Income Tax Appellate Tribunal - Mumbai
Asha Handicrafts Association, Mumbai vs Department Of Income Tax on 24 October, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'A' : MUMBAI
BEFORE SHRI D.K. AGARWAL, ( JUDICIAL MEMBER) AND
SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER)
ITA No.5310/Mum/2009
Assessment Year : 2006-07
ITA No.5776/Mum/2010
Assessment Year : 2007-08
The Dy. Director of Income tax
Room No.507, Piramal Chambers
Lalbaug, Parel
Mumbai-12. .....(Appellant)
Vs.
M/s. Asha Handicrafts Association
28, Suren Road
Andheri (E)
Mumbai-400 093. .....(Respondent)
P.A. No.(AAATA 0206 A)
Appellant by : Shri Parthasarthi Naik
Respondent by : Shri Raja B. Singh
Date of hearing : 24.10.2011
Date of pronouncement : 31st October, 2011
ORDER
Per RAJENDRA SINGH (AM).
These appeals by the revenue are directed against the orders dated 15.6.2009 and 31.3.2010 of CIT(A) for the assessment year 2006-07. The dispute raised in these appeals relates to the allowability of exemption under section 11 of the Income tax Act. As the dispute raised in both the appeals is identical, these are being disposed of by a single consolidated order for the sake of convenience. 2 ITA No.5310 & 5776/M/10
A.Y:06-07& 07-08
2. Briefly stated the facts of the case are that the assessee during the assessment proceedings claimed that it was a charitable institution, engaged in growth and development of cottage industries and to provide marketing facilities for needy craftsmen, diffuse the knowledge of the Gospel of Lord Jesus Christ and to show his love by word and deed and activities of charitable nature to bring relief to any in need. The assessee was registered as a charitable institution under section 12A of the Income tax Act under registration No.DLI(C)(I-520). The objectives of the assessee trust as mentioned in the assessment order are as under:-
i) To diffuse the knowledge of the Gospel of the Lord Jesus Christ and to show His love by word and deed.
ii) To help in technical training of craftsmen to increase their efficiency and productivity irrespective of case and creed.
iii)To help encourage the growth and development of cottage industries and to provide the marketing facilities for the needy craftsmen.
iv) To engage in the activities of a charitable nature to bring relief to any in need.
v) To engage in any other activities for the promotion of the above objects.
vi) To apply the entire income and /or profits of the society in promoting its objects and/or for the promotion and development of institutions and association with similar objects.
2.1 The AO observed that whereas the object No.1 was religious, the other objects were charitable in nature. The objects were thus not 3 ITA No.5310 & 5776/M/10 A.Y:06-07& 07-08 wholly religious or wholly charitable but were mixed. The AO therefore, asked the assessee to explain as to why exemption under section 11 should not be disallowed. The assessee explained that diffusing the knowledge of Gospel of the Lord Jesus Christ or expressing love of Jesus Christ did not relate to any particular religious organization including church. It was extended to persons of all religions and communities. In pursuance of objects, the assessee was involved in conducting schools, running medical centres and contributing to the relief of the poor. The assessee also submitted that judgment of Hon'ble High Court of Jammu and Kashmir in the case of Ghulam Mohidin Trust vs. CIT (248 ITR 587) referred to by the AO was not on the proposition that exemption under section 11 could not be allowed in case of mixed objects or in case of religious trusts. In that case, exemption had been disallowed on the ground that the trust had been established for the benefit of a particular religious community. It was confined only to muslims. On the other hand, the assessee trust was a charitable trust for the benefit of the public irrespective of caste or creed. The AO however was not satisfied by the explanation given. He referred to the provisions of section 13(1)(b) as per which in case trust was established after commencement of the Act, exemption is not available if the trust is created or established for the benefit of any particular religious community. The AO also held that in case of mixed 4 ITA No.5310 & 5776/M/10 A.Y:06-07& 07-08 objects i.e. partly charitable and partly religious, exemption under section 11 was not allowable in view of the judgment of Ghulam Mohidin Trust vs. CIT (248 ITR 587). AO noted that the assessee had spent sums of Rs.14,63,525/- and Rs.12,08,131/- out of total expenditure of Rs.49,91,807/- and Rs.38,76,406/- in the respective two years towards propagation of Christianity i.e. "Gospel Efforts" and therefore it was hit by the provisions of Section 13(1)(b). The AO therefore disallowed the claim of exemption.
2.2 The assessee disputed the decision of AO and submitted before CIT(A) that one of the objects i.e. diffusing knowledge of the Gospel of Jesus Christ denotes encouraging people to show their love to fellow human beings by good and charitable deeds and, therefore, it meant involving in charitable activities. It was because of this object that the trust was involved in conducting schools, running medical centres and contributing to relief of the poor. The details of expenditure under the head "Gospel Efforts" also supported the said proposition. The details in case of assessment year 2006-07 of the expenditure of Rs.14,63,525/- were given as under:-
Medical Centre Project, Saharanpur Rs.76,513/-
E-academy Project, Agra Rs.60,060/-
Women's Awareness Project, Jaipur Rs.37,985/-
Tution Project, Jaipur Rs.30,610/-
Child Development Project, Moradabad Rs.11,887/-
5 ITA No.5310 & 5776/M/10
A.Y:06-07& 07-08
T.B. Project, Moradabad Rs.15,239/-
School Project, Jaipur Rs.16,820/-
School Project, Moradabad Rs.21,662/-
School Project, Lalaitpur Rs.4,780/-
Aid to poor Rs.3,100/-
Retreat Expenses, Moradabad Rs.48,821/-
Remuneration to staff Rs.7,29,818/-
Contribution to Provident Fund Rs.33,382/-
Reimbursement of expenses of Staff on Rs.2,72,848/-
Conveyance, Travel, Postage, Telephone,
Stationery etc.
