THE MULUND BHAJANA, MUMBAI V. DIT (E), MUMBAI

ITA 1466/MUM/2010

• Counselvise Citation: 146619914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 07-04-2011
• Assessment Year: misc
• Appeal Filed On: 23-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: K GOPAL; SA TYENDRA PANDEY
• Keywords: Charitable institution
• Section: 80G; 12A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.1466/M/2010 THE MULUND BHAJANA SAMAJ THE DIRECTOR OF INCOMET AX(EXEMPTION) KAMAL KUNJ, 1 ST FLOOR ROOM NO.116, PIRAMAL CHAMBERS ZAVER ROAD, MULUND (WEST) PAREL, MUMBAI 400 012. MUMBAI 400 080. PAN : AAATT 3617 Q APPELLANT RESPONDENT ASSESSEE BY : S/SHRI K.GOPAL & SA TYENDRA PANDEY REVENUE BY : MS. ASHIMA GUPTA O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 5.2.10 OF DIRECTOR OF INCOME-TAX (EXEMPTION). THE ONLY DISPUT E RAISED BY THE ASSESSEE IS REGARDING GRANT OF CERTIFICATE UNDER SECTION 80G OF THE INCOME-TAX ACT. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE TRUST WHICH WAS ALREADY REGISTERED UNDER SECTION 12A OF THE INCOME- TAX ACT HAD FILED APPLICATION DATED 24.4.2009 FOR GRANT OF EXEMPTION UNDER SECTION 80G. THE DONATION MADE TO A TRUST CERTIFIED UNDER SECTION 80 G ARE ELIGIBLE FOR DEDUCTION IN CASE OF THE DONOR. THE DIT(E) OBTAINED DETAILS O F EXPENDITURE FROM WHICH IT 2 WAS NOTED THAT THE TRUST HAD EXPENDED SUMS OF RS.4, 79,778/- DURING THE FINANCIAL YEAR 2005-06, RS.3,50,201/- DURING THE FI NANCIAL YEAR 2006-07 AND RS.1,76,524/- DURING THE FINANCIAL YEAR 2007-08 UND ER THE HEAD RELIGIOUS. THE DIT(E) NOTED THAT EXPENDITURE ON RELIGIOUS ACTI VITIES EXCEEDED THE 5% LIMIT ALLOWED IN SECTION 80G(5B) AND THEREFORE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE APPLICATION FOR CERTIFICATE UNDER SECTION 8 0G SHOULD NOT BE REJECTED. THE ASSESSEE SUBMITTED THAT THE EXPENDITURE HAD BEE N INCURRED ON RELIGIOUS FESTIVAL WHICH INVOLVED SUBSTANTIAL CULTURAL ASPECT S FOR THE BENEFIT OF PUBLIC AT LARGE AND THEREFORE MOST OF IT WAS OF THE NATURE OF EXPENDITURE ON SOCIAL WELFARE AND CULTURAL ADVANCEMENT. THE ASSESSEE PLAC ED RELIANCE ON THE JUDGMENT OF HONBLE HIGH COURT OF GUJARAT IN CASE O F ORPAT CHARITABLE TRUST VS CIT (256 ITR 690). THE DIT(E) HOWEVER DID NOT ACCEP T THE CONTENTION THAT EXPENDITURE WAS ON CHARITABLE PURPOSE AS IN THE AUD ITED PROFIT AND LOSS ACCOUNT THE EXPENSES HAD BEEN SHOWN UNDER THE HEAD RELIGIO US ACTIVITIES. THE DIT(E) ALSO DISTINGUISHED THE JUDGMENT OF HONBLE HIGH COU RT OF GUJARAT IN CASE OF ORPAT CHARITABLE TRUST (SUPRA) WHICH RELATED TO THE CONTRAVENTION OF THE PROVISIONS OF SECTION 11(5) AND WAS NOT RELEVANT TO SECTION 80G. SINCE THE EXPENDITURE ON RELIGIOUS ACTIVITIES WAS MORE THAN T HE 5% LIMIT OF THE INCOME AS PRESCRIBED UNDER SECTION 80G(5B) DIT(E) REJECTED TH E APPLICATION FOR CERTIFICATE UNDER SECTION 80G. AGGRIEVED BY THE SAID DECISION T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LEARNED AR FOR THE ASSESSEE REITER ATED THE SUBMISSION MADE BEFORE DIT(E) THAT THE EXPENDITURE ALSO RELATE TO CULTURAL AND SOCIAL ASPECTS HAVING CHARITABLE IN NATURE. IT WAS ALSO SU BMITTED THAT THE EXPENDITURE HAD BEEN INCURRED OUT OF CONTRIBUTIONS MADE FOR THE PUBLIC AT LARGE FOR THE FESTIVALS AND THEREFORE THERE WAS NO INCOME ON ACCO UNT OF DONATION WHICH COULD 3 BE CONSIDERED FOR THE PURPOSE OF SECTION 80G. IT WA S FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT BEEN PROVIDED WITH FAIR AND REASON ABLE OPPORTUNITY AND IT WAS POINTED OUT THAT SPECIFIC GROUND IN THIS REGARD HAS BEEN RAISED BY THE ASSESSEE. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF DIT(E) AND ON THE FINDINGS GIVEN THEREIN. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING GRANT OF CERTIF ICATE UNDER SECTION 80G OF THE INCOME-TAX ACT. THE DONATION MADE TO A TRUST WHICH HAVE BEEN GRANTED EXEMPTION CERTIFICATE UNDER SECTION 80G ARE ALLOWED DEDUCTION UNDER SECTION 80G OF THE INCOME-TAX ACT. THERE ARE CERTAIN CONDIT IONS PRESCRIBED UNDER SECTION 80G(5) FOR GRANT OF CERTIFICATE UNDER SECTI ON 80G AND ONE OF THE CONDITIONS AS MENTIONED IN SECTION 80G(5B) IS THAT EXPENDITURE OF RELIGIOUS NATURE SHOULD NOT EXCEED 5% OF TOTAL INCOME. DIT(E) HAD NOTED FROM THE AUDITED ACCOUNTS THAT THE EXPENDITURE SHOWN UNDER T HE HEAD RELIGIOUS HAD EXCEEDED THE 5% MONETARY LIMIT PRESCRIBED UNDER SEC TION 80G(5B). THE CASE OF THE ASSESSEE IS THAT SUCH EXPENDITURE ALSO INCLUDED EXPENDITURE ON ACTIVITIES RELATING TO THE SOCIAL WELFARE AND CULTURAL ADVANCE MENT OF THE PUBLIC AT LARGE WHICH WILL NOT COME UNDER THE HEAD RELIGIOUS EXPEND ITURE. THE LEARNED AR HAS ALSO SUBMITTED THAT SUCH EXPENDITURE HAD BEEN INCUR RED OUT OF CONTRIBUTIONS MADE BY THE PUBLIC AT LARGE FOR THE SPECIFIC PURPOS E OF HOLDING FESTIVALS AND IT WAS NOT A DONATION TO THE TRUST AND THEREFORE SUCH CONTRIBUTIONS COULD NOT BE CONSIDERED FOR THE PURPOSE OF LIMITATION UNDER SECT ION 80G. IT HAS ALSO BEEN SUBMITTED THAT FAIR AND REASONABLE OPPORTUNITY HAD NOT BEEN ALLOWED TO THE ASSESSEE BEFORE REJECTING THE APPLICATION. 4 5. WE HAVE CAREFULLY CONSIDERED THE VARIOUS ASPECTS . DIT(E) HAS MENTIONED CERTAIN EXPENDITURE FOR FINANCIAL YEARS 2005-06, 20 06-07 AND 2007-08 TO BE OF THE NATURE OF RELIGIOUS EXPENDITURE. HOWEVER, DETAI LS OF SUCH EXPENDITURE ARE NOT GIVEN AND THEREFORE IT IS NOT POSSIBLE TO ASCER TAIN TRUE NATURE OF EXPENDITURE. THE CLAIM OF THE ASSESSEE THAT THE EXP ENDITURE ALSO INCLUDED SUBSTANTIAL PART OF ACTIVITIES RELATING TO SOCIAL W ELFARE AND CULTURAL ADVANCEMENT CANNOT BE ADJUDICATED WITHOUT OBTAINING THE FULL DE TAILS OF EXPENDITURE. MOREOVER THE CLAIM OF THE ASSESSEE THAT THE EXPENDI TURE HAD BEEN INCURRED OUT OF CONTRIBUTIONS FROM PUBLIC SPECIFICALLY MADE FOR THE PURPOSE OF FESTIVALS AND THEREFORE SUCH CONTRIBUTIONS COULD NOT BE CONSIDERE D AS DONATION FOR THE PURPOSE OF LIMITATION UNDER SECTION 80G(5B). THIS A SPECT IS ALSO REQUIRED TO BE EXAMINED AFTER PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDER OF DIT(E) AND RESTORE THE MATTER BA CK TO HIM FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION IN THE LIGH T OF OBSERVATIONS MADE ABOVE AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 7. ORDER WAS PRONOUNCED IN THE OPEN COURT 20.04.201 1. SD/- SD/- ( D. K. AGARWAL ) (RAJEND RA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5 5. THE DR J BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK