TaxTMI 
TaxTMI 
2022 (4) TMI 1124
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.... the Bombay Public Trust Act 1950 vide registration No. E/8846/Rajkot dated 18th March 2010 with the Assistant Charity Commissioner of Rajkot region. The assessee was also registered under the provisions of section 12A and 80G of the Act by the Commissioner of Income Tax with effect from the financial year 2010-11. 3.1 It was claimed by the assessee that it is engaged in the activity of education, medical relief, monetary help, refinement and social development and general public utilities which were provided to the public at large irrespective of the religion, caste, race, community or social status. There was no element of profit motive in the activities carried out by it (the assessee). The assessee has shown the gross receipts of Rs. 8,21,15,600/- in the year under consideration, the breakup of the same stand as under: - Bank Interest and other income Rs. 2,34,66,269/- - General donation Rs. 3,02,325/- - Specific donation for building Rs. 5,83,47,006/- 3.2 However, the AO during the assessment proceedings on verification of the balance sheet as on 31st March 2014 found that the assessee has shown different kind of fixed assets which were located....
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....s website clearly shows that "temple' is being built in garb of "prayer hall"- The printout of same is made part of this order as annexure-B. * This website also states that the trust publishes a religious and spiritual magazine "Khodaldharn Smruti". * Expenditure on its stated objects of the trust deed, i.e.-educational, Medical, Monitory help, refinement and social development could not be deciphered from any bills or details produced during assessment proceedings. 5.3 From the perusal of the details on record and the website of the assessee trust, it is established that the assessee is primarily a religious trust. It is likely that the assessee has attempted to hide its true nature of being a religious trust as a charitable one, ostensibly to garner benefit u/s.80G. However, such religious activities are outside the objects as stated in trust-deed. 3.5 In view of the above, the AO was of the opinion that the activities of the assessee are in the nature of religious which were camouflaged as charitable in nature. Thus the activities carried out by the assessee were not in accordance with the trust deed. Thus the AO denied the benefit of exemption....
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....ther these are the architectural design wherein the cultural activities like Independence Day, teachers day and other such public festivals are organised. Accordingly, the prayer hall constructed by the assessee cannot be treated as temple as alleged by the AO based on the bills of architect, amount of expenditures. 4.4 The assessee in the year under consideration has also incurred an expense of Rs.30.92 lakhs towards the charitable activities. These expenses were incurred towards the supply of books to the students, donation to chief minister relief fund, Khel Mahotsav, Samulagan Event expenses, group woman welfare and empowerment expenses. As such the amount of Rs.5.83 crores was representing the corpus fund received for the purpose of the building and incurred accordingly. Therefore it is not correct to allege by the AO based on the website of the trust that it was mainly engaged in the religious activities. 4.5 The words used the construction of the temples in the website shall not alter the character of the intent of the trust which is charitable in nature. The words temple were the denoting the place for worship /meditation. 4.6 The magazine published by the trust do....
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....on of income reveals that during the year under consideration, the trust had income from other sources to the tune of Rs. 2,34,66,269/- (comprising of bank interest and other income). It had further received Voluntary Contribution to the tune of Rs. 5,86,49,331/- (which consists general donation of Rs. 3,02,325/-and Rs. 5,83,47,006/- being income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust towards building construction fund). Thus, the gross income of the trust was Rs. 8,21,15,600/-. On the perusal of income and expenditure account of Trust, it is observed that Appellant Trust has transferred amount of Rs. 5,83,47,006 towards building fund. The above voluntary contributions were received for specific purpose as mentioned in receipts issued by the Appellant Trust hence ;----same were specifically transferred to building fund in Balance Sheet and accumulated building fund as per Audited Annual Accounts submitted before Assessing Officer is Rs. 34.05 crores as on 31st March, 2014, which includes above transfer of Rs. 5.83 crores. The above voluntary contributions hay been claimed as exempt as per the provis....
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....t, is in vogue, the Assessing Officer cannot disturb the claim of benefit under Section 11. This contention of Appellant is supported by decision of the Hon'ble Gujarat High Court in Tax Appeal No. 376 of 2010 in the case of Commissioner of Income tax-1 Rajkot v/s. Saurastra Kutch Stock Exchange Ltd dated 8.8.2011 wherein it has been held that, while granting registration under Section 12A of the Act, the Commissioner has to make necessary inquiries and such registration would be granted only if necessary requirements are fulfilled. It was in this background that this Court in case of Hirala Whagwati (supra) held and observed that "It is also required to be noted that once the registration under Section 12A(a) of the Act is granted, the grant of benefit cannot be denied. The Income Tax Officer was not justified in refusing the benefits, which would otherwise accrue under the registration. If there is no registration, as contemplated under Section 12A(a) read with Rule 17(A), the revenue would have been justified in making the submission that the benefit cannot be granted but where the application for registration is submitted and the registration having been granted, the benefi....
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....'ble Supreme Court vide order dated 1 0"' May, 2011 referred supra. 6.8 From the above it is clear that the AO cannot deny the benefits of section 11 to the Appellant trust, when, the registration u/s. 12A granted by the Commissioner subsists. 7. With regard to observation made by AO at para 5.2 that Assessee is primarily a religious trust and while arriving at such conclusion he has made specific observations which are already summarised at para - 6.3, it is found that Appellant Trust in its income and expenditure account has included donation of Rs. 5,83,57,006 received for specific purpose being building construction and same is transferred to building fund in year under consideration which is apparent from building fund lying in Balance Sheet as on 31st March, 2014. This voluntary contribution received for specific purpose was claimed as exempt under Section ll(l)(d) in return of income. Section ll(l)(dj clearly states that total income for the current year will not include income in the form of voluntary contribution made with a specific direction that they shall form part of corpus of Trust. The Appellant has received above donation with specific dir....
