Income Tax failed to appreciate that the trust deeds and the activities of the trust were verified by the various commissioners of Income Tax including the commissioner of the Income Tax who has passed the impugned order and on their satisfaction the trust was registered u/s 12A and recognition / renewal of recognition u/s 80G was granted. 5. On the facts and circumstances of the case and in law the learned CIT erred in holding that the activities of the trust were of a religious nature.She failed to appreciate that all the activities of the trust were carried out in accordance with the objects of the trust and were for the benefit of general public and all facilities of the trust were made available to general public without distinguishing between community, caste, creed and religion. 6. On the facts and circumstances of the case and in law the learned CIT erred in treating voluntary contributions received with specific directions towards various funds a....
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....ame was a Donation-in-kind (Vasturup Denagi) from the devotees and the construction of the of temple was for advancement of the object of general public utility, and was therefore, in accordance with the object of the trust. The assessee also contended that the Pooja, Abhishek and other religious activities are being carried out by another trust known as Sanjeevan Trust, and hence, the assessee has not incurred any expenditure as alleged in performing the religious rituals. The assessee also stated that the trust has constructed Meditation Centers and he has also constructed canteen and the said facility is utilized by the devotees of the assessee trust. As regards to the gift scheme of giving silver coins to the followers/devotees who collect donations, the assessee trust stated that it is merely felicitation and appreciation of the efforts of those devotees. The assessee also claimed that the trust has no objective of earning profit through tourism, and the beautification of the premises is only an attempt to create clean, pleasant, and hygienic atmosphere. The assessee stated that expenditure to the extent of Rs. 7 crores on Samadhi Mandir was incurred as per the request of the ....
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.... carried by the trust includes construction of Temples, Auditorium, Stadium, running of Lodging & Restaurant, and expenditure on religious discourses. Therefore, it had become essential to verify as to whether the trust was hit by provisions of Sec. 13(1), of the act, particularly with reference to sec. 13(l)(c) of the Act. It had also become necessary to ensure that the expenditure on religious purpose does not exceed the prescribed limits of 5 percent, as is provided under sec. 80G(5B) of the Act. 8. Thus, it is clear from the above, that in the assessee's case, the review of the correctness of the registration u/s 12AA of the Act, is not arbitrary, but with sufficient valid reasons. Therefore, the assessee's contention that, it was granted registration on two occasions by the Commissioner, and that it is registered with the charity commissioner as "Charitable", is not at all tenable in view of the clear position of facts brought out here-in-above, and also unambiguous, and sufficiently clear position of Law. Hence, I have no hesitation in rejecting the assessee's contention to this extent. 9. Further, as brought out earlier, it is seen that the assessee has bee....
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....e's intention expenditure of construction of Temple, Meditation centre, Stadium, Auditorium, and also on other activities like Conducting Discourse, etc., in nut-shell is essentially uforSpjritu.al and Moral up-liftment of people". Therefore, it is essential to look as to whether such an objective qualifies to be "Charitable" within the meaning of Sec. 2(15) of the Act. In this respect, it is seen that the term spiritual, or Moral, is not defined under the Income Tax Act, 1961. Therefore, one has to look for the meaning of these terms, as is commonly used. It is seen that various dictionaries define the term "spiritual" as under: Spiritual (adj.): 1. Of, relating to, consisting of, or having the nature of spirit; not tangible or material.. 2. Of, concerned with, or affecting the soul 3. Of, from, or relating to God; deific. 4. Of or belonging to a church or religion; sacred. 5. Relating to or having the nature of spirits or a spirit; supernatural And the term "moral" is defined as: Moral (adj.): 1. concerned with or relating to human behavior, esp the distinction between good and bad or right and wrong behavior moral sense. 2. adhering to conventionally accepte....
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....onfined to the meaning assigned thereto as contained in section 2(15) of the Act. The word 'education' has not been defined in the IT Act. However, the meaning of word ' education' expounded by the Hon'ble Supreme Court in the case of Sole Trustee Loka Shikshana Trust ( 1975 ) 101 ITR 234 ( SC ), rendered in the context of section 2(15) of the Act is relevant here wherein it has been held that -" The sense in which word ' education' has been used in section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received..... What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling" 15. In the light of the above judgment of the Supreme Court the existence of concept of 'normal schooling' has to be seen in the case of the assessee. In the present case, it claims that it is educating the masses by imparting discourse, etc. in "Spiritual and moral values". In light of the afore-said decision of the Hon'ble Ap....
