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TMI Blog2024 (6) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... ship, library, hostels for meritorious students etc. It is also an admitted fact that the assessee society is granted with the registration u/s 12AA by the Ld CIT(E). The expenditure incurred by the assessee society are not found to be religious in nature, as per the financials statements submitted by the assessee society, though, CIT(E) has commented in the order that the expenses incurred by the assessee during last three years also exceeds 5% of the total income but have not clarified or commented, which are those expenses and how the said expenses are religious in nature. Thus we are of the considered view that the assessee society is eligible for grant of approval u/s 80G(5) of the Act, thus, set aside the order of Ld. CIT(E) and direct to grant exemption/approval to the assessee society, accordingly. Appeal of assessee allowed. - SHRI RAVISH SOOD , JM And SHRI ARUN KHODPIA , AM For the Assessee : Shri Nilesh Jain , CA For the Revenue : Smt. Ila M. Parmar , CIT - DR ORDER Per Arun Khodpia , AM : The captioned appeal is filed by the assessee against the order passed by Commissioner of Income Tax (Exemption), Bhopal dated 21/04/2023 rejecting the application for request to gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income in violation of sec. 80G(5B) of the Act. iii) Its objectives are in the nature of religious purposes and in violation to sec. 80G(5)(ii), 80G(5)(iii), Expln-3 of sec. 80G and sec. 80G(5B) of the Act. d) The Id. CIT(E) relied on several case laws to support his findings. e) The observations are contrary to facts because, i) The appellant itself admitted that it is a charitable cum religious institution its registration u/. 12AA is not disputed. ii) Its charitable purposes do not include any purposes the whole or substantially the whole of which is of religious nature. iii) The charitable purpose is not for the benefit of a particular religious community or caste but for public at large. iv) The referred objectives i.e. Sl. No. 2, 3, 4, 8 [page-21 of PB] are general and charitable in nature and cannot be interpreted to be solely religious in nature. v) The Id. CIT(E) did not spell out how provisions of sec. 80G(5)(ii), (iii) and Explanation-3 are violated. vi) The Id. CIT (E) wrongly interpreted that the expenditure incurred for religious purposes during last three years has exceeded 5% of total income in violation of 80G(5B), because the major part of income spent during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat case the expenditure incurred was more than 5% of total income. vi) M/S. New Noble Education Society vs. CCIT- It is in relation to sec. 10(23C) and further the words 'only for charitable purposes' used in sec. 80G(5) need to be read along with provisions of sub-sec. (5B) of sec. 80G otherwise it will defeat the purpose of insertion of subsec.( 5B). The is no addition exception in sec. 10(23C) of the Act. i) In this view of the matter, it is humbly prayed that the Id. CIT(E) may kindly be directed to allow registration u/s.80G(5) on regular basis and revoke cancellation of provisional order in the interest of justice. 6. The cases relied upon by the Ld. AR and the ratio of law laid down by Hon ble courts in the respective cases are extracted here under so as to consider applicability of such findings in the present case: i. CIT vs M/s. Dawoodi Bohara Jamat--[364 ITR 31 (SC)] The objects of the trust exhibit the dual tenor of religious and charitable purposes and activities - Section 11 of the Act shelters such trust with composite objects to claim exemption from tax as a religious and charitable trust subject to provisions of Section 13 - The activities of the trust und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year of operation after registration under Section 12AA of the Act which was accorded on 30.11.2015, the approach of CIT(E) declining approval under Section 80G(5)(vi) of the Act cannot be said to reasonable and legally sustainable. Needless to say, in case in subsequent years, the revenue is satisfied that the activities of the respondent-assessee are not qualified for charitable purposes, it shall be open for the department to initiate action for cancellation of registration under Section 12AA of the Act and also for passing appropriate orders regarding approval granted under Section 80G(5)(vi) of the Act in accordance with law. iii. CIT vs. Lok Sewa Sansthan Samiti [2019]105 taxmann.com 203 (SC)[P-4] As of today, the assessee stands registered as a charitable institution under Section 12-A of the Act. The natural corollary is that this application under Section 80G(5) of the Act also becomes liable to be allowed. iv. CIT(E) vs. O.P. Munjal Foundations [2020-115 taxmann.com 191 (P H) [Head Notes] Section 80G read with section 12AA of the Income-tax Act, 1961 - Deductions - Donation to certain funds, charitable institution (Approval under sub-section (5)) - Assessee had set up ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed law, the CIT proceeded to pass an order refusing registration. Therefore, such a finding recorded by the CIT is without any substance. The Tribunal which on facts took note of the aforesaid income and expenditure account and the relevant Schedules, came to the conclusion that the expenditure incurred by the assessee towards religious activities for two years is less than 5 per cent. The balance sheet or income and expenditure account of the Schedules is not in dispute. It is under those circumstances the appellate authority has applied its mind, looked into aforesaid undisputed records and has recorded a finding of fact. vi) CIT vs. Rajkot Jilla Gayatri Parivar Trust - 2019- (8) TMI- 466-Gujarat 3. The appellate tribunal while passing the impugned order observed as under:- 8. We have heard the rival contentions and perused the materials available on record. At this juncture we find important to refer the provisions as contained under explanation 3 to section 80G(5) of the Act which is reproduced as under: Charitable purpose does not include any purpose the whole or substantially the whole of which is of a religious nature. 