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TMI Blog2018 (4) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... rries out renovation of Lord Vishnu Temple. Such single contribution was not considered as a religious activity. In the case on hand, worship of Godess Kali Mata and expenditure incurred towards the same is definitely incurred for a particular religious purpose. The arguments of the assessee, that any person of any religion can perform the Puja to Goddess Kali and hence the expenditure in question is not restricted to a particular religion is not correct. The expenditure is of religious nature. Just because the expenditure is by persons of all categories, castes and creeds, does not cease to make the expenditure of religious nature. The requirement of the Section 80G(5)(iii) of the Act are not the basis on which approval u/s 80G of the Act, was denied and hence the arguments advanced based on this Section has no merit. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee does not contain any expression to be for the benefit of any particular religions community or case. Reliance on 307 ITR 226 (Raj) Umaid Charitable Trust V UOI. Further, in the impugned order, nothing has been shown to disentitle the application for approval of assessee by not fulfilling any one or more conditions of s. 80G(5)(i) to (v) as prescribed in Rule 11AA(5) to reject the application. "It is essentially a charitable organization with the avowed object of serving the humanity irrespective of any caste, creed or religion which would also be borne out from the objects contained in the memorandum of association. Secondly, sub clause (5B) of S. 80G is an enabling clause by which it is provided that an entity, otherwise entitled to the benefit of s. 80G, shall not loose the benefit merely because a small percent of its total income (5%) is spent for religious nature. This enabling clause can not be used for refusing grant of registration to assessee. The assessee also submits that the two items of disbursement, namely priest honorarium and puja expenses, considered as outgoings for religious purposes are not for any religious purpose, either for a particular religion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caste. In case it is held that all activities of worship, tantamount to religious activities, then the use of word "particular religious community or caste" made in sub clause (iii) of subsection (5) becomes otiose and inoperative. There would have been no need to differentiate between a particular religious community or caste and other religious activity. Religion in its expression resembles a particular sect, community, caste or body of people and one religion can not be conceived as applicable to or practiced by the whole of humanity as such. [Religion: Monastic condition, order, practice of sacred rite, one of the prevalent systems of faith and worship.] Thus the word religion essentially means and embraces a particular faith, discipline or practice. There is nothing known as a religion followed by the entire humanity in this world. Religion in its interpretation can not thus be divorced from a particular religion so as to apply to all mankind universally. Reliance also placed on 251 ITR 849 (AP) & quoted 307 ITR 226 quoted at pages 232 & 233 of 307 ITR and also para 14 of page 234 & 235, para 15 & 16 of page. 236, para 19 of page 237 to indicate the distinction of religion wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 11 and 12 or clause (23AA) or clause (23C) of section 10 :- Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if- (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institutions or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not use directly or indirectly, for the purposes of such business. (ii )the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose. (iii)the institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid. (5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing : Provided that no order of rejection of an application shall be passed without giving the institution or fund an opportunity of being heard. (6) The time-limit within which the Commissioner shall pass an order either granting the approval or rejecting the application shall not exceed six months from the date on which such application was made : Provided that in computing the period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded." 7. Now a scrutiny of relevant case laws on the controversy involved in the present case is considered expedient at this stage. From the side of the assessee-petitioner, following case laws are relied upon whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides for deduction in respect of donations to certain funds and institutions. It applies to donations to any institution or fund established in India for charitable purpose and if it fulfils the following conditions, namely the instrument under which the institution is constituted does not or rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose. Sub-section (5) read with Explanation 3 makes it clear that the Commissioner can refuse to grant recognition under section 80G of the Act only in the event of finding that the claimed charitable purpose includes any purpose the whole or substantially the whole of which is of a religious nature'. It was held that in the present case there was no such finding and hence the Commissioner ought not have refused the claim of petitioner. 11. In Sri Ramakrishna Sewa Ashrama v. CIT [2001] 252 ITR 171 (AP), the petitioner, a registered society, had many objects including those charitable in nature, to diffuse scientific knowledge on Vedanta and the promotion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be established with a purpose as set out in the deed of declaration which appears to be highly charitable but the trust may in fact be engaged in such activities which cannot even remotely be called charitable, and yet the donations made to the trust would enjoy exemption. The authority conferred with the power to grant exemption is not debarred from finding out the real purpose as distinguished from the ostensible purpose and if it may find that the purpose of the trust was other than charitable then nothing debars the authority from denying the approval. . . . The purpose of the establishment-the real purpose as distinguished from the ostensible purpose - is germane to the inquiry, which the Commissioner has to hold while granting [or refusal to grant] approval. . . ." (p. 19) 13. In Hiralal Bhagwati v. CIT [2000] 246 ITR 188, it was observed by the Gujarat High Court that an object beneficial to a section of the public is an object of 'general public utility'. To serve as a charitable purpose, it is not necessary that the object must be to serve the whole of mankind or all persons living in a country or province. The Hon'ble Court further opined that the CIT h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous sympathy with fellow beings of the lower order when he showed this tenderness to birds and beasts and shared it with the public. The art gallery too had link with religion in its wider connotation although it is plainer to regard it as a gesture of aesthetics and charitable disposition. God is Truth. Truth is beauty, beauty is Truth. A thing of beauty is a joy for ever. In fact for a highly elevated Indian mind, this conceptual nexus is not far-fetched. The garden and the love of flowers strike a psychic chord at once beautiful and religiously mystical, as any reader of Wordsworth or other great poet in English or Sanskrit will agree. The point is that the multiform dispositions had been united by a spiritual thirst and, if read in their integrality, could be designated religious-cum-charitable. In sum, the primary intendment was to dedicate as debutter and to direct fulfilment of uplifting religious and para-religious purposes, the focus being on worship of Sree Jagannathjee and the fall-out some subsidiary, yet significant, charitable items. The finer note struck by the felt necessities of his soul was divinised and humanised, the central object being Sree Jagannathjee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able the individual believer to exist more happily is common to all 'religions'." 