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TMI Blog2015 (7) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... Shiva Shakthi Shiridi Sai Anugraha Mahapeetam Versus Dy. Director of Income-tax (Exemptions), Hyderabad [2014 (12) TMI 250 - ITAT HYDERABAD] Since the DIT(E) refused approval u/s. 80G only on the reason that registration u/s. 12AA was denied to assessee, we direct the DIT(E) to examine the application and grant registration u/s. 80G, if other conditions are satisfied. - Decided in favour of assessee for statistical purposes. - I.T.A. Nos. 1263/HYD/2013 & 1799/HYD/2014 - - - Dated:- 29-7-2015 - Shri B. Ramakotaiah and Shri Saktijit Dey, JJ. For the Petitioner : Shri Bhupal Gowd Maragauni, AR For the Respondent : Shri V. Srinivas, DR ORDER PER B. RAMAKOTAIAH, A.M. : These are appeals by assessee-society directed against the common order of the DIT (Exemptions), Hyderabad rejecting assessee s application for grant of registration u/s. 12AA of the Income Tax Act [Act] and consequent rejection of approval u/s. 80G(5) of the Act. 2. Assessee filed appeal No. 1263/Hyd/2013 against the order of 12AA raising grounds both on 12AA registration and also rejection of 80G with 3 days delay. This delay was explained as misplacement of order of DIT in the offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such amended Memorandum of Association was not furnished. Therefore, according to him, those object clauses of religious nature are still there in force, notwithstanding a resolution passed by assessee-society. He was of the opinion that assessee-society does not qualify either as a public charitable trust or as a public religious trust. Relying on various case law as recorded in the order, the DIT held that the trust can not be allowed registration under the Act. He extracted the observations of the Hon ble Jammu and Kashmir High Court in the case of Ghulam Mohidin Trust Vs. CIT [248 ITR 587] to consider that assessee is not eligible for registration. Accordingly, he did not grant registration u/s. 12AA of the Act. Consequently, he also rejected the other application filed in Form 10G for approval u/s. 80G(5) of the Act by the same order dt. 27-06- 2013. Assessee is aggrieved and preferred the present two appeals. 5. Shri M. Bhupal Gowd, Life Member of the society authorized by the President of the society appeared and explained that the above three object causes are not religious in nature. Even then, honouring the opinion expressed by the DIT(E), assessee-society passed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the benefit of general public. As can be seen from Clause-Xii, it speaks of propagating Dharma and Culture by evolving suitable methods to reach various sections of our society. These objectives cannot be treated as for the benefit of a particulars religion or community. Similarly, promoting and encouraging use of temples as centres for propagation of 'Dharmic Values' also cannot be considered to be confined to a particular religion or community. Promoting 'Dharmic Awakening' and patriotism through festivals, Jathras etc., and organising Social Bhajans, plays, Dramas, Group songs and other cultural activities and to organise social and Dharmic lectures for propagation of 'Dharmic Values' cannot be considered to be for a particular religion or a community. In fact these are for the benefit of general public. Just because the word 'Dharma' is used in the above clauses, it does not mean that it pertains to a religious activity. 'Dharma' can be of any religion or for any social order which is for the benefit of society in general. 9. Thus, on careful reading of the object clauses in general specifically clauses on which Ld. DIT(E) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of particular religion. After perusing the objects we are inclined to hold that they cannot be considered to be for the benefit of a particular religious community, rather, in our view, the object clauses specifically referred to by ld. DIT(E) are for the benefit of the general public and not confined to any particular religious class or community. Reverting back to the issue whether having objects of both charitable and religious nature disentitles from availing exemption u/s 11. Let us examine the said provision which reads as under: 11. (1) [(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of [fifteen] per cent of the income from such property; According to ld. DIT(E) the words charitable or religious appearing in the aforesaid provision would mean, a trust or institution can either have charitable or religious objects and not both. In our view, such a narrow inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11, it becomes relevant to test it on the anvil of Section 13. 43.Thus, the second issue which arises for our consideration and decision is, whether the respondent-trust is a charitable and religious trust only for the purposes of a particular community and therefore, not eligible for exemption under Section 11 of the Act in view of provisions of Section 13(1)(b) of the Act. 44.In the instant case, the Tribunal has found on facts after analysing the objects of the trust that the respondent trust is a public religious trust and its objects are solely religious in nature and being of the opinion that Section 13(1)(b) is solely meant for charitable trust for particular community, negated the possibility of applicability of Section 13(1)(b) of the Act at the outset. The High Court has also confirmed the aforesaid view in appeal and observed that Section 13(1)(b) would only be applicable in case of income of the trust for charitable purpose established for benefit of a particular religious community. In our considered view, the said view may not be the correct interpretation of the provision. 45.From the phraseology in clause (b) of section 13(1), it could be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the said community would render the trust as ineligible for claiming exemption under similar provisions of Kerala Agricultural Income Tax Act, 1950. The Court observed as follows: The Deed of Trust and the rules run into more than thirty pages out of which six pages of the Trust Deed narrate the philosophy of Jain Dharma. The objects of the Trust clearly show that the Trust is meant for propagation of Jain religion and rendering help to the followers of Jain religion. Even medical aid and similar facilities are to be rendered to persons devoted to Jain religion and to non-Jains if suffering from ailments but the medical aid could be given to them only if any member of the families managing the Trust, shows sympathy and is interested in their treatment. The Tribunal, in our opinion, was right in its conclusion that the dominant purpose of the Trust in the present case was propagation of Jain religion and to serve its followers and any part of agricultural income of the Trust spent in the State of Kerala also could not be treated as allowable item of the expenses. 49.In the present case, the objects of the respondent-trust based on religious tenets under Quran ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion are partly charitable or religious trusts established after April 1, 1962. Therefore, on account of language of the statute in section 11, there is prohibition from income derived from property held for charitable or religious purposes. According to him, income under both charitable and religious purposes cannot be combined together and the assessee has to choose either of the charitable activities or religious activities, but not both. I had to state that in my humble opinion, there is no statutory provision to support proposition of law, stated by the learned Judicial Member. The learned Judicial Member, like the revenue authorities, misconstrued the legal implication of the word or in section 11(1)(a). 13. The principle of law emerging from the aforesaid decisions are a trust/institution having charitable and religious objects will be eligible for exemption u/s 11 unless hit by restrictions imposed u/s 13(1)(a) or 13(1)(b) of the Act. As in the present case, ld. DIT(E) has not brought any material on record to show that provisions of section 13(1)(a) or 13(1)(b) applies to the assessee, denial of registration u/s 12AA for alleged violation of section 11(1)(a), in o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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