1980 (7) TMI 119 - AT - Income Tax

Issues Involved:
1. Whether the RSS is a taxable entity.
2. Whether Gurudakshina received from Swayamsevaks and non-Swayamsevaks constitutes taxable income.
3. Whether the RSS can be taxed in the status of a "Body of Individuals" (BOI).
4. Whether the income of various Shakhas can be clubbed and taxed in the hands of the RSS.
5. Whether the income received by RSS is exempt under the principle of mutuality.
6. Whether the income received by RSS qualifies as casual and non-recurring.
7. Whether the income received by RSS qualifies as for charitable purposes under Section 2(15) of the IT Act.

Issue-Wise Detailed Analysis:

1. Whether the RSS is a taxable entity:
The Tribunal confirmed that the RSS is a taxable entity. The AAC's decision that the RSS is a taxable entity and its status as a BOI was upheld. The Tribunal rejected the assessee's contention that it does not fall under the purview of the IT Act, 1961.

2. Whether Gurudakshina received from Swayamsevaks and non-Swayamsevaks constitutes taxable income:
The Tribunal found that Gurudakshina from Swayamsevaks is exempt from tax on the grounds of mutuality, as per the CBDT's instructions. Contributions from non-Swayamsevaks were also not considered taxable, as they were deemed donations. The Tribunal concluded that such receipts do not constitute income of the RSS and cannot be subjected to tax.

3. Whether the RSS can be taxed in the status of a "Body of Individuals" (BOI):
The Tribunal upheld the AAC's decision to assign the status of BOI to the RSS. However, it clarified that the RSS at Nagpur is a BOI constituted of individual Swayamsevaks forming the RSS at Nagpur and not a BOI constituted of individuals from other Shakhas across the country.

4. Whether the income of various Shakhas can be clubbed and taxed in the hands of the RSS:
The Tribunal did not confirm the AAC's finding that all Shakhas across the country are branches of the RSS and constitute one unit. The Tribunal found that Shakhas are autonomous units and their net income or Kendraunsh cannot be taxed in the hands of the RSS at Nagpur. The principle of mutuality applied, and the Tribunal concluded that the contributions from Shakhas to the RSS at Nagpur are donations and not taxable income.

5. Whether the income received by RSS is exempt under the principle of mutuality:
The Tribunal applied the principle of mutuality to the Gurudakshina received from Swayamsevaks, making it exempt from tax. Contributions from non-Swayamsevaks were also considered donations and not taxable. The Tribunal emphasized that the principle of mutuality is applicable in this case.

6. Whether the income received by RSS qualifies as casual and non-recurring:
The AAC found that the income received by the RSS is not casual and non-recurring, as Swayamsevaks are under a spiritual and physical obligation to make such payments. The Tribunal did not specifically address this issue in detail, but the AAC's finding was not overturned.

7. Whether the income received by RSS qualifies as for charitable purposes under Section 2(15) of the IT Act:
The AAC concluded that the RSS was not created solely for educational purposes but also for informing Hindus on political, economic, and cultural plans, which are not considered charitable in nature. The Tribunal did not overturn this finding but focused on the principle of mutuality for exemption.

Conclusion:
The Tribunal allowed the assessee's appeals partly, confirming that the RSS is a taxable entity but exempting Gurudakshina received from Swayamsevaks and non-Swayamsevaks from tax. The Tribunal rejected the Revenue's appeals, confirming that the income of various Shakhas cannot be clubbed and taxed in the hands of the RSS at Nagpur. The status of the RSS as a BOI was upheld, but only for the RSS at Nagpur and not for other Shakhas. The principle of mutuality was applied, exempting the relevant receipts from tax.

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