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....sec. 2(15) of the Act, fall short to 85% of its total income, the assessee has defaulted on this count also. 20. I have also considered the submission of the assessee regarding receipt of huge amounts of donations, claimed to be towards "corpus of the Trust". I have also carefully examined the relevant records. In. this regards it is pertinent to note that the very same issue, was examined by two different assessing officers for the AYs 2007-08, and 2008-09, in the assessee's own case. This issue has been examined in detail vide the orders u/s 143(3) r.w.s. 147 dated 30-12-2011, and order u/s 143(3) dt. 31-12-2010, for the above AYs, respectively. Through these orders, both the AOs have come to the conclusions that the funds against which the donations are stated to be received are not corpus of the trust. 21. In this respect, I have also considered the issue in light of the facts of the case and also considering the legal aspects. It is seen that the assessee has maintained various earmarked funds as per its objects, and has credited all the donations directly to these funds. The said amount was not considered while computing the income, claiming it to be donations towar....
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....rpus donations, but forms part and parcel of the income of/the assessee. Since, on considering such donations, the income expended on the charitable objects of the trust fall short of 85% of its total income, the assessee has defaulted on this count also. 25. It is also seen that the Chief Trustee, Shri Narendra Baburao Surve alias Sadguru Narendra Maharaj, uses a lavish building in the trust premises as his residence and the latest amended trust deed provides for payment of exorbitant salary of Chief Trustee, also that the trust will incur expenditure for the trustees and family member of the trustees. It is also seen that, vide provisions of the latest amended trust deed, the trust has devised a system by which the Chief Trustee will only define his heir for the post of Chief Trustee and "Adhishtata", and that heir cannot take part in the management of the trust during the life of Chief Trustee. The absolute right to remove any trustee is vested in the Chief Trustee, and such disqualified/dismissed trustee's right, to appeal has also been forfeited. In this regards it is pertinent to note that the very same issue was examined by two different assessing officers for the AYs....
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....nd "Sentiments of People", which cannot be allowed. Moreover,, section 13(l)(c) provides for forfeiture of exemption for the benefits provided for the interested persons. Thus, under section 13(l)(c), if the income of a voluntary organization is applied for the benefit of certain specified interested persons then the mption available u/s 11 will be lost. In this case, as is brought out in the preceding paras, not only the undue benefit has been provided to the interested persons, i.e. the Chief Trustee, and his family, but the latest amendment, more or less has rendered the assessee as a private property, with absolute control and command at the disposal of the Chief Trustee, for all times to come, with almost negligible participation of the public at large, in the day to day affairs of the trust, or questioning the utilization of the property of the trust. 28. In view of the above, I am of the considered view that the assessee has not only infringed the provisions of sec. 13(l)(c) of the Act, but the latest amendments to the trust deed goes against the very spirit of the term "Charitable Trust", as is envisaged for the purpose of the Income tax Act. 29. I have also carefu....
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....ade but there is no finding supported by the proper reasoning. The Ld. Commissioner tried to make out a case that the assessee has not applied 85% of its surplus income on the charitable object and for making out said case, Ld. Commissioner discarded all the evidence on record. He submits that the assessee has been regularly assessed for years together by the tax authorities. He submits that the observation of the Ld. Commissioner on the amendments to the trust deed are totally misplaced. He referred to the Compilation more particularly the chart showing the different amendments to the trust deed and submits that there is no change in the powers of the Chief trustee as the same powers were there in the earlier trust deed also. He submits that Ld. CIT has noted that the details and documents were not filed by the assessee but said observation is not correct. The assessee was given very short time as the notice was issued and same was returnable on 19-03-2012 and the order is passed on 21-03-2012. In the short notice how the assessee can file all required details. He submits that all the Pooja and Temple management is with the "Sanjeevan Trust" and whether the activities of the said ....
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....re to this main activity, temples are required. Ld Consule argues that for example if People visit the temple, pray to God, their minds are cleaned - bad thoughs walk out and good thoughts enter, by attending prabhodhan and meditation centre then the objects and activities of the assessee trust are for the benefits of the general public at large and covered in the definition of charitable purpose.. The temples are also required to carry out the object of preaching and propagating the philosophy of meditation as a means of attainment of physical, mental and spiritual health, treating people having notions of blind faith, curing addicts and the like. Towards this end, the spiritual atmosphere in the vicinity of the meditation centre needs to be pure. Spirituality and improvement in thoughts pertaining to social values, moral values, ethics and understanding the concept of soul requires purity in thoughts and it is best achieved after offering prayers to God. These temples are open to all without discretion being made between any member of the public as to their caste, creed and religion. The assessee trust never supports superstition and make awareness in society at large, not to get....
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.... Counsel submits that in Para 25, of the order u/s 12 AA (3) of the Income-tax Act, 1961, Ld. Commissioner has alleged that the Chief Trustee uses a lavish building in the trust premises as his residence and the latest amended trust deed provides for payment of exorbitant salary to Chief Trustee, also that the trust will incur expenditure for the trustees and family members of the trustees. He submits that the trust is registered as Charitable Trust by Commissioner of Income Tax, Kolhapur vide Certificate dated 15.09.1999. Along with the application for registration, the scheme of management and general administration dated 21.07.1999 was enclosed. Vide clause no 10(B)(1) of the deed dated 21.07.1999 (Refer page no 487 and 488 of paper book no 4), the provision for free of cost residence facility and appropriate remuneration for running livelihood of the chief trustee was made. A similar provision is made vide clause number 11(B)(1) of the trust deed dated 04.04.2005 (Refer Page no 340 and 341 of Paper book no 3). This clause permits provision of accommodation to the Chief Trustee and his family on account of the fact that the Chief Trustee devotes his full time for the benefit of ....
