Income Tax Appellate Tribunal - Jodhpur
Gautam Nidhi Foundation Trust, Jodhpur vs Pcit, Exemption, Jaipur on 14 June, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
JODHPUR BENCH, JODHPUR.
BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER &
SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER
I.T.A. No. 503/Jodh/2023
Assessment Year: 2023-24
Gautam Nidhi Foundation Trust Vs. Principal Commissioner of
Jalam Niwas, Paota, B Road, Income Tax,
Jodhpur. Exemption,
[PAN: AAETG2843F ] Jaipur.
(Appellant) (Respondent)
Appellant by Sh. Amit Kothari, C.A.
Respondent by SHRI Lovish Kumar, CIT-DR
Date of Hearing 19.03.2024
Date of Pronouncement 14.06.2024
ORDER
Per:DR. S. Seethalakshmi, JM:
This appeal filed by assessee is arising out of the order of the ld. CIT(E), Jaipur dated 29.11.2023 passed under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as the "Act").
2. In this appeal, the assessee has raised solitary ground as under: -
"1. The ld. PCIT(A) has erred in refusing to grant permanent registration u/s 12AB of the Act. The order so passed by the Ld. PCIT is bad in law and bad on facts.
3. Apropos solitary ground of the assessee, brief facts of the case are that the assessee filed online application in Form No. 10AB seeking I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 2 registration u/s 12AB of the Income Tax Act, 1961 was filed on 30.05.2023. A letter/notice No. ITBA/EXM/F/EXM43/2023- 24/1054552836(1) dated 24.07.2023 was issued at the e- mail/address provided in the application requiring the applicant to submit certain documents/explanations by 08.08.2023. In compliance thereof, the assessee had submitted reply as well as copy of I/E account and Balance sheet for F.Y. 2022- 23, list of donation, bank statement, copy of Aadhar card and PAN of the trustees. The ld. CIT (E) on perusal of reply found few discrepancies and thus show cause letter was issued to the assessee vide this office DIN & Notice No. ITBA/EXM/F/EXM43/2023- 24/1057306952(1) dated 24.10.2023 to submit certain details/information on or before 03.11.2023. In response there to, the assessee filed reply and again it was seen by the ld. CIT(E) that activities were carried out for benefit of particular community and in this regard show cause was issued on 24.11.2023 fixing the date on 27.11.2023 but on fixed date no reply was furnished by the assessee.
The ld. CIT(E) noticed that since it is a limitation matter, therefore, the case was decided on the basis of detail filed by the assessee along with its application in Form no. 10AB as well as during the proceedings.
Conclusively, it is noted that the ld. CIT(E) rejected the claim of registration u/s 12AB of the Act giving following observations..
I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 3 "2.4. This reply of the applicant is thoroughly examined but not found tenable on the basis of discussion in below mentioned paras:
The preamble of the trust overrides the objects of the institution. Applicant in its reply dated 27.11.2023 nowhere denied the fact that activities are only for the persons of Jain Community. Therefore on factually basis as seen above that all beneficiaries are Jain's only. It is well known fact that Jain community is approximately 1% of total population and nearly 100% activities are for the benefit of Jain Community. Applicant was specifically asked to furnish the name of beneficiaries with Caste in particular format but applicant has not furnished the same. Though the payments are done through cheque/direct to institute, but the payment was made for the benefit of Jain Community as evident from the table above and assessee has not disputed this fact.
Applicant is silent on the issue that activities are carried out only for Jain Community.
The outcome of judgement in the case of Palghat Shadi Mahal Trust, 254 ITR 212 denied the exemption where activities are particular for caste/community.
It is clear that the applicant violated the provisions of section 13(1)(b) of the I.T. Act, 1961 and specified violation under Explanation (d) of section 12AB(4) of the I.T. Act, 1961.
Therefore, in view of above discussion the applicant's claim of registration u/s 12A of the Act is liable to be rejected as assessee in its preamble of deed is meant for working for specific caste/religion i.e. Jain, and in practice also discrimination in it's on the basis of caste/religion and entire benefit to a particular religious community, which make assessee non-charitable and also specific violation under clause (d) of Explanation below u/s 12AB and also violation of section 13(1)(b) of the I.Τ. Act, 1961.
03. In view of above discussion assessee's claim of registration section 12AB is liable to be rejected and thus being rejected on following grounds: -
Made for the benefit of Particular community."
4. Aggrieved from the order of the ld. CIT(E) the assessee preferred an appeal before us taking the ground as raised hereinabove. To support the solitary ground, the ld. AR of the assessee has filed the following documents in support of his contentions running page nos 1 to 55.
