TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 790
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.... 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 performance of seva puja (charitable offerings), give lessons and instr....
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....mpared 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 not been defined anywhere in the Act, its ordinary meaning is to be interpret....
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....ri 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 involved in the present case. "80G. Deduction in respect of donations to certain funds, ch....
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...., 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 exceeding five per cent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply. Explanation 3 - In this sect....
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....ity. 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 would be entitled to exemption under section 5(1)(v) of the Gift Tax Act. 10. In Tirumala Tirupati Devasthanam v. Chief CIT [2001] 251 ITR 849 (AP), the petitioner institution maintained 10 temples and 22 educational institutions, peer home and bala m....
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....o 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 Trust v. DIT (Exemption) [1998] 232 ITR 11, the Delhi High Court observed that :- "For the purpose of construing the purpose of the trust, one need not remain necessarily confined to the objects of the trust and set out in the deed of declaration. The real purpose of....
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....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 service of man in a land where the divinity in daridra Narayana is conceptually common place and, while it is overtly secular, its motive springs from spiritual sources. It is religion to love the poor. Likewise his insistence on the aviary and the menagerie and throwing open both to the people to see and delight is not....
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....n'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 associated with religious practice though such activity is not covered by the guarantee of freedom of conscience and the right freely to profess, practice and propagate religion. So, the Constitution considers religion as a matter of thought, expression, belief, faith and worship, a matter involving the conscience and a matter which may be professed, practiced under propagated by anyone and which m....
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....s 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 section of the public as distinguished from an individual or a group of individuals would be a "charitable purpose". On appeal, this judgment has been affirmed by the Apex Court in CIT v. Ahmedabad Rana Caste Association [1983] 140 ITR 1. 20. In CIT v. Rajneesh Foundation [2006] 280 ITR 553, the Bombay High Court observed that charitable purpose includes relief of the poor, education, medical relief and advancement of any other object of general pub....
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....tor 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 were poor and needed assistance were being given, assistance monthly basis. The fact that some of the devotees were given cash assistance could not be a ground to hold that all the beneficiaries were identifiable. That apart, much more money of the trusts was being spent for the medical benefits, poor feeding and education assistance to a larger number of persons. It was not possible to say that it was more in the nature of a private trust and the benefit to the public was incidental or insignificant. ....
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.... 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 trust wholly and substantially for charitable purposes. But the Commissioner denied the special deduction under section 80G(5) for its donors for the assessment years 1994-95 to 1997-98 on the ground that some of the clauses of the petitioner-trust pertained to wholly religious purposes. On a writ petition : Held, dismissing the petition, that the Commissioner had quoted object items 1 to 5 and sub-clause (4) of other objects and also the preamble to the petitioner-trust which showed that the petitioner-trust had many objects which were....
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.... 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 even wholly or substantially. Nothing has been pointed out in the impugned order that the petitioner-trust has been constantly spending money for a particular religion. One should discern and imbibe with great respects the observations of Hon'ble Supreme Court in Sri Jagannath Jew's case (supra). 32. This Court does not see any leaning in favour of any particular religion in trust deed of the petitioner-trust and therefore, once such exemption was granted to the petitioner trust, upon scrutiny of its application and it held the field for at least thre....
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....ondents. 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 petitioner-trust has to be viewed in light of the objects with which charitable trust in question was constituted. 34. Consequently, this writ petition is allowed and the impugned order Annex. 10 dated 16-12-2004 is quashed and set aside and the petitioner-trust shall be deemed to be registered under section 80G of the Act throughout the period after 1-4-2004 with all consequential benefits. 35. With these observations, this writ petition is allowed with no order as to costs. 6. Applying the propositions of law laid down in this case-law, to the facts of the case, we find from t....