TaxTMI 
TaxTMI 
2018 (4) TMI 790
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovisions of Section 80G(5B) of the Income-tax Act, 1961. Because of the reason mentioned above, the application for approval u/s 80G is REJECTED. This is also held that, the application Society is not approved for exemption to donations u/s 80G of the Income-tax Act, 1961." 3. The ld. Counsel for the assessee, Shri G. Banerjee made elaborate submission. He also made written submissions which are extracted for ready reference:- "The application for approval u/s, 80G(5)(vi) has been disallowed by the ld. CIT(Exemption) by order dated 16.12.2016 which is contested in this appeal. The application of the assessee falls under 80G(2)(i ') and is covered by S.80G(5) as to its validation. Sub section (5) of s. 80G stipulates the conditions for grant of approval of an institution or fund as prescribed in Rule 11AA. As per 11AA(4), the approval should be granted on satisfaction of conditions u/s. 80G(5)(i) to (v). One of the condition in Sub clause (iii) is that the inst./fund is not expressed to be for the benefit of any particular religious community (or caste. As per the MOA of the assessee (pgs. 7 of PB) the object clauses 3(a) to 3(1) contains purposes of perform....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion (B) is 5%of total income of assessee whereas the ld CIT(E) has compared the same as a percentage of gross receipts and not total income. In case total income of the assessee is considered. (Rs. 3058 for F.Y. 2015-16 - PB Pg. 2), then no part of this total income has been spent or applied for any purpose and, have been accumulated to next year. Thus, it is claimed that the assessee is sufficiently entitled to the grant of registration u/s. 80G. The assessee has not spent anything out of his total income and the entire total income is accumulated for application in succeeding year. The Ld. Commissioner refused to grant registration on the basis of sub clause (5B) of section 80G on the basis that more than 5% of its income was spent on religious activity but ignored the fact that income does not mean gross receipt. Income of any business is worked out after deducting expenses reasonably incurred. It was in any event a case of an initial registration which should not have been refused." Thirdly, the word charitable purpose has been explained in Expl. 3 as excluding purposes, the whole or substantially the whole of which is of a religious nature. Religious nature, having n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to earn the Surplus to be applied for charitable purposes." 4. The ld. D/R, Shri G. Mallikarjuna, pointed out that the disallowance was made because the assessee has incurred expenditure in excess of 5% of this total income for religious purposes. He pointed out that the expression for the benefit of particular religious community or caste cannot be brought in or imported or relied upon while interpreting Section 80G(5B) of the Act, which is a separate section having different wording and purpose. 5. After hearing rival contentions, perusing the papers on record, orders of the authorities below as well as case-law cited, we hold as follows:- 5.1. The relevant provisions of the Act and Rules as well as a discussing on the case law on the subject has been brought out by the Hon‟ble Rajasthan High Court in the case of Umaid Charitable Trust vs The Union Of India (Uoi) And Ors. 2008 207 ITR 226 (Raj), which is extracted for ready reference:- "5. That before considering the various judgments on this aspect of the matter, it would be appropriate to reproduce the relevant provisions of section 80G of the Act to the extent the same are relevant for the controversy....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognized by the Government or by a University established by law, or affiliated to any University established by law, or is an institution financed wholly or in part by the Government or a local authority; and (vi)in relation to donations made after 31-3-1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf : Provided that any approval shall have effect for such assessment year or years, not exceeding (five) assessment years, as may be specified in the approval. (5A) Where a deduction under this section is claimed and allowed for any assessment year in respect of any sum specified in sub-section (2), the sum in respect of which deduction is so allowed shall not qualify for deduction under any other provision of this Act for the same or any other assessment year. (5B) Notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not excee....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dominant purpose of the trust is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity. It was observed that the primary and dominant purpose in the present case was promotion of commerce and trade in art silk etc., was an object of public utility not involving the carrying on of any activity for profit within the meaning of section 2(15); and that the assessee was entitled to exemption. 