2010 (7) TMI 1187 - AT - Income Tax

Exemption u/s 80G - Renewal of recognition u/s 80G denied on the ground that the assessee had violated the conditions as laid down in s.80G(5)(ii) and (iii) - assessee trust is doing charitable work without any discrimination on the basis of caste, creed or religion - HELD THAT - The assessee trust s hospital had treated 8,51,127 patients of non-Christian community out of 9,00,406 total patients received treatments which works out to 94.5%. Likewise, for the F.Y.2009-10, the total number of patients received various treatments from its hospital were 9,07,641, out of which, 8,50,146 patients were not belonging to the Christian community. This very fact belies the finding of the Ld. DIT(E) that the assessee-trust had served only its community and was being run for the benefit of Catholics. When the assessee-trust was established in sixties the very object must have been for the benefit of Catholics, however, in practice the other community patients who have out-numbered the Christian community indeed received treatments from its hospital cannot be looked in isolation. Even on a glimpse of statistics provided, we find that out of the total number of 685 students admitted in its Medical College, 195 students were from Hindu community, 24 from Muslim and the remaining were from various sects of Christian community. Likewise, the number of staffs employed in its various institutions such as Research Institute, Medical College, Hospital etc., we find that a fair number of staffs were from other communities too. This precisely contradicts the finding given by the Ld. DIT (E) in his impugned order that 80% of the total number of students from Christian community and the position of non-teaching staff were around 90% from its community and so on so forth. Assessee-trust has been serving the humanity in its noble profession rendering timely treatment to the needy without discriminating the caste, creed, community etc.- one should approach its cause with a wider perception rather than trying to read between the lines. Provisions of s.80G(5)(iii) cannot be applied to the instant case since the assessee trust s beneficiaries being the society at large and NOT to be beneficiary of Catholics alone as alleged by the Ld. DIT(E). - Decided in favour of assessee.

Summary

Issues Involved:
1. Denial of renewal of recognition under Section 80G of the Income Tax Act.
2. Alleged violation of conditions under Section 80G(5)(ii) and (iii) of the Income Tax Act.
3. Interpretation of the term "Catholic" as a religious community or caste.
4. Compliance with the requirements of Section 80G(5)(iii) regarding the benefit to a particular religious community or caste.

Issue-Wise Detailed Analysis:

1. Denial of Renewal of Recognition under Section 80G of the Income Tax Act:
The appeal was directed against the denial of renewal of recognition under Section 80G by the Director of Income-tax (Exemption) [DIT(E)]. The assessee-trust had previously been granted recognition under Section 80G till 31.3.2009 and had applied for renewal on 20.3.2009.

2. Alleged Violation of Conditions under Section 80G(5)(ii) and (iii) of the Income Tax Act:
The DIT(E) rejected the renewal application on the grounds that the assessee had violated the conditions laid down in Section 80G(5)(ii) and (iii). Specifically, the primary object of the trust was to benefit Catholics, which was seen as not in accordance with Section 80G(5)(iii).

3. Interpretation of the Term "Catholic" as a Religious Community or Caste:
The DIT(E) interpreted the term "Catholic" as denoting a religious community or caste, which led to the conclusion that the trust was primarily for the benefit of a particular community. The assessee argued that "Catholic" does not denote a religious community or caste and that the trust was open to all irrespective of caste or creed.

4. Compliance with the Requirements of Section 80G(5)(iii):
The assessee contended that the trust did not exclusively benefit Catholics, as evidenced by the statistics showing that a significant majority of patients treated were non-Catholics. The trust's Memorandum of Association also stated that benefits were open to all, which was argued to be in compliance with Section 80G(5)(iii).

Judgment Analysis:

Primary Object and Compliance with Section 80G(5)(iii):
The Tribunal scrutinized the primary object of the trust, which stated "primarily for the benefit of Catholics; others may be admitted without distinction of caste and creed." Despite the wording, the trust was found to serve a broader community, as demonstrated by the high percentage of non-Catholic patients treated and the diverse student and staff composition.

Legal Precedents:
The Tribunal referred to several legal precedents, including:
- CIT v. Bigabass Maheshwar Sewa Samiti: The court held that a trust providing some preference to a particular community does not necessarily violate Section 80G(5)(iii).
- Vimalabai Neelkanth Jatar Charitable Trust v. ITO: It was held that a trust giving preference to certain communities "other things being equal" did not violate the section.
- Ecumenical Christian Centre v. CIT: The court emphasized the importance of previous recognitions and the need for substantial reasons to deny renewal.

Conclusion:
The Tribunal concluded that the DIT(E) was not justified in refusing the renewal of recognition under Section 80G. The assessee-trust's activities demonstrated service to a broad community without discrimination, aligning with the requirements of Section 80G(5)(iii). The appeal was allowed, and the renewal of recognition was granted.

Final Order:
The assessee's appeal was allowed, and the renewal of recognition under Section 80G of the Income Tax Act was granted. The judgment was pronounced in the open court on July 23, 2010.