Pothana Vignana Peetham, Warangal, Secunderabad V. DIT, Exemptions, Hyd, Hyderabad

ITA 1000/HYD/2015

• Counselvise Citation: [2016] 128 COUNSELVISE.COM (IT) 9764 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2016
• Assessment Year: 2015-2016
• Appeal Filed On: 03-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIBENDU MOHARANA
• Assessee Lawyers: CH. G. MURALI KRISHNA
• Keywords: Charitable institution
• Section: 11; 80G; 12A; 12AA; 101

Judgement Text

ITA NOS 1000 OF 2015 AND 1568 OF 2014 POTHANA VIGNA NA PEETHAM WARANGAL PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NOS.1000/HYD/2015 & 1568/HYD/2014 (ASSESSMENT YEAR: 2015-16) POTHAN A VIGNANA PEETHAM WARANGAL PAN: AACTP 4505 H VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI CH. G. MURALI KRISHNA MURTHY FOR REVENUE : SHRI SIBENDU MOHARANA, DR DATE OF HEARING : 15.6.2016 DAT E OF PRONOUNCEMENT : 17 .6.2016 O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH THE ABOVE ARE ASSESSEES APPEALS AGAINST THE D ENIAL OF REGISTRATION U/S 80G AND 12AA (1)(B)(II) OF THE I.T . ACT RESPECTIVELY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO CIETY FILED AN APPLICATION IN FORM NO.10A ON 23.1.2014 SEEKING REG ISTRATION U/S 12AA OF THE I.T. ACT. THE DIRECTOR OF INCOME TA X (EXEMPTIONS) ASKED THE ASSESSEE TO FILE RELEVANT DE TAILS. ON PERUSAL OF THE MATERIAL FILED BY THE ASSESSEE, THE DIT (E) FOUND THAT THE AIMS AND OBJECTIVES OF THE SOCIETY CONTAIN ED BOTH CHARITABLE AND RELIGIOUS OBJECTIVES. ACCORDING TO T HE DIT (E), THE OBJECTIVES HAVE TO BE ONLY FOR CHARITABLE OR RELIGI OUS PURPOSES. SINCE THE OBJECTIVES WERE MIXED OBJECTIVES, HE DENI ED REGISTRATION U/S 12AA OF THE I.T. ACT AND CONSEQUENTLY ALSO DENI ED ITA NOS 1000 OF 2015 AND 1568 OF 2014 POTHANA VIGNA NA PEETHAM WARANGAL PAGE 2 OF 4 REGISTRATION U/S 80G OF THE I.T. ACT. AGGRIEVED, TH E ASSESSEE IS IN APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND P LACED RELIANCE UPON THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF CIT .V. DAWOODI BOHRA JAMAT (2014)364 ITR 3 1 (SC) TO CONTEND A CHARITABLE TRUST CANNOT BE DENIED THE REG ISTRATION U/S 12AA OF THE I.TG. ACT MERELY BECAUSE OF MIXED OBJEC TIVES. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE DIT (E). 4. AT THE OUTSET IT IS NOTICED THAT THE ASSESSEES APPEAL AGAINST THE DENIAL OF REGISTRATION U/S 80G IS BARRED BY 296 DAYS. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE ASSESSEE HAD INITIALLY FILED A SINGLE APPEAL AGAINST BOTH THE OR DERS I.E. U/S 12AA AND SECTION 80G OF THE ACT AND THE REGISTRY HA S TAKEN AN OBJECTION THAT SEPARATE APPEALS HAVE TO BE FILED. I N VIEW OF THE SAME, THE ASSESSEE HAS FILED A SEPARATE APPEAL AGAI NST THE ORDER OF THE DIT (E) DENYING REGISTRATION U/S 80G AND THE REFORE, THE DELAY HAS OCCURRED. HAVING REGARD TO THE CONTENTIO NS OF THE ASSESSEE WHICH WE FIND REASONABLE, WE CONDONE THE D ELAY OF 296 DAYS AND PROCEED TO DISPOSE OF THE APPEALS AS UNDER . 