Vivekananda Seva Samiti, Medak Dist V. DIT(E), Hyderabad

ITA 1263/HYD/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0304 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 22-07-2015
• Assessment Year: misc
• Appeal Filed On: 11-09-2013
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: BHUPAL GOWD MARAGAUNI
• Keywords: Charitable institution
• Section: 80G; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI, RAMAYAMPET, MEDAK DISTRICT [PAN: AAAAV8563G] VS THE DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI BHUPAL GOWD MARAGAUNI , A R FOR REVENUE : SHRI V. SRINIVAS, DR DATE OF HEARING : 22 - 0 7 - 201 5 DATE OF PRONOUNCEMENT : 29 - 0 7 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE ARE APPEALS BY ASSESSEE-SOCIETY DIRECTED AGA INST THE COMMON ORDER OF THE DIT (EXEMPTIONS), HYDERABAD REJ ECTING ASSESSEES APPLICATION FOR GRANT OF REGISTRATION U/S. 12AA OF THE INCOME TAX ACT [ACT] AND CONSEQUENT REJECTION OF APPROVAL U/S. 80G (5) OF THE ACT. 2. ASSESSEE FILED APPEAL NO. 1263/HYD/2013 AGAINST THE ORDER OF 12AA RAISING GROUNDS BOTH ON 12AA REGISTRATION AND ALSO REJECTION OF 80G WITH 3 DAYS DELAY. THIS DELAY WAS EXPLAINED AS MISPLACEMENT OF ORDER OF DIT IN THE OFFICE OF ASSESSEE AT RAMAYAMPE T BY THE STAFF AND CONSEQUENT TO DELAY IN FILING IN APPEAL IN HYDERABA D WITH 3 DAYS DELAY. CONSIDERING THE EXPLANATION OF ASSESSEE, THE DELAY IN FILING THE APPEAL IS CONDONED. ITA NO. 1799/HYD/2014 IS HOWEVER, FILED WITH A DELAY OF 417 I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 2 -: DAYS. IT WAS EXPLAINED THAT SINCE THE DIT(E) PASSE D A COMMON ORDER, BEING UNKNOWN TO THE PROCEEDINGS/PROCEDURES, ASSESS EE-SOCIETY PREFERRED A COMMON APPEAL. LATER ON IT HAS COME TO KNOW THAT TWO APPEALS ARE TO BE FILED SEPARATELY. ACCORDINGLY, A SSESSEE PREFERRED A SEPARATE APPEAL TO BE FILED FOR DIFFERENT SECTIONS. THEREFORE, THE SECOND APPEAL ON THE ISSUE OF 80G WAS PREFERRED WITH A DEL AY OF 417 DAYS. CONSIDERING THE EXPLANATION OF ASSESSEE, THE CONDON ATION REQUESTED WAS GRANTED AND ACCORDINGLY THIS APPEAL IS ALSO ADMITTE D. 3. BRIEFLY THE FACTS ARE, ASSESSEE CLAIMING ITSELF TO BE A CHARITABLE TRUST CREATED VIDE REGISTERED DEED WITH A REGISTRAT ION NO. 722/09, FILED APPLICATION SEEKING REGISTRATION U/S. 12AA OF THE A CT BEFORE THE LD. DIT(E) IN THE PRESCRIBED MANNER ON 18-12-2012. IN THE COURSE OF SCRUTINY, THE DIT(E) HAS ISSUED A QUESTIONNAIRE ON 06-03-2013 ASKING ASSESSEE-SOCIETY TO FURNISH DETAILS ON SPECIFIC POI NTS, TO PRODUCE ALL ORIGINAL DOCUMENTS OF TRUST AND ALSO BOOKS OF ACCOU NTS AND BILLS AND VOUCHERS FOR VERIFICATION. AFTER GOING THROUGH THE AIMS AND OBJECTS OF THE SOCIETY, THE DIT(E) NOTICED THAT SOCIETY HAS BOTH C HARITABLE AND RELIGIONS OBJECTIVES. ACCORDING TO HIM, OBJECT CLAUSE AT SR. NO. XII, XIII AND XIV ARE OF RELIGIONS NATURE. HE EXTRACTED THEM AS UNDE R: 'XII. TO PROPAGATE OUR DHARMA AND CULTURE BY EVOLVI NG SUITABLE METHODS TO REACH VARIOUS SECTIONS OF OUR S OCIETY. XIII. TO PROMOTE AND ENCOURAGE THE USE OF TEMPLES AS CENTERS FOR PROPAGATIONS OF DHARMIC VALUES TO HELP ESTABLI SH NEW TEMPLES WHEREVER NECESSARY AND TO TAKE ALL NECESSARY STEPS FOR ENABLING PROPER MANAGEMENT AND ADMINISTRATION OF TEMPLES AN D THEIR