2018 (2) TMI 732 - AT - Income Tax

Registration u/s 12A eligibility - Voluntary contributions received by the Appellant covered under exceptions covered under sub-section (2)(b) of section 115BBC - charitable activities along with organizing of spiritual lectures, the assessee by no means ceases to be a religious institution - Held that - In the present case, as per the objects clauses reproduced by the AO this is also an object of the assessee to establish and maintain anathashrama , old age home home for deaf and dumb and to render all sorts of help to the poor and needy including conducting of marriage and mass marriage. These objects are similar to the objects of the assessee trust in the case of judgment of Hon ble Delhi High Court rendered in the case of CIT (E) Vs. Bhagwan Shree Laxmi Naraindham Trust (2015 (9) TMI 558 - DELHI HIGH COURT) as reproduced above except this that in that case, this was also an object that the assessee trust will arrange spiritual lectures but in the present case, there is no such object. But in considered opinion, this difference is not material because spreading spirituality was not considered to be a religious activity in that case as can be seen in Para 15 of that judgment reproduced above - Decided in favour of the assessee.

Issues Involved:
1. Legitimacy of the order passed by the Commissioner.
2. Consideration of submissions made by the appellant.
3. Classification of voluntary contributions under Section 115BBC(2)(b) of the Income Tax Act.
4. Classification of the appellant trust as a "religious trust."
5. Applicability of the Delhi High Court decision in the case of Bhagwan Shree Lakshmi Naraindham Trust.
6. Treatment of voluntary donations towards the corpus fund as anonymous donations.
7. Exemption of anonymous donations under Section 115BBC for religious and charitable trusts.
8. Application of Section 11 for charitable purposes.

Detailed Analysis:

1. Legitimacy of the Order Passed by the Commissioner:
The appellant argued that the order passed by the Commissioner was unjust and illegal, contrary to facts, circumstances, and binding decisions on the issue. The appellant contended that the Commissioner ignored the submissions made by the appellant, which should have been considered in the decision-making process.

2. Consideration of Submissions Made by the Appellant:
The appellant claimed that the Commissioner did not justify confirming the order passed by the assessing officer by ignoring the submissions made by the appellant. The appellant emphasized that the voluntary contributions received were covered under exceptions specified in Section 115BBC(2)(b) of the Income Tax Act, as clarified by the CBDT circular No. 14/2006 dated 28.12.2006.

3. Classification of Voluntary Contributions Under Section 115BBC(2)(b) of the Income Tax Act:
The appellant argued that the voluntary contributions received should be classified under exceptions covered under Section 115BBC(2)(b) of the Income Tax Act. The appellant referenced the CBDT circular No. 14/2006, which clarifies that anonymous donations made to wholly religious trusts are not taxed.

4. Classification of the Appellant Trust as a "Religious Trust":
The appellant contended that the Commissioner grossly erred in holding that the object of the appellant trust did not qualify it to be categorized as a "religious trust." The appellant trust's objectives included maintaining and running old age homes, homes for the deaf and dumb, hospitals, and providing aid to the poor and needy, which should be considered religious activities.

5. Applicability of the Delhi High Court Decision in the Case of Bhagwan Shree Lakshmi Naraindham Trust:
The appellant argued that the Commissioner should have been guided by the Delhi High Court's decision in the case of Bhagwan Shree Lakshmi Naraindham Trust. This decision declared that trusts targeting groups such as widows, orphans, old and infirm people, destitute, illiterate, handicapped, and mentally retarded individuals fall under the category of religious activities.

6. Treatment of Voluntary Donations Towards the Corpus Fund as Anonymous Donations:
The appellant asserted that the assessing officer erred in treating an amount of ?34,24,180/- received as voluntary donations towards the corpus fund as anonymous donations. The appellant provided details of such donations during the assessment proceedings, including serial numbers, dates, names, and amounts, except for addresses, which are not mandated by law.

7. Exemption of Anonymous Donations Under Section 115BBC for Religious and Charitable Trusts:
The appellant argued that the trust, being registered under Section 12A of the Income Tax Act, falls under the category of "any trust or institution created or established wholly for religious and charitable purposes." Consequently, such donations should be specifically excluded from the provisions of Section 115BBC. The appellant referenced various judicial pronouncements supporting this view.

8. Application of Section 11 for Charitable Purposes:
The appellant contended that the assessing officer failed to appreciate that the appellant had spent and utilized the entire donations/revenues received during the year towards charitable purposes. Consequently, the provisions of Section 11 should have been applied, excluding the same from the computation of "total income."

Conclusion:
Upon considering the rival submissions, the Tribunal examined the objects of the assessee trust and found them similar to those in the case of Bhagwan Shree Lakshmi Naraindham Trust, which was deemed a religious trust by the Delhi High Court. The Tribunal concluded that the issue is covered in favor of the assessee by this judgment and decided the issue accordingly. The appeal of the assessee was allowed, and the order pronounced in the open court.

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