Income Tax Appellate Tribunal - Rajkot
Shri Shakti Charitable Trust, Rajkot, ... vs The Cit(Exemption), Ahmedabad, ... on 20 May, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT
BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER &
SHRI DIESH MOHAN SINHA, JUDICIAL MEMBER
आयकर अपील सं./ITA No. 138/RJT/20 23
( नधारण वष / Assessment Year: (2023-24)
(Hybrid Hearing)
Shri Shakti C haritable Trust Rajkot, Vs. The CIT (Exemption),
Maa, Akshar Marg M ain Road, Nr. Ahmedabad
Lakh n a Bun glo w, Gand hidham,
Rajkot - 36 0003.
थायीले खासं . /जीआइआरसं . /PAN/GIR No.: AAOTS0036N
(Appellant) (Respondent)
Appellant by : Shri Sanjay Dholakiya, AR
Respondent by : Shri V. K. Jaiswal, CIT-DR
सुनवाई क तार ख/ Date of Hearing : 15/04/2024
घोषणा क तार ख/Date of Pronouncement : 20/05/2024
आदे श / O R D E R
PER DINESH MOHAN SINHA, JM:
This appeal filed by the assessee is directed against the order of Learned Commissioner of Income Tax (Exemption), [in short, "the Ld. CIT(E)"], Ahmedabad, dated 16.03.2023 that the Ld. CIT(E) rejected assessee's application filed in Form No.10AB and u/s 80G(5) of the Income Tax Act, 1961 (in short 'the Act') and provisional registration was also cancelled.
2. Grounds of appeal raised by the assessee are as follows:
"1) That the learned CIT(E) has erred in facts as well as in law regarding the applicability of sec 80G(5) of the Act.
2) The learned CIT(E) had erroneously erred in fact as well in law without appreciating that the statutory provisions allow to reject the renewal only in the cases of finding that activities are not genuine or had not complied with the provisions of other laws.ITA No.138/RJT/2023
Assessment Year.2023-24 Shakti Charitable Trust Rajkot
3) The appellant may please be allowed to add further grounds of the appeal and/ or allowed to amend, alter, delete, change and / or raise further grounds during the pendency of these proceedings.
Relief claimed in the Appeal The order of Hon'ble CIT(E) No. ITBA/EXM/F/EXM45/2022- 23/1050850910(1) dated 16/03/2023 may please be declared null, void, ineffective and bad in law in view of above and reinstate the original registration u/s 80G(5) of the Act. Yu are also requested to grant us the cost of this appeal besides other relief as may be found reasonable, necessary and expedient in the interest of the justice."
3. The facts of the case in brief are that the trust has been in existence since 2014 and providing charitable services to the public without any discrimination of caste, creed, religion or community, within the financial capacity of the trust. It has a registered office and a board of trustees, and it maintains proper accounts and records. The trust was registered u/s 12A bearing the 12A Unique Registration No.AAOTS0036N22AD01, dated 14.03.2023. The trust has duly applied on 30.03.2022 in Form No.10A u/s 80G(5). The Department had on 06.04.2022 accepted the application and gave the provisional unique registration no.AAOTS0036N22AD01 valid up to AY.2024-25. Thereafter on our renewal application in form 10AB filed on 28.09.2022 the Ld. CIT(E), Ahmedabad.
4. The Ld. CIT(E) rejected the application of the trust for approval or registration u/s 80G(5) of the Act that application rejected on the ground that one of the object of trust is religious, hence is in violation of provisions of the Act. The same is reproduced as under:
"......
D. (4) To establish ad handle Bhaktidham, Muktidham, Vaidik Sanskar Kendra, Yagan Shaala, Divya Jivan Kendra, Jal Kendra, Ann Khestra ad Dharmashala.
......."
