Income Tax Appellate Tribunal - Agra
Radha Raman Niwas Trust, Mathura vs Assessee on 13 March, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND
SHRI A.L. GEHLOT, ACCOUNTANT MEMBER
ITA Nos. 541 & 542/Agra/ 2012
Shri Radha Raman Niwas Trust, Vs. Commissioner of Income Tax-1
136, Raman Reti, Chhatikra Road, Agra.
Virndavan, Mathura (U.P.)
(PAN -AAJTS 2380 Q)
(Appellant) (Respondent)
Appellant by : Shri Vijay Kumar Agarwal, C.A. &
Shri Amit Goyal, C.A.
Respondent by : Shri K.K. Mishra, Jr. D.R.
Date of hearing : 13.03.2013
Date of pronouncement : 22.03.2013
ORDER
PER A.L. GEHLOT,ACCOUNTANT MEMBER:
These appeals have been filed by the assessee against two different orders, both dated 03.10.2012, passed by the learned CIT-1, Agra.
2. The grounds raised in these appeals pertain to rejection of application of the assessee for grant of registration under Section 12AA of the Income Tax Act, 1961 ('the Act' hereinafter) and approval under Section 80G of the Act. The assessee 2 ITA Nos.541 & 542/Agr/2012 filed Form No.10A and 10G, for grant of registration under Section 12AA and for the approval under Section 80G of the Act before the CIT on 10.04.2012. The assessee made the compliance of letter dated 10.09.2012 issued by the CIT in order to examine the genuineness of the Trust. The Trust has also furnished written submissions before the CIT. The CIT rejected both the applications for grant of registration under Section 12AA and approval under Section 80G of the Act as under:-
"3. The objects mentioned in trust deed like Akhand naam sankirtan in aashram uninterruptedly, Thakur Sewa of Shri Girdhari Ji and Samadhi of Baba Gaurang Das. And organization of Bhandaras on all important religious festival and other festivals like avirbhav and tirobhav tithes of Gaudiya Sampradayas bibhutis are pourely religious in nature and not in accordance with the section 2(15) of the I.T. Act, 1961.
4. In view of the above discussed facts, I am not satisfied about the objects and the genuineness of the activities of the applicant's trust as the applicant has failed to establish that its activities partake the character of charitable activities as defined in Sec.2 (15) of the I.T. Act1961. As such, the applicant trust's application for granting of registration u/s 12AA of I.T. Act, 1961 is hereby rejected. For the same reasons the applicant's request for grant of approval u/s 80G is also hereby rejected."
3. The learned Authorised Representative submitted that the assessee was established by Baba Murli Manohar Das alias Baba Sheetal Charan Das vide Trust Deed registered with SDM, Math, District Mathura-U.P. on 12.02.1957. The learned Authorised Representative pointed out objects of the Trust form the trust 3 ITA Nos.541 & 542/Agr/2012 deed and submitted that the CIT did appreciate the objects of the trust as the objects of the trust is charitable in accordance with section 2(15) of the Act, to carry sewa and puja of Shri Girdhari Ji and carry akhand naam-sankirtan uninterruptedly in Aashram, to Manage and maintain the temple of Shri Girdhari Ji and to maintain Samadhi of Baba Shri Gaurang Das and to organize bhandaras on all important, religious festivals and other festivals like avirbhav and tirobhav tithes of Gaudiya Sampradays bibhutis.
4. The learned Authorised Representative submitted that in pursuance of the objects of the Trust, the Trust carried out various charitable activities including running the gaushala, dispensary in the name of Baba Gaurang Das Parmarth Chikitsalaya, regular dana is being provided to birds and other activities providing foods and activities related to preservation of old Samadhi and spiritual education and meditation. The learned Authorised Representative submitted that the assessee furnished the complete details before the CIT. The learned Authorised Representative drew our attention to the expenditures incurred by the trust on various charitable activities in different years which are as under:-
S.No. Nature of Activities 31.03.2009 31.03.2010 31.03.2011
1. Bhandara Expenses 488113 515902 604583 4 ITA Nos.541 & 542/Agr/2012 2 Gaushala Expenses 41548 45439 48098 3 Thakur Sewa Exp. 17887 19461 22789 4 Medicine Exp. 12876 22755 34588
5. Feeding of birds 10286 12413 15789
6. Festival Expenses 70270 82926 85171
7. Maintenance Expenses 175784 183309 266870 including Salary & Electricity
5. The learned Authorised Representative submitted that the CIT without appreciating the facts of the case held that the activities were not charitable activities under Section 2 (15) of the Act. The CIT has wrongly held that object of assessee's Trust is purely religious in nature. The learned Authorised Representative while explaining activities of the Trust submitted that objects of the Trust is very well covered under the definition of the charitable purpose within the meaning of Section 2(15) of the Act. The learned Authorised Representative in support of his contention relied upon the order of I.T.A.T., Nagpur Bench in the case of Shiv Mandir Devsttan Panch Committee Sanstan Nagpur Vs. CIT-1 Nagpur reported in ITA No. 223/Nagpur 2009 order dated 11.10.2012. 5 ITA Nos.541 & 542/Agr/2012
6. The learned Departmental Representative relied upon the order of CIT.
7. We have heard the learned Representatives of the parties and records perused. The issues under consideration whether under the facts of the case the CIT was correct in rejecting the assessee's application for registration under Section 12AA of the Act and application for grant of approval under Section 80G of the Act. The assessee filed both applications in prescribed form on 10.04.2012. The submission of learned Authorised Representative is that the assessee has furnished the complete details before the CIT which were required for granting registration under Section 12A/ 12AA of the Act and approval under Section 80G. The copy of submission made before CIT has also been placed in Paper Book .For granting registration under Section 12AA of the Act. Procedure for registration is provided under Section 12AA of the Act. If we see the entire scheme of the Act, in this regard, we notice that the trusts or institutions claiming exemption from taxation under the Income-tax Act, 1961, have to comply with certain obligations. In this respect we shall have to discuss the provisions contained in sections 12, 12A, 12AA and 80G of the Act, Rule 17A and Rule 11AA of Income Tax Rules and CBDT Circular. These are reproduced hereunder:--
6 ITA Nos.541 & 542/Agr/2012
[Income of trusts or institutions from contributions.
