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TMI Blog2016 (4) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... iled list of donations in golaks for the AY 2010-11, the AO noticed that the assessee was stated to be in receipt of golak donations amounting to Rs. 1,99,86,858/-. As per the AO, the total annual donations of Rs. 16,59,47,049/- comprised of the following items: I) donations received in cash Rs.9,06,53,538/- 2) donations received in kind Rs. 83,57,943/- 3) Grants in aid Rs. 13,43,631/- 4) Foreign donations Rs. 6,55,91,637/- Rs.16,59,47,049 5% of this amount comes to RS.82,97,532/- 3.1. After carrying out a comparison the total golak donations stated at Rs. 1,99,86,888/- as per list supplied with the appellant's reply dated 22.01.2013, and RS.82,97,352/- being 5% of Rs. 16,59,47,049/-, the resultant difference of Rs. 1,16,89,535/-, according to the AO, represented excess amount as per provisions of section 115BC of the Act. The assessee was required by the AO to explain as to why the same may not be taxed in accordance with the provisions of section 115BBC of the Act. In response thereto, the assessee filed reply dated 26.02.2013, as incorporated at pages 4 & 5 of the assessment order. The only difference of opinion arose between the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manav Sewa. Famous Persian Poet Sheikh Saadi has said in Persian. "Bandai Bajuz Khaidmat-e- Khalak neest" This means worship {of God} without serving the Khalkat (Creation) is empty and meaningless. MUSLIM FAITH Zakaa^i.e. Charity for the welfare of downtrodden is one of the fwe tenants of Islam. As per Internet Information, Zakaat has been ordered and mentioned 30 times in the Holy Book of Quran. Copy of Print of one reference is attached as specimen. SIKHISM Under Sikhism, great stress has been laid by all groups on Sewa i.e. service to Manking and have talked the followers to spend Dasvand for charitable purposes. 5.2.3 Dasvand is one of the orders from the Seikh Gurus and is part of Sikh Religion. It literally means tenth part of the income should be given for religious purpose including to help the poor. It is part of Rehatnama ordered by the Sikh Gurus. Photocopy from the book 'Lecture - Maha Chaanan' of Page 109 is attached in this context. This, in Punjabi, reads as under: "kirat karan jog sikhan layee kamai kami zaroori karar de ke gurmati ne angheen, beemar te lawaris birdhan da prabhadh kita hai te uh is tarah ke lodvandan di madad layi har kirat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s:-: 6.1. Hon'ble Gujarat High Court had discussed issue of 'religious purpose and charitable purpose' in the case of CIT v. Barkate Salfaijhia Society, reported in 213 ITR 492 [Guj.] from which discussion, relevant to present issue is being reproduced hereunder:- 1. The Phrase "religious purpose" includes relief of the poor, education, medical relief, and the advancement (sic). 2. However, the phrase charitable purpose is defined u/s 2(15) of the Act which reads as under: 3. It is to be noted that definition of the phrase "charitable purpose" is inclusive and it covers a wider field than the field covered by the words "religious purpose". Further, in some cases, even a religious activity by a particular sect would be a charitable activity; for some, supply of fodder to animals and cattle is a religious object, while to others it may be a charitable purpose, according to Hindu religious activity. Similarly, Khairat under the Mohamedan law woidd be considered to be a religious activity. The said activities may be for a charitable purpose to some. Hence, in many cases, both the purposes may be overlapping. The purposes may have both the elements, charity as well as religi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le purposes or it can be for both charitable and religious purposes. "Hence the words "trust for charitable purpose" would include even trust for advancement of religion. At this stage, we would note that the definition of charitable purpose under the Incometax Act goes much further than the definition of charity to be derived from the English cases because it specifically includes medical relief and embraces all objects of general public utility subject to the condition imposed by the restrictive words "not involwng the carrying on of any activity for profit". While dealing with section 11, a Division Bench of this court in the case in the case of Addl. CIT v. A.A. Bibijiwala Trust (1975) 100 ITR 516, has observed as follows (at page 523): ''Similarly, in the case before us also, the property is settled upon wakf that is, for purposes which are considered to be religious, pious or charitable according to the notions of members of the Dawoodi Bohra community and further the income in the corpus of these properties settled upon trust must be used for Dawat purposes, that is, for the benefit of the Dawoodi Bohra community. Though the words of clauses 6,7 and 8 are very wide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f by recording adjudications and by giving consolidated findings:-: 6.1 Hon'ble Gujarat High Court had discussed issue of 'religious purpose and charitable purpose' in the case of CIT v. Barkate Salfaijhia Society, reported in 213 ITR 492 [Guj.] from which discussion, relevant to present issue is being reproduced hereunder:- 1. The Phrase "religious purpose" includes relief of the poor, education, medical relief, and the advancement (sic). 2. However, the phrase charitable purpose is defined u/s 2(15) of the Act which reads as under: 3. It is to be noted that definition of the phrase "charitable purpose" is inclusive and it covers a wider field than the field covered by the words "religious purpose". Further, in some cases, even a religious activity by a particular sect would be a charitable activity; for some, supply of fodder to animals and cattle is a religious object, while to others it may be a charitable purpose, according to Hindu religious activity. Similarly, Khairat under the Mohamedan law woidd be considered to be a religious activity. The said activities may be for a charitable purpose to some. Hence, in many cases, both the purposes may be overlapping. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a trust can be either for religious purposes or for charitable purposes or it can be for both charitable and religious purposes. "Hence the words "trust for charitable purpose" would include even trust for advancement of religion. At this stage, we would note that the definition of charitable purpose under the Income-tax Act goes much further than the definition of charity to be derived from the English cases because it specifically includes medical relief and embraces all objects of general public utility subject to the condition imposed by the restrictive words "not involwng the carrying on of any activity for profit". While dealing with section 11, a Division Bench of this court in the case in the case of Addl. CIT v. A.A. Bibijiwala Trust (1975) 100 ITR 516, has observed as follows (at page 523): ''Similarly, in the case before us also, the property is settled upon wakf that is, for purposes which are considered to be religious, pious or charitable according to the notions of members of the Dawoodi Bohra community and further the income in the corpus of these properties settled upon trust must be used for Dawat purposes, that is, for the benefit of the Dawoodi Bohra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omine of demarcation in thecase ofin the Hindu system between religion and charity in the case of Ramchandra Shukla v. Shree Mahadeoji AIR 1970 (SC) 458. Thus religious purpose also includes relief of the poor, education, medical relief, etc. In view of the above discussion, the assessee trust is established wholly for religious and charitable purposes and as such falls under section 115BBC(2)(b)_ as j/'has not received any anonymous donation amounts with specific directions that such donation is fore any university or other educational institution, or any hospital or other medical institutions run by such trusts or institution. In view of above, provisions of Section 115BBC of the IT act, 1961 are not applicable to the assessee trust. In view of the above, the addition made by the Assessing Officer, of Rs. 1,16,89,535/- is hereby deleted. " 6. The ld. DR contended that the ld. CIT(A) has erred in law in deleting the addition made by the AO at Rs. 1,16,89,535/- by invoking the provisions of section 115BBC(1)(i) of the Act. She further submitted that the ld. CIT(A) was not correct in treating the assessee trust to be covered under the provisions of section 115BBC(2)(b), ignori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was justified in upholding the decision of the Appellate Assistant Commissioner that the assessee is a public charitable and religious trust and its income is entitled to exemption u/s 11 of the Income Tax Act, 1961." The Hon'ble High Court had answered the question in favour of the assessee. 12. In "Bombay Panjrapole Trust, Mumbai vs. Department of Income Tax", vide order dated 15.05.2013, passed by the Mumbai Bench of the Tribunal, it was held as under: " 3. Assessee is a Charitable Trust engaged in maintaining gaushalas, tending to other animals and birds doing research in animal husbandry and conducting schools and classes to educate the people in these fields. During the assessment proceedings, the AO found that it had collections i.e., Dharmau Box Collection and Dharmun (other collection) which were at Rs. 5.80 Lakhs and Rs. 1.02 Crores respectively on which the AO sought the assessee's reply. After considering the reply of the assessee, AO added (Dharmau Box Collection) Rs. 5,80,980/- and Rs. 74,02,187/- (part of other collection to the total income of the assessee. 4. Assessee preferred an appeal before the Fist Appellate Authority (FAA). After cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f we strictly accept the submissions of the DR, then we must also accept the situations where we will find wounded and dead animals on the roads, in open, and at houses, rotting, spreading foul smell and diseases. Therefore, accordingly, the DR would accept a situation like this. We find that this trust has been inn existence for the last 176 years doing and performing a public good and service to humanity with sincere and intentions, not even asking people to make contributions. Whatever contributions by way of donations are coming, are coming in small donations, which are put by public at large in donation boxes (dharmau)." 14. In "CIT vs. Dawoodi Bohara Jamat" 364 ITR 31, the Hon'ble Supreme Court observed as under: "The assessee was a registered public trust under the M.P. Public Trusts Act, 1951. It filed an application for registration before the Commissioner as envisaged under section 12A, read with section 12AA for availing the exemption under section 11. The Commissioner opined that the assessee was a charitable trust and since the object and purpose of the trust was confined only to a particular religious community, the same would attract the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and broadly would encompass objects relating to observance of rituals and ceremonies, propagation of tenets of the religion and other allied activities of the religious community. An example of such would entail activities such as the dance performances (Garba) or distribution of food specifically for people on fast during the Hindu festivities of Navratri. 36. In certain cases, the activities of the trust may contain elements of both: religious and charitable and thus, both the purposes may be over lapping. More so when the religious activity carried on by a particular section of people would be a charitable activity for or towards other members of the community and also public at large. For example, the practice of optional charity in the form of Khairat or Sadaquah under Mohammadan Law would be covered under both charitable as well as religious purpose. Further, while providing food and fodder to animals especially cow is religious activity for Hindus, it would be charitable in respect to non- Hindus as well. Similarly, service of water to the thirsty would find mention as religious activity in sacred texts and at the same time would qualify as a charitable activity. 