PROPERTIES. XIV. TO PROMOTE DHARMIC AWAKENING AND PATRIOTISM THROUGH FESTIVALS, JATHARAS ETC AND ORGANIZING SOCIAL BHAJ ANS PLAYS, DRAMAS, GROUP SONGS AND OTHER CULTURE ACTIVITIES AND TO OR GANIZE SOCIAL AND DHARMIC LECTURES FOR PROPAGATION OF DHARMIC VALUES '. I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 3 -: 4. DURING THE COURSE OF PROCEEDINGS, THE PRESIDENT OF ASSESSEE-SOCIETY SUBMITTED THAT THEY HAVE PASSED RESOLUTION FOR DELE TING THOSE CLAUSES AS FROM MEMORANDUM OF ASSOCIATION. HOWEVER, THE DIT R ECORDS THAT SUCH AMENDED MEMORANDUM OF ASSOCIATION WAS NOT FURNISHED . THEREFORE, ACCORDING TO HIM, THOSE OBJECT CLAUSES OF RELIGIOU S NATURE ARE STILL THERE IN FORCE, NOTWITHSTANDING A RESOLUTION PASSED BY AS SESSEE-SOCIETY. HE WAS OF THE OPINION THAT ASSESSEE-SOCIETY DOES NOT Q UALIFY EITHER AS A PUBLIC CHARITABLE TRUST OR AS A PUBLIC RELIGIOUS TR UST. RELYING ON VARIOUS CASE LAW AS RECORDED IN THE ORDER, THE DIT HELD THA T THE TRUST CAN NOT BE ALLOWED REGISTRATION UNDER THE ACT. HE EXTRACTED T HE OBSERVATIONS OF THE HONBLE JAMMU AND KASHMIR HIGH COURT IN THE CASE OF GHULAM MOHIDIN TRUST VS. CIT [248 ITR 587] TO CONSIDER THAT ASSESS EE IS NOT ELIGIBLE FOR REGISTRATION. ACCORDINGLY, HE DID NOT GRANT REGIST RATION U/S. 12AA OF THE ACT. CONSEQUENTLY, HE ALSO REJECTED THE OTHER APPL ICATION FILED IN FORM 10G FOR APPROVAL U/S. 80G(5) OF THE ACT BY THE SAME ORDER DT. 27-06- 2013. ASSESSEE IS AGGRIEVED AND PREFERRED THE PRES ENT TWO APPEALS. 5. SHRI M. BHUPAL GOWD, LIFE MEMBER OF THE SOCIETY AUTHORIZED BY THE PRESIDENT OF THE SOCIETY APPEARED AND EXPLAINED THAT THE ABOVE THREE OBJECT CAUSES ARE NOT RELIGIOUS IN NATURE. EVEN TH EN, HONOURING THE OPINION EXPRESSED BY THE DIT(E), ASSESSEE-SOCIETY P ASSED A RESOLUTION AMENDING THE ABOVE OBJECTS. BUT DUE TO STATE GOVER NMENT EMPLOYEES STRIKE (SAKALA JANULA SAMME) AT THE RELEVANT POINT OF TIME, THEY WERE NOT ABLE TO GET THE REVISED/AMENDED OBJECTS OF THE SOCIETY. HE FILED A COPY OF THE REVISED OBJECTS OF THE SOCIETY FOR PERU SAL. IT WAS REQUESTED THAT REGISTRATION MAY BE GRANTED TO ASSESSEE-SOCIET Y AS THE OBJECTS ARE CHARITABLE IN NATURE. 6. LD. CIT-DR HOWEVER, RELIED ON THE ORDERS OF THE DIT(E). I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 4 -: 7. WE HAVE CONSIDERED SUBMISSIONS OF THE PARTIES AN D PERUSED THE IMPUGNED ORDER OF LD. DIT(E) AS WELL AS OTHER MATER IALS ON RECORD. AT PRESENT, AS THE ASSESSEE-SOCIETY AMENDED THOSE OBJE CTS WHICH THE DIT(E) CONSIDERED AS RELIGIOUS IN NATURE, THE OBJECTION OF DIT(E) HAS NO MERIT. BECAUSE OF THE STRIKE AT THE RELEVANT POINT OF TIME , ASSESSEE COULD NOT FURNISH A REVISED MEMORANDUM OF ASSOCIATION BUT THA T COULD NOT PREVENT THE DIT(E) IN GRANTING REGISTRATION U/S. 12AA. AS PER SECTION 12AA, LD. CIT/DIT HAS TO SATISFY HIMSELF ABOUT THE OBJECT OF THE TRUST AND GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTI TUTION. ON GOING THROUGH THE IMPUGNED ORDER OF THE LD. DIT(E), IT IS ABSOLU TELY CLEAR THAT HE ACCEPTS THE MAJORITY OF THE OBJECTS ARE CHARITABLE IN NATURE. SPECIFIC OBJECTION OF LD. DIT(E) IS WITH REFERENCE TO THREE OBJECTS WHICH IN HIS VIEW VIOLATES THE PROVISIONS CONTAINED IN SECTION 1 1. THE OBJECT CLAUSE WHICH LD. DIT(E) CONSIDERS