TaxTMI 
TaxTMI 
2016 (4) TMI 160
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.... produced and after going through the detailed list of donations in golaks for the AY 2010-11, the AO noticed that the assessee was stated to be in receipt of golak donations amounting to Rs. 1,99,86,858/-. As per the AO, the total annual donations of Rs. 16,59,47,049/- comprised of the following items: I) donations received in cash Rs.9,06,53,538/- 2) donations received in kind Rs. 83,57,943/- 3) Grants in aid Rs. 13,43,631/- 4) Foreign donations Rs. 6,55,91,637/- Rs.16,59,47,049 5% of this amount comes to RS.82,97,532/- 3.1. After carrying out a comparison the total golak donations stated at Rs. 1,99,86,888/- as per list supplied with the appellant's reply dated 22.01.2013, and RS.82,97,352/- being 5% of Rs. 16,59,47,049/-, the resultant difference of Rs. 1,16,89,535/-, according to the AO, represented excess amount as per provisions of section 115BC of the Act. The assessee was required by the AO to explain as to why the same may not be taxed in accordance with the provisions of section 115BBC of the Act. In response thereto, the assessee filed reply dated 26.02.2013, as incorporated at pages 4 & 5 of the....
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.... gave charities only for that which was a religious purpose carried on by the Pingalwara Society through Manav Sewa. Famous Persian Poet Sheikh Saadi has said in Persian. "Bandai Bajuz Khaidmat-e- Khalak neest" This means worship {of God} without serving the Khalkat (Creation) is empty and meaningless. MUSLIM FAITH Zakaa^i.e. Charity for the welfare of downtrodden is one of the fwe tenants of Islam. As per Internet Information, Zakaat has been ordered and mentioned 30 times in the Holy Book of Quran. Copy of Print of one reference is attached as specimen. SIKHISM Under Sikhism, great stress has been laid by all groups on Sewa i.e. service to Manking and have talked the followers to spend Dasvand for charitable purposes. 5.2.3 Dasvand is one of the orders from the Seikh Gurus and is part of Sikh Religion. It literally means tenth part of the income should be given for religious purpose including to help the poor. It is part of Rehatnama ordered by the Sikh Gurus. Photocopy from the book 'Lecture - Maha Chaanan' of Page 109 is attached in this context. This, in Punjabi, reads as under: "kirat karan jog sikhan lay....
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....ws quoted in support thereto and have also gone through the AO's findings contained in his above referred assessment order. The appeal is hereby disposed off by recording adjudications and by giving consolidated findings:-: 6.1. Hon'ble Gujarat High Court had discussed issue of 'religious purpose and charitable purpose' in the case of CIT v. Barkate Salfaijhia Society, reported in 213 ITR 492 [Guj.] from which discussion, relevant to present issue is being reproduced hereunder:- 1. The Phrase "religious purpose" includes relief of the poor, education, medical relief, and the advancement (sic). 2. However, the phrase charitable purpose is defined u/s 2(15) of the Act which reads as under: 3. It is to be noted that definition of the phrase "charitable purpose" is inclusive and it covers a wider field than the field covered by the words "religious purpose". Further, in some cases, even a religious activity by a particular sect would be a charitable activity; for some, supply of fodder to animals and cattle is a religious object, while to others it may be a charitable purpose, according to Hindu religious activity. Similarly, Khairat under the Mohame....
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....s 26+27). Istha and puria are in fact registered as the common duties of the twice born class, (cf Pandit Prannath Saraswati, page 27)." 6. In view of the aforesaid discussions, it can be said that a trust can be either for religious purposes or for charitable purposes or it can be for both charitable and religious purposes. "Hence the words "trust for charitable purpose" would include even trust for advancement of religion. At this stage, we would note that the definition of charitable purpose under the Incometax Act goes much further than the definition of charity to be derived from the English cases because it specifically includes medical relief and embraces all objects of general public utility subject to the condition imposed by the restrictive words "not involwng the carrying on of any activity for profit". While dealing with section 11, a Division Bench of this court in the case in the case of Addl. CIT v. A.A. Bibijiwala Trust (1975) 100 ITR 516, has observed as follows (at page 523): ''Similarly, in the case before us also, the property is settled upon wakf that is, for purposes which are considered to be religious, pious or charitable ....