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific community of the respondent-trust are objects with religious purpose only. However, in respect to the other objects, in our view the fact that the said objects trace their source to the Holy Quran and resolve to abide by the path of godliness shown by Allah would not be sufficient to conclude that the entire purpose and activities of the trust would be purely religious in color. The objects reflect the intent of the trust as observance of the tenets of Islam, but do not restrict the activities of the trust to religious obligations only and for the benefit of the members of the community. The Privy Council Trustees of The Tribune In re [1939] 7 ITR 415 has held that in judging whether a certain purpose is of public benefit or not, the Courts must in general apply the standards of customary law and common public benefit or not, the Courts must in general apply the standards of customary law and common opinion amongst the community to which the parties interested belong to. Therefore, it is pertinent to analyse whether the customary law would restrict the charitable disposition of the intended activities in the objects. 39. The provision of food to the public on religious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only. Similarly, assistance by the respondent-trust to the needy and poor for religious activities would not divest the trust of its altruist character." 16. It was thus held that the objects of the Trust exhibited the dual tenor of religious and charitable purpose and activities. 17. In "Bhagwan Shree Laxmi Narain vs. ITO (E), Trust Ward-III, Delhi", vide order dated 20.08.2014 (copy placed on record), passed in ITA No.5812/Del/2012, for AY 2009-10, co-authored by one of us - the ld. AM, it has been held as follows: "10.7. On a consideration of the above alongwith the findings recorded in the assessment order which have been extracted in para 2 & 3 of this order, it is seen that while considering the explanation qua the anonymous donations which was claimed to be voluntary donations by the assessee, the tax authorities have come to the incorrect conclusion that since the assessee was engaged in spiritual lectures which according to their understanding of the context in which the explanation was offered was mistakenly and erroneously considered to be a bar to the assessee in claiming that the rigours of sec. 115BBC were not attracted. The said conclusion has been arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that these arguments/philosophy on the touchstone of science may fail and to some of us non-believers maybe only rhetoric is not a relevant consideration as what cannot be cured has to be endured, for a person on his last breath is no reason to callously subscribe to the philosophy that such a person should be deprived of the psychological comfort of believing that somewhere in the universe there may have been a greater purpose in going through the painful experience. The issue is not what we believe but what strength can be imparted to a potential destitute, sufferer. The objects of ameliorating their miseries, providing night shelter, self-help capability, knowledge distribution of food medicines etc coupled with solace in the name of God cannot be outrightly rejected and merely because the assessee is not limiting itself to disbursing food medicine, providing shelter etc and is also giving lectures on spirituality was not the kind of assessee contemplated under section 115BBC who was to be visited by the rigours of the said section. 10.9. We also hold on a consideration of the terms "religion"; "religious" "spirituality" and "spiritual", that in the context of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the community which has never looked down upon any other religion and over the times has constantly maintained and upheld the diverse and at times contradictory individual beliefs and practices of its followers with the attitude of live and let live as it is not a static religion but a living religion, a way of life. The religion of the community by its very practices, philosophy and tenets has celebrated and revered the importance of not only human life but also animal life and vegetation life so much so that even the inanimate is celebrated and revered consequently the environmental role and importance is emphasized in everyday practices as it too is regarded as a living environment, a living entity. Thus following the ratio of the Privy Council as considered by the Apex Court in CIT, Ujjain vs M/s Dawoodi Bohara Jamat and applying the standards of the customary law and common opinion of the community to which the trust belongs we hold that the nuanced distinction sought to be drawn by the Revenue on facts is completely misplaced and consequently we find ourselves unable to uphold the same. 10.11.While coming to the said conclusion the objects of the trust have been con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar this in the case of wholly religious purposes trust or in the case of wholly religious and charitable purposes trust ....unless the other condition of section 115BBC(2)(b) are fulfilled with which we are not concerned in the facts of the present case. 10.13. For the sake of completeness, we also would deem it appropriate to address the decisions relied upon by the Ld. Sr. DR. Considering the same, we are pained to note that they have been cited carelessly without considering it necessary even to address how the facts are pari-materia and how the ratio-decidendi of the said decisions are relevant to the facts of the present proceedings. It is seen that the decision of the Apex Court in CIT v. Andhra Chamber of Commerce, 55 ITR 722 (SC) has no relevance to the facts of the present case. Apart from the fact that the decision proceeds on entirely different facts it is also seen that the issue has been decided in assessee's favour on the facts of that case. Similarly the decision of the Patna High Court in Bihar Institute of Mining and Mines Surveying vs CIT 208 ITR 608 (Patna) again has no relevance to the present proceedings as charging of a specified fee by the institutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Charitable Society has received charity through Golaks from the different places/Gurdwaras/Bus Stands as offered by different persons for the welfare of the physically, mentally and visually challenged persons - men and women, old and young including those suffering from incurable diseases like, aids, cancer, hepatitis, T.B., etc., including abandoned children. 