TO BE OF RELIGIOUS NATUR E ARE AS UNDER: 'XII. TO PROPAGATE OUR DHARMA AND CULTURE BY EVOLVI NG SUITABLE METHODS TO REACH VARIOUS SECTIONS OF OUR S OCIETY. XIII. TO PROMOTE AND ENCOURAGE THE USE OF TEMPLES AS CENTERS FOR PROPAGATIONS OF DHARMIC VALUES TO HELP ESTABLI SH NEW TEMPLES WHEREVER NECESSARY AND TO TAKE ALL NECESSARY STEPS FOR ENABLING PROPER MANAGEMENT AND ADMINISTRATION OF TEMPLES AN D THEIR PROPERTIES. XIV. TO PROMOTE DHARMIC AWAKENING AND PATRIOTISM THROUGH FESTIVALS, JATHARAS ETC AND ORGANIZING SOCIAL BHAJ ANS PLAYS, DRAMAS, GROUP SONGS AND OTHER CULTURE ACTIVITIES AND TO OR GANIZE SOCIAL AND DHARMIC LECTURES FOR PROPAGATION OF DHARMIC VALUES '. 8. HOWEVER, ON CAREFUL ANALYSIS OF THE AFORESAID CL AUSE, IT CAN BE SEEN THAT THEY ARE NEITHER FOR THE BENEFIT OF A PARTICUL AR RELIGION OR COMMUNITY NOR THEY ARE CONFINED TO A PARTICULAR CLASS OF PEOP LE OR PEOPLE OF PARTICULAR CASTE OR CREED. ON THE CONTRARY, THESE OBJECT CLAUSES CERTAINLY GIVES AN IMPRESSION THAT IT IS FOR THE BENEFIT OF G ENERAL PUBLIC. AS CAN BE I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 5 -: SEEN FROM CLAUSE-XII, IT SPEAKS OF PROPAGATING DHA RMA AND CULTURE BY EVOLVING SUITABLE METHODS TO REACH VARIOUS SECTIONS OF OUR SOCIETY. THESE OBJECTIVES CANNOT BE TREATED AS FOR THE BENEF IT OF A PARTICULARS RELIGION OR COMMUNITY. SIMILARLY, PROMOTING AND EN COURAGING USE OF TEMPLES AS CENTRES FOR PROPAGATION OF 'DHARMIC VALU ES' ALSO CANNOT BE CONSIDERED TO BE CONFINED TO A PARTICULAR RELIGION OR COMMUNITY. PROMOTING 'DHARMIC AWAKENING' AND PATRIOTISM THROUG H FESTIVALS, JATHRAS ETC., AND ORGANISING SOCIAL BHAJANS, PLAYS, DRAMAS, GROUP SONGS AND OTHER CULTURAL ACTIVITIES AND TO ORGANISE SOCIAL AND DHARMIC LECTURES FOR PROPAGATION OF 'DHARMIC VALUES' CANNOT BE CONSIDERED TO BE FOR A PARTICULAR RELIGION OR A COMMUNITY. IN FACT THESE ARE FOR THE BENEFIT OF GENERAL PUBLIC. JUST BECAUSE THE WORD 'DHARMA' IS USED IN THE ABOVE CLAUSES, IT DOES NOT MEAN THAT IT PERTAINS TO A REL IGIOUS ACTIVITY. 'DHARMA' CAN BE OF ANY RELIGION OR FOR ANY SOCIAL O RDER WHICH IS FOR THE BENEFIT OF SOCIETY IN GENERAL. 9. THUS, ON CAREFUL READING OF THE OBJECT CLAUSES I N GENERAL SPECIFICALLY CLAUSES ON WHICH LD. DIT(E) HAS RAISED CONCERN STATING THAT THEY ARE OF RELIGIOUS NATURE, THE IMPRESSION ONE GE TS IS THERE IS NOTHING IN THESE CLAUSES WHICH CAN LEAD ONE TO BELIEVE THAT THEY ARE FOR THE BENEFIT OF A PARTICULAR RELIGION OR COMMUNITY, HENC E COMING WITHIN THE MISCHIEF OF SECTION 13(1)(A) OR 13(1)(B) OF THE ACT . ON THE CONTRARY, THESE CLAUSES IF AT ALL THEY CAN BE CALLED TO BE OF RELIG IOUS NATURE ARE FOR THE BENEFIT OF GENERAL PUBLIC, HENCE, CAN BE CONSIDERED TO BE IN THE NATURE OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS ENG RAINED IN THE DEFINITION OF 'CHARITABLE PURPOSE' U/S. 2(15) OF THE ACT. LAW IS WELL SETTLED THAT 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' IS OF THE W IDEST CONNOTATION AS THE WORD 'GENERAL' IN SAID EXPRESSION SIGNIFIES A WHOLE CLASS. HENCE, ADVANCEMENT OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM BENEFIT TO AN INDIVIDU AL OR A GROUP OF I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 6 -: INDIVIDUALS WOULD BE A CHARITABLE