I.T.A. No. 503/Jodh/2023
Gautam Nidhi Foundation Trust 4
S. No. Particulars Page No.
1. Submission to the Ld. CIT(E), Jaipur 1-11
2. Ledger copies of Education and Medical Expenses 12-17
3. Form 10AC 18-19
4. Registration certificate od Devsthan Vibhag 20
5. Registered Trust dee 21-39
6. Audit report and financial statements for A.Y. 2023-24 40-55
5. During the course of hearing, the ld. AR of the assessee reiterated the same arguments as raised before the ld.CIT(E) and submitted that the ld. CIT(E) is not justified in rejecting the claim of the assessee. He further submitted that the assessee is a charitable trust and religious trust which does not benefit any specific religious community and therefore, it cannot be held that Section 13(1)(b) of the Act would be attracted to the assessee trust and thus it is eligible to claim exemption u/s 11 of the Act.
6. Per contra, the ld. DR relied on the order of the ld. CIT(E) and advanced his following submissions to counter the arguments of the ld. AR of the assessee "The following written submissions in addition to oral submissions during hearing are submitted for kind consideration in support of the order passed by the Id. CIT(Exemptions) Jaipur.
(A) Benefit to any particular religious community or caste
(i) There is a specified violation if a charitable institution applies its income for the benefit of any particular religious community or caste.
(ii) Paraphrasing, a specified violation is regarded as having occurred if the following conditions are satisfied:
I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 5
(a) There is an institution;
(b) The institution has been established for charitable purposes;
(c) The charitable institution is created or established after the commencement of the Income-tax Act, 1961;
(d) The institution has earned income;
(e) The institution has applied any part of its income for the benefit of any particular religious community or caste.
(iii) On a literal reading,
(a) the income need not be of the relevant previous year but could be accumulated income;
(b) the Explanation could apply irrespective of the smallness of the amount of income involved. To illustrate, if the income of the trust is Rs. 1 crore and it has utilised only Rs. 50,000 in the manner indicated in the Explanation, there is a specified violation. (B) Meaning of 'for the benefit
(i) Explanation (d) is applicable if income is applied "for the benefit" of a particular religious community/caste. The clause does not imply or mandate a total exclusion of all other categories, that is, other than the preferred religious community. The word 'only' cannot be imported. [Refere: Buxar Diocesan Society v. CIT [2015] 62 taxmann.com 91 (Patna Trib.) in the context of section 13(1)(b)]
(ii) The word 'benefit', would extend to any preferential or, correspondingly, an unequal treatment accorded to the members drawn from a particular religious identity. As such, any such preference in its working would make it fall within the purview of the clause.
(iii) Any preference, say, by way of providing for a quota, management discretion. etc. accorded to the members of the public drawn on the basis of religious affiliation; be it for employment as faculty/staff therein, admission to the students, grant of loans or scholarships for study, etc., would amount to a benefit in terms of the provision. [Refer: Muslim Educational Society v. CIT [2011] 12 taxmann.com 127/46 SOT 282 (URO) (Cochin - Trib.) in the context of section 80G(5)(iii) which uses an identical expression "for the benefit"].
(iv) The provision applies if income is applied for the benefit of any "particular religious community or caste", which phrase has to be read in a broad manner [Tellicherry Minority Welfare Trust v. CIT [2011] 15 taxmann.com 185/48 SOT 313 (Cochin - Trib.) affirmed in Tellicherry Minority Welfare Trust v. CIT [2014] 45 taxmann.com 395/223 Taxman 160 (Mag.)/364 ITR 472 (Ker.) (C) Section 12AB vs Section 13
(i) Explanation 2 to section 13 provides that a charitable institution created or established for the benefit of any of the following shall not be deemed to be an institution created or established for the benefit of a religious community or caste for the purpose of section 13(1)(b): (a) Scheduled Castes (b) Backward Classes (c) Scheduled Tribes (d) Women (e) Children No such exception is mentioned in Explanation (d) to section 12AB
(ii) For section 13(1)(b), there is no specific reference to the activities of the trust or where the funds have been applied as the language of the section refers to "if the trust or institution is created or established for the benefit of......" However in section 12AB there is specific I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 6 reference and even a "specified violation occurs in connection with application of income (and thus also the activities, as application of income gets reflected in some part of activities). Explanation (d) to section 12AB refers to "has applied any part of its income for the benefit of Thus the Explanation (d) to section 12AB is focused towards how the income is being applied by the trust.
(iii) As per explanation (e) to section 12AB, there is a specified violation if any activity of the charitable institution is: (a) not genuine; or (b) not carried out in accordance with the conditions subject to which the institution is registered.
The condition mentioned in explanation (d) to section 12AB is also mentioned in conditions subject to which the institution is registered.
Further regarding the "not genuine", it has been held for the purpose of section 12AA(3) that genuine activities mean that the activities of the institution are: (a) not mere camouflage or make believe, but are real, pure and sincere.