8.1 As per the above provision, the assessee cannot get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The issue is now squarely covered by a decision of the Supreme Court in the case of Commissioner of Incometax, Allahabad Vs. Lok Sewa Sansthan Samiti Sonebhadra reported in [20191 105 taxmann.com 203 (SC). It is not in dispute that the respondent assessee stands registered as a Charitable Institution under Section 12A of the Act. In such circumstances, as a natural corollary, the application under Section 80G(5) of the Act would also be liable to be allowed. vii- Santshreshtha Gajanan Maharaj Sevabhavi Sanstha Borisavargao Kasij vs. CIT 2022 (12) TMI 338 - ITAT Pune. 6. So therefore, it is a non-obstante clause taking care of section 80G(5)(ii) and the Explanation 3 and stating that the expenditure for a religious nature if it does not exceed five per cent of the total income then the said trust or institution shall be deemed to be an institution to which the provision of section 80G would apply. In this context, the assessee has given an undertaking that whenever the construction of temple would take place and the maintenance fund for the said temple it shall be in accordance with section 80G (5B) of the Act. That, the assessee would even take necessary approval from the Charit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the income, and if the substantial work done by the trust is charitable in nature benefitting the public at large then the institution or trust has to be granted exemption u/s 80G of the Act. In the present case of the assessee, the department has not been able to make out a case through facts that the assessee is substantially a religious trust. That on examination of the facts and circumstances we set aside the order of the Id. CIT (Exemption) and direct him to grant exemption/approval u/s 80G of the Act to the assesseetrust. Grounds of appeal are allowed. 7. Ld. AR on behalf of the assessee further submitted that in the present case, Ld. CIT(E) has erred in observing that provisions of section 80G(5B) has overriding effect over clause (ii) of subsection (5) and explanation 3 and allows religious expenditure of trust up to 5% which is establish only for charitable purpose, in the present case the assessee is not established for charitable purposes. In support of such contention Ld. AR placed his reliance on the order of Hon ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat (supra), wherein Hon ble Apex Court has held that to become eligible under section 11, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble institution under Section 12-A of the Act. The natural corollary is that this application under Section 80G(5) of the Act also becomes liable to be allowed. Copy of the registration u/s 12AA granted to the assessee is furnished before us. For the sake of clarity, the same is extracted as under : 10. Ld. AR, in view of aforesaid facts and discussion has prayed that the order passed by Ld. CIT(E) rejecting the application for grant of approval u/s 80G(5) of the Income Tax Act, 1961 has grossly erred therefore, the order of cancellation is bad in law, unjustified and the same is liable to be struck down with the directions that the assessee society since have fulfilled all the stipulated conditions, thus also approved for the registration u/s 12AA, is eligible for grant of approval u/s 80G(5) of the Act. 11. Ld. CIT DR on the contrary has vehemently relied upon the orders of Ld. CIT(E), Bhopal. 12. We have considered the rival submissions, perused the material available on record and the case laws relied upon by the parties. In the present case the assessee society is found to be formed with certain objectives. Though the assessee society as admitted being involved in certain reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions apply. 14. In the present case according to the bye laws, the assessee society was formed with the objects to provide education, research, training, support to orphans, moral education, literature, environmental safety, employments to deprived, Human welfare, animal kindness, scholarship, library, hostels for meritorious students etc. It is also an admitted fact that the assessee society is granted with the registration u/s 12AA by the Ld CIT(E). The expenditure incurred by the assessee society are not found to be religious in nature, as per the financials statements submitted by the assessee society, though, Ld CIT(E) has commented in the order that the expenses incurred by the assessee during last three years also exceeds 5% of the total income but have not clarified or commented, which are those expenses and how the said expenses are religious in nature. Under such scenario, respectfully following the decisions of the Hon ble Courts referred to supra and on perusal of financials, facts, and circumstances of the present case, after thoughtful deliberations, we are of the considered view that the assessee society is eligible for grant of approval u/s 80G(5) of the Act, thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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