12. (1)] Any voluntary contributions 12a received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from12a property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly.] [(2) The value of any services, being medical or educational services, made available by any charitable or religious trust running a hospital or medical institution or an educational institution, to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13, shall be deemed to be income of such trust or institution derived from property held under trust wholly for charitable or religious purposes during the previous year in which such services are so provided and shall be chargeable to income-tax notwithstanding the provisions of sub-section (1) of section 11.
Explanation.--For the purposes of this sub-section, the expression "value" shall be the value of any benefit or facility granted or provided free of cost or at concessional rate to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13.] [(3) Notwithstanding anything contained in section 11, any amount of donation received by the trust or institution in terms of clause (d) of sub- section (2) of section 80G 15[in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of that section, in the manner specified in that clause, or] which has been utilised for purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund on or before the 31st day of March, 16[2004] shall be deemed to be the income of the previous year and shall accordingly be charged to tax.] [Conditions for applicability of sections 11 and 12.] 7 ITA Nos.541 & 542/Agr/2012 12A.[(1)] The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:--
(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form22 and in the prescribed manner to the 23[***] Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, 24[whichever is later and such trust or institution is registered under section 12AA] :
[Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,--
(i) from the date of the creation of the trust or the establishment of the institution if the 26[***] Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period27 aforesaid for sufficient reasons;
(ii) from the 1st day of the financial year in which the application is made, if the 28[***] Commissioner is not so satisfied:] [Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007;] [(aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form30 and manner to the Commissioner and such trust or institution is registered under section 12AA;]
(b) where the total income of the trust or institution as computed under this Act without giving effect to 31[the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year], the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and 8 ITA Nos.541 & 542/Agr/2012 the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the pres-cribed form32 duly signed and verified by such accountant and setting forth such particulars as may be prescribed.]
(c)[***] [(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made.] [Procedure for registration.
12AA. (1) The [***] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (1)] of section 12A, shall--
(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he--
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant :
Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. [(1A) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day.] (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in 9 ITA Nos.541 & 542/Agr/2012 which the application was received under clause (a)[or clause (aa) of sub-section (1)] of section 12A.] [(3) Where a trust or an institution has been granted registration under clause
(b) of sub-section (1)[or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution:
Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] Deduction in respect of donations to certain funds, charitable institutions, etc. 80G [(1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,-- [(i) in a case where the aggregate of the sums specified in sub-section (2) includes any sum or sums of the nature specified in [sub-clause (i) or in] [sub-clause (iiia)[or in sub-clause (iiiaa) [or in sub-clause (iiiab)] [or in sub-clause (iiie)] [or in sub-clause (iiif)] [or in sub-clause (iiig)] [or in sub- clause (iiiga)] or [sub-clause (iiih) or] [sub-clause (iiiha) or sub-clause (iiihb) or sub-clause (iiihc) [or sub-clause (iiihd)] [or sub-clause (iiihe)] [or sub-clause (iiihf)] [or sub-clause (iiihg) or sub-clause (iiihh)] [or sub-
clause (iiihi)] [or sub-clause (iiihj)] or] in] sub-clause (vii) of clause (a) [or in clause (c)] [or in clause (d)] thereof, an amount equal to the whole of the sum or, as the case may be, sums of such nature plus fifty per cent of the balance of such aggregate; and]
(ii) in any other case, an amount equal to fifty per cent of the aggregate of the sums specified in sub-section (2).] (2) The sums referred to in sub-section (1) shall be the following, namely :--
(a) any sums paid by the assessee in the previous year as donations to--
(i) the National Defence Fund set up by the Central Government; or 10 ITA Nos.541 & 542/Agr/2012
(ii) the Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust adopted by the National Committee at its meeting held on the 17th day of August, 1964; or
(iii) the Prime Minister's Drought Relief Fund; or [(iiia) the Prime Minister's National Relief Fund; or] [(iiiaa) the Prime Minister's Armenia Earthquake Relief Fund; or] [(iiiab) the Africa (Public Contributions - India) Fund; or] [(iiib) the National Children's Fund; or] [(iiic) the Indira Gandhi Memorial Trust, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of February, 1985; or] [(iiid) the Rajiv Gandhi Foundation, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of June, 1991; or] [(iiie) the National Foundation for Communal Harmony; or] [(iiif) a University or any educational institution of national eminence as may be approved by the prescribed authority in this behalf; or] [(iiig) the Maharashtra Chief Minister's Relief Fund during the period beginning on the 1st day of October, 1993 and ending on the 6th day of October, 1993 or to the Chief Minister's Earthquake Relief Fund, Maharashtra; or] [(iiiga) any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat; or] [(iiih) any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district for the purposes of improvement of primary education in villages and towns in such district and for literacy and post-literacy activities.
Explanation.--For the purposes of this sub-clause, "town" means a town which has a population not exceeding one lakh according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or] [(iiiha) the National Blood Transfusion Council or to any State Blood Transfusion Council which has its sole object the control, supervision, regulation or encouragement in India of the services related to operation and requirements of blood banks.