Fateh Chand Trust & College Committee v. CIT(E) [2019] 101 taxmann.com 364 (Agra Trib.), para 19; Evidence India Action Foundation v. CIT(E) [ITA Nos. 9135 & 9136/Del./2019, dated 25-6-2020), para 6.2 (not camouflage, bogus, artificial and whether these are in accordance with the objects of the Institution). Anwar Sultana Educational Trust v. CIT(E) [ITA No. 140/Asr/2020, dated 16- 8-2021], para 16 [Genuineness of activities would mean that activities are not camouflage, bogus, artificial and these are in accordance with the objects of the institution]. Compliance with conditions for registration -the appellant has not fulfilled and has violated the conditions of registration.
Humbly prayed to uphold the order of the Ld. CIT(E), Jaipur."
7. We have heard both the parties and gone through material available on record and and after due consideration of the matter, we find that the CIT(Exemption) was not justified in not granting registration u/s 12AB of the Income Tax Act. We find that the institution has been duly formed and registered under the local laws, and is established for charitable activities. The institution is not meant for the benefit of any particular religion. We have also carefully considered the order passed by the CIT(Exemption) observing that the trust is for the benefit of particular religion, which is not current and not I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 7 emerging from the facts and details submitted. The contention of the assessee that the preamble of the trust merely acknowledges the profound influence of this revered individual, emphasizing that the charitable activities are driven by a commitment to benevolence rather than the promotion of any particular religious doctrine is found to be correct. Simply mentioning of such reference will not render the trust to be for the benefit of any particular religion and the CIT(E) was incorrect in drawing adverse inference on such basis. The clause 23 of the trust deed also provides that the trust shall be open to all people irrespective of any caste, creed or religion. Further the CIT(E) has observed that payment of education expenses had been paid to various institutions. We find that there is no payment to any individual person, but the payment has been made directly to the educational institutions towards the fees of the students who are enrolled after detailed process being followed. It is not that the payment is only made to any specific educational institution, but is to various institutions. Applications are invited and after scrutiny of forms the aid is provided. Similarly in relation to medical expenses there is direct payment to Government for registration under Chirangivi Yogna of Government of Rajasthan. The judicial decision of CIT vs. Phalghat Shadi Mahal Trust 254 ITR 212 is not applicable in the case of the assessee as in the by laws of the said trust itself provided the discrimination on the basis of the caste, while in the present case there is no such restriction. The Hon'ble Supreme in the case of I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 8 CIT vs. Dawoodi Bohara, Jamat reported in 364 ITR 31(SC), had allowed benefit of registration and it was held that the it cannot be lost sight of that the supreme goal of all religions is philanthropy which could be manifested in various forms. In the said case, it was observed that the objects of the trust are based on religious tenets under Quran according to religious faith of Islam, but the activities of the trust are not meant for a particular religion and it was observed that the trust is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that s.
13(1)(b) of the Act would be attracted to the trust and thereby, it would be eligible to claim exemption under s. 11 of the Act. The Bench feels that it will be useful to refer to various judicial decisions considered in the case of Umaid Charitable Trust vs. Union of India reported in 307 ITR 226 (Raj) which is being reproduced hereunder :
7. Now a scrutiny of relevant case law on the controversy involved in the present case is considered expedient at this stage. From the side of the assessee-petitioner, the following case law are relied upon which are noticed with relevant extract from the same as below :-
8. In Addl. CIT vs. Surat Art Silk Cloth Manufacturers Association (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC), the hon'ble apex Court held that where the main or primary objects are distributive, each and every object must be charitable in order that the trust or institution May be upheld as a valid charity. But if primary and dominant purpose of the trust is charitable, another object which by itself May not be charitable but which is merely ancillary or incidental to the primary or dominant purpose, would not prevent the trust or institution from being a valid charity. It was observed that the primary and dominant purpose in the present case was promotion of commerce and trade in art silk etc., was an object of public utility not involving the carrying on of any activity for profit within the meaning of s. 2(15) ; and that the assessee was entitled to exemption.
I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 9
9. In CIT vs. K.H. Kusumgar (1987) 63 CTR (Bom) 70 : (1988) 169 ITR 370 (Bom), the Bombay High Court observed that where the object of a charitable trust was, inter alia, imparting of education and encouragement and promotion of the study and practice of the Shewatamber Jain Murtipujak religion amongst students of ashrams, boarding-houses, gurukuls, vidyalayas, pathshalas and shravikushramas and also amongst all persons without distinction of sex, caste, creed, place or religion, a gift of immovable property made to such charitable trust could not be said to be for a purpose the whole or substantially the whole of which was of a religious nature and the gift would be entitled to exemption under s. 5(1)(v) of the Gift-tax Act.
