Income Tax Appellate Tribunal - Mumbai
Bombay Panjrapole, Mumbai vs Department Of Income Tax on 25 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'B', MUMBAI
BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER &
SHRI VIVEK VARMA, JUDICIAL MEMBER
I.T.A. NO. 5714/M/2010
ASSESSMENT YEAR 2007-2008
ITO (E)-I(1), Vs. Bombay Panjrapole,
R.No.503, Piramal Chambers, Near Madhav Baug Post Office,
5th Floor, Parel, Bhuleshwar, C.P. Tank,
Mumbai - 400 012. Mumbai - 400 004.
PAN: AAATB4289N
(Appellant) (Respondent)
Appellant by : Mr. P. C. Maurya
Respondent by : Mr. Girish Dave
Date of Hearing: 16.07.2012 Date of order:25.07.2012
ORDER
Per VIVEK VARMA, JM:
This appeal is filed by the department against the order of CIT (A), Mumbai dated, 26.03.2010, wherein the CIT (A) has deleted the addition of Rs. 84,36,407/-
made by the AO u/s 115BBC.
2. The facts of the case are that the assessee is a charitable trust engaged in maintaining gaushalas and tending to other animals and birds, by giving them food, shelter and medical aid to disabled animals and other activities, all connected with the protection and feeding of animals and birds, besides doing research in animal husbandry and conducting schools and classes to educate the people in these fields.
3. In the course of assessment proceedings, the AO came across two types of collections i.e. Dharmau Box Collection and Dharmun (other collection) which were at Rs. 5,25,716/- and Rs. 1,00,13,978/- respectively, on which the AO sought the 2 I.T.A. NO. 5714/M/2010 assessee's reply. The assessee gave a detailed reply and relied on the decisions of the Hon'ble Bombay High Court in the case of Vallabhdas Karsondas Nehata vs CIT, reported in 15 ITR 113, wherein the Hon'ble Bombay High Court held, "that supply of fodder to animals and cattle is a charitable object", and the case of CIT vs Swasthic Textile Trading Co. Ltd., reported in 113 ITR 852, wherein the Hon'ble Gujarat High Court held, "that the object of establishing, maintaining, running and helping gaushalas, panjarpoles for animals etc. is highly charitable".
4. The AO, after considering the detailed reply added the entire collections of Dharmau box amounting to Rs. 5,25,716/- and in the case of Dharmau, for which the assessee was able to identify the donations of Rs. 21,03,286/- reduced this from Rs. 1,00,13,978/- and added Rs. 79,10,691/-. The aggregate addition made by the AO came to Rs. 84,36,407/- (Rs. 5,25,716 + Rs. 79,10,691). While considering the reply of the assessee, the AO came across the amounts of donations, which ranged from Rs. 10/- to Rs. 15/-. It was also brought to the notice of the AO that in the year ended 31.03.1994, the charity commissioner held that expenses on cow grass, miscellaneous expenses for animals, mils upaj, cow dung were not in the nature of veterinary treatment and therefore the same were not exempted from the contribution u/s 52 of the Bombay Public Trust Act. Against this order of the Charity Commissioner, a Writ was filed before the Hon'ble Bombay High Court, who passed the interim order in favour of the assessee and charity commissioner had to refund the contribution to the charity commission at Rs.1,04,768/-. The Hon'ble Bombay High Court upheld the interim order, as passed, in the final order. The AO was apprised that even the Income Tax Department had been accepting the computation of the assessee. The assessee submitted that, "by virtue of "Law of Precedence" on 3 I.T.A. NO. 5714/M/2010 the same facts and circumstances the practice ought to be followed and could not be deviated". The AO, however, did not accept the same and added the sums, as mentioned, to the income of the assessee for the year under consideration.
5. The assessee, took the issue before the CIT (A), before whom, the submissions were reiterated, relevant portions are extracted here under:
".............
1. The Trust was declared by Sir Jamsetjee Jeejeebhoy, Knight by a Trust Deed dated October 18, 1834 for the keep of stray cattle and other animals with a view to protect their lives. The Trust craves leave to refer to and rely upon the Trust Deed dated October 18, 1834.
2. The Charity Commissioner approved the Scheme for Management and Administration of the Trust with registration no. E-127 under section 50A of the Bombay Public Trusts Act, 1950. Under the said scheme, the Trustees were under an obligation to collect and receive rents, interest, dividends, donations and any other income of the trust. To pay there from the outgoings payable in respect of the trust assets and any other costs, charges and expenses incidental to the management and maintenance of the trust assets and apply the balance funds in the following manner viz., (1) maintenance and up-keep of Panjrapole; (2) keeping of cattle and other animals and birds in the Panjrapole and giving them food, shelter and medical aid and to look after old, infirm and disable animals; (3) carrying out and implementing other existing objects of the Trust as mentioned in the earlier Trust Deeds such as giving financial and other aid and assistance to other sick or weak panjrapole and other institutions of the same or similar nature and other miscellaneous objects. We are enclosing herewith a copy of the Scheme of Management and Administration of Petitioner Trust as approved by the Charity Commissioner under section 50A of the Bombay Public Trusts, Act, 1950
3. For last more than 176 years, the trust has been engaged in taking care of the old, infirm and disabled animals and birds. For this purpose, apart from the panjrapole at Bhuleshwar it has branches at Raita, Mala, Walsing, Lakhivali, Chembur and Bhilad. As of February 2010, the Trust had in all 1800 animals and birds in the panjrapole including approximately 1100 cows, 50 bullocks, 50 dogs, 250 goats, 200 pigeons and 150 other bids, etc. The Courts, the Police and the public at large leave the animals and birds 4 I.T.A. NO. 5714/M/2010 who have met with some accident, or who have been ill treated by their owners or who have been rescued from the slaughter houses into the Trust panjrapole. The Trust provides such animals and birds with medical care, food and shelter.
4. It is a well known fact that taking care of old, sick, wounded and infirm animals especially cows and dogs providing them with medical care and feeding them has been always considered as a holy and religious duty by the Hindus, Jains and Parsees. Since the Trust is carrying out religious obligations it submits that it has been created the established wholly for religious purposes. The Trust craves leave to refer to and rely upon books on religion to show that taking care of old, sick, wounded, infirm and other such animals is religious obligation.
5. The Trust was notified as an infirmary by the Governor in Council vide notification no. 3428 dated May 12, 1915. This notification was issued under section 6(2) of the Prevention of Cruelty to Animals Act, 1890.
Subsequently, the Secretary, Government of Maharashtra, passed an order dated February 02, 2008, appointing the Trust as an infirmary under the Prevention of Cruelty to Animals Act, 1960. In fact the Assistant Charity Commissioner's order dated August 18, 1997 holding that the expenses on green grass for the cows cannot be regarded as towards veterinary treatment and hence liable to contribution under section 58 of the Bombay Public Trusts Act, 1950 was reversed by the Hon'ble High Court.
6. The Trust sources of receipts comprises of rent, interest, dividend donation, box collection etc. and amounts received from visitors to the panjrapole towards expenses of green grass, gol lady and dana, etc. for feeding the animals and birds in the panjrapole. This amount received from the visitors though of small petty individual amounts forms a substantial part of the total receipts of the trust. The green grass, gol laddu and dana taken by the visitors from the panjrapole have to be used by them in feeding the animals and birds within the panjrapole and cannot be removed outside the panjrapole premises. The Trust is under an obligation to feed the animals and birds in the panjrapole. Apart from providing medical attention it is also essential to provide the animals and birds in the panjrapole with good food so that they can lead a healthy life. By distributing the green grass, gol laddu and dana among the visitors who in turn use them to feed the animals and birds in the panjrapole, the Trust has in effect defrayed its expenditure on feeding the animals and birds in the panjrapole. It is given approximately for example the quantity of grass given, the size of the ladu, 5 I.T.A. NO. 5714/M/2010 quantity of dana, etc. are not by any exact weight or quantity. The quality of care taken by the Trust of the animals and birds in the panjrapole is reflected by the Gopal Ratna award conferred by the Government of India on the Trust where one of the panjrapole gave the highest quantity of milk for the year 1983-84. The trust has also received various similar awards from state level and national level institutions. Photo copies of some of the other several awards received over the years are also enclosed herewith.
7. The receipts from visitors to the panjrapole towards the expenses of green grass, gol laddu and dana, the total receipts of the Trust including that from the visitors and expenditure incurred by the Trust for the previous years relevant to assessment years 2003-2004 to 2007-2008 are as under:
8. The green grass, gol laddu and dana is taken by the people visitiing the panjrapole for which they pay an amount ranging between Rs. 2 to may be Rs. 150/- per visitor. On an average, on a regular day there are approximately 450 to 600 visitors to the Trust resulting in a daily collection of Rs. 35,000/- approximately. Further, the frequency of these visitors is more focused during the morning hours and is not evenly spread over the whole day. On special days like half moon, full moon and no moon days, the number of visitors coming to the panjrapole range approximately between 1200 to 1600. On such days, which number 60 days in a year, the Trust has collection of approximately Rs. 50,000/- per day. Further, on festival occasions like Makar Sankranti, Diwali and New Year (four days in a year) the number of visitors coming to the panjarapole goes up to approximately 3000 to 4000. On these days, the panjarapole has a collection of approximately Rs. 2 lakhs to Rs. 3 lakhs per day. Amounts of Rs. 2 to Rs. 150/- paid by the visitors towards defraying of expenses is normally out of their personal savings and by no stretch of imagination can be regarded as any unaccounted money being channelized by them into the Trust. The Trust submits that writing such names and addresses on the receipts would take at least 2 to 2.1/2 minutes per person. As stated above, these visitors are not evenly spread over the entire day. In fact, the maximum traffic is only for a few hours in the morning. It is practically impossible for the Trust to take and maintain the details in respect of the names and addresses of such persons withing the limited time frame. Further, just by making note of the names and addresses of the persons visiting the panjrapole would never be sufficient to ascertain the identity of that person because the Trust will never be able to verify the correctness of such names and addresses. Therefore, not only is it impossible for the Trust 6 I.T.A. NO. 5714/M/2010 to maintain such details, but the entire exercise would also be meaningless because it would not serve any purpose. However, in respect of amounts received in excess of Rs. 150/- the Trust has system of maintaining record of the identity of the payer indicating the name and address of such person.
9. In the Pandrapole the Appellant has a collection box which carries a notice that "NOTICE DONATION IN THIS BOX IS ACCEPTED STRICTLY FOR SHELTER, MEDICAL AID & TO LOOK AFTER OLD INFIRM & DISABLED ANIMALS LYING IN BOMBAY PANJRAPOLE AS PROVIDED AS OBJECT OF THIS INSTITUTION"
Therefore the box collection donations were received with a specific direction that such donation was for the infirmary i.e. a hospital or a medical institution.
Photos of the said collection box and the notice are enclosed herewith for your ready reference. The same can also be physically verified by a visit to the panjrapole premises at the Head Office at Bhuleshwar.
While introducing Financial Bill, 2006 in the Parliament on February 28, 2006 in his budget speech at paragraph 168, the Finance Minister observed:
"168. The standing committee on Finance has expressed concern that many charitable institutions misuse the provisions of the Income Tax Act. I propose to focus on the misuse, namely, receiving anonymous or pseudonymous donations. Accordingly, I propose that anonymous or pseudonymous donations to wholly charitable institutions will be taxed at the highest marginal rate. Such donations to partly religious and partly charitable institutions / trusts will be taxed only if the donation is specifically for an educational or medical purpose. However, I make it clear that such donations to wholly religious institutions and religious trusts will not be covered by the new provision."