9. In CIT v. K.H. Kusumgar [1988] 169 ITR 370, the Bombay High Court observed that where the object of a charitable trust was, inter alia, imparting of education and encouragement and promotion of the study and practice of the Shewatamber Jain Murtipujak religion amongst students of ashrams, boarding-houses, gurukuls, vidyalayas, pathshalas and shravikushramas and also amongst all persons without distinction of sex, caste, creed, place or religion, a gift of immovable property made to such charitable trust could not be said to be for a purpose the whole or substantially the whole of which was of a religious nature and the gift woul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh Court, while setting aside the rejection and restoring the matter before Commissioner held that although the aims and objects of the petitioner did not include some purely religious activities, they also included many temporal and secular activities such as to diffuse scientific and technical knowledge on Vedanta and also for promotion of science, literature, fine arts, charitable institutions in educational, technical, social and scientific fields to carry on spiritual and cultural works, study of philosophies of different cultures and civilizations, etc. The rejection of Commissioner did not satisfy the requirements of a reasoned decision or speaking order. The Commissioner had to consider the applications of the petitioner under section 80G and apply his mind to the material placed before him and take a decision by a reasoned order. It was also observed that when the Commissioner grants or refuses to grant approval to an institution under section 80G, he acts as a quasi-judicial statutory authority; the conclusion reached and the findings recorded by him have to be supported by reasons. Past Activities of Applicant to be seen 12. In Kirti Chand Tarawati Charitable Tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....through Krishna Iyer, J. held as under :- ". . . The law is set out thus by B.K. Mukherjea : 'The fact that property is ordinarily described as debutter is certainly a piece of evidence in favour of dedication, but not conclusive'. In Binod Behari v. Manmatha [1915] 21 CLJ 42 (Cal.), Cox, J. observed as follows :- 'The fact that the property is called debutter is a doubtless evidence in the plaintiff's favour but it does not relieve them of the whole burden of proving that the land was dedicated and is inalienable.' Though inconclusive, it carries weight in the light of what we may call the mission of the disposition which is inspired by devotion to 'my Thakoor' and animated by a general religious fulfilment. It must be remembered that the donor was not tied down by bigotry to performance of pujas, important though they were. A more cosmic and liberal view of Hinduism informed his soul and so in his declaration of dedication of Sree Jagannathjee he addressed to the managers many directions of a broadly religious and charitable character. His injunction to feed the poor was Narayana seva for worship of God through servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actical spirituality as it has an elevating moral influence, fostering a deep sense of fellow feeling and fraternity. Such acts not only fulfil our cherished human values but they equally promote public goods and welfare and are, therefore, dominantly religio-charitable, it was further held that the Tribunal was right in holding that the donations to the trust could be deducted. The Hon'ble Court, while quiting Sri Jagannath Jew's case (supra), where the amounts spent for religious and charitable purposes such as feeding of poor were excluded from the total income, observed on page 865, "it is religion to love the poor." 16. In S.P. Mittal v. Union of India AIR 1983 SC 1, the Hon'ble Supreme Court discussed the definition of religion. It was observed by Chinappa Reddy, J. in para 12 that : ". . . Constitution views religion, as comparising thought, expression, belief, faith or worship, as involving the conscience and as something which may be professed, practiced and propagated and which is any man's attribute in the same manner as race, sex, language, residence etc. We also see that economic, financial, political or other secular activity may be a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lic as distinguished from specified individuals. The section of the community sought to be benefited must undoubtedly be sufficiently defined and identifiable by some common quality of a public or impersonal nature. The Court further observed that if the primary purpose be advancement of objects of general public utility, it would remain charitable even if an incidental entry into the political domain for achieving that purpose was there. It was also held that advancement or promotion of trade, commerce and industry leading to economic prosperity enured for the benefit of the entire community. That prosperity would be shared also by those who engaged in trade, commerce and industry, but on that account the purpose was not rendered any the less an object of general public utility. 