17. In CIT v. Social Service Centre [2001] 250 ITR 39, the Andhra Pradesh High Court opined, "We do not find that donation to a church or construction of a church is not a purpose which is not of general public utility. Therefore, the contention of the Department that the expenditure on religious activities could not be given exemption cannot be accepted particularly in the context of our polity. We are aware that most of the religious and charitable activities go together in this country." (p. 40) The assessee, which was a registered under section 12A of the Income-tax Act, 1961, as a charitable trust was granted exemption/sections 11 and 12 of the Act. Charitable purpose includes benefit of a section of public 18. In CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722, the Hon'ble Supreme Court observed that the expression "object of general public utility" was not restricted to objects beneficial to the whole of mankind. An object beneficial to a section of public was an object of general public utility. To serve as a charitable purpose, it was not necessary that object shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that taken in earlier proceedings, the question of the exemption of the assessee-appellant should not have been reopened. Strictly speaking, res judicata does not apply to income-tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year; where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year." (p. 322) 22. In DIT v. Lovely Bal Shiksha Parishad [2004] 266 ITR 349, the Delhi High Court observed that in view of the fact that no change in the nature of activities had been pointed out and the assessee had been granted exemption under section 10(22) of the Income-tax Act, 1961, not only in respect of the earlier years but subsequent years as well, the assessee was entitled to exemption in the assessment year 1991-92. 23. In CIT v. N.P. Mathew [2006] 280 ITR 44, the Kerala High Court observed that in Income Tax Proceedings difference should not be made between assessees i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Society. The High Court had found that the conduct of the educational institution is drawing from the assessee-trust larger sums than what had been credited by the trust in its favour in 1969-70 showed that it was fully aware of its credit with the assessee-trust and the funds that had been made available to it by the trust. It was no part of the revenue's case at any point of time that the credit entries made in the assessee's books of account were not genuine or the trust or that they were make - believe or bogus. The Income-tax Officer had not doubted the said entries and called upon the assessee to produce the accounts of the college. The High Court was right in holding that the assessee was entitled to exemption under section 1 of the Income-tax Act, 1961. 27. In CIT v. Indian National Theater Trust [2008] 169 Taxman 42, the Delhi High Court held that as far as the third question is concerned, on examining the orders passed by the authorities, in which the objects of both the assessee-trust as well as the Shriram Centre for Art and Cultural have been discussed, we are of the considered view that the Tribunal was correct in its conclusion that the sum of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfluenced by the order rejecting the renewal for the previous period 1995 - 2000. This judgment is of no help to the learned counsel for the respondents. 30. I have heard the learned counsel for the parties at length and given my thoughtful consideration to the facts of the present case and the case laws cited at the Bar. 31. This Court is of the considered opinion that mere one contribution by the charitable trust to another trust which carried out repair and renovation of Lord Vishnu's temple does not disentitle the petitioner-trust from renewal of its exemption certificate under section 80G of the Act. The line of distinction between religious purposes and charitable purposes is very thin and no water tight compartment between the two activities can be very well-established. Unless objective of the charitable trust in question itself is for spending its income for a particular religion and it is so found in the trust deed, the Income-tax Department cannot reject the renewal of the Trust as Charitable Trust under section 80G of the Act merely because one particular expenditure is for an activity which may be termed as spending for a particular religion. In the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) also in the impugned order, it was held on the basis of one particular clause (2)(h) of the trust-deed which read "to establish, maintain and to grant and/or aid to public places of worship and prayer halls". The Hon'ble Supreme Court dealing with Explanation4 of section 80G(5) held as under : "To reiterate, Explanation3 does not require the ascertainment of whether the whole or substantially the whole of the institution or fund's charitable purpose is of religious nature. If it did, it would read differently. It requires the ascertainment of whether there is one purpose within the institution or fund's overall charitable purpose which is wholly, or substantially wholly, of a religious nature. There is little doubt that clause 2(h) of the trust deed which permits the trustees to support prayer halls and places of worship sets out a purpose the whole or substantially the whole of which is of religious nature, and this has not been seriously disputed. Therefore, in our view, the trust and the donation by the assessee to it fall outside the scope of section 80G." (p. 582) The aforesaid case is clearly distinguishable from the facts of the present case as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts income towards religious purposes. The religious expenditure in question is towards puja expenses and honarium paid to priests. In our view the judgement in the case of Umaid Charitable Trust (supra), does not come to the rescue of the assessee, because in that case a single charitable contribution was made to another trust, which carries out renovation of Lord Vishnu Temple. Such single contribution was not considered as a religious activity. In the case on hand, worship of Godess Kali Mata and expenditure incurred towards the same is definitely incurred for a particular religious purpose. The arguments of the assessee, that any person of any religion can perform the Puja to Goddess Kali and hence the expenditure in question is not restricted to a particular religion is not correct. The expenditure is of religious nature. Just because the expenditure is by persons of all categories, castes and creeds, does not cease to make the expenditure of religious nature. The requirement of the Section 80G(5)(iii) of the Act are not the basis on which approval u/s 80G of the Act, was denied and hence the arguments advanced based on this Section has no merit. 7. In view of the above discus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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