2020 (6) TMI 55 - HC - Income Tax

Exemption u/s 80G(5)(iii) - renewal of exemption denied as primary object of the Trust among others, primarily was for the benefit of Catholics and others may be admitted without any distinction of caste or creed - whether the respondent is doing charitable work without any discrimination on the basis of caste, creed or religion? - HELD THAT - Clause 3 of the Memorandum of Association which uses the expression primarily for the benefit of Catholics . Others may be admitted without distinction of caste and creed has been thoroughly examined by the Department several time and only on the satisfaction, the Tribunal granted exemption under Section 80G(5)(iii) of the Act to the Assessee. No explanation is forthcoming on behalf of the appellants Revenue as to why the exemption was granted to the respondent - Society for the previous years from 1963 till the year 2009. From the perusal of paragraph No.7.3 of the order passed by the Tribunal, it is recorded that, even though the object of formation of Trust was primarily for the benefit of Catholics, the Tribunal has taken into account the statistics in the financial year 2008-09 and has found that the assessee Trust s Hospital has treated 8,51,127 patients of non-Christian community out of 9,00,406 total patients received treatment which works out to 94.5%. Similarly, in the financial year 2009-10, the total number of patients received various treatments in the hospital is 9,07,641 and out of which, 8,50,146 patients did not belong to the Christian community. Thus, this fact belies the finding recorded by the Director of Income Tax (Exemptions) that the Assessee - Trust had served only Catholic community and only run for the benefit of the Catholics. Out of total number of 685 students admitted in the medical college, 195 students were from Hindu community, 24 from Muslim and the remaining were from various sects of Christian community. Similarly, the number of staffs employed in its various institutions such as Research Institute, Medical College, Hospital etc., were from other communities also. In paragraph No.7.4 of the order of the Tribunal, it has been held that the assessee Trust has been serving the people on humanity basis in its noble profession by rendering timely treatment to the needy without discriminating the caste, creed, community etc. The findings recorded by the Tribunal are based on meticulous appreciation of the evidence on record which does not call for our interference. Assessee is held entitled for renewal of exemption under Section 80G(5)(iii) of the Act from the year 2009. - Decided in favour of assessee.

Summary

Issues:
Renewal of exemption under Section 80G of the Income Tax Act, 1961 based on the primary object of the Trust being for the benefit of Catholics and whether the Trust is performing charitable work without discrimination based on caste, creed, or religion.

Analysis:

Issue 1: Renewal of Exemption under Section 80G
The appeal was filed by the Revenue challenging the order of the Income Tax Appellate Tribunal granting renewal of exemption under Section 80G of the Act. The Trust, established in 1961, applied for renewal in 2009. The primary object of the Trust was to establish and run a medical college and hospital. The Director of Income Tax observed that the Trust's Memorandum of Association did not align with Section 80G(5)(iii) of the Act. The Tribunal, however, allowed the appeal, stating that the Trust served all communities without discrimination. The Revenue argued that the Trust primarily benefited the Catholic community based on statistics, but the Tribunal found evidence of non-discriminatory service. The Court noted that the Trust had received exemption under Section 80G in previous years without explanation from the Revenue, leading to the dismissal of the appeal.

Issue 2: Charitable Work Without Discrimination
The key issue was whether the Trust was performing charitable work without discrimination based on caste, creed, or religion. The Tribunal's findings showed that the Trust treated a significant number of patients from non-Christian communities and admitted students and employed staff from various religious backgrounds. The Tribunal concluded that the Trust served people on a humanitarian basis without discrimination. The Court upheld the Tribunal's findings, emphasizing the Trust's non-discriminatory practices and its service to the community. The Court ruled in favor of the Trust, holding it entitled to renewal of exemption under Section 80G(5)(iii) of the Act from 2009 onwards.

In conclusion, the Court dismissed the Revenue's appeal, affirming the Trust's entitlement to renewal of exemption under Section 80G(5)(iii) based on its non-discriminatory charitable activities and service to the community.