PURPOSE. CONSIDE RED IN THE AFORESAID PERSPECTIVE, THERE CANNOT BE ANY DOUBT THAT THE MAI N OBJECT OF ASSESSEE- TRUST IS CHARITABLE IN NATURE, AS IT IS FOR THE BEN EFIT OF GENERAL PUBLIC. THE HON'BLE SUPREME COURT IN THE CASE OF ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [121 ITR 1 (SC)] AN D A NUMBER OF OTHER DECISIONS HELD THAT IF THE PRIMARY PURPOSE AND PRED OMINANT OBJECTS OF A TRUST ARE TO PROMOTE WELFARE OF THE GENERAL PUBLIC, THE PURPOSE WOULD BE CHARITABLE PURPOSE. IF THE PRIMARY OR PREDOMINANT OBJECT OF AN INSTITUTION IS CHARITABLE, ANY OTHER OBJECT WHICH M IGHT NOT BE CHARITABLE BUT WHICH IS ANCILLARY OR INCIDENTAL TO THE DOMINAN T PURPOSE, WOULD NOT PREVENT THE TRUST OR INSTITUTION FROM BEING A CHARI TABLE TRUST. 10. EVEN IN A CASE WHERE THERE ARE MIXED OBJECTS, T HERE IS BOTH CHARITABLE AND RELIGIOUS, THE REGISTRATION CANNOT B E DENIED AND THIS ISSUE WAS ELABORATELY DISCUSSED BY THE CO-ORDINATE BENCH IN THE CASE OF SHIVA SHAKTHI SHIRIDI SAI ANUGRAHA MAHAPEETAM IN ITA NO. 1232/HYD/2014 DT. 03-12-2014 AS UNDER: '11. EVEN ASSUMING THAT APPELLANT TRUST HAS MIXED OBJECTS I.E. BOTH CHARITABLE AND RELIGIOUS, LET US EXAMINE WHETHER F OR THIS REASON ALONE IT BECOMES INELIGIBLE FOR AVAILING EXEMPTIONS U/S 11 AND BEIN G REGISTERED U/S 12AA OF THE ACT. LD. DIT(E) IN HIS ORDER HAS OBSERVED THAT APP ELLANT TRUST IS HAVING BOTH CHARITABLE AND RELIGIOUS OBJECTS, FURTHER THE RELI GIOUS OBJECTS ARE FOR THE BENEFIT OF PARTICULAR RELIGION. AFTER PERUSING THE OBJECTS WE ARE INCLINED TO HOLD THAT THEY CANNOT BE CONSIDERED TO BE FOR THE BENEFIT OF A PA RTICULAR RELIGIOUS COMMUNITY, RATHER, IN OUR VIEW, THE OBJECT CLAUSES SPECIFICAL LY REFERRED TO BY LD. DIT(E) ARE FOR THE BENEFIT OF THE GENERAL PUBLIC AND NOT CONF INED TO ANY PARTICULAR RELIGIOUS CLASS OR COMMUNITY. REVERTING BACK TO THE ISSUE W HETHER HAVING OBJECTS OF BOTH CHARITABLE AND RELIGIOUS NATURE DISENTITLES FROM A VAILING EXEMPTION U/S 11. LET US EXAMINE THE SAID PROVISION WHICH READS AS UNDER: 11. (1) [(A) INCOME DERIVED FROM PROPERTY HELD UNDER T RUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXT ENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPL ICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHI CH THE INCOME SO I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 7 -: ACCUMULATED OR SET APART IS NOT IN EXCESS OF [FI FTEEN] PER CENT OF THE INCOME FROM SUCH PROPERTY; ACCORDING TO LD. DIT(E) THE WORDS CHARITABLE OR R ELIGIOUS APPEARING IN THE AFORESAID PROVISION WOULD MEAN, A TRUST OR INSTITU TION CAN EITHER HAVE CHARITABLE OR RELIGIOUS OBJECTS AND NOT BOTH. IN OUR VIEW, SU CH A NARROW INTERPRETATION CANNOT BE GIVEN TO SECTION 11(1)(A) OF THE ACT. SE CTION 11(1)(A) OF THE ACT MAKES NO DISTINCTION BETWEEN RELIGIOUS OR CHARITABLE INS TITUTION SO FAR AS GRANT OF EXEMPTION IS CONCERNED, SAVE AND EXCEPT THE CONDIT IONS IMPOSED U/S 13 OF THE ACT. THE WORD OR BETWEEN CHARITABLE AND RELIGIOUS AS USED IN SECTION 11(1)(A) IS NOT DISJUNCTIVE BUT CONJUNCTIVE IN NATURE, THEREFORE, IT IS NECESSARY TO READ THAT INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOL LY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BOTH ARE EXEMPT. THE HONBL E SUPREME COURT IN CASE OF CIT VS. M/S DAWOODI BOHARH JAMAT, CIVIL APPEAL NO. 2492 OF 2014 OBSERVED, IN CERTAIN CASES ACTIVITIES OF THE TRUS T MAY CONTAIN ELEMENTS OF BOTH RELIGIOUS AND CHARITABLE AND THUS, BOTH THE PURPO SES MAY BE OVERLAPPING. MORE SO, WHEN THE RELIGIOUS ACTIVITY CARRIED ON BY A P ARTICULAR SECTION OF PEOPLE WOULD BE A CHARITABLE ACTIVITY FOR OR TOWARDS OTHER MEM BERS OF THE COMMUNITY OR ALSO PUBLIC AT LARGE. FEEDING ANIMALS OR COW MAY BE A R ELIGIOUS ACTIVITY FOR A PARTICULAR COMMUNITY BUT MAY BE CHARITABLE FOR OTH ERS. SIMILARLY, FEEDING POOR PEOPLE OR GIVING WATER TO THIRSTY MAY BE REL IGIOUS FOR SOME BUT CHARITABLE FOR OTHERS. ANALYSING THE OBJECTS OF TH E TRUST BY KEEPING THE AFORESAID PRINCIPLES IN VIEW, HONBLE APEX COURT FINALLY HEL D AS UNDER: 41.THEREFORE, THE OBJECTS OF THE TRUST EXHIBIT THE DUAL TENOR OF RELIGIOUS AND CHARITABLE PURPOSES AND ACTIVITI ES. SECTION 11 OF THE ACT SHELTERS SUCH TRUST WITH COMPOSITE OB JECTS TO CLAIM EXEMPTION FROM TAX AS A RELIGIOUS AND CHARITABLE TRUST SUBJECT TO PROVISIONS OF SECTION 13. THE ACTIVITIES OF THE T RUST UNDER SUCH OBJECTS WOULD THEREFORE BE ENTITLED TO EXEMPTION ACCORDINGLY. 42.WE WOULD NOW PROCEED TO EXAMINE THE OBJECTS U NDER THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT. IT BE COMES AMPLY CLEAR FROM THE LANGUAGE EMPLOYED IN THE PROVISIO NS THAT SECTION 13 IS IN THE NATURE OF AN EXEMPTION FROM APPLICABILITY OF SECTIONS 11 OR 12 AND THE EXAMINATION OF ITS APPL ICABILITY WOULD ONLY ARISE AT THE STAGE OF CLAIM UNDER SECTIONS 11 OR 12. THUS, WHERE THE INCOME OF A TRUST IS ELIGIBLE FOR EXEM PTION UNDER SECTION 11, THE ELIGIBILITY FOR CLAIMING EXEMPTIO N OUGHT TO BE TESTED ON THE TOUCHSTONE OF THE PROVISIONS OF SEC TION 13. IN THE INSTANT CASE, IT BEING ESTABLISHED THAT THE RESP ONDENT-TRUST IS A PUBLIC CHARITABLE AND RELIGIOUS TRUST ELIGIBLE FOR CLAIMING EXEMPTION UNDER SECTION 11, IT BECOMES RELEVANT T O TEST IT ON THE ANVIL OF SECTION 13. I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 8 -: 43.THUS, THE SECOND ISSUE WHICH ARISES FOR OUR CO NSIDERATION AND DECISION IS, WHETHER THE RESPONDENT-TRUST IS A C HARITABLE AND RELIGIOUS TRUST ONLY FOR THE PURPOSES OF A PARTI CULAR COMMUNITY AND THEREFORE, NOT ELIGIBLE FOR EXEMPTION UNDER SECT ION 11 OF THE ACT IN VIEW OF PROVISIONS OF SECTION 13(1)(B) OF THE ACT. 44.IN THE INSTANT CASE, THE TRIBUNAL HAS FOUND ON FACTS AFTER ANALYSING THE OBJECTS OF THE TRUST THAT THE RESP ONDENT TRUST IS A PUBLIC RELIGIOUS TRUST AND ITS OBJECTS ARE SOL ELY RELIGIOUS IN NATURE AND BEING OF THE OPINION THAT SECTION 13(1 )(B) IS SOLELY MEANT FOR CHARITABLE TRUST FOR PARTICULAR COMMUNI TY, NEGATED THE POSSIBILITY OF APPLICABILITY OF SECTION 13(1)(B) OF THE ACT AT THE OUTSET. THE HIGH COURT HAS ALSO CONFIRMED THE AF ORESAID VIEW IN APPEAL AND OBSERVED THAT SECTION 13(1)(B) WOULD ONLY BE APPLICABLE IN CASE OF INCOME OF THE TRUST FOR CHA RITABLE PURPOSE ESTABLISHED FOR BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY. IN OUR CONSIDERED VIEW, THE SAID VIEW MAY NOT B E THE 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 INCLUD E ONLY THE TRUSTS ESTABLISHED FOR CHARITABLE PURPOSES. THAT HOWEVE R DOES NOT MEAN THAT 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 EXCLUDED FROM BEING ELIGIB LE FOR EXEMPTION UNDER SECTION 11 IS A TRUST FOR CHARITABLE P URPOSE WHICH IS ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RE LIGIOUS COMMUNITY OR CASTE. 