Income Tax Appellate Tribunal - Hyderabad
Avadhana Saraswathi Peetham, ... vs Assessee on 8 August, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND
SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA.No.357/Hyd/2013
Avadhana Saraswathi Peetham, Director of Income Tax (E)
Hyderabad vs. Hyderabad.
PAN AAATA5272A
(Appellant) (Respondent)
For appellant : Shri S.Rama Rao (A.R.)
For respondent : Shri R.Laxman (D.R.)
Date of Hearing : 08.08.2013
Date of pronouncement : 23.08.2013
ORDER
Per SMT. ASHA VIJAYARAGHAVAN, J.M.
The appeal of the assessee is against the order of DIT (Exemption) refusing to grant approval under Section 80G for the assessee. Originally OIT had rejected approval under Section 80G(5) for the assessee vide his order dated 22.05.2010. On appeal, ITAT in ITA.No.496/H/2010 dated 28.06.2012 set aside the matter to the file of DIT (Exemption) to consider in accordance with law.
2. DIT(E) while giving effect to the order of the ITAT, again rejected approval under Section 80G(5). The First objection of the DIT(E) is that Shri Sharma, Chairman and Managing Trustee has been occupying the premises of the trust without paying rent.
3. The next objection of DIT(E) is that temple exits in the premises of the trust which is involved religious activities. A temple of Goddess Sarawathi has been constructed inside the trust premises. DIT(E) concluded that expenditure are of religious in nature exceeds 5% of the income and also the assessee has not established reasonableness of providing house for rending 2 to Mr. Sharma. Hence the assessee is not entitled to approval under Section 80G(5).
4. Aggrieved the assessee is on appeal. The learned Counsel for assessee, submitted that the assessee has been granted approval under Section 80G(5) (vi) till 31.03.2009 and that there is no change in circumstances after 31.03.2009 and the return of the assessee for the assessment year 2009-10 to 2012-13 has been accepted by the department and no objection or disallowance has been made on the same so far.
5. The learned Counsel relied on the following case laws :
1. The decision of High Court of Gujarat in the case of N.N. Desai Charitable Trust vs. CIT reported in 246 ITR 452 (Guj.) wherein the Hon'ble High Court held that once the trust was registered and was granted approval under section 80G(5), the CIT can not reject the request for such approval on the ground that the income of the appellant trust was likely to be included in the taxable income.
2. The decision of the Gujarat High Court in the case of Orpat Charitable Trust vs. CIT reported in 256 ITR 690 held that contravention of Sec.11(5) would have bearing only at the point of time of assessment of the charitable trust and could not be a material consideration for refusal of approval u/s. 80G(5).
3. The decision of High Court of Karnataka in the case of DIT (E) vs. Adhaar Ajhar reported in 60 DTR 365 held that the application for renewal of recognition under section 80G can not be rejected even when there were certain contradictions of Sec.13(I)(d)(iia) r.w.s.11(5) of the I.T. Act.
4. The High Court of Punjab & Haryana in the case of CIT vs. Rajamale Educational Society reported in 65 DTR 307 held that once exemption u/s. 12AA was granted and the same was continuing, the CIT was not justified in denying approval under section 80G of the I.T. Act.
5. The High Court of Punjab & Haryana in the case of Sonepat Hindu Educational and Charitable Society 3 vs. CIT reported in 278 ITR 262 held that the scope of enquiry by the CIT extend only to see the allowability of the application for exemption and not whether the income of the appellant would be taxable or not can not be determined at the time of granting recognition u/s. 80G(5) of the I.T. Act.
6. The Karnataka High Court in the case of DIT (E) vs. International Society for Krishna Consciousness reported in 54 DTR 126 held that where expenditure incurred in the preceding two years on religious activities is less than 5% of the total income, renewal of recognition u/sec. 80G(5) can not be denied.
7. The decision of the Hon'ble ITAT, Jaipur Bench-A in the case of Bhagwan Mahavir Purushardha Prerana Nidhi Nyas vs. CIT reported in 144 TTJ 379 held that if there is violation of the provisions u/sec.13(1)(b) of the I.T. Act it effects the exemption u/sec.11 for such assessment year and would not effect the registration.
8. The decision of the Hon'ble ITAT, Pune Bench in the case of Shikshan Prasarak Mandali vs. CIT reported in 10 DTR 470 and 117 TTJ 337 held that as long as the exemption under sec. 11 is available to the society the requirement of 80G(5) is to be considered as fulfilled.
6. We heard both the parties and perused the material available on record. As regards providing free residential house to Sharma, the provisions of Section 13(2) will apply only if the benefit acquired by Sharma is unreasonable or excessive having regard to the market condition. The assessee submitted that Shri Sharma has been teaching various aspects of memory and other related matter to the students and has not been charging any fees from the trust for doing so. Therefore if rent were to be collected from the Sharma then the fee payable to him for the services rendered by him should also be taken into account. If that is taken into account then there will be no benefit accruing to him, as fee payable to him is much more than the rent recoverable from him. The department has not established that the provision of rent free accommodation to Mr.Sharma is excessive and unreasonable having regard to the services rendered by him.