Rs.14,63,525/-
2.3 It was further submitted that the trust had not been created for the benefit of any particular religious community which was clear from the fact that beneficiaries of "Gospel Efforts" were people from different religions, caste and creed. An affidavit to that effect was filed by the Chief Executive Officer of the trust. It was also submitted that the benefits of section 11 were available in cases of trust which were partly religious and partly charitable. Reliance was placed for the said proposition on the case of Pocket Testament League(India) (19 SOT
150). It was also pointed out that provisions of section 13(1)(6) were applicable only in cases of trust which were created purely for charitable purposes which was not so in the present case. CIT(A) was satisfied by the explanation given and agreed that the provisions of section 11 were applicable in case of trust having mixed objects. It was also observed by him that there was nothing on record to show that the trust had been created for the benefit of a particular religious 6 ITA No.5310 & 5776/M/10 A.Y:06-07& 07-08 community or caste. The CIT(A) pointed out that the judgment of Hon'ble High Court of Jammu and Kashmir in case of Ghulam Mohidin Trust vs. CIT (248 ITR 587) (supra), was not applicable as in that case trust had been created for the benefit of a particular community. The CIT(A) accordingly set aside the orders of AO for both the years and held that the assessee trust was entitled for exemption under section
11.
3. Before us the ld. AR for the assessee reiterated the submissions made before the lower authorities. It was submitted that the trust had not been created for the benefit of a particular religious community. Further the exemption under section 11 was available even in case of the trust with mixed objectives i.e. partly religious and partly charitable. Reliance for the said proposition was placed on the Third Member decision of the Tribunal in the case of Society of Presentation Sisters vs. Income tax Officer (121 ITD 422). It was pointed out that provisions of section 13(1)(b) apply only in case of charitable trust created for the benefit of a particular religious community which was not applicable in case of the assessee. It was accordingly urged that the order of CIT(A) should be upheld. The ld. DR on the other hand placed reliance on the order of CIT(A).
7 ITA No.5310 & 5776/M/10
A.Y:06-07& 07-08
4. We have perused the records and considered the rival contentions carefully. The dispute is regarding allowability of exemption under section 11 of the Income tax Act. There is no dispute that the trust is registered under section 12A of the I.T. Act. The objects of the trust have been reproduced in para -2 earlier. The object No.1 is regarding diffusing the knowledge of Gospel of Lord Jesus Christ and to show his love by deed which had been interpreted by the AO to mean that the assessee trust had been created for the benefit of a particular religious community. There is no dispute about five other objects being charitable in nature. The assessee had incurred certain expenditure in both the years under the head "Gospel Efforts". The details of expenditure incurred under different heads for two years are as under :-
Head of assessment assessment year
expenditure year 2006-07 2007-08
Resource Centre Rs.25,89,154/- Rs.23,61,872/-
Gospel Efforts Rs.14,63,525/- Rs.12,08,131/-
Relief Work Rs.9,39,128/- Rs.3,06,403/-
Total Rs.49,91,807/- Rs.38,76,406/-
4.1 The assessee has submitted that diffusing knowledge of the Gospel of Jesus Christ denotes encouraging people to show their love to fellow human beings by good and charitable deeds. The details of expenditure under "Gospel Efforts" have been reproduced in para -2.2 earlier which shows that the expenditure had been incurred on 8 ITA No.5310 & 5776/M/10 A.Y:06-07& 07-08 conducting schools, running medical centres and providing relief to poor. CIT(A) has given a clear finding that the AO had placed no material on record to show that the trust had been created for the benefit of a particular religious community. No such material has been placed before us also. Provisions of section 11 are applicable even in cases where trust has mixed objectives. i.e. partly religious and partly charitable. This view is supported by Third Member decision of the Tribunal in the case of Society of Presentation Sisters vs. Income tax Officer (121 ITD 422) (supra). The provisions of section 13(1)(b) on which the AO has placed reliance are applicable to the trusts which are purely charitable and created for a particular community. This view is supported by the judgment of Hon'ble High Court of Gujarat in the case of Barkate Saifiyah Society (213 ITR 492). The assessee trust is partly religious and partly charitable and it has not been created for the benefit of a particular religious community and therefore it is not hit by the provisions of section 13(1)(b). The AO has placed reliance on the judgment of Hon'ble High Court of Jammu and Kashmir in case of Ghulam Mohidin Trust vs. CIT (248 ITR 587) (supra), but the said judgment is also distinguishable as in that case the trust had been exclusively created for a particular religious community i.e. the muslim community. Considering the entirety of facts and circumstances, we 9 ITA No.5310 & 5776/M/10 A.Y:06-07& 07-08 see no infirmity in the order of CIT(A) allowing the claim of exemption. The orders of CIT(A) for both the years are accordingly upheld.
5. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 31.10.2011.
Sd/- Sd/-
(D.K. AGARWAL) (RAJENDRA SINGH )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated: 31.10.2011.
Jv.
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR " " Bench
True Copy
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.