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2017 (9) TMI 532 - HC - Income TaxExemption u/s 11 - religious purpose / charitable purpose - AO / CIT(A) observed that the Assessee was not using its funds for public benefit but rather for the benefit of specified persons under Section 13(3) - Held That - The CIT (A) had proceeded on the basis that although the Assessee Society was for both religious and charitable purposes, since it was for the benefit of only one religious community the provision of Section 13 (1) (b) would apply to deny it exemption under Section 11 of the Act. The above conclusion was legally flawed. It was contrary to the decision of the Supreme Court in Dawoodi Bohra Jamat 2014 (3) TMI 652 - SUPREME COURT which held that even where the trust or society has both religious and charitable objects, it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large . In that case it was factually found that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community and, therefore Section 13 (1) (b) was not attracted. In the present case too, the factual finding of the ITAT is likewise. It has been found that the activities of the Assessee Society, though both religious and charitable, were not exclusively meant for one particular religious community. It was, therefore, rightly not denied exemption under Section 11 of the Act. - Decided against the revenue.
Issues:
1. Whether the Assessee-Society is a charitable society established 'for the benefit of any particular religious community or caste' in violation of Section 13 (1) (b) of the Income Tax Act, 1961? Analysis: The appeal by the Revenue under Section 260A of the Income Tax Act, 1961, challenged the order passed by the Income Tax Appellate Tribunal (ITAT) regarding the Assessment Year 2012-13. The Revenue contended that the Assessee-Society was carrying out activities directed towards the benefit of a particular community, potentially violating Section 13 (1) (b) of the Act. The Assessee-Society, registered under Section 12A (a) of the Act, aimed to disseminate religious knowledge, promote worship, and conduct various charitable, educational, and cultural programs. The ITAT found that the activities conducted by the Assessee-Society were for the benefit of the public at large and not limited to any specific religious community or caste. The Assessing Officer (AO) had raised concerns about the Assessee-Society incurring expenses for priests belonging to a particular community, questioning the charitable nature of such expenses. The AO concluded that the Society was not engaging in activities for the general public's benefit but for specified individuals, thus not qualifying for exemption under Section 11 of the Act. The Commissioner of Income Tax (Appeals) (CIT(A)) also denied exemption under Section 11, emphasizing that the Society's activities primarily benefited one religious community. However, the ITAT observed that neither the AO nor the CIT(A) had conducted a factual examination to support their conclusions. Referring to the Supreme Court's decision in Commissioner of Income Tax v. Dawoodi Bohra Jamat, the ITAT highlighted the importance of examining whether the charitable activities exclusively benefited a particular religious community to determine the applicability of Section 13 (1) (b) of the Act. The ITAT found that the activities of the Assessee-Society, though religious and charitable, were not exclusively for one religious community, aligning with the Supreme Court's precedent. Therefore, the ITAT correctly concluded that the Assessee-Society was eligible for exemption under Section 11 of the Act. Consequently, the High Court dismissed the appeal, stating that no substantial question of law arose from the ITAT's order.
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