TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 1101
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....ion managed by the board members comprising of pastors, christian priests and retired Bible College teachers(Theologians) with limited exposure to the provisions of Income tax or Company law affairs. Further during the period under question there was a change in the office of the general secretary of the petitioner. Rev. M. Benjamin Inbaraj took charge as the new General Secretary on 01.06.2014. With the change in the General Secretary, the newly appointed General Secretary and other Board members were completely engrossed in the religious* activities of the petitioner trust and its administration proceedings. The president of the petitioner trust is by way of traditional practice the Bishop of Madras. The President during the said year, Rev Or V Devasahayam who was the Bishop in Madras also retired in August 2014 and the new Bishop was elected and consecrated only in March 2016. Although Rev Or V Devasahayam continued as the president of the petitioner trust during the interim period no major decisions or action was initiated until the new Bishop took charge. During the year 2014-15 there was also a change in the auditor of the petitioner trust when CA John Ravindran was a....
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....s Act, 1956 was claiming exemption u/s.11 of the Act by virtue of a registration u/s.12A(a) of the Act, granted by ld. Commissioner of Income Tax vide his order granted in C.No.212(431)/73, dated 21.09.1973. During the course of assessment proceedings for the impugned assessment year, ld. Assessing Officer after considering the objects of the assessee, came to a conclusion that majority of them were in the nature of general public utility. As per ld. Assessing Officer intention of the assessee was to publish and sell literature, religious, books, treatise etc and to do allied work like printing, book binding, selling of stationery and akin activities. According to the ld. Assessing Officer, objects of the assessee did not prohibit it from carrying on an exclusive business in printing, publishing and sale of books. Further, as per ld. Assessing Officer major source of its income were from sale of books. Ld. Assessing Officer put the assessee on notice as why it should not be denied exemption claimed by it u/s.11A of the Act. Though the assessee submitted before ld. Assessing Officer that it was a Christian Religious Society publishing and selling Christian literature to the public, ....
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....n 11 of the Act. 6. While completing assessment ld. Assessing Officer also noted that depreciation of 72,00,167/- claimed by the assessee were on assets, cost of which was already allowed as application of income. Relying on the judgment of Apex Court in the case of Escorts Ltd and Another vs. Union of India and Others 199 ITR 43, he denied claim of such depreciation. 7. Aggrieved, assessee moved in appeal before ld. Commissioner of Income Tax (Appeals). Argument of the assessee was that publishing and selling of religious books was a public religious activity, and for this it relied on the judgment of Hon'ble Andhra Pradesh High Court in the case of Arsha Vijinanna Trust vs. DIT (Exemptions) 295 ITR 437. As per the assessee selling religious books could not be construed as an activity in the nature of trade, commerce or business. Further, as per the assessee it's main activity was distribution of religious books and tracts and only a small part of the books sold, dealt with subjects of History, Social Science and Literature. Contention of the assessee was that such secular books were displayed to attract attention of the pubic to the Christian literature. As per the assess....
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....eral public utility''. Further, according to him, observations of the ld. Assessing Officer with regard to amendment to the objects without prior approval of the CIT and non incorporation of accounts of Trivandrum and Cochin branches were also justified. He thus held that assessee was rightly denied the claim of exemption under section 11 of the Act. On the aspect of disallowance of depreciation also ld. CIT(A) upheld the view of the ld. Assessing Officer. According to him, Hon'ble Delhi High Court in the case of DIT (E) vs. Charanjiv Charitable Trust, (2014) 102 DTR 0001 had held that depreciation could not be granted where value of the concerned asset was treated as application of income. 12. Now before me, the ld. Authorised Representative strongly assailing the orders of the lower authorities reiterated the contentions taken by the assessee before the lower authorities. According to her, assessee was a company registered u/s.25 of the Act and not a trust. Further, according to ld. Authorised Representative assessee's activities squarely fell within the meaning of 'religion'. It was not a case of general public utility. Relying on the judgment of Hon'ble Andhra Pradesh in the c....
