2011 (5) TMI 261 - AT - Income Tax

Registration u/s 12AA - Approval u/s 80G - Held that CIT must be aware of that the Hindu consists of a number of communities having the different Gods who are being worshipped in a different manner, different rituals, different ethical codes - Even the worship of God is not essential for a person who has adopted Hinduism way of life - Thus, Hinduism holds within its fold men of divergent views and traditions who have very little in common except a vague faith in what may be called the fundamentals of the Hinduism - The word community means a society of people living in the same place, under the same laws and regulations and who have common rights and privileges - This may apply to Christianity or Moslem but not to Hinduism - Therefore, it cannot be said that Hindu is a separate community or a separate religion - Technically Hindu is neither a religion nor a community. Under these facts and circumstances, we are of the view that the CIT is not correct in law in not allowing the approval to the assessee trust under section 80G of the Act - Accordingly, set aside the order of the CIT and direct the CIT to grant approval to the assessee-trust under section 80G(5)(vi) of the Act Technically Hindu is neither a religion nor a community. Construction and maintenance of Brij Chaurasi Kos Parikrama way and construction and maintenance of Dharamshala, tents, night stay camps etc., in Brij Chaurasi Kos Parikrama Marg can not be held as religious activity benefit of section 80G being charitable in nature - Decided in favor of assessee.

Summary

Issues Involved:
1. Rejection of the application for renewal of approval under section 80G of the Income-tax Act.
2. Whether the trust's activities are charitable or religious in nature.
3. Compliance with the conditions laid down under section 80G(5)(ii) and 80G(5)(iii) of the Income-tax Act.
4. Whether the trust benefits a particular religious community or caste.
5. Whether the trust has spent more than the permissible limit on religious activities.

Detailed Analysis:

Issue 1: Rejection of the Application for Renewal of Approval under Section 80G
The assessee appealed against the order of CIT-I, Agra, dated 9-3-2010, which rejected the application for renewal of approval under section 80G. The grounds for rejection included presumptions about the nature of the trust's activities and failure to appreciate that the trust was not engaged in religious activities as per the trust deed.

Issue 2: Nature of the Trust's Activities - Charitable or Religious
The CIT observed that the trust's activities, such as the construction and maintenance of Brij Chaurasi Kos Parikrama way and Dharamshalas, were religious and benefited the Hindu community. The CIT cited sections 80G(5)(ii) and 80G(5)(iii) and noted that the trust spent more than the permissible limit on religious activities.

Issue 3: Compliance with Conditions under Section 80G(5)(ii) and 80G(5)(iii)
Section 80G(5) outlines conditions for approval, including that the trust must not apply funds for non-charitable purposes and must not benefit any particular religious community or caste. The CIT concluded that the trust violated these conditions, as its activities were deemed religious.

Issue 4: Benefit to a Particular Religious Community or Caste
The Tribunal analyzed whether the trust's activities were for the benefit of a particular religious community. It was noted that the construction of the Parikrama way and Dharamshalas served a general public utility purpose, benefiting all tourists regardless of religious affiliation. The Tribunal referenced various legal precedents, including the case of Satya Vijay Patel Hindu Dharmashala Trust v. CIT, to support the view that such activities are charitable.

Issue 5: Expenditure on Religious Activities
The CIT noted that the trust spent 21.6% and 21.72% of its total income on religious activities in the financial years 2008-09 and 2007-08, exceeding the permissible limit of 5% under section 80G(5B). The Tribunal found that the CIT did not provide sufficient evidence to prove that the trust's activities were wholly or substantially religious.

Conclusion:
The Tribunal concluded that the trust's activities, such as constructing and maintaining the Parikrama way and Dharamshalas, were charitable and served a general public utility. The Tribunal held that the CIT's observations were based on presumptions and lacked sufficient evidence. The trust's activities did not violate the conditions under section 80G(5)(ii) and 80G(5)(iii), as they were not for the benefit of any particular religious community. The Tribunal directed the CIT to grant approval to the assessee-trust under section 80G(5)(vi) of the Income-tax Act.

Result:
The appeal of the assessee was allowed, and the CIT was directed to grant the approval for renewal under section 80G.