10. In Tirumala Tirupathi Devasthanam vs. Chief CIT & Anr. (2001) 171 CTR (AP) 638 : (2001) 251 ITR 849 (AP), the petitioner institution maintained 10 temples and 22 educational institutions, peer home and bala mandir specified in the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. The petitioner provided free food, free accommodation, free transport to the pilgrims irrespective of caste and religion on the simple declaration of faith in the Lord. The hon'ble High Court, while allowing the writ petition and setting aside the order of the Commissioner of not granting exemption to the petitioner and directing him to consider the application de novo in the light of the hon'ble court's order, held that " s. 80G of the Income-tax Act, 1961, provides for deduction in respect of donations to certain funds and institutions. It applies to donations to any institution or fund established in India for charitable purpose and if it fulfils the following conditions, namely the instrument under which the institution is constituted does not or 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. Sub-s. (5) read with Expln. 3 makes it clear that the Commissioner can refuse to grant recognition under s. 80G of the Act only in the event of finding that the claimed charitable purpose includes any purpose the whole or substantially the whole of which is of a religious nature" . It was held that in the present case there was no such finding and hence the Commissioner ought not have refused the claim of petitioner.
11. In Sri Ramakrishna Seva Ashrama vs. CIT (2001) 171 CTR (AP) 633 : (2001) 252 ITR 171 (AP), the petitioner, a registered society, had many objects including those charitable in nature, to diffuse scientific knowledge on Vedanta and the promotion of science, literature and fine arts. One of the objects was preaching ideals of Hinduism. It was granted approval for deduction under s. 80G but its subsequent applications for approval were rejected by the Commissioner on the ground that preaching of ideals of Hinduism and other religions amounted to an object of religious nature. The hon'ble High Court, while setting aside the rejection and restoring the matter before the Commissioner held that although the aims and objects of the petitioner did not include some purely religious activities, they also included many temporal and secular activities such as to diffuse scientific and technical knowledge on Vedanta and also for promotion of science, literature, fine arts, charitable institutions in educational, technical, social and scientific fields to carry on spiritual and cultural works, study of philosophies of different cultures and civilizations, etc. The rejection of the Commissioner did not satisfy the requirements of a reasoned decision or speaking order. The Commissioner had to consider the applications of the petitioner under s.
I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 10 80G and apply his mind to the material placed before him and take a decision by a reasoned order. It was also observed that when the Commissioner grants or refuses to grant approval to an institution under s. 80G, he acts as a quasi judicial statutory authority ; the conclusion reached and the findings recorded by him have to be supported by reasons. Past activities of applicant to be seen.
12. In Kirti Chand Tarawati Charitable trust vs. Director of IT (Exemption) & Ors. (1999) 152 CTR (Del) 322, the Delhi High Court observed that : " For the purpose of construing the purpose of the trust, one need not remain necessarily confined to the objects of the trust as set out in the deed of declaration. The real purpose of the establishment of the trust has to be found out and spelled out. ' Purpose' means that which one sets before him to accomplish or attend, an intention or aim, object, plan, project ; the term is synonymous with the ends sought and an object to attain, an intention, etc. . . . Purpose must obviously be construed as a real purpose and not a purpose as it outwardly appears to be. Any other interpretation would permit a fraud being played on the law permitting exemption from taxation. If the argument of learned counsel for the petitioner were to be accepted then a trust May be established with a purpose as set out in the deed of declaration which appears to be highly charitable but the trust May in fact be engaged in such activities which cannot even remotely be called charitable, and yet the donations made to the trust would enjoy exemption. The authority conferred with the power to grant exemption is not debarred from finding out the real purpose as distinguished from the ostensible purpose and if it May find that the purpose of the trust was other than charitable then nothing debars the authority from denying the approval . . . The purpose of the establishment--the real purpose as distinguished from the ostensible purpose--is germane to the inquiry, which the Commissioner has to hold while granting or refusal to grant approval."
13. In Hiralal Bhagwati vs. CIT (2000) 161 CTR (Guj) 401 : (2000) 246 ITR 188 (Guj), it was observed by the Gujarat High Court that an object beneficial to a section of the public is an object of " general public utility" . To serve as a charitable purpose, it is not necessary that the object must be to serve the whole of mankind or all persons living in a country or province. The hon'ble Court further opined that the Commissioner of Income-tax has to examine the objects of creating the trust as well as an empirical study of the past activities of the appellant has to be done. The Commissioner of Income-tax has to examine that it is really a charitable trust or institution entitled for registration.