5. The Learned Authorized Representative (Ld. AR) of the assessee submitted that the Ld. CIT(E) observed that there are three categories of Page | 2 ITA No.138/RJT/2023 Assessment Year.2023-24 Shakti Charitable Trust Rajkot trusts according to purposes, namely (i) Charitable purposes, (ii) Religious purposes and (iii) religious-cum-charitable purposes. Out of these categories, only (i) category is eligible for approval u/s 80G, although all three categories are eligible for registration u/s 12AB. Ld. CIT(E) has further observed that the determination of religious expenditure upto 5% as prescribed in section 80G(5B) is also applicable only to category (i) i.e. purely charitable trusts. Therefore, according to Ld. CIT(E), the categories falling under (ii) and (iii) are not eligible for approval u/s 80G(5). Ultimately, Ld. CIT(E) taking note of Object Clauses 4(r) and 4(s) of assessee as reproduced above, concluded that the assessee is not merely charitable in nature, its objects as specified in clauses 4(r) and 4(s) are by nature religious in nature; therefore the assessee is not eligible for grant of approval u/s 80G(5). The Ld. CIT(E) also relied upon certain decisions including the Upper Ganges Sugar Mills Ltd. Vs CIT (1997) 73 Taxman 645 (SC) to support his stand that even if one of the objects is wholly or substantially of a religious nature, the assessee would not be entitled to approval u/s 80G(5) of the Act.
6. The one of the Objects of the Trust Deed is religious in nature. Therefore, the assessee has violated the above referred provisions of the Income Tax Act and hence the assessee is not entitled to get approval u/s 80G(5) of the Income Tax Act, therefore the present application filed in Form No.10AB is liable to be rejected.
7. The Ld. AR of the assessee submitted that the Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd vs CIT, reported in 93 Taxman 645, wherein adjudicating similar issue u/s 80G(5) of the Act has held that - "Section 80G applies to donations to any institution or fund established in India for a charitable purpose. Charitable purpose, for the purpose of the section, does not include any purpose the whole or Page | 3 ITA No.138/RJT/2023 Assessment Year.2023-24 Shakti Charitable Trust Rajkot substantially the whole of which is of a religious nature. [Emphasis supplied] Explanation 3, which uses this phraseology, takes note of the fact that an institution or fund established for a charitable purpose may have a number of objects. If any one of these objects is wholly, or substantially of a religious character, the institution or fund falls outside the scope of section 80G and a donation to it does not secure the advantage of the deduction that it gives."
8. On the other hand, Learned Commissioner of Income Tax - Departmental Representative (Ld. CIT-DR) for the Revenue submitted that the CIT(E) has correctly noted, on reading of Clause D(4) of trust- deed, that the trustees have full freedom to give loans to any person without any accountability or responsibility. The Ld. CIT-DR strongly contended that the order of CIT(E) is very much correct and is not entitled to get approval u/s 80G(5) of the Act, therefore the present application filed in Form No.10AB liable to be rejected and hence the order must be upheld.
9. The objects of the trust are reproduced below:
"5. Objectives of Trust:
The objectives of this trust without any discrimination to cast or religion will be as following.
A. Social:-
1) This trust will do all the activities regarding development of human society and regarding research and development.
2) It will do activities for the conduct of better family, good virtues. Simple living, better society with good qualities and it will publish matter regarding this.
3) It will conduct activities against bad qualities, bad habits and addiction to protect the society and humans from those. As well as it will arrange programs for anti-addiction and anti-drug activities.
4) To establish shelters for old handicapped, weak, widow, blinds, deaf, dumb, mentally retarders and start ease centres for those.
5) As the part of women empowerment, establish and manage courses and centres for tailoring, cutting, fitting, designing, dress materials etc.
6) To run annakshetra. to eliminate social ill systems, to remove dowry system, to handle marriage bureau, to arrange smuhlagna and to receive donations Page | 4 ITA No.138/RJT/2023 Assessment Year.2023-24 Shakti Charitable Trust Rajkot and gifts regarding the same. To prepare the backward and tribal class economically, start and handle professional and educational Services .
7) To spend money for the elimination of all living entities and to arrange for the post-demise procedures. It keep and maintain non hereditary dead body of humans as well as any animal.
8) To distribute required goods and food packets and serve in any natural calamities. It will be able to distribute food packets and grain.
