Madras High Court
Reliance Motor Co. Pvt. Ltd. vs Commissioner Of Income-Tax on 18 August, 1994
Equivalent citations: [1995]213ITR733(MAD)
JUDGMENT Gulab C. Gupta, J.
1. This is a reference under section 256(1) of the Income-tax Act, 1961, seeking our opinion on the following question of law :
"Whether the Tribunal was right in law in holding that the applicant is not entitled for relief under section 80G of the Income-tax Act in respect of donation of Rs. 20,000 each made by it to S. Rm. Ct. M. Tiruppani Trust for the assessment years 1969-70 and 1970-71 ?"
2. There is no dispute that the assessee donated the amount mentioned above to S. Rm. Ct. M. Tiruppani trust during the assessment years 1969-70 and 1970-71 and claimed benefit in relation thereto under section 80G of the Income-tax Act, 1961 (for short "the Act"). The Income-tax Officer came to the conclusion that the trust to which the donation has been made was not a charitable trust pure and simple but the object of the trust included religious purposes also and the said trust had not applied to the Commissioner of Income-tax for recognition of the trust under section 80G of the assessee. On appeal, the Appellate Assistant Commissioner held that the donation made by the assessee should be allowed. The matter went to the Income-tax Appellate Tribunal. The Tribunal, following its earlier decision for the assessment year 1968-69, rejected the claim and upheld the order of the Income-tax Officer. Thereafter, the assessee sought for a reference which has been made.
3. The submission of learned counsel for the assessee is that section 80G of the Act is independent of sections 11 and 12A of the Act and, therefore, considerations of those section should not influence the decision in the instant case. There appears to be no difficulty in accepting the said submission. The question, however, would be whether the assessee had made donation to a fund or institution covered under the provisions of section 80G(2)(iv) of the Act. In order to get the benefit of it, one has to refer to sub-section (5) and unless the aforesaid section is attracted the benefit of section 80G of the Act would not be available to the assessee. Clauses (ii) and (iii) of the aforesaid section clearly provide that the trust to which the donation is made should be purely a charitable trust and no part of its income should be capable of being transferred or applied for any purpose other than a charitable purpose. It is specifically provided that the institution or funds should not be expressed to be for the benefit of any particular religions community or caste. The name of the trust in question itself indicates that it belongs to a particular religions community. The object of the trust includes not only charitable purposes but also religious purposes like renovating old Hindu temples or establishing and maintaining Pasumadam and Nandavanam for the use of the Hindu temples. These would, therefore, sufficiently indicate that sub-section (5) of this provision would not apply to the trust in question. In such a situation, on benefit of section 80G of the Act would be available to the assessee. This court would, therefore, find no illegality in the view taken by the Tribunal in the matter. The argument of learned counsel that though the trust deed mentions charitable and religions purposes; but in actuality only a school has been run, has no relevance in view of the clear language of clauses (ii) and (iii) of sub-section (5) of section 80G of the Act. It is not the actual user but the likelihood of its being used and the capacity of the trust to do so, which is important.
4. In this view of the matter our answer to the question is in the affirmative and against the assessee and is to the effect that the assessee is not entitled to the relief under section 80G of the Act in respect of the donations made to the said trust. No costs. Counsel's fee Rs. 1,000 one set.