ITO, CHENNAI V. Shri Shirdi Saibaba Spiritual and Charitable Trust, CHENNAI

ITA 1879/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8071 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 21-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 20-08-2015
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Charitable institution
• Section: 143(3); 142(1); 12A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , !' . ! $ , % & ' [ BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.1879/MDS/2015 & C.O.NO.130/MDS/2015 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER (EXEMPTIONS) WARD III CHENNAI VS. M/S SHRI SHIRDI SAIBABA SPIRIT UAL AND CHARITABLE TRUST SAI BUSINESS POINT 17, II FLOOR MOUNT ROAD, LITTLEMOUNT CHENNAI 600 015 [PAN AAATS 3448 J ] (APPELLANT) (RESPONDENT /CROSS OBJECTOR ) / APPELLANT BY : SHRI SUPRIYOPAL, JCIT /RESPONDENT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE / DATE OF HEARING : 21 - 09 - 2016 ! / DATE OF PRONOUNCEMENT : 07 - 1 1 - 2016 ( / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE AND THE CROSS OBJECT ION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CO MMISSIONER OF INCOME-TAX (APPEALS)-17, CHENNAI, DATED 11.6.2015 I N I.T.A.NO.152/14-15 FOR ASSESSMENT YEAR 2011-12 PASS ED U/S 143(3) AND 250 OF THE INCOME-TAX ACT, 1961(IN SHORT THE A CT). ITA NO.1879/15 C.O 130/15 :- 2 -: 2. THE REVENUE HAS FILED THE APPEAL CHALLENGING THE A CTION OF THE CIT(A) IN TREATING THAT THE ASSESSEE IS ELIGIB LE FOR EXEMPTION U/S 11 AND ACTIVITIES OF THE ASSESSEE ARE NOT RELIGIOU S AND IRRESPECTIVE OF THE TOTAL RECEIPTS OF SALE OF EDUCATIONAL ARTICLES EXCEEDS THE THRESHOLD LIMIT AS ENVISAGED IN SECOND PROVISO TO SEC. 2(15) OF THE ACT AND ALSO THE CASE LAWS RELIED UPON BY THE CIT(A) ARE DISTING UISHABLE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARITABLE TRUST REGISTERED U/S 12A OF THE ACT VID E NO.DIT NO.2(191).. DATED 24.9.1992AND HAS BEEN FILING RETURN OF INCOM E REGULARLY AND FOR THE IMPUGNED ASSESSMENT YEAR THE RETURN OF INCOME W AS FILED ON 27.9.2011. SUBSEQUENTLY, NOTICE U/S 143(2) WAS IS SUED ALONGWITH NOTICE U/S 142(1) CALLING FOR SPECIFIC DETAILS. IN COMPLIANCE, LD. AR OF THE ASSESSEE APPEARED AND FILED THE INFORMATION AN D ALSO PRODUCED THE RECORDS FOR VERIFICATION OF THE ASSESSING OFFIC ER. THE ASSESSING OFFICER, ON PERUSAL OF THE RECORDS TO THE INSTITUTI ON FOUND THAT THE ACTIVITIES ARE MOSTLY CHARITABLE OR RELIGIOUS AND T HE REGISTRATION WAS GRANTED U/S 12A OF THE ACT AS A PUBLIC CHARITABLE INSTITUTION AND ALSO APPROVAL U/S 80G(5) OF THE ACT WAS GRANTED TILL 31 .3.2012. THE LD. AR FILED THE DETAILS ON NATURE OF ACTIVITIES UNDERTAKE N ALONGWITH COPY OF THE TRUST DEED, REGISTRATION CERTIFICATE AND ALSO P RODUCED THE BOOKS OF ACCOUNT. THE MAIN ACTIVITY OF THE TRUST BEING SPIR ITUAL AND CHARITABLE ITA NO.1879/15 C.O 130/15 :- 3 -: TRUST OF PUBLIC NATURE IS TO MAINTAIN SPIRITUAL HAL L AND CONDUCTED MUSIC CONCERTS, LECTURES, CULTURAL DANCES/VOCAL PERFORMAN CES ETC TO PROMOTE VARIOUS FORMS OF ART, CONDUCTING POOR FEEDING ACTIV ITIES AND ASSISTING IN PRESERVING OF CATTLE AND OTHER ANIMALS, CONDUCTING MEDICAL CAMPS TO PROVIDE BASIC MEDICAL FACILITIES AND FINANCIAL ASSI STANCE FOR DESERVING POOR PEOPLE FOR MEDICAL TREATMENT AND SURGERIES ETC AND GRANTING FINANCIAL ASSISTANCE BY PROVIDING BOOKS, STUDY MATE RIALS TO POOR STUDENTS. FURTHER HELPING OTHER CHARITABLE ORGANI ZATIONS HAVING SIMILAR OBJECTS. THE ASSESSING OFFICER HAVING CONS IDERED THE ACTIVITIES, CALLED FOR FURTHER CLARIFICATIONS AND THE FINANCIA L STATEMENTS WERE PRODUCED IN THE ASSESSMENT PROCEEDINGS. THE LD. AR SUBMITTED THAT THE ASSESSEE IS CARRYING ON RELIGIOUS ACTIVITIES C ANNOT BE TRUE AS IT IS VERY DIFFICULT TO PINPOINT FOR WHICH PARTICULAR REL IGION THESE ACTIVITIES ARE CARRIED OUT. THE NATURE OF EXPENDITURE WILL PROVE THAT NO AMOUNT WAS SPENT IN PROPAGATING OR FAVOURING A PARTICULAR RELI GION. SHIRDI SAIBABA HIMSELF HAD NO BELIEF IN ANY PARTICULAR RELIGION AN D HAS NEVER PROPAGATED ANY PARTICULAR RELIGION. IT WAS SUBMITT ED THAT IF IT IS ACCEPTED THAT THE ACTIVITIES ARE OF RELIGIOUS NATUR E, THESE ACTIVITIES ARE FOR THE GENERAL PUBLIC AND IS NOT INTENDED FOR ANY PARTICULAR COMMUNITY OR CASTE TO BE DISQUALIFIED UNDER SECTION 13(1)(B) OF THE ACT. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE IS SELLING DEVOTIONAL OBJECTS SUCH AS SPIRITUAL BOOKS, CASSETTES AND CDS AND THESE ACTIVITIES ITA NO.1879/15 C.O 130/15 :- 4 -: ARE FOR THE ADVANCEMENT OF PUBLIC UTILITY. THE ASS ESSING OFFICER ON PERUSAL OF STOCK BOOKS AND BOOKS OF ACCOUNT FOUND T HAT THE ASSESSEE IS SELLING THE DEVOTIONAL ARTICLES WITH A PROFIT MA RGIN. HE RELIED ON THE JUDGMENT OF ANDHRA PRADESH HIGH COURT IN THE CASE O F ANDHRA PRADESH SEED CERTIFICATION AGENCY VS CHIEF CIT, 28 TAXMANN. COM 288 DATED 17.12.2012 IS OF THE OPINION THAT ANY ACTIVITY COND UCTED IS IN THE NATURE OF TRADE, COMERCE OR BUSINESS AND SUCH ACTIV ITIES CANNOT BE HELD TO BE CHARTABLE PURPOSE U/S 2(15) OF THE ACT. THE ASSESSEE-TRUST REGISTERED U/S 12A OF THE ACT AND ALSO APPROVED U /S 80G, SINCE THE ACTIVITIES ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY SERVICE, THE PROVISIONS OF SEC. 2(15) ARE INVOKED. FINALLY, THE ASSESSING OFFICER CONCLUDED THAT THE INCOME IS NOT CONFINED TO THE INCOME DERIVED FROM SALE OF CDS AND DEVOTIONAL ACTI VITIES AND THE SURPLUS IS DERIVED FROM THESE ACTIVITIES AND DENIE D EXEMPTION U/S 11 OF THE ACT AND PASSED ORDER U/S 143(3) DATED 31.3. 2014. 4. AGGRIEVED, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) IN THE APPELLATE PROCEEDINGS, THE LD. AR OF THE ASSESSEE ARGUED THE GROUNDS AND ALSO REITERATED THE SUBMISSI ONS MADE IN THE ASSESSMENT PROCEEDINGS. FURTHER, IN THE WRITTEN SU BMISSION ENVISAGED VARIOUS FACTS AND THE OBJECTS. THE CIT(A) AFTER CO NSIDERING THE WRITTEN SUBMISSIONS AND ALSO THE OBJECTS OF THE ASSESSEE A S PER THE TRUST DEED DATED 23.8.1993, SATISFIED THAT THE ACTIVITIES OF T HE ASSESSEE FALL WITHIN ITA NO.1879/15 C.O 130/15 :- 5 -: THE LIMBS OF CHARITABLE PURPOSE WHEREAS THE ASSESSI NG OFFICER HAS INITIATED THE ACTION OF TAXABILITY WITHOUT CONSIDE RING THE FACTS THAT THE PROFIT IS ONLY INCIDENTAL TO ACHIEVEMENT OF THE MA IN OBJECTS. THE CIT(A) FURTHER RELIED ON VARIOUS ASPECTS OF ACTIVIT IES DEALT WITH BY THE ASSESSEE AND GAVE A FINDING THAT THE DEVOTEES OF SA IBABA MAY NOT LIKE TO