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TMI Blog2013 (3) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... l under Section 80G of the Act as under:- 3. The objects mentioned in trust deed like Akhand naam sankirtan in aashram uninterruptedly, Thakur Sewa of Shri Girdhari Ji and Samadhi of Baba Gaurang Das. And organization of Bhandaras on all important religious festival and other festivals like avirbhav and tirobhav tithes of Gaudiya Sampradayas bibhutis are pourely religious in nature and not in accordance with the section 2(15) of the I.T. Act, 1961. 4. In view of the above discussed facts, I am not satisfied about the objects and the genuineness of the activities of the applicant s trust as the applicant has failed to establish that its activities partake the character of charitable activities as defined in Sec.2 (15) of the I.T. Act1961. As such, the applicant trust s application for granting of registration u/s 12AA of I.T. Act, 1961 is hereby rejected. For the same reasons the applicant s request for grant of approval u/s 80G is also hereby rejected. 3. The learned Authorised Representative submitted that the assessee was established by Baba Murli Manohar Das alias Baba Sheetal Charan Das vide Trust Deed registered with SDM, Math, District Mathura-U.P. on 12.02.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the CIT without appreciating the facts of the case held that the activities were not charitable activities under Section 2 (15) of the Act. The CIT has wrongly held that object of assessee s Trust is purely religious in nature. The learned Authorised Representative while explaining activities of the Trust submitted that objects of the Trust is very well covered under the definition of the charitable purpose within the meaning of Section 2(15) of the Act. The learned Authorised Representative in support of his contention relied upon the order of I.T.A.T., Nagpur Bench in the case of Shiv Mandir Devsttan Panch Committee Sanstan Nagpur Vs. CIT-1 Nagpur reported in ITA No. 223/Nagpur 2009 order dated 11.10.2012. 6. The learned Departmental Representative relied upon the order of CIT. 7. We have heard the learned Representatives of the parties and records perused. The issues under consideration whether under the facts of the case the CIT was correct in rejecting the assessee s application for registration under Section 12AA of the Act and application for grant of approval under Section 80G of the Act. The assessee filed both applications in prescribed form on 10.04.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twithstanding anything contained in section 11, any amount of donation received by the trust or institution in terms of clause (d) of subsection (2) of section 80G 15[in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of that section, in the manner specified in that clause, or] which has been utilised for purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund on or before the 31st day of March, 16[2004] shall be deemed to be the income of the previous year and shall accordingly be charged to tax.] [Conditions for applicability of sections 11 and 12.] 12A.[(1)] The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form22 and in the prescribed manner to the 23[***] Commissioner be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The [***] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (1)] of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. [(1A) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Commissioner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid by the assessee in the previous year as donations to- (i) the National Defence Fund set up by the Central Government; or (ii) the Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust adopted by the National Committee at its meeting held on the 17th day of August, 1964; or (iii) the Prime Minister's Drought Relief Fund; or [(iiia) the Prime Minister's National Relief Fund; or] [(iiiaa) the Prime Minister's Armenia Earthquake Relief Fund; or] [(iiiab) the Africa (Public Contributions - India) Fund; or] [(iiib) the National Children's Fund; or] [(iiic) the Indira Gandhi Memorial Trust, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of February, 1985; or] [(iiid) the Rajiv Gandhi Foundation, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of June, 1991; or] [(iiie) the National Foundation for Communal Harmony; or] [(iiif) a University or any educational institution of national eminence as may be approved by the prescribed authority in this behalf; or] [(iiig) the Maharashtra Chief Minister& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Fund or the Lieutenant Governor's Relief Fund in respect of any State or Union territory, as the case may be : Provided that such Fund is- (a) the only Fund of its kind established in the State or the Union territory, as the case may be; (b) under the overall control of the Chief Secretary or the Department of Finance of the State or the Union territory, as the case may be; (c) administered in such manner as may be specified by the State Government or the Lieutenant Governor, as the case may be; or] (iiihg) the National Sports Fund to be set up by the Central Government; or (iiihh) the National Cultural Fund set up by the Central Government; or] (iiihi) the Fund for Technology Development and Application set up by the Central Government; or] [(iiihj) the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities constituted under subsection (1) of section 3 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); or] (iv) any other fund or any institution to which this section applies; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of computing the aggregate of the sums in respect of which deduction is to be allowed under sub-section (1)]. [(i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 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 institution 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 be used, directly or indirectly, for the purposes of such business;]] (ii) the instrument under which the institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding five per cent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply.] [(5C) This [section] applies in relation to amounts referred to in clause (d) of subsection (2) only if the trust or institution or fund is established in India for a charitable purpose and it fulfils the following conditions, namely :- (i) it is approved in terms of clause (vi) of sub-section (5); (ii) it maintains separate accounts of income and expenditure for providing relief to the victims of earthquake in Gujarat; (iii) the donations made to the trust or institution or fund are applied only for providing relief to the earthquake victims of Gujarat on or before the 31st day of March,[2004]; [(iv) the amount of donation remaining unutilised on the 31st day of March, [2004] is transferred to the Prime Minister's National Relief Fund on or before the 31st day of March,[2004];] (v) it renders