9) It will avail services by taking grant of E-billing centres from GEB so that people don't have to go far. And it will be able to do other social activities.
10) It will conduct all the anti-pollution activities so that human society and other animals could get fresh food, water and air.
11)To conduct plantation programs, plant the trees, distribute and grow plants, to conduct activities for gardening and to protect and maintain them, to conduct the activities for forest protection and development.
B. Gaushala and Panjarapoi:-
1) This trust will try its best to stop the animals being taken to slaughter houses. It will conduct all the activities for protection of cows and will try to stop the illegal deals of animals and stop any torture and pain being given to animals.
2) To run gaushala panjarapol and cattle camps, to get subsidy for that activity, to develop, maintain, give treatment to the generations of cows, to get the grass from vidi, either from government or from private, to hire the room for that as well as to develop gaushala and panjarapol receive donations from foreign or from own country. To handover the management of gaushala and panjarapol to other trusts. It will avail the facilities of grass and water for gaushala and panjarapol.
3) To establish shelter for animals and birds, to feed them and for their protection to establish and handle the zoo.
4) To handle the zoo in the hands of Nigam, board, state or central government.
5) To avail better quality of milk. ghee, butter, curd, gaumutra. cow dunk etc. by developing and maintaining the gaushala. To conduct activities of animal pity by stopping the animal slaughter.
6) To avail the facility of clinic, hospitals for old and handicapped animals and birds. To avail the mobile clinics for the same.
7) To conduct the environmental activities by developing the fertilizers from the cow or buffalo's dunk and their urine and by running gas plants.
C. Health and Medical:
1) It will do activities of health related health protection for human and any other living entity.
2) To start blood banks for treatment, to run an existing blood bank. To establish, run and manage hospital, clinic, medical, maternity home, nursing home, after care clinic home etc. as well as to help such organization or to handle them. To provide, all disease treatment camp, eye treatment camp, dental camp, camps for awareness of thalassemia . AIDS and distribution of medicines.
3) It will try to protect health by mainly the fundamentals of Ayurvedic treatment method and inform the people of its usefulness in day to day life.
Page | 5 ITA No.138/RJT/2023 Assessment Year.2023-24 Shakti Charitable Trust Rajkot Then also, if needed, it will use any other methods like allopathic, homeopathy, naturopathy, biochemical, unaani, magnetism, acupuncture, acupressure for the treatment of people.
4) Hospitals, clinics, treatment camps, panchkarm centres, research centres, vaysthaapan Kendra, dirghayu Kendra. pun sanvanan Kendra could be established and managed.
5) The trust will accept any income legally receivable to any organizations handled by this trust i.e, hospitals. Clinics, maternity homes. Nursing homes etc.
6) To give treatment to patients at very low rate and to purchase any vehicles for such organization and to avail mobile clinics.
7) To prepare the projects for medical services and work according to the projects prepared by -- the co-operative. Government. Proprietary organization, company or firm. Medical stores for low cost medicines could be established and handled.
8) To arrange camps for medical protection, exhibition of forest medicines, treatment camp, suvarnaprashan camp, and anti-addiction.
9) The treatment will be done by green, fresh and dry medical vegetation's swaras , kavath, churna, vati. guti. avleh. tail, hgrut, malam and fresh honey. As well as to establish and handle the medical vegetation organization.
10)To arrange activities like Yoga. Yogasan. Pranayama for health protection of humans.
11)It will do activities of health protection by publishing books. Pamphlets etc D. Spiritual :-
1) To establish centres to develop the religious feelings in human by not considering cast or class, spiritual feelings to materialise the slogans like "Atma-Atma" and "Bhai-Bhai" and to eliminate religious superstitions and to develop the spiritual knowledge of God.
2) SantKutir, Yoga Kutir, meditation centre, silence, praanayam Kendra. yogasan Kendra could be established and managed.
3) To establish and manage libraries for spiritual books, literature, magazines and pamphlets. To establish and manage centres for DivyaJivan and to handle the higher spiritual activities that are helpful to society and human in real sense.
to establish and handle Bhaktidham, Muktidham, Vaidik Sanskar Kendra YagnaShaala, DivyaJivan Kendra, Jal Kendra, Ann Kshetra and Dharmashala.
E. Cultural:
1) To do activities for giving virtues to the human society and especially to Indian youth.
2) To arrange competition of music, dance, drama, drawing, acting and etc. and to get income from those competition. This income could be used for the objectives of trust.
3) It will be able to provide scholarship to the students and teachers of music, dance, drawing, acting and etc. for motivating them .
4) It will be able to provide certificates to the students studying in the schools of music, dance, drawing, acting and etc, by examining them and it will be able to form a committee for such examination and take grant from state or central government.
Page | 6 ITA No.138/RJT/2023 Assessment Year.2023-24 Shakti Charitable Trust Rajkot
5) It will be able to establish schools and colleges giving training of music, dance, drawing, acting and etc. and will be able to handle it. It will handle and run marriage bureau and if needed it will take grant from state or central government.
F. Educational :
1) This trust will do all the educational works related to motivate the society, to remove the darkness of ignorance and to scatter the light of knowledge.
2) This trust will establish, handle and manage nursery, play house. Balwadi, Ghodiyaghar, Angadwadi, mother and children development centres.
3) This trust will establish and manage Gujarati medium and English medium playhouses, nursery, LKG, HKG. pre-primary school, primary school, middle school, high school, higher secondary school and many types of colleges.
4) This trust will establish and manage industrial schools, agricultural schoo and college,laboratory. workshop, library, research centres. Computer training school, college and any other universities.
5) Ayurvedik. Homeopathic, Medical, Dental. Physiotherapy. Compoundery course, Nursing course, Pharmacy and any other colleges would be established and managed.
6) Polytechnic. ITI, engineering, architectural, designing. BCA, BBA. MCA, MBA. PTC, CPEd, AID. BEd. MEd. ete. related certificate, degree, diploma, post diploma, post-graduation etc. colleges would be started and managed.
7) Arts, commerce, science, agriculture, veterinary ete. colleges could be started and handled.Sanskrit Schools could be established.
8) Backward class, tribe, other backward class" boarding, boys/girls boarding, aashramshaala, hostel, old age homes, organisation for handicapped, gymnasium etc. would be established and handled.
9) For the mental and physical development of youth: gymnasium, sports activities, sports club, gymnastic organisation as well as regarding the sports activities the training would be given in a scientific manner. Colleges regarding purchase of the tools for training schools would be established and managed.
10)To prepare the projects for the educational tasks and work according to the projects prepared by the co-operative, government. Proprietary organisation, company or firm.
11) For the motive of students' technical education and professional courses, they, would join in GEB billing centres. BSNL and other different schemes and would work. As well as they will guide students and help them in required financial and social necessity.
12)Schools and organisations for old age education, literature, music, drama, and drawing would be started and managed.
13)It will publish educational research book writing. It will be able to guide, write and publish the books related to religion, as well as distribution of pamphlets of religious and social awareness education.
14)For helping the children at orphanage, this trust will be able to help the children of orphanage with educational books, education or any other social and economic requirement without considering cast. It will be able receive required donation, income and wealth regarding that. It will be able to adopt needy children according to the situation as well as make them develop socially and economically.
Page | 7 ITA No.138/RJT/2023 Assessment Year.2023-24 Shakti Charitable Trust Rajkot
15)It will arrange national and international conferences for higher education such as M.Phil. Ph.D., P.D.F. etc. and it will be able to be helpful to the Students pursuing such higher courses. As well as it will help these students in the research work.
16) Activities like technical, management and self-employment would be helped by this trust. It will do all the activities for agricultural development and maintenance, it will provide knowledge of different languages and conduct the courses for such languages."
10. The Ld. AR further submitted that during this period, the institution has not incurred any expenditure on the above-said object [Clause 5(D)] which are purely religious in nature. The Ld. AR further submitted that in case the institution has charitable nature but expenditure upto 5% incurred on the object which are likely to be religious in nature, even then the institution remains the same character of charitable in nature. It is further submitted that trust has been in existence since 2014 and providing charitable services with the public without any discrimination. The activities of the trust are genuine and are not for the benefit of any particular individual or group, trust helps to poor children and provides food and shelter to the homeless. The object do not channel the benefit to any community, thus would not fall as an institution of religious in nature.