46.SUCH TRUSTS WITH COMPOSITE OBJECTS WOULD NOT B E EXPELLED OUT OF THE PURVIEW OF SECTION 13(1)(B) PER SE. THE SECTI ON REQUIRES IT TO BE ESTABLISHED THAT SUCH CHARITABLE PURPOSE IS NOT FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CASTE. TH AT IS TO SAY, IT NEEDS TO BE EXAMINED WHETHER SUCH RELIGIO US-CHARITABLE ACTIVITY CARRIED ON BY THE TRUST ONLY BENEFITS A CERTAIN PARTICULAR RELIGIOUS COMMUNITY OR CLASS OR SERVES ACROSS THE COMMUNITIES AND FOR SOCIETY AT LARGE. (SOLE TRUSTEE, LOKA SHIKSH ANA TRUST V. CIT, (1975) 101 ITR 234 (SC)). THE SECTION OF COMMUNI TY SOUGHT TO BE BENEFITED MUST BE EITHER SUFFICIENT LY DEFINED OR IDENTIFIABLE BY A COMMON QUALITY OF A PUBLIC OR I MPERSONAL NATURE. (CIT V.ANDHRA CHAMBER OF COMMERCE, 55 ITR 722). 47.THIS COURT IN CIT V. PALGHAT SHADI MAHAL TRUST , (2002) 9 SCC 685 THE MUSLIM RESIDENTS OF KERALA CONSTITUTED A TRUST FOR THE PURPOSE OF CONSTRUCTING AND ESTABLISHING AT PALG HAT-A-SHADI MAHAL AND OTHER INSTITUTIONS FOR THE EDUCATIONAL , SOCIAL AND I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 9 -: ECONOMIC ADVANCEMENT OF THE MUSLIMS AND FOR RELIGIOUS AND CHARITABLE OBJECTS RECOGNISED BY MUSLIM LAW AN D LATER CLARIFIED THAT THE PROCEEDS WOULD BE UTILIZED FOR THE BENEF IT FOR PUBLIC AT LARGE AND UPON THIS BASIS, THE TRUST MADE A CLAIM FOR E XEMPTION FROM TAX UNDER SECTION 11. THIS COURT HELD THAT THE RESOLU TION CLARIFYING THE OBJECT WOULD NOT VALIDLY AMEND THE OBJECT OF THE TRUST-DEED AND SINCE THE OBJECT CONFINED THE BENEFIT TO ONLY MUS LIM COMMUNITY, IT WOULD BE COVERED BY THE RESTRICTION UNDER SECTION 13(1)(B) OF THE ACT EVEN THOUGH IT FUNCTIONED FOR PUBLIC BENEFIT. THUS, THEREIN THE OBJECT SUFFICIENTLY DEFINED OR EXPRESSLY STATED B ENEFICIARY CLASS AND RESTRICTED THE ACTIVITIES OF THE TRUST TO A SPECI FIC COMMUNITY. 48.FURTHER, IN STATE OF KERALA V. M.P. SHANTI VER MA JAIN, (1998) 5 SCC 63 THIS COURT HAS HELD THAT PROPAGATION OF RELIGION AND RESTRICTION OF BENEFITS OF ACTIVITIES OF TRUST I N ITS OBJECTS TO THE SAID COMMUNITY WOULD RENDER THE TRUST A S INELIGIBLE FOR CLAIMING EXEMPTION UNDER SIMILAR PROVISIONS OF KE RALA AGRICULTURAL INCOME TAX ACT, 1950. THE COURT OBSERVED AS FOLLO WS: THE DEED OF TRUST AND THE RULES RUN INTO MORE THAN THIRTY PAGES OUT OF WHICH SIX PAGES OF THE TR UST DEED NARRATE THE PHILOSOPHY OF JAIN DHARMA. THE OBJECTS OF THE TRUST CLEARLY SHOW THAT THE TRUST I S MEANT FOR PROPAGATION OF JAIN RELIGION AND RENDERI NG HELP TO THE FOLLOWERS OF JAIN RELIGION. EVEN MEDIC AL AID AND SIMILAR FACILITIES ARE TO BE RENDERED TO PERSO NS DEVOTED TO JAIN RELIGION AND TO NON-JAINS IF SUFFE RING FROM AILMENTS BUT THE MEDICAL AID COULD BE GIVEN T O THEM ONLY IF ANY MEMBER OF THE FAMILIES MANAGING T HE TRUST, SHOWS SYMPATHY AND IS INTERESTED IN THEIR TREATMENT. THE TRIBUNAL, IN OUR OPINION, WAS RIGHT IN ITS CONCLUSION THAT THE DOMINANT PURPOSE OF THE TRUST IN THE PRESENT CASE WAS PROPAGATION OF JAIN RELIGION AND TO SERVE ITS FOLLOWERS AND ANY PART OF AGRICULTURA L INCOME OF THE TRUST SPENT IN THE STATE OF KERALA A LSO COULD NOT BE TREATED AS ALLOWABLE ITEM OF THE EXPENSES. 