14. In CIT vs. Sri Jagannath Jew 1977 CTR (SC) 104 : (1977) 107 ITR 9 (SC), the hon'ble Supreme Court speaking through Krishna Iyer J. held as under :
" The law is set out thus by B. K. Mukherjea :
' The fact that property is ordinarily described as debutter is certainly a piece of evidence in favour of dedication, but not conclusive' . In Bind Behari vs. Manmatha (1915) 21 CLJ 42 (Cal), Cox J. observed as follows :
' The fact that the property is called debutter is a doubtless evidence in the plaintiff's favour but it does not relieve them of the whole burden of proving that the land was dedicated and is inalienable.' I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 11 Though inconclusive, it carries weight in the light of what we May call the mission of the disposition which is inspired by devotion to ' my Thakoor' and animated by a general religious fulfilment. It must be remembered that the donor was not tied down by bigotry to performance of pumas, important though they were. A more cosmic and liberal view of Hinduism informed his soul and so in his declaration of dedication to Sree Jagannathjee he addressed to the managers many directions of a broadly religious and charitable character. His injunction to feed the poor was Narayana seva for worship of God through service of man in a land where the divinity in daridra Narayana is conceptually common place and, while it is overtly secular, its motive springs from spiritual sources. It is religion to love the poor. Likewise, his insistence on the aviary and the menagerie and throwing open both to the people to see and delight is not a mundane mania but has deeper religious roots. Hinduism worships all creation :
(Peace be unto all bipeds and even so to all quadrupeds).
Indeed, the love of sub-human brethren is high religion.
For ' He prayeth best, who loveth best All things both great and small For the dear God who loveth us.
He made and loveth all.' (Coleridge, in Ancient Mariner) From the Buddha and Mahavira to St. Francis of Assissi and Gandhiji, compassion for living creatures is a profound religious motivation. The sublime mind of Mullick was obviously in religious sympathy with fellow beings of the lower order when he showed this tenderness to birds and beasts and shared it with the public. The art gallery too had link with religion in its wider connotation although it is plainer to regard it as a gesture of aesthetics and charitable disposition. God is Truth. Truth is beauty, beauty is Truth. A thing of beauty is a joy for ever. In fact for a highly elevated Indian mind, this conceptual nexus is not far-fetched. The garden and the love of flowers strike a psychic chord at once beautiful and religiously mystical, as any reader of Wordsworth or other great poet in English or Sanskrit will agree. The point is that the multiform dispositions had been united by a spiritual thirst and, if read in their integrality, could be designated religious-cum-charitable. In sum, the primary intendment was to dedicate as debutter and to direct fulfilment of uplifting religious and para-religious purposes, the focus being on worship of Sree Jagannathjee and the fall-out some subsidiary, yet significant, charitable items. The finer note struck by the felt necessities of his soul was divinised and humanised, the central object being Sree Jagannathjee, the Lord of the Universe."
15. In CIT vs. Swastik Textile Trading Co. (P) Ltd. 1977 CTR (Guj) 618 : (1978) 113 ITR 852 (Guj), the Gujarat High Court observed that compassion for living creatures, although it motivates all true religion, is also practical spirituality as it has an elevating moral influence, fostering a deep sense of fellow feeling and fraternity. Such acts not only fulfil our cherished human values but they equally promote public goods and welfare and are, therefore, dominantly religion-charitable. It was further held that the Tribunal was right in holding that the donations to the trust could be deducted. The hon'ble court, while quoting CIT vs. Sri Jagannath Jew (supra), where the I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 12 amounts spent for religious and charitable purposes such as feeding of poor were excluded from the total income, observed on p. 865, " it is religion to love the poor" .
16. In S. P. Mittal vs. Union of India, AIR 1983 SC 1, 5, the hon'ble Supreme Court discussed the definition of religion. It was observed by Chinappa Reddy J. in paragraph 12 that : " . . . Constitution views religion, as comprising thought, expression, belief, faith or worship, as involving the conscience and as something which May be professed, practised and propagated and which is any man's attribute in the same manner as race, sex, language, residence, etc. We also see that economic, financial, political or other secular activity May be associated with religious practice though such activity is not covered by the guarantee of freedom of conscience and the right freely to profess, practise and propagate religion. So, the Constitution considers religion as a matter of thought, expression, belief, faith and worship, a matter involving the conscience and a matter which May be professed, practised and propagated by anyone and which May even have some secular activity associated with it."
17. The hon'ble Reddy J. on p. 6, para 13 further observed, " Religion is certainly a matter of faith with individuals or communities and it is not necessarily theistic. There are well-known religions in India like Buddhism and Jainism which do not believe in God or intelligent first cause" .
18. The hon'ble Court observed at p. 20 : " Religion is squaring human life with superhuman life. Belief in a superhuman power and such an adjustment of human activities to the requirement of that power as May enable the individual believer to exist more happily is common to all ' religions' ."