47. As regards temple in the trust premises, as pointed out by the assessee that goddess Saraswathi is accepted by people as god of wisdom and is only to support and encourage students. It is submitted temple was Saraswathi, Goddess of learning has been constructed by the students themselves by collecting monies among themselves. The object of the trust is not for carrying our any religious activity. In fact out of the expenses allocated by DIT(E) as temple expenses, expenses of meals have to be excluded because the assessee trust is providing mess to students and poor people. In the profit and loss statement, there is no separate allocation of expenses specifically for the temple.
8. As regards publication of CD and booklets, it has been submitted that it is only in connection with the process of development of memory, which is part of the education. Even otherwise, as receipt of sale of CD etc did not exceeds Rs.10 lakhs in any of the year or previous year, Proviso to Section 2(15) has not application.
9. In the circumstances, we feel that provisions of rent free accommodation to Shri Sharma who is rendering the yeoman service of imparting education to the students and existence of the temple of goddess Saraswathi built by students and sale proceeds of CDs, booklet etc which constituted material for student (receipt from which was in any event less than Rs.10 lakhs per year) cannot be the reason for refusing approval under Section 80G.
10. In the decision of ITAT, Nagpur Bench in the case of Shiv Mandir Devsttan Panch Committee Sanstan vs. CIT-1, Nagpur (2013) 56 SOT 456 (Nagpur) it has been held as follows :
"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."5
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 personal god or gods, a particular system of faith and worship. It means the trust should not be for the benefit of any particular group of persons having the common belief in worshiping of superhuman controlling power or having common system & faith and worship. If the trust is for the benefit of any particular religious community, it would include the advancement, support or propagation of a religion and its tenants, it could be said that a trust has violated the condition No. (iii) of section 80G(5). The objects as has been pointed out by ClT, nowhere talks of advancement, support or propagation of a particular religion, worshipping of Lord Shiva, Hanumanji, Goddess Durga and maintaining of temple, in our opinion, cannot be regarded for the advancement support or propagation of a particular religion. No evidence or material was placed on record or brought before us by the learned DR which may prove that these object relate to a particular religion. No doubt the DR argued that it relate to Hindu Religion but in our opinion it is not so. Lord Shiva, Hanumanji, Goddess Durga does not represent any particular religion, they are merely regarded to be the super power of the universe.
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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 outside the scope of section 80G 6 and the donation to it will not make the donor entitled for the deduction under sec. 80G. The objects as per Explanation 3 must be wholly or substantially whole of which must be of religious nature The assessee has submitted all the evidence including the objects and how the expenditure has been incurred by it. The onus, in our opinion, gets shifted on the Revenue to prove that the assessee-trust is wholly or substantially for the religious purpose. There is no allegation on the part of the revenue that the whole or substantially whole of the object of the trust is to propagate or advance support to particular sect. We may observe that Hinduism is a way of life of a civilized society, It as such is not a religion. In this regard we rely on the case of T.T.Kuppuswamy Chettiar v. State of Tamil Nadu State of Tamil Nadu [1987] 100 LW 1031 in which it was held "The word "Hindu" has not been defined in any of the texts nor in judgment made law. The word was given by British administrators to inhabitants of India, who were not Christians, Muslims, Parsis or Jews. The alleged Hindu religion consists of four castes Brahmins, Kshatriyas, Vaishyas and Sudras belonging ultimately to two schools of law, mitaksharas and dayabhaga. There is, however, no religion by the name 'Hindu', It only shows that so called Hindu religion has been called for convenience." CIT must be aware of that the Hindu consists of a number of communities having the different gods who are being worshipped in a different manner, different rituals, different ethical codes. Even the worship of god is not essential for a person who has adopted Hinduism way of life. Thus, Hinduism holds within its fold men of divergent views and traditions who have very little in common except a vague faith in what may be called the fundamentals of the Hinduism. The word 'community' means a society of people living in the same place, under the same laws and regulations and who have common rights and privileges. This may apply to Christianity or moslem but not to Hinduism. Therefore, it cannot be said that Hindu is a separate community or a separate religion. Technically Hindu is neither a religion nor a community. Therefore, expenses incurred for worshipping of Lord Shiva, Hanuman, Goddess Durga and for maintenance of temple cannot be regarded to be for religious purpose. Under these facts and circumstances, we are of the view that the CIT is not correct in law in not allowing the approval to the assessee trust u/s. 80G of the Act.
11. We, therefore, direct the DIT(E) to grant the approval under section 80G(5) of the Act to the assessee, based on the application made by the 7 assessee on 31.08.2009.
12. In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 23rd August, 2013.
Sd/- Sd/- (CHANDRA POOJARI) (SMT.ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad Date 23rd August, 2013. VBP/- Copy to
1. Avadhana Saraswathi Peetham, C/o. S.Rama Rao, Advocate, Flat No.102, Shriya's Elegance, Road No.9, Himayathnagar, Hyderabad-29.
2. Director of Income Tax (E), Hyderabad.
3. Addl.Director of Income Tax (E)-II, Hyderabad.
4. D.R. "A" Bench, ITAT, Hyderabad.
5. Guard File