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE HON'BLE SUPREME COURT IN T HE CASE OF DAWOODI BOHRA JAMAT (CITED SUPRA) HAS CONSIDERED VA RIOUS JUDICIAL DECISIONS ON THIS ISSUE AND HAS HELD AS UN DER: 43. THUS, THE SECOND ISSUE WHICH ARISES FOR OUR CONSID ERATION AND DECISION IS, WHETHER THE RESPONDENT-TRUST IS A CHARITABLE AND RE LIGIOUS TRUST ONLY FOR THE PURPOSES OF A PARTICULAR COMMUNITY AND THEREFORE, N OT ELIGIBLE FOR EXEMPTION ITA NOS 1000 OF 2015 AND 1568 OF 2014 POTHANA VIGNA NA PEETHAM WARANGAL PAGE 3 OF 4 UNDER SECTION 11 OF THE ACT IN VIEW OF PROVISIONS O F SECTION 13(1)(B) OF THE ACT. 44. IN THE INSTANT CASE, THE TRIBUNAL HAS FOUND ON FAC TS AFTER ANALYSING THE OBJECTS OF THE TRUST THAT THE RESPONDENT-TRUST IS A PUBLIC RELIGIOUS TRUST AND ITS OBJECTS ARE SOLELY RELIGIOUS IN NATURE AND BEING OF THE OPINION THAT SECTION 13(1)(B) IS SOLELY MEANT FOR CHARITABLE TRUST FOR P ARTICULAR COMMUNITY, NEGATED THE POSSIBILITY OF APPLICABILITY OF SECTION 13(1)(B ) OF THE ACT AT THE OUTSET. THE HIGH COURT HAS ALSO CONFIRMED THE AFORESAID VIEW IN APPEAL AND OBSERVED THAT SECTION 13(1)(B) WOULD ONLY BE APPLICABLE IN CASE O F INCOME OF THE TRUST FOR CHARITABLE PURPOSE ESTABLISHED FOR BENEFIT OF A PAR TICULAR RELIGIOUS COMMUNITY. IN OUR CONSIDERED VIEW, THE SAID VIEW MAY NOT BE TH E CORRECT INTERPRETATION OF THE PROVISION. 45. FROM THE PHRASEOLOGY IN CLAUSE (B) OF SECTION 13(1 ), IT COULD BE INFERRED THAT THE LEGISLATURE INTENDED TO INCLUDE ONLY THE T RUSTS ESTABLISHED FOR CHARITABLE PURPOSES. THAT HOWEVER DOES NOT MEAN THA T IF A TRUST IS A COMPOSITE ONE, THAT IS ONE FOR BOTH RELIGIOUS AND CHARITABLE PURPOSES, THEN IT WOULD NOT BE COVERED BY CLAUSE (B). WHAT IS INTENDED TO BE EXCLU DED FROM BEING ELIGIBLE FOR EXEMPTION UNDER SECTION 11 IS A TRUST FOR CHARITABL E PURPOSE WHICH IS ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIG IOUS COMMUNITY OR CASTE. 46. SUCH TRUSTS WITH COMPOSITE OBJECTS WOULD NOT BE EX PELLED OUT OF THE PURVIEW OF SECTION 13(1)(B) PER SE. THE SECTION REQ UIRES IT TO BE ESTABLISHED THAT SUCH CHARITABLE PURPOSE IS NOT FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CASTE. THAT IS TO SAY, IT NEEDS TO BE EXAMINED WHETHER SUCH RELIGIOUS-CHARITABLE ACTIVITY CARRIED ON BY THE TRU ST ONLY BENEFITS A CERTAIN PARTICULAR RELIGIOUS COMMUNITY OR CLASS OR SERVES A CROSS THE COMMUNITIES AND FOR SOCIETY AT LARGE. ( SOLE TRUSTEE, LOKA SHIKSHANA TRUST V. CIT , [1975] 101 ITR 234 (SC) ). THE SECTION OF COMMUNITY SOUGHT TO BE BENEFITED M UST BE EITHER SUFFICIENTLY DEFINED OR IDENTIFIABLE BY A CO MMON QUALITY OF A PUBLIC OR IMPERSONAL NATURE. ( ANDHRA CHAMBER OF COMMERCE (1965) 55 ITR 722). 6. THUS, WHERE A TRUSTS OBJECTIVES ARE BOTH CHARIT ABLE AND RELIGIOUS BUT IS NOT EXCLUSIVELY FOR A PARTICULAR R ELIGIOUS COMMUNITY, IT WOULD NOT FALL UNDER THE EXCEPTIONS P ROVIDED UNDER SECTION 13(1)(B) OF THE I.T. ACT AND IT WOULD NOT BE INELIGIBLE TO CLAIM EXEMPTION U/S 11 OF THE I.T. AC T. IN VIEW OF THIS DECISION, WE REMAND THIS ISSUE BACK TO THE FILE OF THE DIT (E) WITH A DIRECTION TO RECONSIDER THE ASSESSEES APPLICATIO NS FOR REGISTRATION BOTH U/S 12A AND 80G OF THE ACT IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE ABOVE CASE (CITED SUPRA) AND IF IT IS FOUND THAT THE ACTIVITIES ARE F OR THE PUBLIC AT ITA NOS 1000 OF 2015 AND 1568 OF 2014 POTHANA VIGNA NA PEETHAM WARANGAL PAGE 4 OF 4 LARGE AND NOT RESTRICTED TO PARTICULAR RELIGIOUS CO MMUNITY, THEN THE REGISTRATION SHALL NOT BE DENIED. 7. IN THE RESULT, ASSESSEES APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2016. SD/ - SD/ - ( J.SUDHAKAR REDDY ) ( P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 17 TH JUNE, 2016. VNODAN/SPS COPY TO: 1. M/S.CH. G. KRISHNA MURTHY & CO, CAS, 133/1 PRENDARG HAST ROAD, SECUNDERABAD 500003 2. DIRECTOR OF INCOME TAX (E) AAYAKAR BHAVAN, HYDERABA D 3. DY. DIRECTOR DIRECTOR OF INCOME TAX (E) II HYDERABA D 4. THE DR, ITAT, HYDERABAD 5. GUARD FILE BY ORDER