2021 (8) TMI 763 - AT - Income Tax

Application filled u/s 80G - Application denied alleging that activities of the SGPC are confined to Sikh Community only - Assessee S.G.P.C.' never made a claim for registration u/s 12AA since the income has been claimed to be exempt undersection 10(23BBA) - activities of the SGPC are confined to Sikh Community only - only objection of the Ld. Lower Authority was that the Assessee was created for the maintenance and administration of the Shikhs Shrine. - HELD THAT - Assessee trust are primarily doing religious activities for the benefit of the Sikh's religion, as we are deciding that the activities of Assessee are not meant for the benefit of the Sikhs community only, and there is a difference between managing the property and doing the religious activity. Therefore, in our view, there is no requirement for deciding with the issue of registration u/s 12AA of the Income Tax Act for the year under consideration as this was not a reason for denying the registration u/s 80G(5)(iii) of the Act. However, in terms of amendment provision 2020. The assessee is required to apply for registration u/s 12AA of the Act. As the predominant purpose and object of the Assessee are to manage the property, do charitable activities by way of imparting / running educational institutions, organizing lunger, medical camp, hospital etc.; therefore, the activities of the Assessee could not be termed as being done only for the benefit of particular community/ religion hence the Assessee was entitled to the benefit of 80G (5) and would not be religious activities as the its total expenditure incurred on the religious activities was less than 5% during these years. As mentioned herein above even religious activities of Sikh as an individual or as community are meant to extend benefits to the needy human being irrespective caste, creed and religion, which is clear from the Sikhs Maryada (Sikh RehatMaryada, 1945). The Sangat and Pangats are open to all. As every philanthropic or charitable work cannot continue without the contribution from the members of the community/ society , with a view to give impetus to charitable work by the SGPC, it was provided in Sikhs RehatMaryada, which is equally applicable to all Sikhs( Amritdhari or Sahj Dhari both) , to regard as poor men mouth as offering box of Guru and it is old age tradition in India more particularly in Hindus/Sikhs to contribute 10% of the earning for the charitable purposes. The basic concept of charity is to do charity without disclosing identity and knowing who would benefit from the said Charity. Analyzing form any angel in our considered opinion, the Assessee is entitled to benefit under 80G (5)(iii) of the Income Tax Act, 1961, and it will go wrong to allege that the SGPC was constituted for the benefit of a particular religion. Our views mentioned above are supported by the decisions of the Hon ble Supreme Court in the matter of Dawoodi Bohara Jamat 2014 (3) TMI 652 - SUPREME COURT - Thus we are of the view that Assessee is entitled to the registration u/s 80G(5)(iii) from the date of application. - Decided in favour of assessee.

Issues Involved:
1. Rejection of application under Section 80G of the Income Tax Act.
2. Determination of whether the dominant object of the SGPC is religious in nature.
3. Consideration of explanations and submissions by the appellant.
4. Applicability of clause (III) of Section 80G(v).
5. Accuracy of facts mentioned in the Order under Section 80G.
6. Opportunity for proper legal representation.
7. Legality and factual correctness of the Order.

Detailed Analysis:

1. Rejection of Application under Section 80G:
The appellant, SGPC, challenged the rejection of its application under Section 80G by the CIT-1, Amritsar. The CIT-1's order cited the SGPC's dominant object as religious, which conflicted with Section 80G(5)(iii) and Explanation 3 of the Income Tax Act, 1961. The CIT acknowledged SGPC's charitable activities but emphasized its primary function of managing Sikh Gurdwaras.

2. Dominant Object of SGPC:
The CIT-1 held that SGPC's dominant object was religious, focusing on the administration of Sikh Gurdwaras, which conflicted with Section 80G(5)(iii). The appellant argued that SGPC's activities included running educational institutions, hospitals, and other charitable activities, which were not restricted to any particular religious community. The Tribunal noted that SGPC's charitable activities were acknowledged by the CIT and were provided without discrimination of religion, caste, creed, color, sex, or race.

3. Consideration of Explanations and Submissions:
The appellant contended that the CIT-1 failed to consider explanations and submissions properly. The Tribunal observed that the CIT-1 had acknowledged SGPC's charitable activities but focused on the religious aspect due to the administration of Sikh Gurdwaras.

4. Applicability of Clause (III) of Section 80G(v):
The CIT-1's order stated that SGPC was covered under the prohibitive clause (III) of Section 80G(v), which mandates that an institution should not be for the benefit of any particular religious community or caste. The Tribunal noted that SGPC's charitable activities were for the public at large and not confined to the Sikh community. The Tribunal referred to the Sikh Reht Maryada and other provisions to highlight that Sikhism promotes equality and service to all humanity.

5. Accuracy of Facts in the Order:
The appellant challenged the accuracy of facts mentioned in the CIT-1's order. The Tribunal scrutinized the financial records and activities of SGPC, confirming that the expenditure on religious activities was less than 5% of the total expenditure, aligning with Section 80G(5B).

6. Opportunity for Proper Legal Representation:
The appellant argued that proper opportunity for legal representation was not provided. The Tribunal, however, focused on the merits of the case and the legal provisions rather than procedural aspects.

7. Legality and Factual Correctness of the Order:
The Tribunal concluded that the CIT-1's order was not in accordance with the provisions of Section 80G(5) and Explanation 3. The Tribunal emphasized that SGPC's activities were charitable and not exclusively for the benefit of the Sikh community. The Tribunal relied on various judicial pronouncements, including the Supreme Court's decision in Dawoodi Bohra Jamat and Punjab & Haryana High Court's decision in Christian Medical College, to support its conclusion.

Conclusion:
The Tribunal allowed the appeal, granting SGPC registration under Section 80G(5)(iii) from the date of application. The Tribunal highlighted that SGPC's activities were charitable and for the public at large, not confined to any particular religious community. The Tribunal appreciated the efforts of the legal representatives and the Revenue's DR in the disposal of the appeal. The order was pronounced in the Open Court on 16/08/2021.

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