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....are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. 7. Originally sub-Sec. (3) was inserted to sec 12AA by the Finance (No. 2) Act, 2004 w.e.f. 01-04-2004. The said sub-section has undergone the amendment by the Finance (No. 2) Act, 2010 w.e.f. 01-10-2004 as earlier the said provision only referred to the registration granted u/s. 12AA but there was no reference of Sec. 12A, as the Sec. 12AA was brought on the statute book by the Finance (No. 2) Act, 1996 w.e.f. 01- 06-2007. As per the chronology events filed by the assessee, it is seen that the assessee trust was constituted by the trust deed dated 02-12- 1993 and 13-04-1994 the assessee trust was granted the first registration u/s. 12A of the Act on 16-02-1995 Page No. 23 of the Compilation. There was some amendment to the trust deed of the assessee on 21-07-1999 which was filed before the Assistant Charity Commis....
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....the Mohamedan law would be considered to be a religious activity. The said activities may be for a charitable purpose to some. Hence, in many cases, both the purposes may be overlapping. The purposes may have both the elements, charity as well as religious. 9. While dealing with what is "religious" or "charitable purpose" it is observed by the Supreme Court in the case of Ramchandra Shukla vs. Shree Mahadeoji, AIR 1970 SC 458, that there is no line of demarcation in the Hindu system between religion and charity. Indeed, charity is regarded as part of religion. While discussing this aspect, the Supreme Court has further observed as under (at page 464) : "Hindu piety found expression in gifts to idols to religious institutions and for all purposes considered meritorious in the Hindu social and religious system. Therefore, although Courts in India have for a long time adopted the technical meaning of charitable trusts and charitable purposes which the Courts in England have placed upon the term `charity' in the Statute of Elizabeth, and, therefore, all purposes which according to English law are charitable will be charitable under Hindu law, the Hindu concept of charity is s....
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....ust is having the mixed activities of charity as well as religion then the exemption cannot be claimed. The argument of the learned senior counsel is that there is a very thin line of demarcation between the charity and religion. Every religion is having the principles of the charity and many charitable purposes may not have the principles of religion, though the religion is the question of faith. It is to be mentioned here that "charitable purpose" in s. 2(15) of the Act making the inclusive definition and trying to make the charitable purpose more elaborate but there is no definition of the "religious purpose" under the Act. No doubt the law recognises no purpose as charitable unless it is of the public character. In short, it should be for the benefit of the community or the section of the community as held in the case of Ahmedabad Rana Caste Association (supra) by the Hon'ble Supreme Court. As far as religious purpose is concerned means religious purpose within the meaning of personal law applicable to the assessee as held by the Hon'ble High Court of Bombay in the case of Bai Hirbai Rahim Aloo Paroo & Kesarbai Dharamsey Kakoo Charitable & Religious Trust vs. CIT (1968) 68 ITR ....
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....istration under s. 12A. In the present case, the registration, however, was refused by the Director of IT (Exemption) on the ground that as per the object clause Nos. 3(1) and 3(2), the assessee trust was established for the benefit of people belonging to Vaish community only which was clearly in violation of s. 13(1)(b). However, as held by Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra), an object beneficial to the section of the public is an object of general public utility and to serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. Explaining further, it was observed by the Hon'ble apex Court that it is sufficient if the intention is to benefit a section of the public as distinguished from a specified individual. Relying on this decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra), Hon'ble Allahabad High Court in the case of Surji Devi. Kunji Lal Jaipuria Charitable Trust (supra) has held that trust created for giving medical aid, social welfare and upliftment of poor members of Vaish community is, therefore,....
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....ent if the intention is to benefit a section of the public as distinguished from a specified individual. This decision of Hon'ble apex Court followed subsequently by Hon'ble Allahabad High Court in the case of Surji Devi Kunji Lal Jaipuria Charitable Trust (supra) and in the case of Pt. Ram Shanker Misra Trust (supra) to hold that the expenditure incurred by a trust for the benefit of one community is an expenditure incurred on a public charitable object still holds the field notwithstanding the provisions contained in s. 13(1)(b) since the definition of the term "charitable purpose" given in s. 2(15) continues to remain the same. The provisions of s. 13(1) are thus not directly relevant in this regard. On the other hand, the said section begins with the words "Nothing contained in s. 11 or s. 12 shall operate so as to exclude, from the total income of the previous year, of the person........." which clearly envisages operation of s. 11 or s. 12 before the provisions of s. 13 can be applied or invoked in a given case. It also shows that the said provisions can be applied or invoked only at the time of computation of total income of the previous year of the person who is claiming ex....