11 ITA Nos.541 & 542/Agr/2012Explanation.--For the purposes of this sub-clause,--
(a) "National Blood Transfusion Council" means a society registered under the Societies Registration Act, 1860 (21 of 1860) and has an officer not below the rank of an Additional Secretary to the Government of India dealing with the AIDS Control Project as its Chairman, by whatever name called;
(b) "State Blood Transfusion Council" means a society registered, in consultation with the National Blood Transfusion Council, under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India and has Secretary to the Government of that State dealing with the Department of Health, as its Chairman, by whatever name called; or (iiihb) any fund set up by a State Government to provide medical relief to the poor; or (iiihc) the Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants; or] [(iiihd) the Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996; or] [(iiihe) the National Illness Assistance Fund; or] [(iiihf) the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund in respect of any State or Union territory, as the case may be :
Provided that such Fund is--
(a) the only Fund of its kind established in the State or the Union territory, as the case may be;
(b) under the overall control of the Chief Secretary or the Department of Finance of the State or the Union territory, as the case may be;
(c) administered in such manner as may be specified by the State Government or the Lieutenant Governor, as the case may be; or] (iiihg) the National Sports Fund to be set up by the Central Government; or (iiihh) the National Cultural Fund set up by the Central Government; or] (iiihi) the Fund for Technology Development and Application set up by the Central Government; or] 12 ITA Nos.541 & 542/Agr/2012 [(iiihj) the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities constituted under sub-
section (1) of section 3 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); or]
(iv) any other fund or any institution to which this section applies; or
(v) the Government or any local authority, to be utilised for any charitable purpose [other than the purpose of promoting family planning; or]
(vi) an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both;] (via) any corporation referred to in clause (26BB) of section 10; or
(vii) the Government or to any such local authority, institution or association as may be approved in this behalf by the Central Government, to be utilised for the purpose of promoting family planning;]
(b) any sums paid by the assessee in the previous year as donations for the renovation or repair of any such temple, mosque, gurdwara, church or other place as is notified by the Central Government in the Official Gazette to be of historic, archaeological or artistic importance or to be a place of public worship of renown throughout any State or States;
[(c) any sums paid by the assessee, being a company, in the previous year as donations to the Indian Olympic Association or to any other association or institution [established in India, as the Central Government may, having regard to the prescribed guidelines, by notification in the Official Gazette, specify in this behalf] for--
(i) the development of infrastructure for sports and games; or
(ii) the sponsorship of sports and games, in India;]
(d) any sums paid by the assessee, during the period beginning on the 26th day of January, 2001 and ending on the 30th day of September, 2001, to any trust, institution or fund to which this section applies for providing relief to the victims of earthquake in Gujarat.] (3) [Omitted by the Finance Act, 1994, w.e.f. 1-4-1994.] 13 ITA Nos.541 & 542/Agr/2012 [(4) Where the aggregate of the sums referred to in sub-clauses (iv), (v), (vi)[, (via)] and (vii) of clause (a) and in [clauses (b) and (c)] of sub-section (2) exceeds ten per cent of the gross total income (as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of ten per cent of the gross total income shall be ignored for the purpose of computing the aggregate of the sums in respect of which deduction is to be allowed under sub-section (1)]. (5) This section applies to donations to any institution or fund referred to in sub- clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely :--
[(i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12[* * *] [***][or clause (23AA)] [or clause (23C)] of section 10 :
[Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if--
(a) the institution or fund maintains separate books of account in respect of such business;
(b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and
(c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business;]]
(ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose;
(iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste;
(iv) the institution or fund maintains regular accounts of its receipts and expenditure;[* * *] 14 ITA Nos.541 & 542/Agr/2012
(v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law,[[***]] or is an institution financed wholly or in part by the Government or a local authority; [***] [(vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf [; and] [***]] [(vii) where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purposes of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been,--
(a) established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and
(b) approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009.] [(5A) Where a deduction under this section is claimed and allowed for any assessment year in respect of any sum specified in sub-section (2), the sum in respect of which deduction is so allowed shall not qualify for deduction under any other provision of this Act for the same or any other assessment year.] [(5B) 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.] [(5C) This [section] applies in relation to amounts referred to in clause (d) of sub-
section (2) only if the trust or institution or fund is established in India for a charitable purpose and it fulfils the following conditions, namely :--
(i) it is approved in terms of clause (vi) of sub-section (5);15 ITA Nos.541 & 542/Agr/2012
(ii) it maintains separate accounts of income and expenditure for providing relief to the victims of earthquake in Gujarat;
(iii) the donations made to the trust or institution or fund are applied only for providing relief to the earthquake victims of Gujarat on or before the 31st day of March,[2004];
[(iv) the amount of donation remaining unutilised on the 31st day of March, [2004] is transferred to the Prime Minister's National Relief Fund on or before the 31st day of March,[2004];]
(v) it renders accounts of income and expenditure to such authority and in such manner as may be prescribed, on or before the 30th day of June, [2004].]"
Rules 17A and 11AA [Application for registration of charitable or religious trusts, etc. 17A. An application under[clause (aa) of sub-section (1)] of section 12A for registration of a charitable or religious trust or institution shall be made in duplicate in Form No. 10A and shall be accompanied by the following documents, namely :--
(a) where the trust is created, or the institution is established, under an instrument, the instrument in original, together with one copy thereof; and where the trust is created, or the institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment of the institution, together with one copy thereof :
Provided that if the instrument or document in original cannot conveniently be produced, it shall be open to the[[***] Commissioner] to accept a certified copy in lieu of the original;
(b) where the trust or institution has been in existence during any year or years, prior to the financial year in which the application for registration is made, two copies of the accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up.] [Requirements for approval of an institution or fund under section 80G.16 ITA Nos.541 & 542/Agr/2012
"11AA. (1) The application for approval of any institution or fund under clause (vi) of sub-section (5) of section 80G shall be in Form No. 10G and shall be made in triplicate.
(2) The application shall be accompanied by the following documents, namely:--
(i) Copy of registration granted under section 12A or copy of notification issued under section 10(23) or 10(23C) ;
(ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less ;
(iii) Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less.
(3) The Commissioner may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund.
(4) Where the Commissioner is satisfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid.
(5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing :
Provided that no order of rejection of an application shall be passed without giving the institution or fund an opportunity of being heard. (6) The time limit within which the Commissioner shall pass an order either granting the approval or rejecting the application shall not exceed six months from the date on which such application was made:
Provided that in computing the period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded.]"
CBDT Circular 17 ITA Nos.541 & 542/Agr/2012 FINANCE (NO.2) ACT, 1996 - CIRCULAR NO. 762, DATED 18-2-1998--
registration of charitable and religious trusts--
"19.1 Under the existing provisions of the Income-tax Act, exemption from income-tax in respect of the income of a charitable or religious trust or institution is available only if the conditions specified in that section are satisfied. One of these conditions if that the person in receipt of the income shall make an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Chief Commissioner or Commissioner of Income-tax within the specified time. However, there was no provision in the Income-tax for processing of such an application and granting or refusal of registration to the concerned trust or institution.
