2015 (3) TMI 1233 - HC - Income Tax

Denial of approval under section 80G - non charitable activity - ITAT come to the conclusion that the said objects were all of charitable nature and were not hit by the proviso to section 2(15) - Held that - From a plain reading of the order of the Director, it is clear that the same has been passed without even specifying as to which of the objects, and how the same, were not charitable in nature. It has also not been mentioned or clarified in the order as to why on the same objects the trust had been granted exemption under section 80G earlier, and it was being denied at this stage. Proviso to section 2(15) of the Act was inserted with effect from April 1, 2009 and not from April 1, 2008 as has been mentioned by the Director in his order. The order of the Director was totally devoid of reasons and thus, the same was rightly set aside by the Tribunal. Tribunal has, in our view, rightly come to the conclusion that denial of approval under section 80G was not justified. We are not satisfied with the objection raised by the learned counsel for the appellant as, in our opinion, construction of prayer hall or encouraging meditation yoga etc. would not be religious activities. We are, thus, not satisfied with the submission of the learned counsel for the appellant, especially when such is not the ground which has been taken by the Director while denying approval to the assessee.- Decided in favour of assessee

Summary

Issues:
1. Denial of renewal of certificate under section 80G of the Income-tax Act, 1961.
2. Interpretation of the objects of the trust deed in relation to charitable nature.
3. Justification of denial based on religious activities and construction of a "prayer house".

Analysis:

1. The appeal challenged the Income-tax Appellate Tribunal's order setting aside the Director of Income-tax (Exemptions)'s decision to not renew the certificate under section 80G of the Income-tax Act, 1961. The Tribunal directed the renewal of the approval for the appellant. The Director had denied renewal citing non-charitable nature of certain clauses in the trust deed due to the proviso to section 2(15) effective from April 1, 2008. The Tribunal found the objects of the trust to be charitable and not violating the proviso to section 2(15). The Director's order lacked specificity on the non-charitable nature of the objects, leading to the Tribunal's decision.

2. The Tribunal correctly noted that the proviso to section 2(15) came into effect from April 1, 2009, contrary to the Director's mention of April 1, 2008. The Tribunal found the Director's order lacking in reasons and justified in setting it aside. By considering all objects in the trust deed and relevant sections of the Act, the Tribunal concluded that the denial of approval under section 80G was unjustified. The appellant's argument that certain activities were religious and not charitable was rejected by the Court, as construction of a "prayer hall" or promoting meditation and yoga did not fall under religious activities according to the Court's interpretation.

3. The Court dismissed the appeal, stating that no substantial question of law arose for determination. The Court found no grounds for interference with the Tribunal's order. The appellant's attempt to justify the Director's decision based on religious activities was not accepted by the Court, as it was not the basis for the denial of approval. The Court emphasized that the construction of a "prayer hall" and activities like meditation and yoga did not constitute religious activities, supporting the Tribunal's decision to renew the approval under section 80G of the Income-tax Act. The appeal was dismissed with no order as to costs.

This detailed analysis of the judgment highlights the key issues, interpretations, and conclusions reached by the Court regarding the denial and subsequent renewal of the certificate under section 80G of the Income-tax Act, 1961.