IT : To propogate message, teaching, ideals and philosophy of all religious and spiritual reformers, prophets and leading figures of world including Sikh Gurus with special emphasis on vegetarianism is nothing but a public charitable object within meaning of section 2(15) and, therefore, a trust engaged in aforesaid activities is entitled to renewal of exemption under section 80G(5)
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[2013] 35 taxmann.com 516 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'B'
Kuka Martyrs Memorial Trust
v.
Commissioner of Income-tax - II, Ludhiana*
HARI OM MARATHA, JUDICIAL MEMBER
AND N.K. SAINI, ACCOUNTANT MEMBER
AND N.K. SAINI, ACCOUNTANT MEMBER
IT APPEAL NOS. 1202, 1239 & 1240 (CHD.) OF 2011
[ASSESSMENT YEARS 2008-09 TO 2010-11]
[ASSESSMENT YEARS 2008-09 TO 2010-11]
APRIL 16, 2013
Section 2(15), read with section 80G, of the Income-tax Act, 1961 - Charitable purpose [Object of general public utility] - Assessment years 2008-09 to 2010-11 - Whether to propogate message, teaching, ideals and philosophy of all religious and spiritual reformers, prophets and leading figures of world including Sikh Gurus with special emphasis on vegetarianism is nothing but a public charitable object within meaning of section 2(15) - Held, yes - Whether therefore, assessee-trust engaged in aforesaid activities was entitled to renewal of exemption under section 80G(5) - Held, yes [Para 9] [In favour of assessee]
FACTS
| ■ | The assessee-trust having five trustees was registered under section 12AA. It was also granted exemption under section 80G. | |
| ■ | Subsequently, the member of trustees in the trust increased to seven. The object clause of assessee-trust was also enlarged including the object of propagating the message, teaching, ideals and philosophy of all the religious and spiritual reformers, prophets and leading figures of the world including Sikh Gurus with special emphasis on vegetarians. | |
| ■ | The assessee-trust filed an application seeking renewal of exemption under section 80G(5). | |
| ■ | The Commissioner rejected assessee's application holding that the assessee-trust being pursuing religious objects, it was not eligible for exemption. | |
| ■ | On appeal: |
HELD
| ■ | Insofar as the change by increase of its trustees by way of resolution is concerned, it does not have much effect on its registration insofar as its objects continue to be charitable in nature. The added aim/object of the trust, does not seem to be wholly or substantially a religious one. It speaks of propagating the good teachings with an emphasis on teaching benefit of vegetarian food based on teachings of all religious icons including Sikh Gurus, and, it was definitely a 'public charitable purpose' in the changed scenario of the public pattern. | |
| ■ | The meaning of public-charity goes on changing but the main idea of charity remains static. To propagate the message, teaching, ideals and philosophy of all the religious and spirituals reformers, prophets and leading figures of the world including Sikh Gurus with special emphasis on vegetarianism, is nothing but a 'public charitable object'. | |
| ■ | The above object is for public charity and is not limited to a particular class or believer in a particular section. Therefore, the Commissioner is directed to grant approval to the assessee trust under section 80G(5). [Para 9] | |
| ■ | In the result, assessee's appeal is allowed. [Para 10] |
CASE REVIEW
Upper Ganges Sugar Mills Ltd. v. CIT [1997] 227 ITR 578/93 Taxman 645 (SC) (para 9) distinguished.
CASES REFERRED TO
Upper Ganges Sugar Mills Ltd. v. CIT [1997] 227 ITR 578/93 Taxman 645 (SC) (para 4) and Sakthi Charities v. CIT [1990] 182 ITR 483 (Mad.)(para 4).
Sandeep Goyal and Rishabh Singla for the Appellant. Amarveer Singh for the Respondent.