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....) deleted the addition by holding as under: 6. I have carefully considered the appellant's submissions in the backdrop of case laws quoted in support thereto and have also gone through the AO's findings contained in his above referred assessment order. The appeal is hereby disposed off by recording adjudications and by giving consolidated findings:-: 6.1 Hon'ble Gujarat High Court had discussed issue of 'religious purpose and charitable purpose' in the case of CIT v. Barkate Salfaijhia Society, reported in 213 ITR 492 [Guj.] from which discussion, relevant to present issue is being reproduced hereunder:- 1. The Phrase "religious purpose" includes relief of the poor, education, medical relief, and the advancement (sic). 2. However, the phrase charitable purpose is defined u/s 2(15) of the Act which reads as under: 3. It is to be noted that definition of the phrase "charitable purpose" is inclusive and it covers a wider field than the field covered by the words "religious purpose". Further, in some cases, even a religious activity by a particular sect would be a charitable activity; for some, supply of fodder to animals and cattle is a rel....
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....ng water, relief of the sick, and promotion of education and hearing, (cf Pandit Prannath Saraswati's Hindu Law of Endowments, 1897, pages 26+27). Istha and puria are in fact registered as the common duties of the twice born class, (cf Pandit Prannath Saraswati, page 27)." 6. In view of the aforesaid discussions, it can be said that a trust can be either for religious purposes or for charitable purposes or it can be for both charitable and religious purposes. "Hence the words "trust for charitable purpose" would include even trust for advancement of religion. At this stage, we would note that the definition of charitable purpose under the Income-tax Act goes much further than the definition of charity to be derived from the English cases because it specifically includes medical relief and embraces all objects of general public utility subject to the condition imposed by the restrictive words "not involwng the carrying on of any activity for profit". While dealing with section 11, a Division Bench of this court in the case in the case of Addl. CIT v. A.A. Bibijiwala Trust (1975) 100 ITR 516, has observed as follows (at page 523): ''Similarly, in t....
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....s as recognized by the Dawoodi Bohra community that the Mullaji Saheb can use the corpus or the income of this fund". 7. Thus, it can be seen that from the fact of the assessee trust and the case law discussed above that the assessee Trust has been established wholly for religious and charitable purposes. The Hon'ble Supreme Court has held thatjdiere is nomine of demarcation in thecase ofin the Hindu system between religion and charity in the case of Ramchandra Shukla v. Shree Mahadeoji AIR 1970 (SC) 458. Thus religious purpose also includes relief of the poor, education, medical relief, etc. In view of the above discussion, the assessee trust is established wholly for religious and charitable purposes and as such falls under section 115BBC(2)(b)_ as j/'has not received any anonymous donation amounts with specific directions that such donation is fore any university or other educational institution, or any hospital or other medical institutions run by such trusts or institution. In view of above, provisions of Section 115BBC of the IT act, 1961 are not applicable to the assessee trust. In view of the above, the addition made by the Assessing Officer, of Rs. 1,16,89,535....
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....st were in consonance with the aims and objects of the trust and the trust was registered with the Charity Commissioner. On these facts, the Appellate Assistant Commissioner had upheld the trust as a Public Charitable and Religious Trust and the question of law referred to the Hon'ble High Court was as under: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the decision of the Appellate Assistant Commissioner that the assessee is a public charitable and religious trust and its income is entitled to exemption u/s 11 of the Income Tax Act, 1961." The Hon'ble High Court had answered the question in favour of the assessee. 12. In "Bombay Panjrapole Trust, Mumbai vs. Department of Income Tax", vide order dated 15.05.2013, passed by the Mumbai Bench of the Tribunal, it was held as under: " 3. Assessee is a Charitable Trust engaged in maintaining gaushalas, tending to other animals and birds doing research in animal husbandry and conducting schools and classes to educate the people in these fields. During the assessment proceedings, the AO found that it had collections i.e., Dharmau Box Collection and Dharmun (oth....
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....isuse of provisions in receiving donation or unaccounted money received by the assessee-trust. Following his own order for the year 2007-08, FAA deleted the addition made by the AO." 13. The Tribunal dismissed the Departmental appeal, observing as follows: "11.From the order of the CIT(A), we find that the assessee is running veterinary hospital for treatment of wounded and sick animals and birds. If we strictly accept the submissions of the DR, then we must also accept the situations where we will find wounded and dead animals on the roads, in open, and at houses, rotting, spreading foul smell and diseases. Therefore, accordingly, the DR would accept a situation like this. We find that this trust has been inn existence for the last 176 years doing and performing a public good and service to humanity with sincere and intentions, not even asking people to make contributions. Whatever contributions by way of donations are coming, are coming in small donations, which are put by public at large in donation boxes (dharmau)." 14. In "CIT vs. Dawoodi Bohara Jamat" 364 ITR 31, the Hon'ble Supreme Court observed as under: "The assessee was a registered public trust u....