CONNECT DEVOTION OF SAIBABA WITH A LIMITED CIRCL E OF ANY RELIGIOUS GROUP. AS THE SHIRIDI SAIBABA ENJOYS UNIVERSAL FOL LOWERS AND THE ASSESSEE HAS CONSTRUCTED MEDITATION HALL AND HAD LA RGE NUMBER OF PEOPLE FROM WORLDWIDE IRRESPECTIVE OF THEIR RELIGI ON COME TO THE MEDITATION. THE ASSESSEE HAS ALSO SPENT ` 41.25 LAKHS TOWARDS MAINTENANCE OF MEDITATION CENTRE. APART FROM THAT THE DEVOTEES WHO VISIT MEDITATION CENTRE ARE INTERESTED DUE TO LATEN T SPIRITUAL IMPULSE REVERBERATING WITHIN THEM TO BUY SPIRITUAL BOOKS AN D DEVOTIONAL ARTICLES AND CDS ABOUT SHIRIDI SAIBABA AT A REASONABLE PRICE . THE MAIN CUX OF THE OBJECTS WHICH THE ASSESSEE CARRIED ON BEING RE LIEF OF THE POOR, EDUCATION, AND MEDICAL RELIEF, THREE LIMBS FOUND P LACE WITHIN THE PROVISIONS OF CHARITABLE PURPOSE. THE CIT(A) REL IED ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF CST VS SAI PUBLICA TION FUND, 258 ITR 70 AND CIT VS DAWOODI BOHRA JAMAT, 364 ITR 31, WHER EIN THE IT WAS HELD THAT PUBLICATION OF BOOKS, LITERATURE ETC BY T RUST FOR SPREADING MESSAGE OF SAIBABA OF SHIRIDI AMONG DEVOTEES IS NOT BUSINESS. SINCE THE MAIN ACTIVITY IS NOT A BUSINESS, THEN ANY TRANS ACTION INCIDENTAL OR ITA NO.1879/15 C.O 130/15 :- 6 -: ANCILLARY WOULD NOT NORMALLY AMOUNT TO BUSINESS UNLESS AN INDEPENDENT INTENTION TO CARRY ON BUSINESS IN THE I NCIDENTAL OR ANCILLARY ACTIVITY IS ESTABLISHED. SIMILARLY, THE CIT(A) REL IED ON THE MADRAS HIGH COURT JUDGMENT IN THE CASE OF TIRUMALA TIRUPATI DEV ASTHANAM VS STATE OF MADRAS, 29 STC 266 AND FOUND THAT THE ASSESSEE- TRUST IS NOT CARRYING ON TRADE, COMMERCE ETC AS ITS MAIN OBJECT IS TO SPREAD MESSAGE OF SAIBABA. WITH THESE OBSERVATIONS, THE C IT(A) HAS GIVEN ELABORATE FINDINGS THAT THE ASSESSEE IS A PUBLIC C HARITABLE TRUST AND THE ACTIVITIES ARE COVERED WITHIN THE MAIN LIMB OF SEC. 2(15) OF THE ACT BEING CHARITABLE PURPOSE AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED, THE REVENUE IS IN APPEAL. BEFORE US, TH E LD. DR ARGUED THE GROUNDS AND SUBMITTED THAT THE CIT(A) HA S ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION 11 OF THE ACT AND THE ACTIVITIES ARE IN THE NATURE OF CHARITABLE. IRRESP ECTIVE OF THE FACT THAT THE ACTIVITIES FELL IN THE LIMB OF ADVANCEMENT OF A NY PUBLIC CHARITABLE UTILITY AND THE ACTIVITY OF SELLING DEVOTIONAL ARTI CLES DOES NOT FIND PLACE AND IT EXCEEDS THE THRESHOLD LIMIT AS ENVISAGED IN SECOND PROVISO TO SEC. 2(15) OF THE ACT, THE DECISIONS RELIED UPON BY THE CIT(A) ARE DISTINGUISHABLE AND PRAYED FOR SETTING ASIDE THE OR DER OF THE CIT(A). 6. CONTRA, THE LD. AR RELIED ON THE ORDER OF THE CIT(A ) AND OPPOSED TO THE GROUNDS. ITA NO.1879/15 C.O 130/15 :- 7 -: 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERI AL ON RECORD AND THE JUDICIAL DECISIONS CITED. THE LD. D R ENVISAGED BEFORE THAT THE ACTIVITIES CONDUCTED BY THE ASSESSEE ARE IN THE NATURE OF TRADE, BUSINESS OR COMMERCE AND THEY ARE HIT BY THE PROVISO TO SEC. 2(15) OF THE ACT AND THE PROFIT MOTIVE IS ALSO A CR ITERIA IN RUNNING THE DEVOTIONAL SERVICES. WHEREAS THE LD. AR POINTED OU T THAT THE ASSESSEE-TRUST WAS REGISTERED WITH THE INCOME TAX D EPARTMENT IN THE YEAR 1993 U/S 12A AND HAS BEEN RENDERING SERVICE T