Ave Maria Educational and Charitable Trust, Kanyakumari V. CIT - I, Madurai

ITA 2182/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73705 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARI RAJ
• Assessee Lawyers: A F FERNANDEZ
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . , . . ! , ' # [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.2182/MDS/2013 / ASSESSMENT YEAR : N.A AVE MARIA EDUCATIONAL & CHARITABLE TRUST PANARAVIALI, KANNANKARAI VEEANNOOR KANYAKUMARI DISTRICT 629 177 VS. THE COMMISSIONER OF INCOME-TAX-I MADURAI [PAN AACTA 0426 G] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : SHRI A.F. FERNANDEZ, CA /RESPONDENT BY : SHRI HARI RAJ, JCIT / DATE OF HEARING : 13-02-2014 ! / DATE OF PRONOUNCEMENT : 18-02-2014 ( / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX-I MADURAI DATED 11.11.2013, PASSED IN CASE NO.464/408/2007-08/CIT-I, REJECTING ITS APPLICATION FOR I.T.A.NO.2182/13 :- 2 -: APPROVAL UNDER SECTION 80G(5) OF THE INCOME-TAX AC T, 1961 (IN SHORT THE ACT). 2. THE SOLE AND SUBSTANTIVE GRIEVANCE OF THE ASSESSEE IN THE PRESENT APPEAL IS THAT THE CIT HAS WRONGLY REJECTE D ITS APPLICATION SEEKING APPROVAL U/S 80G OF THE ACT BY HOLDING ITS NATURE TO BE RELIGIOUS FOR THE BENEFIT OF A PARTICULAR COMMUN ITY. IT HAS BEEN CONTENDED THAT THE CIT ERRED IN DENYING THE AFORES AID APPROVAL BY NOT TAKING INTO CONSIDERATION RELEVANT PROVISIONS OF SE CTION 80G(5B) WHICH ACTS AS A NON-OBSTANTE CLAUSE TO SECTION 80G(5) EXP LANATION 3 AND PRAYS FOR ACCEPTANCE OF THE APPEAL. 3. THE REVENUE HAS DRAWN SUPPORT FROM THE ORDER OF THE CIT REJECTING ASSESSEES APPLICATION AND PRAYS FOR CON FIRMATION THEREOF. 4. THE ASSESSEE IS A TRUST WHICH WAS GRANTED REGIS TRATION U/S 12AA ON 31.3.2008 WITH EFFECT FROM 16.7.2007. THERE AFTER, ON 13.5.2003, IT HAD APPLIED FOR APPROVAL U/S 80G(5) OF THE ACT. THE SAME STANDS REJECTED BY THE CIT BY ADOPTING THE FOL LOWING REASONS: 2. REPORTS FROM THE LOWER AUTHORITIES HAVE BEEN OBTAINED AND PERUSED. BOTH THE JCIT AND ASSESSING OFFICER HAVE NOT RECOMMENDED THE CASE FOR GRANT OF APPROVAL U/S 80G OF THE I.T. ACT. ON PERUSAL OF PAP ERS FILED ALONG WITH APPLICATION IT IS FOUND THAT THE T RUST HAS BEEN EXECUTED A DEED OF SUPPLEMENT ON 24.02.2009 I.T.A.NO.2182/13 :- 3 -: AND REGISTERED ON 25.02.2009, THERE IS AN OBJECT C LAUSE WHICH READS AS UNDER: 'THE EDUCATIONAL AND ALL OTHER BENEFITS UNDER THE TRUST SHALL BE MAINLY FOR THE BENEFIT AND DEVELOPMENT OF THE CHRISTIAN RELIGIOUS MINORITY COMMUNITY AND MORE PARTICULARLY CHRISTIAN RELIGIOUS MINORITY COMMUNITY IN RURAL VILLAGE. ___ \ )4(~ THIS HAS BEEN ADDED AS CLAUSE III A (15) OF THE PRI NCIPAL DEED. THEREFORE, THE TRUST IS NOT ELIGIBLE FOR GRAN T OF RECOGNITION U/S 80G OF THE ACT. FURTHER, EXPLANATIO N 3 OF SECTION 80G(5) DEFINES CHARITABLE PURPOSE TO EXCLUD E ANY ACTIVITY WHICH IS WHOLLY OR SUBSTANTIALLY WHOLE OF WHICH IS RELIGIOUS IN NATURE. FURTHER, IT HAS BEEN HELD BY THE APEX COURT IN THE CASE OF UPPER GANGES SUGAR MI LLS LTD. VS. CIT (1997) (227 ITR 578) THAT ESTABLISHMENT OF PUBLIC PLACES OF WORSHIP AND PRAYER HALLS WILL BE TREATED AS A RELIGIOUS PURPOSE. THE PRESENCE OF EVEN ONE RELIGIOUS PURPOSE IN THE DEED, WHEREIN INCOME APPLI ED FOR SUCH OBJECT OR NOT, WILL DISENTITLE THE TRUST F OR SUCH APPROVAL. 2.1 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED O PINION THAT THIS TRUST/SOCIETY IS NOT ELIGIBLE FOR EXEMPTI ON U/S 80G(5) OF THE I.T. ACT AS THE TRUST IS ENGAGED IN R ELIGIOUS ACTIVITIES. THEREFORE, THE ASSESSEE HAS FILED THE INSTANT APPE AL. 5. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CAS E FILE. THE ONLY REASON ADOPTED BY THE CIT IS THAT THE ASS ESSEE BEING ENGAGED IN RELIGIOUS ACTIVITIES, IS NOT ENTITLED FO R APPROVAL U/S 80G(5) OF THE ACT. AT THE SAME TIME, WE NOTICE THAT WITH EFFECT FROM 1.4.2000, THE LEGISLATURE IN SECTION 80G(5B)HAS ITS ELF PROVIDED FOR APPROVAL U/S 80G IN CASE THE EXPENDITURE OF FUNDS DURING ANY PREVIOUS YEAR IN CASE OF A RELIGIOUS TRUST DOES NOT EXCEED 5% OF THE TOTAL I.T.A.NO.2182/13 :- 4 -: INCOME. IN OTHER WORDS, THIS CAP OF EXPENDITURE HAS BEEN POSTULATED. ADMITTEDLY, THE ORDER OF THE CIT UNDER CHALLENGE, DOES NOT TAKE INTO ACCOUNT THIS CLINCHING PROVISION. IN THESE CIRCUMS TANCES, KEEPING IN MIND THE FACT THAT THE ASSESSEE HAS ALREADY BEEN G RANTED REGISTRATION U/S 12AA OF THE ACT, WE DEEM IT APPROPRIATE TO ALLO W THE INSTANT APPEAL AS WELL AND LEAVE IT FOR THE DEPARTMENTAL AUTHORITI ES TO EXAMINE THE EXPENDITURE OF THE ASSESSEE-TRUST I.E WHETHER OR NOT IT EXCEEDS 5% AS PRESCRIBED UNDER THE ACT. 6. THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 18 TH OF FEBRUARY, 2014, AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S. S. GODARA) JUDICIAL MEMBER DATED: 18 TH FEBRUARY, 2014 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR