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TMI Blog2012 (4) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... ame, the Appellate Tribunal, vide its order dated 08-07-2011 (in ITA No.1242/JP/2010), cancelled the said denial, holding that in view of the CBDT Circular No. 7/2010 dated 27-10-2010, there was no need for seeking approval u/s. 80G(5) of the Act after 01-10-2009, on which date the applicant-trust held a valid approval from the competent authority u/s. 80G(5) of the Act. That is, in view of the omission of the proviso to section 80G(5)(vi) by the Finance (No.2) Act, 2009, w.e.f. 1-10-2009, a valid approval as on 1-10-2009 would operate in perpetuity. Consequent to the said order by the tribunal, the ld. CIT vide his order dated 12-09-2011 (copy on record), held the assessee's application dated 16-03-2010 (filed on 19-03-2010) as non-est. Further, proceedings for withdrawal of approval u/s. 80G(5) were initiated vide letter no. 1657 dated 19-09-2011 (copy on record). This was for the reason that the trust was observed to have incurred expenditure in the sum of Rs. 11,34,061/- (under the account head 'celebration of public expenses'), which worked out to about 78% of its total receipt of Rs. 14.53 lacs for the financial year ending 31-03-2008, for organizing 'Bhagwat Katha', which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts total receipt for the financial year 2007-08, the first year of its approval, on such activities. The withdrawal of approval u/s. 80G(5)(vi) read with Rule 11AA is, thus, valid in law. 4. We have heard the parties, and perused the material on record, as also the case law cited. 4.1 We may begin by reproducing the relevant parts of section 80G, which provides for deduction in the computation of the total income of an assessee (at defined rates) in respect of the sums referred to in sub-section (2) thereof. Deduction in respect of donations to certain funds, charitable institutions, etc. '80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,-- (i) and (ii)** ** ** (2) The sums referred to in sub-section (1) shall be the following, namely:-- (iv) any other fund or any institution to which this section applies; or (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely:-- (i) ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of any particular community or religion. The same was negated by the hon'ble high court (reported at 154 ITR 308 (Calcutta)) on the basis that, nevertheless, it would not cease to be an object of a religious nature. That is, even if the prayer halls were set up for, or open to people of all the religions of the world, their purpose would yet only be religious. The assessee's plea that, even so, only one of its objects could be termed as of a religious nature, again, did not find favour with the hon'ble court inasmuch as Explanation 3 to the section did not require an ascertainment of whether the whole or substantially the whole of the institution or fund's charitable purpose is of a religious nature. It only required ascertaining whether one purpose within the institution's or fund's overall charitable purpose is wholly, or substantially wholly, of a religious nature, as object clause 2(h) indeed was. The decision by the hon'ble high court was affirmed by the hon'ble apex court. Clearly, the assessee's argument that organizing 'Bhagwat Katha' is not a religious activity or of a religions nature only needs to be stated to be rejected. This is in view of the common understanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the nature and scope of the word 'religion', it was held as under:- 'Appellant-Trust: Religious or Charitable? 4.7 The appellant-trust contends, on the basis of universality of appeal of the Vedas, and it being made accessible to all without any difference, that the institution is not a religious trust, but a charitable one. That would be, to our mind, missing the point. The Vedas are essentially religious scriptures. In fact, from this perspective, it would not even matter if these were classified as of religion 'A' or religion 'B', or had originated not in India but in a different land. The study of Vedas and Vedanta, and dissemination of its knowledge, is in the very nature of religious instruction, irrespective of whatever be the name of the religion it is considered as forming part of, being essentially a representation of truth, as all religious scriptures are. When such instruction is given to somebody with a view to benefit him, the same is charity. That is precisely the reason why education is per se charity. Whether the recipient or beneficiary is a hindu or non-hindu is of little relevance. Any altruistic object would go to be regarded as charity, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns daily. Who contributed, and how an identity between those contributing and those benefiting is being claimed, is a mystery, which even otherwise negates the assessee's contention of the same being charitable inasmuch as in that case the 'donors' are only meeting the cost of an activity organized by them for themselves, so that there is no element of charity therein. No wonder, the said plea was not even pressed by the ld. AR before us, and stands rightly rejected by the authorities below. 4.4 We may next consider the assessee's alternate plea, i.e., of it being prejudiced by the withdrawal of approval in view of carrying out the activities of religious nature in one year as against from year to year. We have given our careful and anxious consideration to the matter. In our view, the withdrawal of approval u/s. 80G would be sustainable in law only in respect of the first year, i.e., the assessment year 2008-09, while the matter would require a review for the subsequent years. This is for reasons of law as well as of fact. Explanation 3 to section 80G clarifies that a charitable object for the purpose of section 80G is only one which is not wholly or substantially wholly of a rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant, or its activities as not genuine, only on the basis that the expenditure on an activity of religious nature, incurred for the benefit of the public at large, exceeds the threshold limit of 5%, as set out by the statute, for one year? Could not the same arise, one may ask, out of a bona fide belief that being open to the members of the public at large, rather than being restricted to members of a particular religious community or caste, the same bears a public character and, thus, is of a charitable nature, in contradistinction to a purely religious nature, which is more often than not identified with a particular religion. True, this aspect stands settled by the hon'ble apex court per its decision in the case of CIT v. Upper Ganges Sugar Mills Ltd. (supra). However, it is also well settled that there is no maxim known to law that every one knows the law [ref: Motilal Padampat Sugar Mills v. State of Uttar Pradesh [1979] 118 ITR 326 (SC)]. Why, the decision in the case of CIT v. Upper Ganges Sugar Mills Ltd. (supra) was not cited even before the tribunal in the case of Kasyapa Veda Research Foundation v. CIT (supra), nor stands referred to by it, so that the view expressed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porating an amendment/s to its constitution (by following the appropriate procedure in its respect). The onus to satisfy the competent authority in the matter, including with regard to the amendment (assuming the said course) being operative with retrospective effect, being only in satisfaction of a statutory mandate, would be on the assessee, who would be allowed reasonable time by the ld. CIT for the purpose. Where satisfied in this regard, the ld. CIT shall grant approval u/s. 80G(5), save for the years where the said limit may have already been exceeded. And, where not so, the ld. CIT shall issue specific finding/s in this regard, stating the reason/s for his being still not satisfied; his order being appeallable. We decide accordingly. 6. Before parting with the order, we may also advert to the assessee's reliance on the decision in the case of CIT v. Social Service Centre (supra), which we find as misplaced. This is as the same is in the context of sections 11 and 12, while the instant case concerns the application of section 80G(5B), with the decision in the case of CIT v. Upper Ganges Sugar Mills Ltd. (supra) being squarely applicable and on the point. Section 11itself pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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