49.IN THE PRESENT CASE, THE OBJECTS OF THE RESPON DENT-TRUST BASED ON RELIGIOUS TENETS UNDER QURAN ACCORDING TO REL IGIOUS FAITH OF ISLAM. WE HAVE ALREADY NOTICED THAT THE PERUSAL OF THE OBJECTS AND PURPOSES OF THE RESPONDENT-TRUST WOULD CLEAR LY DEMONSTRATE THAT THE ACTIVITIES OF THE TRUST THOUGH B OTH CHARITABLE AND RELIGIOUS ARE NOT EXCLUSIVELY MEANT FOR A PART ICULAR RELIGIOUS COMMUNITY. THE OBJECTS, AS EXPLAINED IN THE PRECEDING PARAGRAPHS, DO NOT CHANNEL THE BENEFITS TO ANY C OMMUNITY IF I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 10 -: NOT THE DAWOODI BOHRA COMMUNITY AND THUS, WOULD N OT FALL UNDER THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT. 50.IN THAT VIEW OF THE MATTER, WE ARE OF THE CONS IDERED OPINION THAT THE RESPONDENT-TRUST IS A CHARITABLE AND RELIGIO US TRUST WHICH DOES NOT BENEFIT ANY SPECIFIC RELIGIOUS COMMUNITY AND THEREFORE, IT CANNOT BE HELD THAT SECTION 13(1)(B) OF T HE ACT WOULD BE ATTRACTED TO THE RESPONDENT-TRUST AND THEREBY, IT WOULD BE ELIGIBLE TO CLAIM EXEMPTION UNDER SECTION 11 OF T HE ACT. 12. IN CASE OF THE SOCIETY OF PRESENTATION SISTERS AND OTHERS VS. ITO, 318 ITR(AT)287, THE HONBLE THIRD MEMBER WHILE CONCURR ING WITH THE VIEW EXPRESSED BY HONBLE ACCOUNTANT MEMBER, HELD AS UN DER: IT IS CLEAR FROM PLETHORA OF AUTHORITIES WHER E AFTER CONSIDERING THE PROVISIONS OF SECTION 11(1)(A) T HAT SO FAR AS THE AFORESAID PROVISION IS CONCERNED, NO DIST INCTION IS MADE BETWEEN CHARITABLE AND RELIGIOUS PURPOSES. A CHARITABLE INSTITUTION CAN HAVE RELIGIOUS PURPOS ES; WHEREAS A RELIGIOUS INSTITUTION MAY BE PARTLY CHARITABLE. MOST OF THE DECISIONS WERE GIVEN UNDER THE 1961 ACT. EVEN WH ERE THE DECISION WAS ON CONSIDERATION OF 1922 ACT, THERE IS NO MATERIAL DIFFERENCE AS IS DEMONSTRATED IN TH E ABOVE DISCUSSION. THEIR LORDSHIPS OF THE SUPREME COURT HAVE HELD, AS NOTED EARLIER, THAT CHARITABLE AND RELI GIOUS PURPOSES OVERLAPS IN INDIA. EVEN OTHERWISE RELIEF AND HEL P TO THE POOR, MEDICAL HELP TO THE NEEDY, LOOKING AFTER OF DEITY AND TEMPLES (MOSQUE, CHURCH INCLUDED) ARE NO DOU BT RELIGIOUS PURPOSES BUT THESE ARE ALSO CONSIDERED AS CHARIT ABLE IN INDIA. THEREFORE, THE VIEW TAKEN IN THE TW O CASES BEFORE ME THAT EXEMPTION UNDER SECTION 11(1)(A) CANNOT BE ALLOWED TO A CHARITABLE TRUST AS IT IS ALSO CARRYING SOM E PURPOSES WHICH ARE TERMED AS RELIGIOUS IS TOTALLY UNWAR RANTED. THE ABOVE VIEW IS TOTALLY CONTRARY TO THE WELL ESTAB LISHED AN SETTLED LAW IN INDIA, AS LAID DOWN BY THEIR LORD SHIPS OF THE SUPREME COURT. THE OTHER REASON GIVEN BY THE LEARNED JUDICIAL M EMBER IS THAT TWO TRUSTS IN QUESTION ARE PARTLY C HARITABLE OR RELIGIOUS TRUSTS ESTABLISHED AFTER APRIL 1, 1962 . THEREFORE, ON ACCOUNT OF LANGUAGE OF THE STATUTE IN SECTION 11 , THERE IS PROHIBITION FROM INCOME DERIVED FROM PROPERTY HE LD FOR CHARITABLE OR RELIGIOUS PURPOSES. ACCORDING TO H IM, INCOME UNDER BOTH CHARITABLE AND RELIGIOUS PURPOSES CANNOT BE COMBINED TOGETHER AND THE ASSESSEE HAS TO CHO OSE EITHER OF THE CHARITABLE ACTIVITIES OR RELIGIOUS ACTIVITIES, BUT I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 11 -: NOT BOTH. I HAD TO STATE THAT IN MY HUMBLE OPINI ON, THERE IS NO STATUTORY PROVISION TO SUPPORT PROPOSITION OF LAW, STATED BY THE LEARNED JUDICIAL MEMBER. THE LEARNED JUDICIAL MEMBER, LIKE THE REV ENUE AUTHORITIES, MISCONSTRUED THE LEGAL IMPLICATION OF THE W ORD OR IN SECTION 11(1)(A). 