accounts of income and expenditure to such authority and in such manner as may be prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the 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.] CBDT Circular FINANCE (NO.2) ACT, 1996 - CIRCULAR NO. 762, DATED 18-2- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce an applicant institution came within the phrase 'exists solely for educational purpose and not for profit' no other condition like application of income was required to be complied with. The prescribed authority was only required to examine the nature, activities and genuineness of the institution. The mere existence of profit/surplus did not disqualify the institution. (ii) Hirlal Bhagwati vs. CIT [2000] 246 ITR 188 (Guj) wherein it was held that the expression objects of general public utility does not envisage public at large. The objects which are beneficial to a section of public would be an object of such nature. The trust was registered under section 12A and such registration is not an empty formality and, hence, refusal of grant of a certificate under section 80G was not held to be proper. (iii) Vishwa Hindu Parishad Sankat Mochan Ashram vs. Dy. DIT [2000] 75 ITD 455 (Delhi) wherein it was held that where the trust filed its application on June 23, 1973 which was within stipulated period and the Commissioner failed to deal with it within reasonable time, registration granted on April 1, 1996, should be deemed to have been granted from June 23, 1973, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for attainment of other objects, but seemed to be the main object so far pursued by the assessee and, therefore, the assessee was not established wholly for charitable purposes and, accordingly, it denied registration to the assessee under section 12AA on the ground that the activities of the assessee were purely commercial in nature. In that appeal, the assessee contended that the mode of generating the income from the trust property was immaterial and it was the purpose for which said income was utilized, should be the criteria to accord exemption on registration of the trust, and the authorities had completely misdirected their enquiry and, therefore, the impugned orders were liable to be set aside. It was held that section 11 deals with exemption available to income from property held for charitable or religious purposes. Exemption from tax will be allowed only in respect of the income actually applied for the purposes of the trust. Income derived for trust property must be determined on commercial principles. In order to be eligible for the aforesaid exemption, the assessee has to get the trust registered under section 12A. The assessee has to make an application in the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0G sub-section (5) of the Income tax Act lays down as under:- (5). This section applies to donations to any institution or fund refused to in sub-section (iv) of clause (a) of sub-section ( 2). On if it is established in India for charitable purpose and if it fulfils the following conditions, namely- (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of section 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 institution 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was to be submitted in triplicate. This Rule further requires that the application shall be accompanied with the following documents namely: (i) Copy of registration granted u/s.12A or copy of the notification issued u/s. 10(23) or 10(23C): (ii) Notes on activities of the institution or fund since its inception or during the last three years, whichever is less: (iii) Copies of account of the Institution or fund since its inception or during the last three years, whichever is less. 7. Sub-rule(3) empowers the Commissioner to call for such documents or information from the institution or fund or cause such enquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such activities of such Institution. Subrule(4) lays down that if all the conditions as enumerated in clause (1) to (v) of sub-section (5) of section 80G are fulfilled by the institution or fund, CIT 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. Sub-rule (5) empowers the CIT to reject the application for approval after recording the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e poor, education, medical relief, and the advancement of any other object of general public utility. The objects as enumerated above held on by the assessee trust are charitable within the meaning of section 2 of sub section 15. Some of the objects fall within the advancement of any other object of general public utility. Proviso to section 2 sub section 15 restricts the meaning advancement of any8 other objects of general public utility. But CIT(A) has not stated that proviso to section2 sub section 15 is applicable in the case of the assessee. 10. Now coming to the question whether the assessee trust has violated the conditions as laid down in clause (iii) of section 80G(5), we reproduce this clause which reads as under: (iii, the institution or fund is not expressed to be for the benefit of any particular religious community or caste. This clause stipulates that the Institution or the Trust must not be for the benefit of any particular religious community or caste. The words religious community means the group of people having a common religion or faith. The word religion means the belief in and worship to a superhuman controlling power, specially the persona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s available to the profit at large. Therefore, these objects cannot be regarded to be the religious objects. In our opinion, until and unless the activities for which the trust is established, involve the activity religious purpose, it cannot be said that the assessee has not completed with the condition No. (iii) enumerated u/s. 80G(5) of the Act. 12. Even we noted that all the building maintenance expenses. free food expenses and festival, prayer and daily expenses cannot be regarded to be the one incurred for religious object, even if the object is regarded to be religious one. It is not denied that in the building the assessee was carrying yoga centre, tailoring training centre as well as food for the needy and optical centre for the poor. 13. Explanation 3 to section 80G(v) states that in this section. charitable purpose does not include any purpose the whole or substantially the whole of which is of a religious nature. This explanation takes note of the fact that an institution or fund shall be for a charitable purpose and may have a number of objects. If anyone of these objects is wholly or substantially wholly of a religious nature, the Institution or Funds falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the CIT is not correct in law in not allowing the approval to the assessee trust u/s. 80G of the Act. We accordingly, set aside the order of the CIT and direct the CIT to grant approval to the assessee-trust u/s. 