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....ionary defines the term as follows: "Devoted to religion; exhibiting the spiritual or practical effects of religion, following the requirements of religion; pious, godly, devout." In Kanga, Palkhivala and Vyas, Law and Practice of Income Tax, Vol. 1, Ed. 9th (at p. 544) religious purposes are indicated to include the advancement, support or propagation of a religion and tenets. Thus, a religious purpose would be one relating to a particular religion and broadly would encompass objects relating to observance of rituals and ceremonies, propagation of tenets of the religion and other allied activities of the religious community. An example of such would entail activities such as the dance performances (Garba) or distribution of food specifically for people on fast during the Hindu festivities of Navratri. 36. In certain cases, the activities of the trust may contain elements of both: religious and charitable and thus, both the purposes may be over lapping. More so when the religious activity carried on by a particular section of people would be a charitable activity for or towards other members of the community and also public at large. For example,....
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....ered by the people of Islamic faith . as orders from Allah and the people of Islamic faith obey such orders as holy and religious. The learned Counsel for the assessee has been able to demonstrate that all the objects of the assessee-trust, as noted above, came out from the writings in Quran and as such these are the orders for them while observing Islamic faith." 38. Unquestionably, objects (c) and (f) which provide for the activities completely religious in nature and restricted to the specific community of the respondent-trust are objects with religious purpose only. However, in respect to the other objects, in our view the fact that the said objects trace their source to the Holy Quran and resolve to abide by the path of godliness shown by Allah would not be sufficient to conclude that the entire purpose and activities of the trust would be purely religious in color. The objects reflect the intent of the trust as observance of the tenets of Islam, but do not restrict the activities of the trust to religious obligations only and for the benefit of the members of the community. The Privy Council Trustees of The Tribune In re [1939] 7 ITR 415 has held that in judging whet....
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.... House of Lords in Barralet v. IR 54 TC 446, has observed that "the study and dissemination of ethical principles and the cultivation of rational religious sentiment" would fall in the category of educational purposes. The Madarsa as a Mohommedan institution of teaching does not confine instruction to only dissipation of religious teachings but also contributes to the holistic education of an individual. Therefore, it cannot be said that the object (d) would embody a restrictive purpose of religious activities only. Similarly, assistance by the respondent-trust to the needy and poor for religious activities would not divest the trust of its altruist character." 16. It was thus held that the objects of the Trust exhibited the dual tenor of religious and charitable purpose and activities. 17. In "Bhagwan Shree Laxmi Narain vs. ITO (E), Trust Ward-III, Delhi", vide order dated 20.08.2014 (copy placed on record), passed in ITA No.5812/Del/2012, for AY 2009-10, co-authored by one of us - the ld. AM, it has been held as follows: "10.7. On a consideration of the above alongwith the findings recorded in the assessment order which have been extracted in para 2 & 3 of this ord....
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....ute; old age; infirm etc needs no specific treatise to bring out the potential importance and benefits of spiritual lecture to the target group of mentally disturbed, destitute due to calamities, natural or manmade, age, orphaned, widowed etc. The potential benefit and succor to these target groups by way of some philosophy or imparting of belief that there is some power beyond all this which is watching out for them cannot either be under-estimated or over-emphasized and has to be considered in the proper perspective. The fact that these arguments/philosophy on the touchstone of science may fail and to some of us non-believers maybe only rhetoric is not a relevant consideration as what cannot be cured has to be endured, for a person on his last breath is no reason to callously subscribe to the philosophy that such a person should be deprived of the psychological comfort of believing that somewhere in the universe there may have been a greater purpose in going through the painful experience. The issue is not what we believe but what strength can be imparted to a potential destitute, sufferer. The objects of ameliorating their miseries, providing night shelter, self-help capability,....
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....ssessee's case. 10.10. In order to come to the said conclusion, we have relied upon the observation and findings of the Apex Court in the case of CIT, Ujjain vs Dawoodi Bohara Jamat and the ratio decidendi laid down therein which holds that it is the objects of the trust which are required to be seen and the standards to be applied for considering the same are those of the customary law and common opinion amongst the community to which the parties interested belong to. The present trust as it's very name suggests is formed by the community which has never looked down upon any other religion and over the times has constantly maintained and upheld the diverse and at times contradictory individual beliefs and practices of its followers with the attitude of live and let live as it is not a static religion but a living religion, a way of life. The religion of the community by its very practices, philosophy and tenets has celebrated and revered the importance of not only human life but also animal life and vegetation life so much so that even the inanimate is celebrated and revered consequently the environmental role and importance is emphasized in everyday practices as ....
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....ntified. Mythology may not live up to the exacting standards of history as we understand but cannot be outrightly rejected as fairy tales or imagination as mythology can be described as history which has been carried through by word of mouth and also has a very important role in understanding history of people and nations. Thus not only mythology supports this general belief of an ideal donor who remains unidentified but even various religious written texts and treaties also idealise a donor who remains unidentified. The statute it is seen does not bar this in the case of wholly religious purposes trust or in the case of wholly religious and charitable purposes trust ....unless the other condition of section 115BBC(2)(b) are fulfilled with which we are not concerned in the facts of the present case. 10.13. For the sake of completeness, we also would deem it appropriate to address the decisions relied upon by the Ld. Sr. DR. Considering the same, we are pained to note that they have been cited carelessly without considering it necessary even to address how the facts are pari-materia and how the ratio-decidendi of the said decisions are relevant to the facts of the present p....