Finance (No. 2), Act, 1996 19.2 Hence the Act now provides for a procedure to be followed for grant of registration to a trust or institution. According to this procedure, the Chief Commissioner or Commissioner shall call for documents and information and conduct enquiries to satisfy about the genuineness of the trust or institution. After he is satisfied about the charitable or religious nature of the objects and genuineness of the activities of the trust or institution, he will pass an order granting registration. If he is not so satisfied, he will pass an order refusing registration. However, an opportunity of being heard shall have to be provided to the applicant before an order of refusal to grant registration is passed by the Chief Commissioner or Commissioner. The reason for refusal of registration shall also have to be mentioned in that order. The order granting or refusing registration has to be passed within six months from the end of the month in which the application for registration is received by the Chief Commissioner or Commissioner and a copy of such order shall be sent to the applicant.
Finance (No. 2), Act, 1996 19.3 It has also been provided that the grant of registration shall be one of the conditions for grant of income-tax exemption."
18 ITA Nos.541 & 542/Agr/2012
8. To appreciate the scheme of the Act, we would also like to refer some judicial pronouncements which are as under:-
(i) The Hon'ble Supreme Court in the case of American Hotel and Lodging Association Educational Institute vs. CBDT [2008] 301 ITR 86 has observed as under (head note) :
"On the grant of approval, sections 11 and 13 did not apply. Once an applicant institution came within the phrase 'exists solely for educational purpose and not for profit' no other condition like application of income was required to be complied with. The prescribed authority was only required to examine the nature, activities and genuineness of the institution. The mere existence of profit/surplus did not disqualify the institution."
(ii) Hirlal Bhagwati vs. CIT [2000] 246 ITR 188 (Guj) wherein it was held that the expression 'objects of general public utility' does not envisage public at large. The objects which are beneficial to a section of public would be an object of such nature. The trust was registered under section 12A and such registration is not an empty formality and, hence, refusal of grant of a certificate under section 80G was not held to be proper.
(iii) Vishwa Hindu Parishad Sankat Mochan Ashram vs. Dy. DIT [2000] 75 ITD 455 (Delhi) wherein it was held that where the trust filed its application 19 ITA Nos.541 & 542/Agr/2012 on June 23, 1973 which was within stipulated period and the Commissioner failed to deal with it within reasonable time, registration granted on April 1, 1996, should be deemed to have been granted from June 23, 1973, the date of filing the application so as to entitle the trust to benefit under section 11 for assessment years 1988-89 and 1989-90.
(iv) CIT vs. Jodhpur Chartered Accountants Society [2002] 258 ITR 548 (Raj) - In this case, it was held that if the object of the trust was to benefit whole of mankind by education in tax matters, it was entitled to get registered.
(v) Fifth Generation Education Society vs. Commissioner of Income-tax [1991] 54 TAXMAN 237 (ALL.) - In this case the assessee-society applied for registration under section 12A, but the Commissioner refused to grant registration to it on the grounds, inter alia, (i) that the objects of the assessee- society were general in nature, and (ii) that no activity had been carried on by the assessee-society. On writ it was held that it is evident that at the stage of registration under section 12A the Commissioner is not to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17A 20 ITA Nos.541 & 542/Agr/2012 and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not.
The court observed that the Commissioner's order did not say that the objects of the society were not charitable in nature; it merely said that they were general in nature. Just because they were general they had not ceased to be charitable. Further, the Commissioner had also observed that no activity had been carried out by the society. It was also not the requirement of section 12A nor did section 80G have any relevance at this stage. The Commissioner's order was, therefore, quashed with a direction to him to re-examine the issue in the light of the objects of the society and in the light of the observations made above and pass fresh order accordingly.
(vi) Sanjeevamma Hanumanthe Gowda Charitable Trust vs. Director of Income-tax (Exemptions), Ward-2[2006] 155 TAXMAN 466 (KAR.) - In this case the assessee which was a charitable trust applied for registration under section 12AA to the income-tax authorities for claiming exemptions under the Act. The Director (Exemptions), however, rejected the request of the assessee on the ground that it was carrying on its activities by letting out 21 ITA Nos.541 & 542/Agr/2012 the marriage hall on hire. On appeal, the Tribunal was also of the view that the hiring of the choultry was not for attainment of other objects, but seemed to be the main object so far pursued by the assessee and, therefore, the assessee was not established wholly for charitable purposes and, accordingly, it denied registration to the assessee under section 12AA on the ground that the activities of the assessee were purely commercial in nature. In that appeal, the assessee contended that the mode of generating the income from the trust property was immaterial and it was the purpose for which said income was utilized, should be the criteria to accord exemption on registration of the trust, and the authorities had completely misdirected their enquiry and, therefore, the impugned orders were liable to be set aside. It was held that section 11 deals with exemption available to income from property held for charitable or religious purposes. Exemption from tax will be allowed only in respect of the income actually applied for the purposes of the trust. Income derived for trust property must be determined on commercial principles. In order to be eligible for the aforesaid exemption, the assessee has to get the trust registered under section 12A. The assessee has to make an application in the prescribed form and comply with the other legal requirements mentioned in the aforesaid section. On receipt of such application for registration, the Commissioner is 22 ITA Nos.541 & 542/Agr/2012 under an obligation to follow the procedure prescribed under section 12AA before he grants or refuses registration. What he is expected to do on receipt of such an application is to call for such documents or information from the trust in order to satisfy himself about the genuineness of the activities of the trust or institution. In addition to securing information in the aforesaid manner, it is open to the Commissioner to make such enquiries as he deems necessary in this behalf. Having regard to the scheme of sections 11, 12 and 13 ultimately what the Commissioner has to look into is not the source of income of the trust, but whether such income is applied for charitable or religious purposes. The satisfaction of the Commissioner should be regarding the application of the income of the trust for the aforesaid purposes which only entitle the assessee to claim exemption. For arriving at such satisfaction primarily he has to look at the object of the trust, when the same is reduced into writing in the form of trust deed. If on the date of the application the trust has received income from its property, then find out how the said income has been expended, and whether it can be said that the income is utilized towards charitable and religious purposes, i.e., towards the object of the trust. Therefore, for the purpose of Registration under section 12AA, what the authorities have to satisfy is the genuineness of the activities of the trust or 23 ITA Nos.541 & 542/Agr/2012 institution and how the income derived from the trust property is applied for charitable or religious purpose and not the nature of the activity by which the income is derived by the trust. The court held that in the instant case, the authorities had not kept in mind those mandatory provisions. They had not applied their mind in the way they were expected to before passing the impugned orders. Therefore, both the orders could not be sustained. (vi-a) I.T.A.T., Nagpur Bench in the case of Shiv Mandir Devsttan Panch Committee Sanstan Nagpur vs. CIT-1 Nagpur [2012] 27 Taxman 100 (Nagpur - Trib.) held as below:-
