9911796707
TMI Blog1991 (6) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... several Ashrams for the stay, meditation, discourses and discussions of the Mahatmas. The assessee before us in all these appeals is one of such Ashrams established by Hansji Maharaj. 3. Hansji Maharaj died on19-7-1966leaving behind him Smt. Rajeshwari Devi (widow), S/Sri Satpal Singh Rawat, Mahipal Singh Rawat, Dharampal Singh Rawat and Prempal Singh Rawat, all minor sons at that time as his heirs. AsMission's property he left Prem Nagar Ashram atHardwar(the assessee), Satlok Ashram at Muradnagar, Meerut (U.P.) and House No. 26/96, Shakti Nagar atDelhi. For his heirs he left Kothi at 13,Municipal Road, Dehradun (in the name of his second wife Smt. Rajeshwari Devi) and agricultural lands at village Majri Muaji in Dehradun, U.P. (in the names of his four minor sons). 4. After the death of Hansji Maharaj his youngest son, Sri Prempal Singh, then 9 years, was made the 'Head' of theMission. But he was removed from the 'Gaddi' in 1973. He left forAmericaand is reported to be now settled there as American citizen. His eldest brother, Sri Satpal Singh Rawat succeeded the 'Gaddi'. 5. The assessee-Ashram was established as back as in 1946 as a property of theMission. In that year the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including certain balance sheets and ledgers were seized. On the basis of the material seized, the IT authorities issued notices under section 148 of the IT Act, 1961 (the Act) to the heirs of Hansji Maharaj as also to the assessee-Ashram as an assessable entity in itself. Returns were filed by the concerned persons, assessments were taken up and made and the appeals were carried on and decided, up to the stage of Tribunal in the cases of some of those persons. That is how we come to decide the present appeals for various years in the case of the assessee. ITA No. 3 794/Del/88(A. Y. 1970- 71) : 9. Claiming its status as "Artificial Juridical Person" holding various properties for charitable or religious purposes the assessee filed its return of income for A.Y. 1970-71 on29-6-1979declaring its gross income at Rs. 22,289 from its following activities, viz.: Rs. (a) Pustak Bhandar 4059 (b) Hansadesh Magzine 16183 (c) Dharam Kshetra Kurukshetra 2047 --------------- Total 22,289 --------------- Asserting its character as a charitable institution the assessee also filed an application under section 11(2) of the Act along with the return claiming accumulation and setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itial investment of Rs. 55,000, as stated above, from the total amount of Rs. 2,85,970 he arrived at the figure of Rs. 2,30,970 which he considered to be the income from Aushadhalaya for six years and spread over the same in the following manner : Rs. A.Y. 1970-71 15,000.00 A.Y. 1971-72 25,000.00 A.Y. 1972-73 35,000.00 A.Y. 1973-74 45,000.00 A.Y. 1974-75 60,000.00 A.Y. 1975-76 50,970.00 ---------------------- Total 2,30,970.00 ---------------------- He accordingly made an addition of Rs. 15,000, as income of the year under consideration from Aushadhalaya substantively in the cases of S/Sh. Satpal Singh, Prempal Singh and on protective basis in the cases of the assessee and Smt. Rajeshwari Devi. The aggrieved assessee approached the AAC in appeal. 11. In appeal, the AAC, reversing all the findings of the ITO, held that properties left by Hansji Maharaj belonged to the assessee and not to his heirs, that the activity of publishing books and magazines was not, in the facts and circumstances of the case, a business activity with profit-ea rning motive but an activity for accomplishing charitable objects and meeting charitable purposes, that the Aushadhalaya was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected him to dispose of the appeals for those years in the light of directions of the Tribunal in Revenue's second appeal for A.Y. 1970-71 [ITA No. 5832/Del/83]. 14. Reverting to the facts in the appeal before us, though the AAC, in compliance of Tribunal's order dated 28-3-1985 [ITA No. 5832/Del/83] proceeded to decide assessee's appeal for A.Y. 1970-71 on 25-2-1988 yet, it appears, by one reason or the other he could not look into Tribunal's order dated 25-9-1987 passed in appeals for A.Y. 1971-72 and 1972-73. Considering that the Tribunal had already held that the assessee was engaged in charitable and religious activities the AAC diverted his attention to the issue of accumulation and application of assessee's income for the year under consideration. He held that the funds were accumulated and spent for religious or charitable purposes. It is against that order of the AAC dated25-2-1988, passed by him in second round that revenue has come up before the Tribunal in this second appeal. 15. It is in the above background that the following grounds have been raised by Revenue in this appeal, viz.-- "On the facts and in circumstances of the case the AAC has erred-- (1) In ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mr. Gupta. 18. Now coming to the merits of the grounds raised in the appeal we find that on ground No. 1 there is no evidence on record to show that the order of the Tribunal dated25-8-1987for assessment years 1971-72 and 1972-73 was even brought to the notice of the AAC before he passed the impugned order. It may be mentioned that as per relevant provisions, practice and procedure the copy of the order of the Tribunal dated 25-8-1987 was sent to CIT(A) VII, New Delhi, appeals from whose orders were decided by the Tribunal and not to the AAC who passed the impugned order for assessment year 1970-71. Under such circumstances, the AAC was free to take his own view of the scope of the issues remitted to him. In that sense of the matter Ground No. 1 must fail on its language. We would, however, hasten to add that incidentally the true subject matter of this ground makes the subject matter of Ground No. 2 also and, therefore, we would make our final decision on Ground No. 1 dependent upon and subject to our decision on Ground No. 2. 19. Ground No. 2 relates to the very character of the assessee-Ashram as a charitable Trust in terms of section 2(15) of the Act. This, in fact, is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITO had mentioned a wrong fact about the mutation of their names on6-7-1975. Mutation was in fact effected in the name of the Ashram from the name of Hansji Maharaj. Mr. Gupta further submitted that the CIT(A) had examined the entire expenses incurred vis-a-vis income earned and had concluded that the conduct of the assessee was fully in conformity with the conduct of a charitable institution and that the income earned was applied to charitable objects. Mr. Gupta submitted that this finding was based on proper appreciation of the material on record and should not be disturbed. The learned counsel referred to an earlier order of the Tribunal dated15-12-1983in the case of ITO v. Sri Satpal Singh Rawat for assessment year 1973-74 [IT Appeal No. 513 (Delhi) of 1982] and submitted that the Aushadhalaya was regarded as assessee's property. Mr. Gupta summed up by referring to the fact that the society, now managing the affairs of the Ashram was registered as a society under the U.P. Societies Registration Act and unless a society was a charitable society, meaning thereby it was having charitable purposes as its object, it cannot be registered as a society under the said Act. 22. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding the character of the assessee as a religious or charitable institution are conclusive in nature and effect. We, therefore, hold that the assessee came into existence as a religious and charitable institution and was holding that character in the year under consideration. In its return the assessee has rightly, for that matter claimed its status as that of "Artificial Juridical Person". This was a point raised by the Tribunal in its order at the earlier occasion but had left that undecided. Status of assessee being essential for making assessment upon him we have recorded the above finding accepting assessee's declaration of its status in its return, to avoid any confusion in giving effect to the order of the Tribunal. 25. The pertinent question that still remains for our decision, however, is whether the various properties were held by the assessee during the year under consideration for religious or charitable purposes. In this behalf we entertain no doubt that it was so. The properties of the assessee in this year consisted of the Ashram building which was being used for the free boarding and lodging of the Mahatmas, disciples and followers of Hansji Maharaj, coming to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning and the true concept of "charitable purpose" as intended to be conveyed through the definition of the term given in section 2(15). If providing money to the pauper, food to the hungry, cloth to the naked, learning to the illiterate, eyes to the blind, limb to the lame or medicine to the sick is a charitable purpose, the carrying on an activity earning profit solely to be spent on those purposes or on the advancement of any other object of general public utility may well be in the direction of fulfilment of such " charitable purpose" and hence fall within the purview of the definition of the said term. 27. Publishing books or magazines with a view to earn profit is not, in itself, a charitable purpose. But if such an activity is carried on with the dominant view of propagating moral or socio-religious ideas highlighting the secular aspect of religious philosophy of all religions and the minimal profit earned in the course of such an activity is intended to be spent on the recognised charitable purposes, such an activity would also be for charitable purposes within the meaning of the term defined in section 2(15). As discussed above, we find the same position in this case. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5832 (Del.)/1983 for assessment year 1970-71 to determine whether trust is charitable have not yet been complied with." " 3. In holding that the trust was charitable in terms of section 2(15) even though the Assessing Officer has brought on record that the assessee was engaged in commercial activities." "4. Without prejudice to above in holding the provisions of sections 11 and 12 are applicable even though the assessee had failed to comply with the provisions of section 12." 31. At the hearing it was agreed between the parties that insofar as the questions relating to the character of the assessee, the properties held by it and their user by the assessee in all these four years were concerned there was no change in fact from those obtaining in assessment year 1970-71, discussed above. With this position of facts we have to observe that the subject matter of Ground Nos. 1 to 3 as raised in all these appeals for assessment year 1971-72 to assessment year 1974-75, is covered by that of Ground Nos. 1 and 2 in assessment year 1970-71. We accordingly hold that the assessee was a charitable institution in terms of section 2(15). Ground Nos. 1 and 3 in all the appeals are, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument in this case through a note appended to the application or through separate application. We thus do not feel satisfied with the explanation offered and reject the argument. However, since section 12A recognising the difficulties in the way of charitable institution in filing application for registration in time, empowered the CIT to admit applications after the expiry of the prescribed period, the assesssee can make an application to the CIT and seek the benefit of registration. That is to say the assessee is not without an adequate remedy. However, for the purpose of disposal of the appeal, non-filing of application under section 12A is fatal to the grant of exemption provided in section 11. 35. In ground No. 4 for assessment years 1972-73 and 1974-75 revenue has simply challenged the application of the provisions of sections 11 and 12 of the Act by the CIT(A) on the ground of non-compliance of the conditions laid down under section 12A by the assessee. We have accepted Revenue's case to that extent. The computation of income for those two years is to be made by the ITO without applying the provisions of sections 11 and 12 of the Act. At this stage it was pointed out tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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