19. In CIT vs. Social Service Centre (2001) 169 CTR (AP) 130 : (2001) 250 ITR 39 (AP), 40, the Andhra Pradesh High Court opined : " We do not find that donation to a church or construction of a church is not a purpose which is not of general public utility. Therefore, the contention of the Department that the expenditure on religious activities could not be given exemption cannot be accepted particularly in the context of our polity. We are aware that most of the religious and charitable activities go together in this country." The assessee, which was registered under s. 12A of the IT Act, 1961, as a charitable trust was granted exemption under ss. 11 and 12 of the Act. Charitable purpose includes benefit of a section of public
20. In CIT vs. Andhra Chamber of Commerce (1965) 55 ITR 722 (SC), the hon'ble Supreme Court observed that the expression (headnote) : " object of general public utility" was not restricted to objects beneficial to the whole of mankind. An object beneficial to a section of the public was an object of general public utility. To serve as a charitable purpose, it was not necessary that object should be to benefit the whole of mankind or even all persons living in a particular country or province. It was sufficient if the intention was to benefit a section of the public as distinguished from specified individuals. The section of the community sought to be benefited must undoubtedly be sufficiently defined and identifiable by some common quality of a public or impersonal nature. The Court further observed that if the primary purpose be advancement of objects of general public utility, it would remain charitable even if an I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 13 incidental entry into the political domain for achieving that purpose was there. It was also held that advancement or promotion of trade, commerce and industry leading to economic prosperity enured for the benefit of the entire community. That prosperity would be shared also by those who engaged in trade, commerce and industry, but on that account the purpose was not rendered any the less an object of general public utility.
21. In CIT vs. Ahmedabad Rana Caste Association (1973) 88 ITR 354 (Guj), the Gujarat High Court observed that a purpose would be charitable if it is for the "
advancement of any other object of general public utility" . " Public" means the body of people at large including any class of the public and " utility" means usefulness. Therefore, the advancement of any object beneficial to the public or a section of the public as distinguished from an individual or a group of individuals would be a "
charitable purpose" . On appeal, this judgment has been affirmed by the apex Court in (1983) 140 ITR 1.
22. In CIT vs. Rajneesh Foundation (2005) 199 CTR (Bom) 490 : (2006) 280 ITR 553 (Bom), the Bombay High Court observed that charitable purpose includes relief of the poor, education, medical relief and advancement of any other object of general public utility. Not only in India, meditation and yoga are being accepted in the western countries 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 to be an activity for the advancement of general public utility.
Rule of consistency
23. In Radhasoami Satsang vs. CIT (1991) 100 CTR (SC) 267 : (1992) 193 ITR 321 (SC) the apex Court observed (headnote) : " that in the absence of any material change justifying the Department to take a different view from that taken in earlier proceedings, the question of the exemption of the assessee-appellant should not have been reopened. Strictly speaking, res judicata does not apply to Income-tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year ; where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year."
24. In Director of IT (Exemption) vs. Lovely Bal Shiksha Parishad (2004) 186 CTR (Del) 384 : (2004) 266 ITR 349 (Del), the Delhi High Court observed that in view of the fact that no change in the nature of activities had been pointed out and the assessee had been granted exemption under s. 10(22) of the IT Act, 1961, not only in respect of the earlier years but subsequent years as well, the assessee was entitled to exemption in the asst. yr. 1991-92.
25. In CIT vs. N.P. Mathew & Ors. (2005) 198 CTR (Ker) 551 : (2006) 280 ITR 44 (Ker), the Kerala High Court observed that in Income-tax proceedings difference I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 14 should not be made between assessees in similar situation and between different assessment years of the same assessee.
26. In Orpat Charitable trust vs. CIT (2002) 173 CTR (Guj) 534 : (2002) 256 ITR 690 (Guj), the Gujarat High Court observed while setting aside the order of the Commissioner refusing grant of approval, that even if the ground about contravention of s. 11(5) was validly taken by the Commissioner, that would have a bearing only at the point of time of the assessment of the petitioner and would not be a material consideration in so far as granting approval under s. 80G(5) was concerned. That might be a material factor, but that could not be the sole determinative factor for the purpose of deciding whether the certificate of approval had to be granted to the petitioner or not. Further it had been pointed out to the Commissioner that the trustee through whom the deposits had been made had paid up the funds deposited in those institutions to the petitioner and, so far as the petitioner was concerned, the technical breach ought not to have weighed with the Commissioner.