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.... 2. That this society by its name as All India Pingalwara Charitable Society means serving and looking after the persons who have suffered from different diseases, in the form of insecurity, oldage and other disabled persons as mentioned in para(3) of Memorandum of Association of the Society. Relief of the poor encompasses a wide range of objects for the welfare of the economically and socially disadvantaged and needy. It will, therefore, include within its ambit purposes such as relief to destitutes, orphans, handicapped, disadvantaged - women, children, old aged men and women and in need of aid. 3. That the Charitable Society has received charity through Golaks from the different places/Gurdwaras/Bus Stands as offered by different persons for the welfare of the physically, mentally and visually challenged persons - men and women, old and young including those suffering from incurable diseases like, aids, cancer, hepatitis, T.B., etc., including abandoned children. 4. That the charity offered as mentioned in para(3) above is duly accounted for in tire books of accounts. That charity received is not anonymous donations. This is a charity and not any anonym....
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....faith or religion and to promote their human dignity according, to the universal teachings of the Sikh Scripture, the Guru Granth, and the U.N. Charter of Human Rights. (ii) To provide or arrange for accommodation and treatment for all inmates. (iii) To acquire and purchase land and buildings and to set up, establish and run Pingalwaras for the beneficiaries. (iv) To propagate the cause of the Society through direct or indirect publicity such as books, pamphlets, placards, posters, paintings, painted black-boards, cinema slides, blocks and advertisements .through newspapers or magazines. v) (a)' To open Schools anywhere in India for imparting free education to the poor strata of the society. b) To open Schools for imparting special education to the mentally retarded children. c) To provide education to the blind and to the deaf and dumb children and provide for their Rehabilitation. vi) To open Prosthetic Centres and Orthotic Centres to rehabilitate the disabled persons. vii) To develop nurseries and orchards for distributing free saplings and planting trees on common lands and public places in order to improve the ....
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....on, care and love here. d) Bhagat Puran Singh Adarsh School for the village poor of the Quadian area. This school is situated at Buttar Kaian and provides free education to 362 students. e) Bhagat Puran Singh School, Panj Peer Amritsar for Slum. It has 56 students. f) Free books for the poor and needy students." Environment: a) Vigorous drive to plant trees every year. b) Maintenance of a nursery to provide free saplings. Every year over 60,000 saplings are distributed as a part of the tree plantation drive. c) Distribution of free literature on various environmental issues. d) Natural Farming (Pesticide free cultivation of crops). Seminars: a) Peace & Harmony through Righteousness-2004 b) Reconciliation Creating Partnership for Building Peace. (Golden Institute Branch of Council of Parliament of World Religion-2005) c) Rights of Persons with Disabilties-2006 d) Seminar on III Effects of Pesticides on Health-2006 e) Workshop on Natural Farming-2006 f) Seminar on AIDS Awareness-2007 g) Bhagat Puran Singh Memorial Seminar "Ecological Challeng....
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....e donations made to Pingalwara are exempt from Income Tax under Section 80G of I.T. Act. 1961 " 21. Section 115BC of the Act is reproduced as under: "115BBC. (1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred to in sub-clause (iiiae) or subclause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of- (i) the amount of income tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received in excess of the higher of the following namely:- (A) five per cent of the total donations received by the assessee; or (B) one lakh rupees, and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donat....
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.... in the books of charitable trusts in bulk and this law was not meant for taxing the small and general charities collected by the Genuine Charitable Trusts. 24. The object of the amendment has further been made clear by the Hon'ble Finance Minister, in his Budget Speech, reported at 281 ITR (St.) 57 in the said ITR. The relevant para 168 thereof reads as under:- 'The Standing Committee on Finance has expressed concern that many charitable institutions misuse the provisions of the Income-tax Act. I propose to focus on one misuse, namely, receiving anonymous or pseudonymous donations. Accordingly, I propose that anonymous or pseudonymous donations to wholly charitable institutions will be taxed at the highest marginal rate. Such donations to partly religious and partly charitable institutions / trusts will be taxed only if the donation is specifically for an educational or medical purpose. However, I make it clear that such donations to wholly religious institutions and religious trusts will not be covered by the new provision." 25. Further, CBDT Circular 14 dated 28.12.2006 explains the provisions of section 115BBC, as follows: "25.2 With a view to preven....