In the memorandum explaining the provisions contained in the Finance Bill, 2006 while dealing with the provisions relating to section 115BBC it has been stated that:
"In order to tax unaccounted money being contributed to these institutions by way of anonymous donations, it is proposed to insert a new section 115BBC so as to provide that any income by way of anonymous donations of the entities referred to in that section shall be included in the total income and taxed at the rate of 30 per cent."7
I.T.A. NO. 5714/M/2010 In circular no. 14 of 2006 dated December 28, 2006 explaining the provisions of the Finance Act, 2006 the Respondent No. 3 has clarified in paragraph 25.2 "with a view to prevent channelization of unaccounted money to these institutions by way of anonymous donations, a new section 115BBC has been inserted to provide that any income of wholly charitable trust or institutions by way of anonymous donation shall be included in its total income and taxed at the rate of 30 per cent. Anonymous donations made to wholly charitable and religious trusts or institutions, i.e., mixed purpose trusts or institutions shall be taxed only if it is for any university or other educational institution or any hospital or other medical institution run by them. Anonymous donations to wholly religious trusts or institutions will not be taxed".
Therefore, the object and purpose behind insertion of section 115BBC in the Act was to prevent channelization of unaccounted money by way of anonymous donations to trusts or institutions. This tax is to be levied only on a charitable trust or institution or a mixed purpose trust or institution running a university or other educational institution or any hospital or other medical institution where the anonymous donation is received with a specific direction that it is received for such purpose.
The Jain religious belief of 'Jeeva Daya' i.e. compassion towards all living creatures in not only recorded in all Jain Sacred Texts but is actively practiced to this day in the form of various Trusts and individuals pursuing this concept by spending crores of Rupees every year for protecting all animal life.
A similar religious and humanitarian outlook prevails amongst the Hindu, Jain & Parsi communities.
The appellant trust's A/R has submitted before me that the appellant trust is running Gaushalas to care of cows, birds and other animals in the form of food, medicine and other related facilities. They have also submitted that the regular visitors while visiting Gaushalas by the green grass, gol laddu and other eatable items which are available in the campus of the appellant trust. The said visitors buy these items for meager sum of Rs. 10/- to Rs. 150/- only. This is done by regular visitors with sole intention of 'GO-SEVA' having religious faith in the mind. The appellant trust arranged the same in its campus of these items which helps in carrying out the object of the trust. In addition to this, the appellant trust's A/R also submitted that if anybody purchases these items value of exceeding Rs.
8I.T.A. NO. 5714/M/2010 150/-, then the appellant trust issue receipt to such person, with details of name & address of such donor / visitors.
Having considered the AO's order as well as the appellant trust's submission, I am of the considered view that the AO misunderstood the intention of the law, while applying the provisions of section 115BBC of the IT Act, 1961. This provision has not been brought on statute with the intention to check these type of donation of meager amount of Rs. 10/- to Rs. 150/-. I am of the considered view that this was nowhere intent of the law, besides this, even if, section 115BBC(2) of the IT Act, 1961 is taken into account. Thus the AO's action is considered unjustified and against the provision of law, the same is reproduced as under:
Section 115BBC(2) "(2) The provisions of sub-section (1) shall not apply to any anonymous donation received by-
(a) Any trust or institution created or established wholly for religious purposes.
(b) Any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution".
Even though, the appellant trust has brought to my notice that the main activity of the appellant trust is to run the 'Gaushalas', which is motivated with religious faith. Having considered the appellant trust's submission and also AO's order, I have no hesitation to hold that the AO was not justified in invoking the provision of section 115BBC of the IT Act, 1961 for taxing such anonymous donations, which itself was not permitted as per Section 115-BBC(2) of the IT Act, 1961.