"We heave heard both the parties and have carefully perused the entire material available on record along with the order of CIT. The provisions of Section 80G sub-section (5) of the Income tax Act lays down as under:-
"(5). This section applies to donations to any institution or fund refused to in sub-section (iv) of clause (a) of sub-section ( 2). On if it is established in India for charitable purpose and if it fulfils the following conditions, namely-
(i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of section 11 and 12 or clause (23AA) or clause (23C) of section 10:
Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would 24 ITA Nos.541 & 542/Agr/2012 not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if-
(a) the institution or fund maintains separate books of account in respect of such business:
(b) the donations made to the institution or fund are not used by it directly or indirectly, for the purposes of such business; and
(c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business:
(ii) the institution under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose:
(iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste:
(iv)the institution or fund maintains regular accounts of its receipts and expenditure:
(v) the institution or fund is either constituted as a public trust or is a registered under the Societies Registration Act, 1860(21 of 1860), or under any law corresponding to that Act in force in any part of India or under Section 253 of the Companies Act, 1956 (1 of 1956), or is a University established by law, ir is any other educational institution recognized by the Government or by a University established by law, or affiliated to any University established by law, or is an institution financed wholly or in part by the Government or a local authority; and
(vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf:
Provided that any approval shall have effect for such assessment year or years, not exceeding five assessment years, as may be specified in the approval."25 ITA Nos.541 & 542/Agr/2012
6. From the perusal of the aforesaid section, it is apparent that section 80G of the Act provides for deduction in respect of the donations made by the tax payers to certain trust or donations. These trusts or institutions have to comply with the condition as laid down u/s. 80G(5)(i) to (v) of the Income Tax Act. By finance Act, 1991, the deduction under the provisions of section 80G for any fund or institution not specifically mentioned is allowed if it is approved by the Commissioner of Income Tax in accordance with section 80G(5)(vi). The approval has to be made in accordance with the Rules made in this behalf. Rule 1 1A under the Income Tax Rules has been inserted w.e.f. 21.09.1992. This rule requires an institution or fund to make an application for approval under section 80G(5)(vi) in form No.10G. The application was to be submitted in triplicate. This Rule further requires that the application shall be accompanied with the following documents namely:
(i) Copy of registration granted u/s.12A or copy of the notification issued u/s. 10(23) or 10(23C):
(ii) Notes on activities of the institution or fund since its inception or during the last three years, whichever is less:
(iii) Copies of account of the Institution or fund since its inception or during the last three years, whichever is less.
7. Sub-rule(3) empowers the Commissioner to call for such documents or information from the institution or fund or cause such enquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such activities of such Institution. Sub- rule(4) lays down that if all the conditions as enumerated in clause (1) to
(v) of sub-section (5) of section 80G are fulfilled by the institution or fund, CIT shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid. Sub-rule (5) empowers the CIT to reject the application for approval after recording the reasons for such rejection in writing where the CIT is satisfied that one or more conditions laid down in clause (i) to (v) of section 80G(5) are not fulfilled. This rule also states that no order rejecting the application shall be passed without giving an opportunity of hearing to the institution or trust. Sub rule(6) requires the CIT to pass an order granting or rejecting the application within 6 months from the date on which the application is made. We noted that in 26 ITA Nos.541 & 542/Agr/2012 the case of assessee-trust, the CIT was of the opinion that the assessee trust has not complied with the conditions No.(ii) and (iii) of section 80G(5)(ii) of the Income Tax Act. The Explanation 3 of this section lays down that charitable purpose does not include any purpose the whole or substantially whole of which is of a religious nature. The main objection of the CIT is that the objects as enumerated in the trust deed are religious and the expenditure has been incurred for religious purposes. He has also noted that a trust or institution is permitted to incur an expenditure are exceeding to 5% of his total income in the previous year for religious purpose so that it may not contravene the condition No.(ii), as stipulated u/s. 80G(5) of the Act.
8. We have gone through the relevant clauses which have been regarded to be religious in nature by the CIT(A). The object clause of the trust reads as under:
"Worship of Lord Shiva. Hanumanji, Goddess Durga and maintaining of temple.The celebrate festivals like shivaratri. Hanuman Jayanti, Ganesh Uttasav. Makar Sankranti renovation and maintenance of temple. To make available temple for general public and to provide facilities for the public visiting temple. Balance fund, if any after utilizing for the above mentioned objects, may be utilized for education, social and the cultural activities. To conduct nursery school, sports club hostels and other activities. To help poor children for education. To provide medical and for poor. To help the peoples affected by natural calamity."
Now the question arise whether these objects can be regarded to be of religious nature and the expenditure incurred for the fulfillment of these objects can be said to have been incurred for the benefit of particular religion.
9. The charitable purpose has been defined u/s2(15) of the Act. The definition of charitable purpose is inclusive one. It includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. The objects as enumerated above held on by the assessee trust are charitable within the meaning of section 2 of sub section 15. Some of the objects fall within the "advancement of any other object of general public utility." Proviso to section 2 sub section 15 27 ITA Nos.541 & 542/Agr/2012 restricts the meaning "advancement of any8 other objects of general public utility." But CIT(A) has not stated that proviso to section2 sub section 15 is applicable in the case of the assessee.
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."
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 person 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 community. It would include the advancement, support or propagation of a particular religion, worshipping of Lord shiva, hanumanji. Goddess. Durga and maintaining of temple 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 religions, they are merely regarded to be the super power of the universe.