4. That the charity offered as mentioned in para(3) above is duly accounted for in tire books of accounts. That charity received is not anonymous donations. This is a charity and not any anonymous donation as referred by your good-self attracting the provisions of para2(b) section 115BBC of the Income Tax Act, 1961. 5. That your good-self can verify the genuine-ness of the society in any manner. Its founder Bhagat Puran Singh who established the society and also got it registered on 06-03-1957, with aims and dedication for mitigating the sufferings of the society / humanity. 6. That the society regularly maintains accounts of the all the amount of charity received through GOLAKS. The name and address of the place of GOLAKS from where the cash is received is duly recorded in the account-books. This cash is heated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hools for imparting special education to the mentally retarded children. c) To provide education to the blind and to the deaf and dumb children and provide for their Rehabilitation. vi) To open Prosthetic Centres and Orthotic Centres to rehabilitate the disabled persons. vii) To develop nurseries and orchards for distributing free saplings and planting trees on common lands and public places in order to improve the environment. viii) To do all such, other things as may be necessary and expedient for carrying.on the objects of the Society. " . Rules and Regulations of All India Pingalwara Charitable Society (i) That tills society by name "All India Pingalwara Society" was formed under the pattonage of Late Bhagat Puran Singh Ji the founder thereof for the purpose mentioned in Article 3 of the Memorandum of Association of the society. (2) That the society shall consist: of the following seven members in all, including the following office bearers:- 1 Dr. Inderjit Kaur, Dhurl Gate,Sangrur. Patron President 2 Joginder Singn, DSP (Retd.), - H. No.105, Dashmesh Nagar, Patiala. Vice President 3 Ar. Mukhtar Singh Architect & Town Planner D-577, Ranjit Avenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects of Pesticides on Health-2006 e) Workshop on Natural Farming-2006 f) Seminar on AIDS Awareness-2007 g) Bhagat Puran Singh Memorial Seminar "Ecological Challenges and Social Responsibilities"-2008. Social: a) Distribution of free literature on Religious, medical, social, ethical and environmental issues. b) Printing & free distribution of literature on issues such as living habits, drugs, health, positive thinking-- aspects which improve a human beings quality of life. Miscellaneous: a) During the devastating floods of Punjab in 1988, Pingalwara collected money for the specific purposes and distributed relief among the needy and the affected people, also motivated the people in general and the youth in particular to come forward to give relief and solace to the people in distress. b) During the disastrous earthquake in Latur (Maharashtra) in 1993, took truck load of food stuff, clothes, blankets, and medicines and distributed among the distressed and needy. c) Distributed food stuff, clothes and blankets to J&K border residents who had vacated their homes on account of across the border shelling and terrorism. d) Blood Donation Camps are organize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aggregate of anonymous donations received. (2) The provisions of sub-section (1) shall not apply to any anonymous donation received by- (a) any trust or institution created or established wholly for religious purposes. (b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made 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. (3) For the purpose of this section, "anonymous donation" means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed." 22. This section was inserted in the Income Tax Act by Finance Act, 2006 and sub clauses (i) & (ii) of sub-section (1) were substituted w.e.f. 01.04.2010. The object of bringing this law in the Statute Book w.e.f. 01.04.2006 is well explained in the Memorandum explaining the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d money to these institutions by way of anonymous donations, a new section 115BBC has been inserted to provide that any income of a wholly charitable trust or institution by way of anonymous donation shall be included in its total income and taxed at the rate of 30 per cent. Anonymous donation made to wholly charitable and religious trusts or institutions, i.e. mixed purpose trusts or institutions shall be taxed only if it is for any university or other educational institution or any hospital or other medical institution run by them. Anonymous donation to wholly religious trusts or institutions will not be taxed. 25.3 Anonymous donation has been defined in the new section to mean any voluntary contribution referred to in section 2(24)( iia) of the Act, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as maybe prescribed. 25.4 Consequential amendments have been made in section 10(23C) and section 13 to provide that any income by way of any anonymous donation which is taxable under section 115BBC, shall be included in the total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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