2015 (4) TMI 714 - AT - Income Tax

Exemption granted to the society under section 80G(5) withdrawn - Held that - Assessee was registered as charitable institution under section 12A and the said registration is being continued to be granted to the assessee-society even for the year under consideration. The primary aim of the assessee society was to train men and women as health professionals in the spirit of Jesus Christ and the said facility of training health professionals and medical care was to be provided without consideration of caste, race, creed, language and religion. Though in the primary paragraph of the objects of the assessee-society, it is mentioned that the primary aim was to educate and train christians men and women as health professionals but in actual fact, the assessee-society has been running and maintaining the Christian Medical College, Christian Dental College, Christian College of Nursing and other institutions, though on the ideals and principles in the spirit of christian services, but for training the professionals of any caste, creed, race, religion, etc. Similarly, the medical care is being provided by the assessee-society to all irrespective of their caste, creed or religion, etc. Assessee was directed to furnish the information in respect of the concessions being allowed to the patients by the assessee-society and necessary evidence has been filed on record in this regard which clearly establish the case of the assessee that the said facilities of providing concessional medical and health care is provided to persons of any caste, creed or religion. The assessee-society was established and run by a minority christian community, but as the aim and object of the assessee-society is to train professionals in the field of medical and health-care and also to provide medical facilities in their hospitals to all persons of any caste, creed, race, religion, etc., we are of the view that the activities carried out by the assessee-society are charitable in nature and consequently, the assessee is entitled to the registration under section 80G(5) of the Act. We find no merit in the order of the Commissioner of Income-tax in this regard and reversing the same, we hold that the renewal of registration under section 80G(5) is to be granted to the assessee-society.- Decided in favour of assessee.

Issues Involved:
1. Withdrawal of exemption under section 80G(5) of the Income-tax Act, 1961.
2. Nature of the assessee-society's activities-whether religious or charitable.
3. Applicability of previous case laws cited by the Commissioner of Income-tax.
4. Compliance with the conditions necessary for continuation of exemption under section 80G(5)(iii) read with Explanation 3 and rule 11AA(5) of the Income-tax Rules, 1962.

Detailed Analysis:

1. Withdrawal of Exemption under Section 80G(5):
The primary issue in the appeal is the withdrawal of the exemption granted to the assessee-society under section 80G(5) of the Income-tax Act, 1961. The Commissioner of Income-tax-I, Ludhiana, withdrew this exemption, arguing that the society's activities were religious in nature and did not fulfill the conditions necessary for continuation of the exemption.

2. Nature of the Assessee-Society's Activities:
The assessee-society was established in 1949-50 and had been granted registration under section 12A of the Act. The society's primary aim, as per its memorandum of association, was to educate and train Christian men and women as health professionals in the spirit of Jesus Christ. However, the society also provided medical and educational services to all individuals regardless of caste, creed, or religion. The Commissioner of Income-tax argued that the primary aim was religious, citing the society's focus on Christian training. The assessee countered this by highlighting that the society's activities were charitable, serving all individuals and providing free medical services to non-Christians as well.

3. Applicability of Previous Case Laws:
The Commissioner of Income-tax relied on the cases of Arsha Vijnana Trust v. D. P. Sharma, IRS, Director of Income Tax (Exemptions) [2007] 295 ITR 437 (AP) and Upper Ganges Sugar Mills Ltd. v. CIT [1997] 227 ITR 578 (SC) to argue that the society was religious in nature and thus not eligible for exemption. The assessee argued that these cases were not applicable as their activities were both charitable and religious, and the charitable activities were substantial and inclusive of all communities.

4. Compliance with Conditions for Continuation of Exemption:
Section 80G(5) specifies the conditions for an institution to be eligible for exemption, including that it should not be for the benefit of any particular religious community or caste. Explanation 3 under section 80G(5C) states that "charitable purpose" does not include any purpose that is wholly or substantially of a religious nature. The Commissioner of Income-tax concluded that the society did not meet these conditions. However, the Tribunal found that the society's activities were charitable as they provided medical and educational services to all individuals without discrimination. The Tribunal noted that the society was registered under section 12A and had been granted exemptions in the past, indicating its charitable nature.

Conclusion:
The Tribunal held that the activities carried out by the assessee-society were charitable in nature and not exclusively religious. Consequently, the assessee was entitled to the renewal of registration under section 80G(5) of the Act. The order of the Commissioner of Income-tax was reversed, and the appeal of the assessee was allowed.

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