11.In the case of Commissioner of Hindu Religious and Charitable Endowments Madras Vs. Sri Lakshmindra Thirhja Swamiar 154 SCJ335. Religion has been expressed to mean a matter of faith with individuals or communities and it is not necessarily theristic. There are well known religious in India, like Buddhism and Jainism, which do not believe in God or in any intelligent first cause. A religion undoubtedly has its basis in a system of belief or doctrines which are regarded by those who 28 ITA Nos.541 & 542/Agr/2012 profess that religion as conducive to their spiritual well being, but is will not be correct to say that religions is nothing else but a doctrine or belief. A religion may not only lay down a code of ethical rules for its followers to accept, but it might prescribed rituals and observances, ceremonies and modes of worship which are regarded as integral parts of a religion, and these forms and observances might extent even to matters of food and dress. No material or evidence has been brought on record by the department which may prove that any person coming. Worshipping and maintaining the temple has to follow a particular code of ethical rules and has to carry out the prescribed rituals and observances, ceremonies and modes of worship. The entry is not restricted to a particular group of persons. Any body whether want to worship or not and want to maintain or not can come to the temple and avail of all the facilities available to the profit at large. Therefore, these objects cannot be regarded to be the religious objects. In our opinion, until and unless the activities for which the trust is established, involve the activity religious purpose, it cannot be said that the assessee has not completed with the condition No. (iii) enumerated u/s. 80G(5) of the Act.
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 and the donation to it will not make the donor entitled for the deduction u/s80G. The objects as per Explanation 3 must be wholly or substantially whose 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 29 ITA Nos.541 & 542/Agr/2012 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 a 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 TT Kuppuswamy Chettair Vs. State of Tamil Nadu (1987) 100 L.W 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, Paris or Jewa. The alleged Hindu religion consists of four castes Brahmins, Kshatriyas, vaishyas and sudras belonging ultimately to two schools of law, mitasharas 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 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. We accordingly, set aside the order of the CIT and direct the CIT to grant approval to the assessee-trust u/s. 80G(5)(vi) of the Act.
14. In the result, the appeal of the assessee is allowed."
30 ITA Nos.541 & 542/Agr/2012
(vii) Oxford Academy for Career Development vs. Chief CIT [2009] 315 ITR 382/226 CTR (All.) 606 - The court while examining words "charity' observed that the expressions 'charity' or 'charitable purposes' do not admit of rigid definition.
(viii) In Umaid Charitable Trust vs. Union of India & Ors. (2008) 218 CTR (Raj) 30, it was held that object of the trust being clearly charitable as discernible from the trust deed, a single instance of donation of more than 5 per cent of its income for renovation of temple of Lord Vishnu would not disentitle the trust from renewal of approval under s. 80G (5) on the ground of violation of s. 80G(5B), there being nothing on record to show that assessee is spending its income for a particular religion.
(ix) Relying on decision in Radhasoami Satsang vs. CIT (1991) 100 CTR (SC) 267 : (1992) 1993 ITR 321 (SC), it was observed in Sonepat Hindu Eductional & Charitable Society vs. CIT & Anr. (2005) 196 CTR (P&H) 623 : (2005) 278 ITR 262 (P&H) that the scope of enquiry by the CIT, while dealing with the application under s. 80G(5) (vi), extends to eligibility to exemption under various provisions of the Act, referred to in that sub- 31 ITA Nos.541 & 542/Agr/2012 section, but not to actual computation of income under the Act, particularly when a society or a trust is claiming exemptions under ss. 11 and 12 and not under s. 10. It needs little emphasis that the enquiry for the said purpose relates to whether the applicant is registered under s. 12A; whether it is a trust wholly for charitable purposes and whether the income received by it is liable to be considered under s. 11. Exemption under the provision of s. 10(23C) would not be necessary to make the petitioner eligible for approval under s. 80G. It was emphasized that while dealing with the application under s.80G(5), the scope of enquiry by the CIT extends to eligbility of the applicant to exemption under various provisions referred to in that sub- section but not to actual computation of income under the Act; registration of an institution under s. 12A by itself is a sufficient proof that the institution is created or established for charitable or religious purposes.
(x) In Vidya Bal Mandali vs. CIT & Anr. (2006) 202 CTR (All) 164 : (2006) 282 ITR 415 (All) it was held that purchase of agricultural land by the petitioner-society not being beyond its aims and objects, order of the CIT refusing renewal of registration under s. 80G(5) to the society on the ground that it had indulged in an activity which is beyond its aims and objects 32 ITA Nos.541 & 542/Agr/2012 suffers from manifest error apparent on record and hence same is liable to be set aside with a direction to the concerned authority to decide the matter afresh.
(xi) In Shri Sardarmal Sancheti Charitable Trust vs. Union of India & Anr.
(2009) 222 CTR (Raj) 617, it has been laid down that single contribution of amount exceeding 5 per cent of total income for the purpose of construction of one room in a hostel that is named Oswal Chhatrawas may not by itself be treated to be an act violating the requirements of s. 80G(5B); application of assessee requires reconsideration with reference to objects of the trust and utilization of trust fund.
(xi-a) Where the Tribunal has recorded categorically findings that the assessee is purely a social organization carrying out social activities and no payment was made by the assessee-respondent to any of its members on account of salary or wages, contribution of exemption under s. 80G(5) to the assessee was rightly granted by Tribunal particularly when even in earlier years, similar activities have been accepted by the Revenue. CIT vs. Sewa Bharti Haryana Pradesh (2010) 325 ITR 599 (P&H).
33 ITA Nos.541 & 542/Agr/2012
(xii) In Dera Baba Jodh Sachiar vs. Union of India & Anr. (2010) 328 ITR 178 (P&H), it was held that the CIT has not recorded any finding on the question, as to whether income derived by the petitioner trust is being used for charitable purposes, as per the object of trust or not. CIT refused to grant renewal of exemption only on the ground of the source of income. It is not the source of income which is to be seen, but investment of the income and if income is being utilized for charitable purposes as per the object of the trust/society, then exemption ordinarily cannot be refused.
(xiii) In CIT vs. Swastik Textile Trading Co. Pvt. Ltd. 1977 CTR (Guj.) 618 :
(1978) 113 ITR 852 (Guj) : donation was made to a charitable trust. One of the objects of the donee-trust was establishing, maintaining, running and helping gaushalas, pajarapoles and other similar institutions for animals, etc. The contention of the Revenue was that donation to such a trust was hit by section 80G(5), as the said object of the trust was religious in nature.