Besides this, having careful consideration of all the submissions brought before me, I hold that the AO's action was not justified. As the appellant trust holds the registration under section 12A of the IT Act, 1961 in continuation and even the amount of Rs. 84,36,407/- has been utilized by appellant trust for the cause of appellant trust only. The entire such receipt was utilized by appellant trust for the purpose of object of the trust. Thus, accordingly on the basis of the aforesaid discussion & also considering the application of such anonymous donation, I hold that the AO was not justified in making this addition of Rs. 84,36,407/- and accordingly, I 9 I.T.A. NO. 5714/M/2010 considered it proper and appropriate to delete the addition of Rs. 84,36,407/-. The appellant trust gets relief of Rs. 84,36,407/-"
6. Against this decision of the CIT(A), department has filed the instant appeal.
7. The DR, representing the department supported and relied upon the order of the AO and submitted that maintaining of the gaushalas and birds and animal hospital does not come under the definition of "Charitable", as defined in section 2(15) of the Act, and in any case, maintaining of gaushalas and veterinary hospitals cannot be considered as charitable activity for "public good". He, therefore, submitted that utilization of funds, could not be taken to be coming out from the relevant provisions of section 115BBC. He, therefore, submitted that the order of CIT (A) be set aside and the order of AO be restored.
8. The AR appearing on behalf of the assessee relied upon the order of CIT (A) and in addition he submitted that the AO did not take into consideration the two important decisions cited before him.
9. We have heard the arguments from both the sides and also perused the orders of both the revenue authorities.
10. We are in agreement with the CIT(A) that the purport and purpose for bringing in section 115BBC is to curb the influx of unaccounted money by way of anonymous donations towards educational trusts and other religious trusts and certainly not to curb any and all types of donations / offerings either in temples, muths and religious trusts, where the collections are collected in donation boxes and that too ranging from as low as Rs. 10/- to Rs. 150/-.
11. From the order of the CIT (A), we find that the assessee is running veterinary hospital for treatment of wounded and sick animals and birds. If we strictly accept 10 I.T.A. NO. 5714/M/2010 the submissions of the DR, then we must also accept situations where we will find wounded and dead animals on the roads, in open, and at houses, rotting, spreading foul smell and diseases. Therefore, accordingly, the DR would accept a situation like this. We find that this trust has been in existence for the last 176 years, doing and performing a public good and service to humanity with sincere and good intentions, not even asking people to make contributions. Whatever contributions by way of donations are coming, are coming in small donations, which are put by public at large in donation boxes (dharmau). We also find that approximately Rs. 21 lakhs came as known donations, which were duly taken care in the return and informed to the revenue.
12. We also cannot ignore the decisions of the Hon'ble Bombay High Court and Hon'ble Gujarat High Court referred to earlier, besides the fact that the decision in the assessee's own case, wherein the Hon'ble Bombay High Court has accepted that the assessee, was a public trust and donations were exempted u/s 52 of Bombay Trust Act. We also cannot ignore the fact that even the department has been accepting the status and service rendered to humanity and assessment results of the assessee till the preceding year.
13. Keeping in view all the above considerations and keeping in view the consistent approach from the department, we do not intend to deviate from the order of CIT (A) and hold the same to be correct application of law and facts.
14. In the result, the appeal filed by the department is dismissed.
Order pronounced in the open court on 25.07.2012.
Sd/- Sd/-
(R.S. SYAL) (VIVEK VARMA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
11
I.T.A. NO. 5714/M/2010
Date : 25.07.2012
At :Mumbai
Okk
Copy to :
1. Bombay Panjrapole, Bombay.
2. ITO-E-1(1), Mumbai.
3. The CIT (A), Concerned.
4. The CIT concerned.
5. The DR "B", Bench, ITAT, Mumbai.
6. Guard File.
// True Copy//
By Order
Assistant Registrar
ITAT, Mumbai Benches, Mumbai