13. THE PRINCIPLE OF LAW EMERGING FROM THE AFORESA ID DECISIONS ARE A TRUST/INSTITUTION HAVING CHARITABLE AND RELIGIOUS OBJECTS WILL BE ELIGIBLE FOR EXEMPTION U/S 11 UNLESS HIT BY RESTRICTIONS IMPOSE D U/S 13(1)(A) OR 13(1)(B) OF THE ACT. AS IN THE PRESENT CASE, LD. DIT(E) HAS NOT BR OUGHT ANY MATERIAL ON RECORD TO SHOW THAT PROVISIONS OF SECTION 13(1)(A) OR 13(1)( B) APPLIES TO THE ASSESSEE, DENIAL OF REGISTRATION U/S 12AA FOR ALLEGED VIOLAT ION OF SECTION 11(1)(A), IN OUR VIEW, IS NOT JUSTIFIED. MOREOVER, APPLICABILITY OF SECTION 13 OF THE ACT CAN BE LOOKED INTO BY THE AO AT THE TIME OF ASSESSMENT PR OCEEDINGS AND NOT BY LD. DIT(E) WHILE EXERCISING POWER U/S 12AA OF THE ACT. IN AFORESAID VIEW OF THE MATTER, WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF LD. DIT(E) AND DIRECT HIM TO GRANT REGISTRATION TO THE APPELLANT TRUST U/S 12AA OF THE ACT'. 11. IN VIEW OF THE ABOVE DECISION OF THE CO-ORDINAT E BENCH, WE FIND THAT THE TRUST/INSTITUTION HAVING CHARITABLE AND RELIGIO US OBJECTS WILL ALSO BE ELIGIBLE FOR EXEMPTION U/S. 11, UNLESS HIT BY RESTR ICTIONS IMPOSED U/S. 13(1)(A) OR 13(1)(B) OF THE ACT. THE DIT(E) HAS NO T BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT PROVISIONS OF SECTION 13(1)( A) OR 13(1)(B) APPLIES TO ASSESSEE, DENIAL OF REGISTRATION U/S. 12AA FOR ALLE GED VIOLATION OF SECTION 11 IN OUR VIEW IS NOT JUSTIFIED. MOREOVER, APPLICA BILITY OF SECTION 13 OF THE ACT CAN BE LOOKED INTO BY THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AND NOT BY THE DIT(E) WHILE EXERCISING POWER U/S. 12AA OF THE ACT. MOREOVER, AT PRESENT ASSESSEE ALSO EXCLUD ED THE THREE OBJECT CLAUSES OBJECTED TO BY THE DIT(E). THEREFORE, THE OBJECTIONS RAISED BY DIT(E) DOES NOT SURVIVE. IN VIEW OF THE ABOVE, WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF DIT(E) AND DIRECT HIM TO GRAN T REGISTRATION TO THE APPELLANT-TRUST U/S. 12AA OF THE ACT FROM THE PERIO D IT APPLIED FOR REGISTRATION. ACCORDINGLY, APPEAL IN ITA NO. 1263/ HYD/2013 IS CONSIDERED ALLOWED. I.T.A. NOS. 1263/HYD/2013 & 1799/HYD/2014 VIVEKANANDA SEVA SAMITHI :- 12 -: 12. SINCE THE DIT(E) REFUSED APPROVAL U/S. 80G ONLY ON THE REASON THAT REGISTRATION U/S. 12AA WAS DENIED TO ASSESSEE, WE DIRECT THE DIT(E) TO EXAMINE THE APPLICATION AND GRANT REGISTRATION U /S. 80G, IF OTHER CONDITIONS ARE SATISFIED. ACCORDINGLY, APPEAL IN I TA NO. 1799/HYD/2014 IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. THE ORDER OF DIT(E) ON THIS ISSUE IS SET ASIDE WITH A DIRECTION TO CONSIDER THE APPLICATION AND GRANT REGISTRATION U/S. 80G AFTER DUE VERIFICATION. 13. IN THE RESULT, BOTH THE APPEALS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 29 TH JULY, 2015 TNMM COPY TO : 1. VIVEKANANDA SEVA SAMITHI, H.NO. 17-132/1, RAMAYA MPET, MEDAK DISTRICT. C/O. P. KRISHNA REDDY, 2-1-267/268, NALLAKUNTA, HYDERABAD. 2. THE DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERAB AD. 3. THE DDIT(E)-I, HYDERABAD. 4. D.R. ITAT, HYDERABAD. 5. GUARD FILE.