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2022 (3) TMI 424 - AT - Income TaxExemption u/s 11 and 12 - assessee had received corpus donation and voluntary donations - activities of the assessee society was by and large socio-spiritual and religious in nature which include organizing spiritual events and creating awareness about various social objects such as water conservation, female feticide, prisoner reforms, employment programmes for blind etc - HELD THAT - We find that the assessee s activities are mixed of religious, charitable and social activities. The religious activities have to be given a wide treatment and cannot be interpreted narrowly because in the concept of Hinduism there is no line of demarcation between religious or charitable. It is always mixed of both. Hon ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat 2014 (3) TMI 652 - SUPREME COURT held that if the assessee trust is formed with both religious and charitable objects in terms of section 13(1)(b), its claim for registration u/s 12AA cannot be denied and it can only denied in case when such objects are carried out for the benefit of a particular religious community or caste. If the purpose of the assessee trust is not indicative of wholly religious purpose but collectively indicate both charitable and religious purpose then it has to be treated cumulative and would be outside the purview of section 13(1)(b). AO justification invoking the provisions of section 115BBC - Only those anonymous donations are to be disallowed subject to a specific direction if it is for any university, educational institution or medical institution run by such institution which is not the case here. Here it is not the case that any anonymous donation made is with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution. In fact nowhere there is any finding or it is a matter of fact that assessee is running any such educational or medical institution. Accordingly, we do not find any infirmity in the order of the ld. CIT (A). We are also unable to appreciate the arguments of the ld. CIT DR that, since assessee had been granted certificate u/s 80G which cannot be granted if the trust/institution is wholly and substantially for religious purposes. First of all, this was not the ground taken by the AO and secondly, if there is any infirmity in the grant of certificate issued u/s 80G then it is for the Department to look into that aspect otherwise it has no relevance or bearing in interpreting whether subsection (2) of section 115BBC is applicable in this case or not. Otherwise also, similar donations have been accepted not only in the earlier years but also in the subsequent years u/s 143(3) and it has been categorically found that provisions of seciton115BBC is not applicable, therefore, in view of the rule of consistency, such donations cannot be disallowed. - Decided against revenue.
Issues Involved:
1. Classification of the assessee as a religious charitable society. 2. Deletion of addition under Section 115BBC of the Income Tax Act, 1961. 3. Treatment of corpus and other donations as anonymous donations under Section 115BBC. 4. Eligibility of the assessee for depreciation under Section 32. 5. Double deduction of capital expenditure and depreciation. Issue-wise Detailed Analysis: 1. Classification of the Assessee as a Religious Charitable Society: The Revenue challenged the CIT(A)'s decision to classify the assessee as a religious charitable society, arguing that the objects of the assessee and its registration under Section 80G(5)(vi) did not support this classification. The CIT(A) concluded that the assessee's activities were socio-spiritual and religious, aligning with the objectives outlined in the trust deed. The Tribunal upheld this view, noting that the assessee's activities were a mix of religious, charitable, and social, and that in Hinduism, religious and charitable activities are often intertwined. 2. Deletion of Addition under Section 115BBC: The AO had taxed donations amounting to ?18,36,05,498 under Section 115BBC, which deals with anonymous donations. The CIT(A) deleted this addition, citing that anonymous donations to wholly religious charitable institutions are exempt from Section 115BBC, as clarified by CBDT Circular No. 14/2006. The Tribunal supported this, stating that the assessee's activities were socio-spiritual, qualifying it for the exemption under Section 115BBC(2)(b). 3. Treatment of Corpus and Other Donations as Anonymous Donations: The AO had disallowed corpus donations of ?8,79,20,100 and voluntary donations of ?10,97,53,280, treating them as anonymous due to incomplete donor details. The CIT(A) found that the assessee had provided substantial evidence for these donations and that the AO's disallowance was not justified. The Tribunal agreed, emphasizing that the assessee's activities were religious and charitable, thus falling within the exemption provided by Section 115BBC. 4. Eligibility for Depreciation under Section 32: The AO disallowed the assessee's claim for depreciation of ?3,85,61,953, arguing that it constituted double deduction. The CIT(A) allowed the depreciation, referencing the Delhi High Court's decision in DIT(E) vs. Indraprastha Cancer Society, which permitted depreciation for religious institutions. The Tribunal upheld this decision, noting that the amendment disallowing such depreciation was applicable only from AY 2015-16 onwards. 5. Double Deduction of Capital Expenditure and Depreciation: The Revenue contended that allowing depreciation on assets whose cost had already been treated as application of income resulted in double deduction. The CIT(A) and the Tribunal rejected this argument, relying on judicial precedents that permitted such depreciation for charitable institutions. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on all counts. The assessee was recognized as a religious charitable society, exempt from the provisions of Section 115BBC for anonymous donations, and entitled to claim depreciation on its assets. The Tribunal emphasized the consistency in the Department's treatment of the assessee in previous and subsequent years.
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