Karnataka High Court
Commisisoner Of Income Tax vs Sri Maramaa Temple Seva Trust on 20 November, 2020
Bench: Alok Aradhe, H T Narendra Prasad
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF NOVEMBER 2020
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR. JUSTICE H.T.NARENDRA PRASAD
I.T.A. NO.314 OF 2016
BETWEEN:
COMMISSIONER OF INCOME TAX (EXEMPTIONS)
C.R. BUILDINGS, UNITY BUILDING ANNEXE
MISSION ROAD, BANGALORE.
... APPELLANT
(BY SRI. E.I. SANMATHI, ADV., FOR
SRI. JEEVAN J. NEERLAGI, ADV.,)
AND:
SRI. MARAMAA TEMPLE SEVA TRUST
NO.11, MARAMMA TEMPLE STREET
1ST MAIN ROAD, VYALIKAVAL
BANGALORE-560003
PAN; AANTS4131R.
... RESPONDENT
(BY SRI. RAGHAVAN M, ADV.)
---
THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,
1961 ARISING OUT OF ORDER DATED 30.10.2015 PASSED IN ITA
NO.818/BANG/2015.
(I) DECIDE THE FOREGOING QUESTION OF LAW AND/OR
SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY
THE HON'BLE COURT AS DEEMED FIT.
(II) TO SET ASIDE THE APPELLATE ORDER DATED
30.10.2015 PASSED BY THE ITAT, 'A' BENCH, BENGALURU, AS
2
SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL
PROCEEDINGS NO.ITA NO.818/BANG/2015.
(III) GRANT SUCH OTHER RELIEF AS DEEMED FIT,
INTEREST OF JUSTICE.
THIS ITA COMING ON FOR HEARING, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The appeal was admitted by a bench of this Court vide order dated 10.10.2017 on the following substantial question of law:
(i) Whether, on the facts and in circumstances of the case, the Tribunal is right in directing the Commissioner of Income Tax (Exemptions) to grant registration under section 12-AA of the Act by holding that class of beneficiaries are undoubtedly public or a wide section of public when the assessee is having mixed objects, some of which are charitable and some of which are religious and, as such, the assesse's application was rightly rejected by the Commissioner of Income 3 Tax (Exemptions) and, moreover, the ingredients of section 12-AA were not satisfied in the case of the assessee.
(ii) Whether, on the facts and in circumstances of the case, the Tribunal is right in not considering the issue pertaining rejection of 80G registration wide order passed under section 80G(v)(vi) of the Act.
2. Facts leading to filing of this appeal briefly stated are that the assessee is a trust, which is admittedly engaged in religious as well as charitable activities. The assessee filed an application for registration under Section 12AA of the Act on 08.09.2014 before the Commissioner of Income Tax (Exemptions). The aforesaid authority by an order dated 27.03.2015 inter alia held that from perusal of the objects of the trust as mentioned in the trust deed, it is evident that the object of the trust is religious as well as charitable and of any other object of general public utility under Section 2(15) of the Act. It was further held 4 that under Section 12AA of the Act read with Section 11, 12 and 13, a trust or institution can be registered only under two exclusive categories viz., wholly for charitable purposes or wholly for religious purposes and there is no third category i.e., partly for charitable purposes and partly for religious purposes. Since, the trust has objects for religious purposes as well as charitable purposes, therefore, the same cannot be registered under Section 12AA of the Act. In the result, the application was rejected.
3. Thereupon the assessee filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal by an order dated 30.10.2015, by placing reliance on decision of Gujarat High Court in CIT VS. Barkate Saifiyah Society, 213 ITR 492 held that a trust , which has religious as well as charitable purposes can also be registered under Section 12AA of the Act. In the aforesaid factual background, this appeal has been filed. 5
4. Learned counsel for the revenue submitted that as per Section 11(1)(a) of the Act any institution or trust, has to be wholly charitable or wholly religious and it cannot be partly religious and partly charitable. It is also pointed out that the expression used in Section 11(1)(a) of the Act is 'wholly for charitable or religious purposes'. It is also pointed out that the objects of the trust extracted in para 4 of the order passed by the tribunal are not wholly charitable in nature and therefore, the assessee has rightly denied the benefit of exemption. In support of aforesaid submission, reliance has been placed on decision in 'COMMISSIONER OF INCOME TAX VS. SHERVANI CHARITABLE TRUST', (2007) 164 TAXMAN 268. On the other hand, learned counsel for the assessee has supported the order passed by the tribunal and has submitted that tribunal by placing reliance on the decision of the Gujarat High Court.
6
5. We have considered the submissions made by learned counsel for the parties and have perused the record. Section 11 of the Act deals with the income from the property held for charitable or religious purposes. In 'FAZLUL RABBI PRADHAN VS. STATE OF WEST BENGAL', AIR 1962 SC 1722 while dealing with the expression 'charitable purpose and religious purpose', the Supreme Court held that for satisfying the test for charitable purpose, there must always be some element of public benefit. In 'RAMCHANDRA SHUKLA VS. SHRI MAHADEOJI', AIR 1970 SC 458 has held that in Hindu system there is no line of demarcation between religion and charity is regarded as part of the religion. In CIT vs. Barkate supra, Gujarat High Court by placing reliance on aforesaid decisions of the Supreme Court held that the words 'trust for charitable purpose' would include even trust for advancement of religion. It may be noted that if the object of the trust is partly religious and partly charitable, so long as no part of income or 7 corpus is utilized for a purpose, which is not either charitable or religious, a trust is entitled to exemption under Section 11(1)(a) of the Act and such a trust is entitled for registration under Section 12AA of the Act. We are in agreement with the view taken by High Court of Gujarat. The decision relied upon by the revenue in case of SHERVANI CHARITABLE TRUST supra has no application to the facts of the case as in the aforesaid case only 1/3rd of the income was to be spent on charitable objects and remaining income was to be spent on maintenance and support of members of the settlors family. Therefore, in the aforesaid case it was held that the assessee is not entitled to the benefit of exemption, which admittedly is not a case here.
In view of preceding analysis, the substantial questions of law framed by a bench of this court are answered against the revenue and in favour of the assessee.
8
In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed.
Sd/-
JUDGE Sd/-
JUDGE ss