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....d be classified as one of general public utility or as religious. Objects clause of the Memorandum of Association of the assessee has been reproduced by the ld. Assessing Officer at page 1 & 2 of the assessment order. This is reproduced hereunder once again for better understanding the nature of such objects. a.''To take over the whole or any part either absolutely or in trust or as lessess of the immovable and movable property in India belonging to the United Society for Christian Literature whose head officers are situated at 4 Bouveries Street in the city of London, England. b. To promote the circulation, gratuitously and otherwise of religious tracts, books and treatises. c. To make grants of money, paper and literature to Protestant Christian Churches, Missions, Missionaries and other throughout India d. To carry on business as proprietors and publishers of newspapers, journals, magazines, books and other literary works and undertaking of a religious. educational or useful character. e. To carry on business as printers, booksellers, bookbinders, paper makers, stationers; engravers, photographers, photographic printers, stereotypers, electrotypers, lithographers. mech....
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....acket the assessee as one pursuing an object, different from distribution of religious books. Thus, the claim of the assessee that it's main activity was confined to object clauses (b) and (c), in my opinion carries much strength. Object clause (d) onwards can be considered only as incidental to clause (b) and (c). 17. Now the question is whether circulation and grant of religious books and tracts, or in other words, publication and distribution of religious books can be considered a religious activity. It is here the judgment of Hon'ble Andhra Pradesh High Court in the case of Arsha Vijinanna Trust (supra) comes to the aid of the assessee. There the question was whether an assessee which was selling texts of all Vedas, Vedangas, Upangas and leading Darshanas, Ithihasaas and books like Ramayana, Mahabharatha and Bhagavatham, and works on Indian philosophy, lectures, art and all works on Indian culture, would be eligible for recognition under section 80G(5) of the Act. Assessee while seeking recognition u/s.80G of the Act had claimed that it was not a religious trust. However, Hon'ble Andhra Pradesh High Court held that publication of such books was only a religious activity. Their....
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....cement of the 1961 Act, its income, if it is for the benefit of any particular religious community or caste will be ineligible from claiming the exemption. But it is pertinent to note that section 13(1)(b) talks about "trust for charitable purposes or charitable institution which is for the benefit of any particular religious community or caste''. A public religious institution cannot be treated on par with a charitable institution or trust which confines its charity only for the benefit of any particular religious community or caste''. In other words, Section 13(1)(b) covers only such charitable institutions where the benefit is confined to people of a particular religion or caste. This interpretation is quite possible because the words used in s. 13(1)(b) refers to "trusts for charitable purposes" while a distinction is noted in other provisions like s. 13(1)(c), which refers to a "trust for charitable or religious purposes". There is similar reference under s. 13(1)(d) as well. Hence the prohibition under cl. (b) cannot possibly cover religious institutions. It stands to reason that a religious institution, even if public, may not be able to avoid the brand of a particular relig....
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....ental change concerning religion was brought about in the Constitution by the 42nd Amendment Act, 1976, which inserted in the Preamble the words 'Socialist Secular' before the words 'Democratic Republic'. This amendment serves no other purpose than making explicit what was already provided in the Constitution. The traditional word 'secular' is intended only to reconfirm the position in regard to the secular character of the State, i.e., the State will have no religion of its own. In Keshavanand Bharti vs. State of Kerala AIR 1973 SC 1461, Khanna, J. said (in para 1437) that the word 'secular' implies that, "the State shall not discriminate against any citizen on the ground of religion only". In Indira Nehru Gandhi vs. Raj Narain AIR 1975 SC 2299, Chandrachud, J. explained the basic feature of secularism saying that "the State shall have no religion of its own" and all persons shall be equally entitled to the freedom of conscience and the right to freely profess, practice and propagate religion. Thus pursuing a religious purpose through printing and distribution of religious books, of a religion of choice, can in no way be considered as a taboo or aga....
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....governed by the said Act and cannot be equated to a trust as such. Amendments to objects clause of a Company registered in accordance to Sec. 25 of the Companies Act, 1956, necessarily has to follow the requirements under the said law. Assessee never claimed itself as a trust. It was granted registration u/s.12A(a) of the Act in its status as a company registered under section 25 of the Companies Act. Sec. 11(1) of the Act does not say that only a trust is be eligible for claiming exemption mentioned therein. It only say that income should be derived from property held under trust. There is no case for the Revenue that the property held by assessee in the status of the company u/s.25 of the Act was not under trust. Therefore the case laws relied on by the lower authorities for coming to a conclusion that no amendments could have been made to the objects of the assessee have no applicability. These case laws are relevant only for a trust. Assessee being a company u/s.25 of the Act, it could change its objects as per the prescription under the Companies Act. Even otherwise letter dated 21.09.1973 issued by CIT, intimating acceptance of assessee's application for registration u/s.12A(....