19. In CIT v. Ahmedabad Rana Caste Association [1973] 88 ITR 354 (Guj.), the Gujarat High Court observed that a purpose would be charitable if it is for the "advancement of any other object of general public utility". "Public" means the body of people at large including any class of the public and "utility" means usefulness. Therefore, the advancement of any object beneficial to the public or a se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2002] 256 ITR 690, the Gujarat High Court observed that setting aside the order of the Commissioner refusing grant of approval, that even if the ground about contravention of section 11(5) was validly taken by the Commissioner, that would have bearing only at the point of time of the assessment of the petitioner and would not be a material consideration insofar as granting approval under section 80G(5) was concerned. That might be a material factor, but that could not be the sole determinative factor for the purpose of deciding whether the certificate of approval had to be granted to the petitioner or not. Further it had been pointed out to the Commissioner that the trustee through whom the deposits had been made had paid up the funds deposited in those institutions to the petitioner and, so far as the petitioner was concerned, the technical breach ought not to have weighed with the Commissioner. 25. In Suresh Sunderrao Nayak v. M.K. Pandey, DIT (Exemption) [2007] 288 ITR 79 the Bombay High Court observed that the fact that some of the devotees has been given small amounts on monthly basis does not mean that all the beneficiaries were identifiable. Some of the devotees who....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me of the Trust. The work "application" has to be given a wider interpretation keeping in view the purpose for which the provision has been introduced. 28. On the side opposite, Mr. K.K. Bissa, learned counsel for the respondent relied upon the judgment of the Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills (supra). He also relied upon the decision of this Court in the case of Sri Marudhar Kesari Sthanakwasi Jain Yadgar Samiti Trust v. Union of India [2005] 273 ITR 475, in which this Court held as under : "Section 80G of the Income-tax Act, 1961, applies to donations to any institution or fund established in India for a charitable purpose. Charitable purpose, for the purpose of the section, does not include any purpose the whole or substantially the whole of which is of a religious nature. For the purpose of applying Explanation3 to section 80G each and every object of the trust has to be read and the trust deed is not to be as a whole. Sub-section (5B) of section 80G inserted with effect from 1-4-2000 does not have retrospective effect and is not applicable to earlier assessment years. The petitioner-trust was recognized as a t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e does not necessarily mean that expenditure in question was for a particular religion only. All people who have faith in Lord Vishnu's temple belong to different sects and have faith in different religions and also visit such temple of Lord Vishnu. The revenue has not shown that entry in the said temple was restricted to the persons of one particular community or sect prasticing one religion. Hinduism is not one particular religion and different sects following Hindu philosophy do visit temples of Lord Vishnu, be that Jains, Sikhs, Brahmins etc. There is no water tight compartment between different castes or sects following one particular religion. Freedom of religion is guaranteed in the Constitution of India under article 25 of the Constitution of India. Therefore, taking such a pedantic and narrow approach, it cannot be said that character of the Charitable Trust is lost if one particular expenditure is made for repair and renovation of Lord Vishnu's temple and that too by way of contribution to another trust. A perusal of the trust deed of the petitioner produced on record shows that objective of the trust was clearly charitable and was not for any particular religion ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in the present case which indicates that income of the petitioner-trust was to be applied wholly or substantially for any particular religion. Therefore, the said case has been clearly wrongly applied by the learned CIT(A) in the present case. In Sri Marudhar Kesari Sthanakwasi Jain Yadgar Samiti Trust's case (supra) also relied upon by the learned Counsel for the revenue, the facts of the case were distinguishable in the said case. Thus, the judgments cited and relied upon by the learned Counsel for the revenue are distinguishable on facts and do not support the case of the respondents. Since the law in the case of Upper Ganges Sugar Mills (supra) was laid down while dealing the case of deduction under section 80G of the Act in the hands of donor so also in the case of Sri Marudhar Kesari Sthanakwasi Jain Yadgar Samiti Trust (supra) by this Court, those judgments do not advance cause of the revenue. On the other hand, the case laws relied upon by the learned counsel for the petitioner fully support the case of the petitioner when the Courts have consistently held that it is the dominant object of the trust which is important and contribution and expenditure incurred by the p....