ORDER
Hari Om Maratha, Judicial Member - These are three appeals by the same assessee pertaining to assessment years 2008-09 to 2010-11 preferred against the separate orders of ld. Commissioner of Income-tax (Admn.), Ludhiana, who has refused to renew the approval u/s 80(5)G of the Income-tax Act, 1961 ('the Act' for short) although the appellant is already registered as a Charitable Trust u/s 12A. This refund is on the premise that the Trust is not only a public Charitable Trust but is also a Religious Trust, so, it cannot be eligible for deduction in respect of donation etc. in view of s. 80G(5)(iii) of the Act. Since, in all these appeals, exactly identical issue(s) is involved, these are being decided by a common order.
2. Briefly stated, the facts of the case are that the Appellant Trust was created on 31.07.1992 having one main-trustee and five other trustees. Later on, vide Resolution dated 01.03.1997 the number of other trustees was increased to seven, apart from the Chief Patron (i.e. the main-trustee). The aims and objects of the Trust have also been enlarged through this Resolution. A registration of this Trust from the Registrar of Societies, was obtained after five years of the Constitution on 01.08.1997.
3. The Trust was granted exemption u/s 80G(5) vide order dated 11.2.2005 upto A.Y. 2007-08. Fresh application was filed for exemption u/s 80G on 23.03.2011 after a gap involving of A.Y.s 2008-09, 2009-10 and 2010-11. The ld. Commissioner with a view to satisfy himself regarding the fulfillment of requisite conditions of s.80G(5) of the Act, issued a questionnaire dated 01.09.2011 to the applicant-trust. The assessee explained that it is working for the achievement of its aims and objects which are necessarily charitable in nature, as these are as under :
| "(a) | To propagate the message, teaching, ideals and philosophy of all the religious and spiritual reformers, prophets and leading figures of the world including Sikh Gurus with special emphasis on vegetarians." |
4. After considering the above objects, the ld. Commissioner has found that these have a tinge of religious nature which debars it from getting exemption u/s 80G of the Act. He has quoted Expl. No. 3 appended to s.80G in this regard. He has also discussed some decisions in this regard including that of Hon'ble Apex Court rendered in the case of Upper Ganges Sugar Mills Ltd. v. CIT [1997] 227 ITR 578/93 Taxman 645. Finally, he has opined that the Trust being pursing religious objects, it is not eligible for this exemption. The another objection of the ld. Commissioner is that the aims and objects have been increased vide resolution dated 01.03.1997 and thereafter, it has got registered with the Registrar of Firms and Societies after the above unilateral amendment without getting the approval from the Principal Court of Law having jurisdiction over the Trust. In this regard, reliance has been placed on the decision of Hon'ble Madras High Court in the case of Sakthi Charities v. CIT [1990] 182 ITR 483. He has, thus, found that the Trust is not properly constituted and it has failed to fulfill the conditions before making changes in its objects etc. Therefore, he has rejected the application for exemption u/s 80G of the Act.
5. Now, the assessee/applicant is aggrieved. It has taken the following grounds in its appeal :
| "1. | That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax-1, Ludhiana (hereinafter referred to as "Ld. CIT") erred in rejecting the application under Section 80G(5) of the Income Tax Act read with Rule 11AA(5) of the Income Tax Rules, by wrongly interpreting the law on the issue and also by way of wrong appreciation of the facts of the case and the aims & objects of the Trust. | |
| 2. | That on the facts and in the circumstances of the case and in law, the Ld. CIT has erred in disallowing the exemption under Section 80G(5) of the Income Tax Act 1961 for the following reasons: |
| (a) | The Ld. CIT has wrongly concluded that the objects of the Trust are clearly and substantially of religious nature, which is not eligible for exemption under Section 80G(5) of the Income Tax Act 1961 in view of the Explanation 3. | |
| (b) | That the Ld. CIT has failed to consider the fact that out of the objects, the one in which he has laid emphasis upon does also not convey that the aims and objects of the Trust are religious in nature. In fact, on a reading of the said object of the Trust, it transpires that the Trust has amongst its objects to propagate the message, teachings, ideals and philosophy of all the religious and spiritual reformers, prophets and leading figures of the world and is not confined to either any one religion or different religions or for that matter the religious leaders. In fact, the reference to the religious leaders is in the category of the spiritual reformers and leading figures of the world and the said object cannot be assumed to be religious in any manner. |
| 3. | That on the facts and in the circumstances of the case and in law, the Ld. CIT has misapplied the law in this regard and has relied upon various judgments quoted by him in the order are totally out of place. He has failed to take notice of the fact that in all those judgments the courts have made an endeavour to find out as to whether the activities of the Trust are religious or not which are covered by Explanation 3. He has not correctly appreciated the fact that in the present case the clause being relied upon by him is materially different from the clauses mentioned in the said judgments. The order of the Ld. CIT to that extent is against the law laid down by various courts. | |