27. In Suresh Sunderrao Nayak vs. M.K. Pandey, Director of IT (Exemption) & Ors. (2007) 207 CTR (Bom) 533 : (2007) 288 ITR 79 (Bom), the Bombay High Court observed that the fact that some of the devotees has been given small amounts on monthly basis does not mean that all the beneficiaries were identifiable. Some of the devotees who were poor and needed assistance were being given, assistance monthly basis. The fact that some of the devotees were given cash assistance could not be a ground to hold that all the beneficiaries were identifiable. That apart, much more money of the trusts was being spent for the medical benefits, poor feeding and education assistance to a larger number of persons. It was not possible to say that it was more in the nature of a private trust and the benefit to the public was incidental or insignificant. It was also material to note that in the earlier assessments of this very trust, the objectives of the trust were accepted and the assessment orders had been passed even after 1992 to the effect that the trust was a public charitable trust. The order of the ITO was not valid and was liable to be quashed.
28. In CIT vs. Thanthi trust (1999) 156 CTR (SC) 605 : (1999) 239 ITR 502 (SC), the hon'ble Supreme Court observed while dismissing the appeal, that the question herein was essentially a question of fact. A college was run, not by the assessee-trust, but by another registered charitable society. The High Court had found that for the conduct of the educational institution is drawing from the assesseetrust larger sums than what had been credited by the trust in its favour in 1969-70 showed that it was fully aware of its credit with the assessee-trust and the funds that had been made available to it by the trust. It was no part of the Revenue's case at any point of time that the credit entries made in the assessee's books of account were not genuine or the trust or that they were mere make-believe or bogus. The ITO had not doubted the said entries and called upon the assessee to produce the accounts of the college. The High Court was right in holding that the assessee was entitled to exemption under s. 11 of the IT Act, 1961.
29. In CIT vs. Indian National Theatre trust (2008) 214 CTR (Del) 641, the Delhi High Court held that as far as the third question is concerned, on examining the orders passed by the authorities, in which the objects of both the assessee-trust as well as the I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 15 Shriram Centre for Art and Culture have been discussed, we are of the considered view that the Tribunal was correct in its conclusion that the sum of Rs. 50,000 deposited with Shriram Centre for Art and Culture should be treated as an application of the income of the trust. The work " application" has to be given a wider interpretation keeping in view the purpose for which the provision has been introduced.
30. On the side opposite, Mr. K. K. Bissa, learned counsel for the respondent relied upon the judgment of the hon'ble Supreme Court in the case of Upper Ganges' case (supra) He also relied upon the decision of this Court in the case of Sri Marudhar Kesari Sthanakwasi Jain Yadgar Samiti Trust vs. Union of India (2005) 273 ITR 475, in which this Court held as under (headnote) :
" s. 80G of the IT Act, 1961, applies to donations to any institution or fund established in India for a charitable purpose. Charitable purpose, for the purpose of the section, does not include any purpose the whole or substantially the whole of which is of a religious nature. For the purpose of applying Expln. 3 to s. 80G each and every object of the trust has to be read and the trust deed is not to be as a whole. Sub-s. (5B) of s. 80G inserted with effect from 1st April, 2000, does not have retrospective effect and is not applicable to earlier assessment years. The petitioner-trust was recognized as a trust wholly and substantially for charitable purposes. But the Commissioner denied the special deduction under s. 80G(5) for its donors for the assessment years 1994-95 to 1997-98 on the ground that some of the clauses of the petitioner-trust pertained to wholly religious purposes. On a writ petition :-
Dismissing the petition, that the Commissioner had quoted object items 1 to 5 and sub-clause (4) of other objects and also the preamble to the petitioner-trust which showed that the petitioner-trust had many objects which were wholly and substantially religious. Therefore, the mere fact that insignificant amount had been spent on religious charity, did not entitle the donors to claim deduction under s. 80G."
31. Another decision relied upon by the learned counsel for the Revenue in the case of Mishrilal Gordhanlal Batra Charitable Trust vs. Union of India D. B. Civil Writ Petition No. 4287 of 1998, decided on December2007-- (2008) 307 ITR 221, in which case the Court merely remitted the case back to the Commissioner for reconsideration of the application for renewal with effect from 1st April, 2000, uninfluenced by the order rejecting the renewal for the previous period 1995-2000. This judgment is of no help to the learned counsel for the respondents.
32. I have heard the learned counsel for the parties at length and given my thoughtful consideration to the facts of the present case and the case law cited at the Bar.