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....f, can come and visit the premises and enjoy its serenity. I find substantial force in the argument of the AR. The assessing officer has taken a very narrow interpretation of the presence of statutes of various deities. In fact, the AO himself admits that there was presence of dozen different deities. This again shows that the appellant trust ' has 'taken care of wide range of people with their multiple beliefs and trusts. Hence, the presence of statutes of different deities in. no way construe that the appellant trust is a religious trust. The ratio of decision of Hon'ble GujaraL High Court in the case of Sheth Jivand as Godidas Sankheshwar Paryhwanath Jain Derasar referred supra is applicable on present facts. 7.3 The next finding of the AO, while holding that the appellant trust is a religious trust is that, the architecture of the prayer hall shows 'Garbhgruh' and 'Rangmandap' which are the features of a Hindu temple. For this the AR contended that, Garbhgruhand Rangmandap are ancient mystic names and it has no religious importance. Even if it depicts as sanctified place, still il is open for all to enter the Garbhgruh. Further, Rangmandap i....
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....nt that it has incurred substantial expenditure towards the object of the Trust. While making the above observation that Appellant has not carried out major charitable activities, the AO has considered expenditure incurred out of corpus but, as held herein above, incurring of such expenditure does not make activity of trust as religious activity of the Trust as held by various Courts, supra. 7.5 The next, finding of the AO is that, the website shows that the trust publishes a religious magazine known as 'KhodaldhamSmruti'. However, in support of his argument, the AR produced before me some editions of the magazine. I have gone through the magazines. I find that the same is published in Gujarati language. It is seen that, the magazine is very secular in nature. It contains articles relating to agrictiiture, education, medical, national and other general awareness topics. From the plain, reading of the magazine, nowhere a person can make out that it is published to propagate and spread the beliefs of a particular sect. Therefore, this finding of the AO is also held to be factually incorrect. 7.6 From the above discussion, it is very clear that the appellant ....
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....dar Patel Cultural Foundation, which have been perused by me. Thus it is the plea of the AR that, the objects of both the trusts are similar. Hence, the appellant trust can provide loans / aids to like-minded organizations. In this connection, he submitted that, it has been held by various Hon'ble High Courts that, interest free Joans provided by a trust to its associate trust did not violate provisions of section 13(3) and hence exemption under section 12 cannot be- denied. The following decisions have been relied upon. 1. Hon'ble High Court of Madhya Pradesh has in the case of CIT, Bhopal v. MaaVaishnav Education Society [2013] 38 taxmann.com 193 (Maclhya Pradesh) 2. Hon'ble High Court of Delhi in the case of DIT u. Acme Educational Society [2010] 326 ITR 146 (Delhi). 3. Hon'ble High Court of Allahabad in the case of CIT v. Kanpur Subhash ShikshaSamiti [2013] 36 taxmann.com 536 (Allahabad) 8.1 1 have perused the assessment order and the written submission filed by the AR of the appellant. It is seen from the assessment order that, \the AO has held that, the appellant trust has made investment in contravention of provisions of se....
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....ng registration under section 10(23C) by invoking provisions of section 13(l)(d) on ground that assesses had violated condition of investment specified under section J 1(5) - Whether since money was advanced as a loan by assessee-trust to other trust for which assessee had not received any securities or interest and said sum was returned by other trust and common trustees had no substantial interest in said other trust, amount advanced could not be held to be in violation of section 13(l)(d) and section 11(5} could not be applied to present facts as money advanced was not an investment but a loan - Held, yes -Whether, thus, denial of registration under section 10(23C)(vi} and exemption under section 11 to assessee was unjustified - Held, yes [Paras 29 to 31 and 33] [In favour of assessee]" 8.2 In view of the above, the appellant trust is eligible for benefits of section 11 of the I T Act, as there is no violation of Section 11(5) and thus provisions of Section 13fl)(d]is not attracted. The AO is directed to grant benefit of Section 11 and 12 to the Appellant trust. The related grounds of appeal are thus Allowed. 9. In the result, the appeal of the appellant is all....
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.... the Act is concerned, it is nothing short of perverse conclusion as it is neither conclusion based on any material on record nor after giving any reasons to reverse the findings of the assessing authority and the first appellate authority who have givenwell supported reasons and discussed the material available. 8.2 With respect to the 2nd question for advancing the sum of Rs.1.50 crores, we note that the advance was made by the assessee in the financial year 2011-12 which was subject to the assessment under the provisions of section 143(3) of the Act and there was no allegation against the assessee for having contravened the provisions of section 11(5) read with section 13(1)(d). Likewise the amount of advance received back in full in the assessment AR 2016-17 which was also the subject matter of assessment under section 143(3) of the Act but no adverse inference was drawn by the AO during the relevant assessment proceedings. Accordingly, the case of the assessee was in its favour based on the principles of consistency. Furthermore, the assessee has achieved its own goals by advancing money without charging any interest to the institution which was engaged in charitable activi....