11. In support of the submission, the Ld. AR has drawn the attention towards the under-mentioned judgments in the case of Divya Sadhana Charitable Trust vs. CIT, (2023) 124 TLC 348 (Ind - Trib) wherein it was held as under:
"17. We have considered rival submissions of both sides and perused the facts of case in the light of various decisions relied by both sides. After a careful consideration, we find that the assessee's case is directly covered by two decisions relied upon by Ld. AR, namely (i) KVC Trust (ITAT, Chennai) and (ii) Mishri Lal Gordhan Lal Batra Charitable Trust (Rajasthan HC). Ld. DR for revenue is not able to show any reason for non-applicability of these decisions or to show any contrary decision holding the field. Therefore, following the same view, we are inclined to direct the CIT(E) to consider the application of assessee and grant registration after limited verification that the assessee's case fits in section 80G(5B)."
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12. In the case of Mishrilal Gordhanlal Batraz Charitable Trust vs. UOI & Anr, 178 Taxman 114 (Raj. HC) wherein it was held as under:
"3. Learned counsel for the petitioner has invited our attention to a number of decisions to urge that it is the substance of the objects of the trust in locality and the principal activity of the trust only should be taken into consideration and merely because one of many activities have been stated to be construction of the trust which in fact is not the basic purpose of formation of the trust, that should not be the sole criteria of rejection of the application. He also relied on the amendment brought in section 80G by inserting sub-section (5B) of section 80G by the Finance Act, 1999, with effect from 1-4-2000, which was in consonance with the submissions made by learned counsel for the petitioner which, inter alia, provided an overriding provision that where an institution or fund which incurs expenditure in the relevant year which is of religious nature for an amount not exceeding 5 per cent of its total income in that previous year then for that previous year, the institution or fund shall be deemed exempted under section 80G by deeming it to be so.
4. On this premise learned counsel for the petitioner further urges that in view of this provision, every year the Commissioner has to consider the ratio between the total income of the trust and the expenditure actually incurred for religious purposes and only if the substantive part of the income, that is to say more than 5 per cent of total income is incurred for religious purposes the registration of trust/fund under section 80G can be refused on that ground."
13. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that Ld. CIT(E) has rejected the application of the assessee on the ground that the assessee violated the object of charitable trust, simultaneously violated the provisions of law. The relevant section 80G(5B) is reproduced below:-
"[(5-B) Notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or 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."
Page | 9 ITA No.138/RJT/2023 Assessment Year.2023-24 Shakti Charitable Trust Rajkot Hence, the assessee-trust is not entitled to get approval u/s 80G(5) of the Act. We have reproduced the objects of the assessee trust in para 9 of this order. In these objects there are spiritual objects in sub-para D, which contains object of religious in nature. The ld. counsel for the assessee states that assessee-trust has not incurred any expenditure on those objects which are religious in nature. However, the assessee has not submitted before us any evidence, in the form of income and expenditure account and cash-flow statement for verification of the fact that assessee-trust has not incurred any expenditure. In the aforesaid circumstances and in the light of above discussion, we are inclined to direct the ld. CIT(E) to examine the balance sheet, income and expenditure account and bank statement , in the light of the provisions of section 80G(5B) of the Act, to ascertain the expenditure made by the assessee-trust on religious/spiritual activities and adjudicate the issue as per law.
14. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced on 20/05/2024 in the open court.
Sd/- Sd/-
(A. L. SAINI) (DINESH MOHAN SINHA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
TRUE COPY
Rajkot
दनांक/ Date: 20/05/2024
Copy of the Order forwarded to
1. The Assessee
2. The Respondent
3. The CIT(A)
4. Pr. CIT
5. DR/AR, ITAT, Rajkot
6. Guard File
By Order
Assistant Registrar/Sr. PS/PS
ITAT, Rajkot
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