33. This Court is of the considered opinion that mere one contribution by the charitable trust to another trust which carried out repair and renovation of Lord Vishnu's temple does not disentitle the petitioner-trust from renewal of its exemption I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 16 certificate under s. 80G of the Act. The line of distinction between religious purposes and charitable purposes is very thin and no water tight compartment between the two activities can be very well-established. Unless objective of the charitable trust in question itself is for spending its income for a particular religion and it is so found in the trust deed, the Income-tax Department cannot reject the renewal of the trust as charitable trust under s. 80G of the Act merely because one particular expenditure is for an activity which May be termed as spending for a particular religion. In the present case the repair and renovation of Lord Vishnu's temple does not necessarily mean that expenditure in question was for a particular religion only. All people who have faith in Lord Vishnu's temple belong to different sects and have faith in different religions and also visit such temple of Lord Vishnu. The Revenue has not shown that entry in the said temple was restricted to the persons of one particular community or sect practising one religion. Hinduism is not one particular religion and different sects following Hindu philosophy do visit temples of Lord Vishnu, be they Jains, Sikhs, Brahmins etc. There is no water tight compartment between different castes or sects following one particular religion. Freedom of religion is guaranteed in the Constitution of India under art. 25 of the Constitution of India. Therefore, taking such a pedantic and narrow approach, it cannot be said that the character of the charitable trust is lost if one particular expenditure is made for repair and renovation of Lord Vishnu's temple and that too by way of contribution to another trust. A perusal of the trust deed of the petitioner produced on record shows that objective of the trust was clearly charitable and was not for any particular religion even wholly or substantially. Nothing has been pointed out in the impugned order that the petitioner-trust has been constantly spending money for a particular religion.
34. One should discern and imbibe with great respects the observations of the hon'ble Supreme Court in Sri Jagannath Jew (supra).
35. This Court does not see any leaning in favour of any particular religion in trust deed of the petitioner-trust and therefore, once such exemption was granted to the petitioner-trust, upon scrutiny of its application and it held the field for at least three years as is shown by the impugned order itself and the trust deed indicates that the said trust was constituted long back on 27th Aug., 1963, and has been carrying on such charitable activities, this Court finds no justification for rejecting its renewal under s. 80G of the Act which is a matter of right. The conditions of s. 80G(5) read with Expln. 3 do not stand violated in the present case.
36. The learned counsel for the Revenue relied upon the decision of the Supreme Court in the case of Upper Ganges' case (supra).which has been relied upon by the learned Commissioner of Income-tax also in the impugned order, it was held on the basis of one particular clause (2)(h) of the trust deed which read " to establish, maintain and to grant and/or aid to public places of worship and prayer halls" . The hon'ble Supreme Court dealing with Expln. 4 of s. 80G(5) held as under :
" To reiterate, Expln. 3 does not require the ascertainment of whether the whole or substantially the whole of the institution or fund's charitable purpose is of religious nature. If it did, it would read differently. It requires the ascertainment of whether I.T.A. No. 503/Jodh/2023 Gautam Nidhi Foundation Trust 17 there is one purpose within the institution or fund's overall charitable purpose which is wholly, or substantially wholly, of a religious nature. There is little doubt that cl. 2(h) of the trust deed which permits the trustees to support prayer halls and places of worship sets out a purpose the whole or substantially the whole of which is of religious nature, and this has not been seriously disputed. Therefore, in our view, the trust and the donation by the assessee to it fall outside the scope of s. 80G."
37. The aforesaid case is clearly distinguishable from the facts of the present case as there is no clause in the trust deed in the present case which indicates that income of the petitioner-trust was to be applied wholly or substantially for any particular religion. Therefore, the said case has been clearly wrongly applied by the learned Commissioner of Income-tax in the present case. In Marudhar Kesari's case (supra).also relied upon by the learned counsel for the Revenue, the facts of the case were distinguishable in the said case. Thus, the judgments cited and relied upon by the learned counsel for the Revenue are distinguishable on facts and do not support the case of the respondents. Since the law in the case of Upper Ganges' case (supra).was laid down while dealing the case of deduction under s. 80G of the Act in the hands of donor so also in the case of Marudhar Kesari's case (supra).by this court, those judgments do not advance cause of the Revenue. On the other hand, the case law relied upon by the learned counsel for the petitioner fully support the case of the petitioner when the courts have consistently held that it is the dominant object of the trust which is important and contribution and expenditure incurred by the petitioner- trust has to be viewed in the light of the objects with which charitable trust in question was constituted.
38. Consequently, this writ petition is allowed and the impugned order annexure 10 dt. 16th Dec., 2004, is quashed and set aside and the petitioner-trust shall be deemed to be registered under s. 80G of the Act throughout the period after 1st April, 2004, with all consequential benefits.'' Hence, in view of the above legal position and the facts as discussed above, we direct ld. CIT(E) to grant the registration to the assessee trust, and it cannot be held to be for the benefit of any particular religion or caste. Thus the appeal of the assessee is allowed.
I.T.A. No. 503/Jodh/2023
Gautam Nidhi Foundation Trust 18
8. In the result, the appeal of the assessee is allowed.
Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board.
Sd/- Sd/-
(Rathod Kamlesh Jayantbhai) (DR. S. Seethalakshmi)
Accountant Member Judicial Member
*Mishra
Copy of the order forwarded to:
(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.
True Copy
By order
Assistant Registrar