| 4. | That the Ld. CIT has passed the impugned order without appreciating the fact that the Trust in question is meant only and only for the charitable purposes. The various charitable objects and the activities of the Trust were duly informed to the Ld. CIT but he has not even appreciated those. It is brought to the notice of this Hon'ble Court that amongst others, the Trust is providing free langar (food) to the general public; is maintaining a Park at Malerkotla which is used by the general public; holding a function every month in the memory of Kuka Martyrs on which occasion the langar is distributed and moral values are Preached; promoting national feelings amongst the people. Besides that, the Trust is also constructing meditation hall for benefit of the public at large. It is also maintaining a museum hall where monuments and paintings of the Kuka Martyrs have been kept and a number of people visit the museum to pay tributes to those martyrs. It is also maintaining a library where books of general knowledge, notional devotion and cultural heritage of country are kept. These activities are only to name a few. In fact, every single penny of the Trust is being used for such like purposes which are nothing but only and only charitable in nature. It is ironical that the Ld CIT has observed that the Trust is not meant for charitable purposes and thus exemption under Section 80G(5) is not available to it. | |
| 5. | That while passing the order in question, the Ld. CIT has also overlooked the definition of Section 2(15) under the Income Tax Act wherein a charitable purpose has been defined. According to the said section, charitable purpose means (a) relief to the poor; (b) education; (c) medical relief; and (d) advancement of any other object of general public utility (the other object). If we have a look at the activities of the Trust, it is more than clear that the Trust is giving relief to poor and is doing all the activities which are covered under the definition of charitable purposes. The order of Ld. CIT holding to the contrary is thus totally wrong. | |
| 6. | That the order passed by the Ld. CIT is wrong to the extent that the assessee has failed to fulfil the conditions before making changes in the Trust Deed and therefore those changes are bad in law and as such, the Trust is not properly constituted for the following reasons: |
| (a) | That as per the existing law, the charge or alteration in the Trust can be done to the Memorandum of association signed by the Trustees and no amendment in this regard is to be filed and endorsed by the Sub-Registrar's Office. | |
| (b) | That the Ld. CIT has not considered that the Trust in question is duly registered with the Registrar of Firms and Societies under Registration No. 675 of 1997-98. All the formalities with regard to formation of the Trust are duly fulfilled and on the basis of that, the Trust has been registered by the concerned authorities. It is not for the Income Tax Department to point out the defects in constitution of the Trust as under the concerned law, the Trust has been found to be duly constituted. | |
| (c) | The defects pointed out by the Ld. CIT are only procedural in nature and do not have the effect of taking away the essence of the Trust being for a charitable purpose which is very much eligible for exemption under Section 80G(5). | |
| (d) | The Ld. CIT was also wrong in holding that Trust was not constituted properly while passing the order for exemption for assessment years 2008-09 and 2010-11 on the basis of an amendment carried out in the year 1997 despite the fact that for the earlier years, the exemption under Section 80G(5) has duly been granted to the assessee even up to the period 2007-08. If the Trust had not been constituted properly, the question of granting the exemption even for that period would not have arisen. The Department is now estopped in law from raking up this issue for the years in questions. |
| 7. | That the Ld. CIT has also failed to consider the aspect insofar as the funds of the Trust is concerned. It was specifically informed that 85% of the income of the Trust is received from the Central and State Govt. by way of grants and every single penny is further utilized in the charitable/public purposes and cannot be assumed to be violating the provisions of Income Tax Act, 1961. | |
| All the above grounds are without prejudice to each other. The Appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. The appellant prays that appropriate relief be granted based on the said grounds of appeal and the facts and circumstances of the case." |
6. We have heard rival submissions and have carefully circumspected the entire available record. It was agreed by ld. AR that the appellant has filed an appeal before the Tribunal for renewal/grant of approval u/s 80G(5) of the Act, which is delayed by 11 days due to reasons mentioned in the petition for condonation of delay which is supported by an affidavit duly executed by it. It is found that the appellant had filed its appeal on 22.12.2011 within limitation but the Tribunal found that for all the three years only one appeal had been filed. To remove this defect of filing three separate appeals, these appeals got delayed by 11 days. In our considered opinion, the assessee has got a good reason for the condonation of this appeal. Accordingly, we condone the delay in filing the appeals and admit them at their original numbers.
7. On merits, the ld. AR repeated all the grounds in which he has taken reasons on account of which these appeals may be allowed. On the other hand, ld. CIT-DR has repeated the reasons given by ld. Commissioner in favour of refusal of exemption sought by the appellant u/s 80G of the Act.
8. We have given our thoughtful considerations to the rival stands and have also circumspected the entire record. The section 80G(5) of the Act, alongwith its Explanation-3 read as under:
"80G(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; | |
| (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. |
Explanation 3.—In this section, 'charitable purpose' does not include any purpose the whole or substantially the whole of which is of a religious nature."
9. We have found that the Trust stands registered as a 'Charitable Trust' u/s 12AA of the Act. It was also granted approval u/s 80G(5) initially and after the expiry of that period of approval and after revision in the constitution of Trust by way of enlargement of two more trustees and increase in its objects, and after getting registered under the Society's Act, it has applied for renewal/grant of approval u/s 80G of the Act. In so far as the change by increase of its trustees by way of Resolution is concerned, it does not have much effect on its registration in so far as its objects continue to be charitable in nature. The added aim/object of this Trust, incorporated in the above portion of this order, does not seem to be wholly or substantially a religious one. It speaks of propagating the good teachings with a emphasis on teaching benefit of vegetarian food based on teachings of all religious icons including Sikh Gurus, is definitely a 'public charitable purpose' in the changed scenario of the public-pattern. S. 2(15) of the Act defines 'charitable purpose' which includes :
| (i) | relief of the poor, | |
| (ii) | education, medical relief | |
| (iii) | preservation of environment including waterheads, forest and wild, life, | |
| (iv) | preservation of monuments or places or objects of artistic or historic interest, and | |
| (v) | the advancement of any other object of general public utility, unless it involves the carrying on of any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application or retention of the income from such activity. This proviso is further qualified by a second proviso, which says that the first proviso shall not apply if the aggregate value of the receipts from the activities is ten lakhs rupees or less in the previous year. |
Thus, apart from giving an inclusive definition of the term 'charitable purpose', the addition to its meaning by way of 'provisos' shows that its meaning goes on increasing, restricted or retained in view of the general understanding or requirement of the 'public charity'. Thus, the meaning of public-charity goes on changing but the main idea of charity remains static. To propagate the message, teaching, ideals and philosophy of all the religious and spiritual reformers, prophets and leading figures of the world including Sikh Gurus with special emphasis on vegetarianism, is nothing but a 'public charitable object'. The teaching of gurus with a view to spread vegetarian way of life definitely saves the wild life and would help in preserving environment. Thus, without viewing the meaning of the above object from a limited aperture whose simple use of the word 'religion' is taken on otherwise is unfortunate. It is the religion which teaches one and all the way of life. How, one could live physically, mentally and socially happy and prosperous, is taught by one and all religion. So, it is religion in that wider sense of its meaning and not in the way of limited meaning of segmentalization of society and creating a divide in the society. Thus, the above object is for public charity and is not limited to a particular class or believer in a particular section. Hence, the decision of Hon'ble Apex Court in Upper Ganges Sugar Mills Ltd. (supra) will not apply to the facts of this case. Therefore, we direct ld. Commissioner to grant approval to the appellant Trust u/s 80G(5) as it has been claimed by it.
10. In the result, we allow all the appeals.
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