O THE SOCIETY BY PROVIDING SPIRITUAL AND MORAL TEACHINGS. ON PERUSA L OF THE ASSESSMENT ORDER AND THE CIT(A)S ORDER, WE FIND THAT THE ASSE SSING OFFICER HAS RELIED ON THE FINDING THAT THE ASSESSEE-TRUST IS S ELLING DEVOTIONAL ARTICLES AT A PROFIT MOTIVE AND THE ACTION OF THE ASSESSEE-TRUST IS IN THE NATURE OF TRADE, COMMERCE AND BUSINESS AND RELIED O N THE DECISIONS. THE ASSESSING OFFICER HAS CONSIDERED ONLY ONE SIDE OF THE COIN WITHOUT FOCUSING ON THE CLEAR FACTS THAT THE OBJECTS OF THE TRUST AS DISCUSSED AT PAGE 3 OF THE ASSESSMENT ORDER FALLS WITHIN THE MEA NING OF CHARITABLE PURPOSE AND THE ASSESSEE-TRUST HAS BEEN UNDERTAK ING THESE ACTIVITIES AS DISCLOSED IN THE INCOME AND EXPENDITURE ACCOUNT FOR THE SAID ASSESSMENT YEAR. THE TRUST IS IN EXISTENCE FOR MORE THAN THREE DECADES AND HAS GROWN OVER A PERIOD WHEREAS THE PROFIT ON S ALE OF THE DEVOTIONAL ARTICLES HAS BEEN UTILIZED TO COMPLY WIT H THE OBJECTS OF THE TRUST. FURTHER, THE CIT(A) HAS ELABORATELY DISCUSS ED ON THE ITA NO.1879/15 C.O 130/15 :- 8 -: APPLICABILITY OF THE ACTIVITIES, USAGE OF THE FUNDS FOR THE BENEFIT OF SPREADING THE MESSAGE OF SHIRIDI SAIBABA. WE FIND THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE OF SELLING SPIRITUAL BO OKS AND DEVOTIONAL ARTICLES ARE COVERED WITHIN THE PROVISIONS OF SEC. 2(15) OF THE ACT AND THE MAIN INCOME OF THE TRUST AROSE ON DISTRIBUTION OF POOJA ARTICLES AND SALE OF CDS AND DEVOTIONAL ARTICLES AND IT DOES NO T CARRY ON ANY ACTIVITY IN THE NATURE OF TRADE OR COMMERCE. AS PE R AMENDMENT TO PROVISO TO SEC. 2(15),THE RELIEF TO THE POOR, EDUCA TION AND MEDICAL RELIEF WHICH THE ASSESSEE-TRUST HAS BEEN CARRYING OUT FALLS WITHIN THE LIMBS. FURTHER, TEACHINGS OF SAIBABA IS NOT RESTRI CTED TO ANY PARTICULAR RELIGION OR CASTE AND IT IS UNIVERSAL TEACHINGS AND HAVE FOLLOWERS IN INDIA AND VARIOUS PARTS OF THE WORLD. THE ACTIVITIE S DOES NOT FALL IN THE CATEGORY OF BUSINESS AND THE DECISIONS RELIED ON B Y THE CIT(A) EXPLAIN THAT THE MAIN ACTIVITY IS NOT BUSINESS AND THE TRAN SACTION OF PROFIT IS ONLY INCIDENTAL OR ANCILLARY WHEREAS THE TRUST WAS ESTABLISHED FOR THE PURPOSE OF SPREADING MESSAGE OF THE TEACHINGS OF SA IBABA. THEREFORE, WE ARE OF THE OPINION THAT THE ACTIVITIES OF THE A SSESSEE QUALIFY FOR CHARITABLE PURPOSE AND THE CIT(A) HAS DISCUSSED ELA BORATELY THE EXPLANATIONS OF THE ASSESSEE AND ALLOWED THE APPEA L. SO, CONSIDERING THE APPARENT FACTS AND MATERIAL ON RECORD, WE DO NO T FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHOL D THE SAME. ITA NO.1879/15 C.O 130/15 :- 9 -: 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. 9. THE ASSESSEE HAS FILED THE CROSS OBJECTION IN SUPP ORT OF THE ORDER OF THE CIT(A). SINCE WE HAVE DISMISSED THE A PPEAL OF THE REVENUE THE CROSS OBJECTION HAS BECOME INFRUCTUOUS AND HENCE, DISMISSED. 10. TO SUMMARIZE, THE APPEAL OF THE REVENUE AND THE CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 7 TH NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER ( . ! $ ) (G. PAVAN KUMAR) % / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 7 TH NOVEMBER, 2016 RD %& '()( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+, - / DR 3. *./ / CIT(A) 6. ,01 / GF