Gaushalas are for preservation and improvement of breed of bovine animals, etc. while panjarapoles are for protection and preservation of infirm animals. The Gujarat High Court negatived the contention of the Revenue, on the 34 ITA Nos.541 & 542/Agr/2012 ground that the said object was charitable in nature only. According to the High Court, the object so as to embrace within its scope those acts of charity, which advance general public morality, alleviating suffering of weak, infirm animals or preventing cruelty to animals, encouraging compassionate feeling and tender treatment by protecting such domestic animals, by service of such animals or looking after and promoting the well \-being of these domestic animals, including such bovine animals which are the mainstay of our agricultural community. Donation in question was hence held to be eligible for deduction under section 80G.
9. In light of above discussion, we noticed that it is a condition for getting exemption for the income derived from the property held under trust that the trust should be registered with the Commissioner holding jurisdiction over the areas where the trust is situated. The application for registration is to be made in Form No.10A as per rule 17A of the Income-tax Rules, 1962 within one year from the formation of the trust. Delay in making an application can be condoned by the Commissioner if he is satisfied that the entity was prevented by sufficient cause to file the application in time. The registration is compulsory for getting benefit of sections 11 and 12. At the time of considering the application for registration, it is 35 ITA Nos.541 & 542/Agr/2012 not necessary for the Commissioner to consider the question as how the income of the trust will be applied. The question only requires that there should be an application in proper form within the prescribed time and the accounts should be maintained in a particular manner and should be audited, as required-- New Life in Christ Evange-listic Association v. CIT [2000] 246 ITR 533/ 111 Taxman 16 (Mad.). Support was taken from Fifth Generation Education Society v. CIT [1990] 185 ITR 634 (All.) which held similarly. The said Section 12AA of the Act provides that the Commissioner on receipt of an application for registration of a Trust shall call for such documents or information from the Trust as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust and may also make such inquires as he may deem necessary in this behalf and after satisfying himself about the objects of the trust or institution and genuineness of its activities, he shall pass an order in writing registering the Trust or refusing to register the Trust. We find that at the time of granting the registration under Section 12AA, the Commissioner has limited power only to examine objects of the Trust and genuineness of the activities. The law requires that he should pass a speaking order. In the case under consideration, we notice that the assessee has furnished all the required details before the CIT. As regards the objects of the trust; we notice that these are charitable objects in accordance with Section 2 (15) 36 ITA Nos.541 & 542/Agr/2012 of the Act. To carry sewa puja of Sri Girdhari Ji and carry Akhand Naam Sankirtan uninterruptedly in Aashram is one type of meditation and yoga. The trust carries such meditation and yoga since its inception, more than last 50 years. Such types of meditation accepted not only in India but are accepted in western country also as a great source for physical and mental health and spiritual attainment. When a large number of people feel that meditation is a great source for physical, mental and spiritual well being, it must be held that these activities are for the advancement of general public utility. Maintaining Samadhi of Guru is also charitable purpose in accordance with Section 2(15) of the Act and Pooja of such Samadhi reminds people of ideology of Guru, in whose memory pooja is carried out. Organizing bhandara is an activity of providing foods to persons irrespective of any cost or religious. Such bhandara activities are like day meal food scheme of the government. When the government is running such scheme, under those circumstances, it cannot be said that objects of the trust are not charitable. Running gaushala, Piaau and providing dana to birds is also charitable activities. The assessee discharged the burden in this regard by furnishing all necessary details of copy of trust deed pointing out various charitable objects of the trust and expenditures incurred on charitable activities.
37 ITA Nos.541 & 542/Agr/2012
10. The main reason of rejection given by CIT is that activity of trust is purely religious in nature. We notice that this aspect has been considered by the Hon'ble jurisdictional High Court of Allahabad in the case of Commissioner of Income Tax Vs. Surji Devi Kunji Lal Jaipuria Charitable Trust reported in 186 ITR 728 wherein it has been held that Vasya community was a section of the public and the trust created for giving medical aid, social welfare, uplifting of poor members of the community and for giving financial and other help on the occasion of the marriage of the members of this community was for religious and charitable purposes. The assessee was entitled to exemption under Section 11 of the Income Tax Act, 1961. For granting approval under Section 80G the condition lay down under Section (5) (iii) is that the institution or fund is not expressed for the benefit of any particular religious community or caste. The activities carried out by the trust are in general public utility and not to benefit to specify individual. The Apex Court in the case of Ahmedabad Rana Caste Association Vs. Commissioner of Income Tax, Gujarat reported in 82 ITR 704 has laid down that to constitute charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or all persons in a country or State. It is sufficient if the intention to benefit a Section of the public. After declaring the law as aforesaid, the Court held that a trust created for the benefit of in the case of Ahmedabad Rana Caste 38 ITA Nos.541 & 542/Agr/2012 Association Vs. Commissioner of Income Tax, Gujarat (Supra) a charitable trust entitled to exemption. In the case under consideration, the trust is carrying out those activities on account of which public at large following their ethics, moralities, respect, taking care of old parents and others, keeping good speeds in relations, keep awareness about the power and duties towards entire human being, society and country and balancing in doing wrong and right things. Even at the time of war, army persons are following the things what one learned from activities of such trust. Therefore, it cannot be held that the activities of such trust are not charitable, the activities are charitable in accordance with section 2(15) of the Act, or carrying activities for a particular cast or commodity or group of person or religious one. The Hon'ble jurisdictional High court in the case of Oxford Academy for Career Development vs. Chief CIT [2009] 315 ITR 382/226 CTR (All.) 606 -while examining words "charity' observed that the expressions 'charity' or 'charitable purposes' do not admit of rigid definition. In order to understand what these expressions legally convey, one can merely enumerate its various aspects and characteristics as they have been recognized by the laws of a particular country. In Umar Baksh vs. CIT AIR 1931 Lakh. 578 (SB), it was observed that for construing the words 'religious or charitable purpose' it is necessary to investigate the meaning of these words in the particular system of 39 ITA Nos.541 & 542/Agr/2012 jurisprudence that may be followed by the assessee. In the Hindu Smritis 'charity', whether secular or religious, is but a part of the content of the word 'dharma'. When the word is used in the context of gifts of property, it means all acts of piety and benevolence considerably wider than what is understood by the use of the word 'charity'. According to the Hindu text writers, gifts for religious and charitable purposes fall into two divisions 'ishta' and 'purta', the former being sacrifice and sacrificial gifts and the like, and the latter charity properly so-called. In Mayne's Hindu Law and Usage, 11th Edition, at page 911, 'purta' or charitable acts are referred to as acts of construction of tanks, wells with flights of steps, temples, planting of groves, the gift of food, dharmasalas (rest houses) and places for supplying drinking water, the relief of the sick, the establishment of processions for the honour of deities and so on. Gifts for the promotion of education and knowledge were also considered charitable activities.
In the light of above discussions, we find that in fact in the case under consideration the assessee trust in totality providing one type of super education to entire human being and such education trust cannot be held a non-charitable or religious trust.
40 ITA Nos.541 & 542/Agr/2012
11. On perusal of trust deed we find that the object is charitable in accordance with Section 2(15) of the Act. The clause 5 of trust deed clearly provides that no trustee get any benefit from the trust property or income. Clause 21 provides that in case of resolution of the trust committee the entire place and property will be given to the other trust of similar nature.
12. On perusal of the order of CIT, we noticed that the CIT did not give any finding that these activities were not charitable activities whereas the law required that the CIT should pass a speaking order in case of rejection of assessee's application. That CIT without examining the complete facts and without appreciating the activities of the trust has wrongly held that the activities of the trust are religious in nature. The order of the CIT is not in accordance with law.
13. On merit also, the assessee is entitled for registration as the CIT has failed to point out with a specific finding that the objects and the activities of the trust are not genuine which is requirement of Section 12AA of the Act. The order of CIT is not specific narrating the complete facts, whereas the assessee has discharged the burden in this regard by furnishing the complete facts on record and material before the CIT.
41 ITA Nos.541 & 542/Agr/2012
14. Section 13 read with section 13(1)(b) of the Act provides that nothing contained in section 11 or section 12 shall operate so as to exclude from total income of the previous year of person in receipt thereof - in the case of trust charitable purpose institution created after the commencement of this Act, any income thereof if the institution is crated for the benefit of any particular religious community or caste. Thus the bar under the said section 13(1)(b), is not applicable to a charitable trust which was created or established for the benefit of any particular religious community or caste before the commencement of the Income Tax Act, 1961 as held in following cases:-
i) CIT Vs. Shri Maheswari Agarwal Marwari panchayat, (1982) 136 ITR 556 (MP)
ii) CIT vs. Saraswath Poor Students Fund (1985) 46 CTR (Kar) 107 : (1984) 150 ITR 142 (Kar)
iii) CIT vs. Arya Vysya Kalyana Nilaya Sangam (1986) 54 CTR (AP) 155 :
(1986) 150 ITR 142 (AP) :
iv) CIT vs. Surji Devi Kunji Lal Jaipuria Charitable Trust (1990) 87 CTR (All) 213 : (1990) 186 ITR 728 (All)
v) CIT vs. Surji Devi Kunji Lal Jaipuria Charitable Trust (1990) 186 ITR 728 (All)
vi) CIT vs. Surji Devi Kunji Lal Jaipuria Charitable Trust (1991) 187 ITR 590 (All) 42 ITA Nos.541 & 542/Agr/2012
15. In the case under consideration, the undisputed fact is that the trust is created on 12.02.1957, before the commencement of this Act. Under the circumstances, the assessee is entitled to benefit of section 11 and 12 of the Act.
16. As regards approval under section 80G of the Act, we noticed that Rule 11AA requires that an application in Form No.10G is to be given. The application should be accompanied by copy of the registration granted under section 12A of the Act or copy of notification issued under section 10(23) or 10(23C) of the Act; notes on activities of the institution since its inception or during the last 3 years, whichever is less; and copies of the accounts of the institution since its inception or during the last 3 years, whichever is less. The Commissioner is empowered to call for such further documents or information or calls for such enquiries in order to satisfy himself about the genuineness of the activities of the institution. If the Commissioner is satisfied that the conditions laid down in clauses (i) to (v) of sub- section (5) of section 80G are fulfilled, he shall record such satisfaction and grant approval. If he is not so satisfied, he shall reject the application after recording the reasons. Thus, as per the provisions of section 80G(5), read with rule 11AA for granting registration, the Commissioner needs to be satisfied that the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled. In the 43 ITA Nos.541 & 542/Agr/2012 case under consideration, the assessee furnished the application in the prescribed form along with all applicable documents. The objects of the assessee-trust were for charitable purpose within the definition of 'charitable purpose', as specified in section 2(15). The condition prescribed in clause (iv) of sub-section (5) of section 80G is that the institution or fund should maintain regular accounts of its expenditure. The said condition was also complied with. The condition in clause
(v) of sub-section (5) of section 80G is that the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860. The said condition was also complied with, as the assessee trust constituted as a public charitable trust on 12.02.1957. From the above, it was clear that all the conditions laid down in rule 11AA, i.e., conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G were fulfilled. The assessee trust is not for the benefit of any particular religion, community or caste, as envisaged in clause (iii) of sub-section (5) of section 80G, therefore, the assessee cannot be denied approval as there cannot be any ground to hold that the assessee is not carrying on any charitable purposes so as to deny it registration under section 80G(5). Since in the instant case the conditions laid down in rule 11AA as also in clauses (i) to (v) of sub-section (5) of section 80G were complied with, the assessee was eligible for approval under section 80G(5)(vi). 44 ITA Nos.541 & 542/Agr/2012
17. In view of above discussion, the CIT is directed to grant registration under Section 12A/12AA of the Act w.e.f. 10.04.2012 and also grant approval under Section 80G of the Act w.e.f. 10.04.2012 within thirty days from the date of this order.
18. In the result, both the appeals filed by the assessee are allowed.
(Order pronounced in the open Court)
Sd/- Sd/-
(BHAVNESH SAINI) (A.L. GEHLOT)
Judicial Member Accountant Member
Amit/
Copy of the order forwarded to:-
1. Appellant
2. Respondent
3. CIT (Appeals) concerned
4. CIT concerned
5. D.R., ITAT, Agra Bench, Agra
6. Guard File. By Order
Sr. Private Secretary
Income Tax Appellate Tribunal, Agra
True Copy