80G(5)(vi) of the Act. 14. In the result, the appeal of the assessee is allowed. (vii) Oxford Academy for Career Development vs. Chief CIT [2009] 315 ITR 382/226 CTR (All.) 606 The court while examining words charity observed that the expressions charity or charitable purposes do not admit of rigid definition. (viii) In Umaid Charitable Trust vs. Union of India Ors. (2008) 218 CTR (Raj) 30, it was held that object of the trust being clearly charitable as discernible from the trust deed, a single instance of donation of more than 5 per cent of its income for renovation of temple of Lord Vishnu would not disentitle the trust from renewal of approval under s. 80G (5) on the ground of violation of s. 80G(5B), there being nothing on record to show that assessee is spending its income for a particular religion. (ix) Relying on decision in Radhasoami Satsang vs. CIT (1991) 100 CTR (SC) 267 : (1992) 1993 ITR 321 (SC), it was observed in Sonepat Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization carrying out social activities and no payment was made by the assessee-respondent to any of its members on account of salary or wages, contribution of exemption under s. 80G(5) to the assessee was rightly granted by Tribunal particularly when even in earlier years, similar activities have been accepted by the Revenue. CIT vs. Sewa Bharti Haryana Pradesh (2010) 325 ITR 599 (P H). (xii) In Dera Baba Jodh Sachiar vs. Union of India Anr. (2010) 328 ITR 178 (P H), it was held that the CIT has not recorded any finding on the question, as to whether income derived by the petitioner trust is being used for charitable purposes, as per the object of trust or not. CIT refused to grant renewal of exemption only on the ground of the source of income. It is not the source of income which is to be seen, but investment of the income and if income is being utilized for charitable purposes as per the object of the trust/society, then exemption ordinarily cannot be refused. (xiii) In CIT vs. Swastik Textile Trading Co. Pvt. Ltd. 1977 CTR (Guj.) 618 : (1978) 113 ITR 852 (Guj) : donation was made to a charitable trust. One of the objects of the donee-trust was establishing, maintaining, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the Commissioner on receipt of an application for registration of a Trust shall call for such documents or information from the Trust as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust and may also make such inquires as he may deem necessary in this behalf and after satisfying himself about the objects of the trust or institution and genuineness of its activities, he shall pass an order in writing registering the Trust or refusing to register the Trust. We find that at the time of granting the registration under Section 12AA, the Commissioner has limited power only to examine objects of the Trust and genuineness of the activities. The law requires that he should pass a speaking order. In the case under consideration, we notice that the assessee has furnished all the required details before the CIT. As regards the objects of the trust; we notice that these are charitable objects in accordance with Section 2 (15) of the Act. To carry sewa puja of Sri Girdhari Ji and carry Akhand Naam Sankirtan uninterruptedly in Aashram is one type of meditation and yoga. The trust carries such meditation and yoga since its inception, more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or all persons in a country or State. It is sufficient if the intention to benefit a Section of the public. After declaring the law as aforesaid, the Court held that a trust created for the benefit of in the case of Ahmedabad Rana Caste Association Vs. Commissioner of Income Tax, Gujarat (Supra) a charitable trust entitled to exemption. In the case under consideration, the trust is carrying out those activities on account of which public at large following their ethics, moralities, respect, taking care of old parents and others, keeping good speeds in relations, keep awareness about the power and duties towards entire human being, society and country and balancing in doing wrong and right things. Even at the time of war, army persons are following the things what one learned from activities of such trust. Therefore, it cannot be held that the activities of such trust are not charitable, the activities are charitable in accordance with section 2(15) of the Act, or carrying activities for a particular cast or commodity or group of person or religious one. The Hon ble jurisdictional Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot give any finding that these activities were not charitable activities whereas the law required that the CIT should pass a speaking order in case of rejection of assessee s application. That CIT without examining the complete facts and without appreciating the activities of the trust has wrongly held that the activities of the trust are religious in nature. The order of the CIT is not in accordance with law. 13. On merit also, the assessee is entitled for registration as the CIT has failed to point out with a specific finding that the objects and the activities of the trust are not genuine which is requirement of Section 12AA of the Act. The order of CIT is not specific narrating the complete facts, whereas the assessee has discharged the burden in this regard by furnishing the complete facts on record and material before the CIT. 14. Section 13 read with section 13(1)(b) of the Act provides that nothing contained in section 11 or section 12 shall operate so as to exclude from total income of the previous year of person in receipt thereof - in the case of trust charitable purpose institution created after the commencement of this Act, any income thereof if the institution i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case under consideration, the assessee furnished the application in the prescribed form along with all applicable documents. The objects of the assessee-trust were for charitable purpose within the definition of charitable purpose , as specified in section 2(15). The condition prescribed in clause (iv) of sub-section (5) of section 80G is that the institution or fund should maintain regular accounts of its expenditure. The said condition was also complied with. The condition in clause (v) of sub-section (5) of section 80G is that the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860. The said condition was also complied with, as the assessee trust constituted as a public charitable trust on 12.02.1957. From the above, it was clear that all the conditions laid down in rule 11AA, i.e., conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G were fulfilled. The assessee trust is not for the benefit of any particular religion, community or caste, as envisaged in clause (iii) of sub-section (5) of section 80G, therefore, the assessee cannot be denied approval as there cannot be any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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