2007 (8) TMI 86 - HC - Income Tax

Donation for Charitable purpose - Alleged that assessee-trust publishing the religious books had contravened the provisions of Section 80G(5)(iii) of the Act and accordingly the request for renewal of exemption was not granted - Held that allegation was correct and allowed

Issues Involved:
1. Reopening of exemption granted under Section 80-G of the Income Tax Act.
2. Interpretation of Epics as religious or cultural texts.
3. Jurisdiction of the authority to comment on the merits and message of Epics.
4. Review of the work of the Founder Chairman of the Trust.
5. Examination of the matter within the parameters of Section 80-G(5)(iii) of the Act.
6. Correctness of the finding that the Trust was meant for propagating Hindu religion.
7. Distinction between the cultural and religious parts of the Trust's activities.

Detailed Analysis:

Issue 1: Reopening of Exemption Granted Under Section 80-G of the Income Tax Act
The Trust challenged the reopening of the exemption granted under Section 80-G, arguing that the exemption had been granted for 20 years and should not have been reopened. The court found that if the exemption had been granted by misconstruing the law, it would not bar the respondent from passing an order when an application for extension was made. The court upheld the respondent's decision to refuse the renewal of the exemption.

Issue 2: Interpretation of Epics as Religious or Cultural Texts
The petitioner contended that the Epics Ramayana and Mahabharata enunciated universal values and should not be considered as promoting Hindu religious values. The court, however, noted that these texts deal with Hindu Gods and Goddesses and their preachings, and hence, could not be divested of their religious nature. The court held that the respondent was justified in assuming that the Trust's objective was religious in nature.

Issue 3: Jurisdiction of the Authority to Comment on the Merits and Message of Epics
The petitioner argued that the authority had no jurisdiction to go into the merits and message of the Epics and denigrate their heroes. The court did not explicitly address this issue in the judgment but implicitly supported the respondent's stance by upholding the refusal of the exemption.

Issue 4: Review of the Work of the Founder Chairman of the Trust
The petitioner contended that the officer had no concern or business to review the work of the Founder Chairman of the Trust. The court agreed, stating that the respondent made unnecessary and unfortunate comments about the book "The Light of Ramayana" authored by Justice P. Kodanda Ramayya. The court set aside these comments as they were not relevant to the decision on whether the Trust was a religious Trust.

Issue 5: Examination of the Matter Within the Parameters of Section 80-G(5)(iii) of the Act
The petitioner argued that the officer failed to examine the matter within the parameters of Section 80-G(5)(iii) of the Act. The court referenced several judgments, including those from the Madras High Court, Delhi High Court, and Rajasthan High Court, which supported the view that a Trust with religious purposes does not qualify for exemption under Section 80-G. The court concluded that the respondent correctly applied the law in refusing the renewal.

Issue 6: Correctness of the Finding That the Trust Was Meant for Propagating Hindu Religion
The petitioner contended that the Trust was meant to propagate the knowledge of Arsha Dharma and not specifically Hindu religion. The court, however, held that the Trust's activities, including the publication of texts like Ramayana and Mahabharata, were inherently religious. The court upheld the respondent's finding that the Trust was religious in nature.

Issue 7: Distinction Between the Cultural and Religious Parts of the Trust's Activities
The petitioner argued that even religious Epics have cultural and literary parts, and their publication should not be termed as religious. The court rejected this argument, stating that if the petitioner's interpretation were accepted, no sacred book could be termed religious. The court emphasized that all religions preach Dharma, and the Trust's activities were substantially religious.

Additional Remarks:
The court criticized the respondent for making personal and disparaging comments about Justice P. Kodanda Ramayya, who was not a party to the proceedings. The court set aside these comments and directed the Central Board of Direct Taxes to initiate appropriate action against the officer for his conduct.

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