M.RM.Charities, CHENNAI V. CIT, Madurai

ITA 2190/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5026 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-05-2011
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J NICHANE
• Keywords: Charitable institution; Question of law
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B ENCH A C HENNAI BEFORE SHRI U.B. BEDI , J.M. AND SHRI N.S. SAINI , AM .. I.T.A. NO. 2190 /MDS/2 0 1 0 ASSESSMENT YEAR S 2009 - 10 M.R.M. CHARITIES M.R.M. HOUSE 15, PERIYANAN CHETTIAR LANE KARAIKUDI 630 001. (PAN NO. AACTM 3157 C ) VS. THE C.I.T I MADURAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SMT. J. NICHANE DEPARTMENT BY : SHRI SHAJI P. JACOB O R D E R PER N.S . SAINI, A.M : - TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT - I , MADURAI DATED 18 . 0 8 .20 10 FOR ASSESSMENT YEAR 2009 - 10. PAGE 2 OF 8 I.T.A. NO. 2190 MDS/20 1 0 2. T HE SOLE ISSUE INVOLVED IN TH IS APPEAL IS THAT THE COMMISSIONER OF INCOME - TAX ERRED IN REJECTING THE APPLICATION FOR APPROVAL U/S 80G OF THE INCOME - TAX ACT, 1961 [IN SHORT, THE ACT]. 3. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL ON RECORD, WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE TRUST WHICH IS REGISTERED U/S 12A OF THE ACT HAS APPLIED FOR APPROVAL U/S 80G OF THE ACT TO THE LD. CIT - I, MADURAI. THE LD. CIT, VIDE ORDER UNDER APPEAL, REFUSED TO GRANT APPROVAL U/S 80G OF THE ACT BY OBSERVING AT PARAS 3 AND 4 OF HIS ORDER AS UNDER: IT IS OBSERVED FROM THE RECORDS SUBMITTED BY THE APPLICANT TRUST THAT THE APPLICANT WAS GRANTED REGISTRATION U/S 12AA OF THE ACT ON 4.9.2009. IN THIS CONTEXT, IT IS TO BE NOTED THAT THE PROVISIONS OF EXPLANATION 3 TO SECTION 80G(5) OF THE ACT CLEARLY STIPULATES AND RESTRICTS THAT CHARITABLE PURPOSE DOES NOT INCLUDE ANY PURPOSE THE WHOLE OR SUBSTAN TIALLY THE WHOLE OF WHICH IS OF A RELIGIOUS NATURE. IN THE INSTANT CASE, SINCE THE TRUST HAS BEEN ACTIVELY ENGAGED IN RELIGIOUS ACTIVITIES BY DOING ANNADHANAMS ONLY IN TEMPLES, IT IS CLEARLY FALLING UNDER THE ABOVE PROVISIONS OF THE ACT. IN VIEW OF THE ABO VE, I AM OF THE CONSIDERED OPINION THAT THIS TRUST IS NOT ELIGIBLE FOR GRANT OF APPROVAL OF CERTIFICATE OF APPROVAL U/S 80G(VI) OF THE ACT. PAGE 3 OF 8 I.T.A. NO. 2190 MDS/20 1 0 4. BEFORE US, THE LD. A.R. OF ASSESSEE SUBMITTED THAT ANNADHANAM WAS DONE FOR ALL PEOPLE AND NOT TO PEOPLE BELONGI NG TO A PARTICULAR RELIGION AND RELIED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GIAN EDUCATIONAL SOCIETY VS. CIT [2010] 6 ITR [TRIBUNAL] 350 [DEL]. 5. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE ORDERS OF THE LD. CIT AND RELIE D UPON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S INTERNATIONAL SUFI CENTRE VS. THE DIRECTOR OF INCOME TAX REPORTED IN 2011 - TIOL - 237 - HIGH COURT - KAR - II. 6. WE FIND IN THE CASE OF GIAN EDUCATIONAL SOCIETY [SUPRA], THE TRIBUNAL HAS H ELD AS UNDER: THE MAIN REASON TO REFUSE RENEWAL U/S 80G AS STATED IN THE ORDER OF TH E LD. CIT(A) IS THAT PROVIDING ADULT EDUCATION AND PRELIMINARY EDUCATION UPT O NURSERY DOES NOT FALL WITHIN THE AMBIT OF REGULAR EDUCATION AS MENTIONED IN SECTION 2(15) OF THE ACT. IN OUR CONSIDERED OPINION SUCH OBSERVATION OF THE LD. CIT(A) IS CONTRARY TO THE PROVISIONS OF THE ACT. IT IS RECORDED IN THE IMPUGNED ORDER THAT THE ASSESSEE IS PROVIDING THESE FACILITIES TO THE POOR AND NEEDY P ERSONS AGAINST NOMINAL PAYMENTS. IN THE GROUNDS OF APPEAL, IT HAS PAGE 4 OF 8 I.T.A. NO. 2190 MDS/20 1 0 BEEN CLEARLY WRITTEN THAT SUCH FACILITIES ARE BEING PROVIDED TO THE POOR AND DESERVING PERSON AND ONLY AN AMOUNT OF RS. 30 PER MONTH IS BEING CHARGED FROM NURSERY CHILDREN JUST TO COVER SOM E EXPENDITURE. THE ACTIVITIES ARE CARRIED ON WITH THE HELP OF DONATIONS RECEIVED FROM MEMBERS AND FROM PERSONS CONTRIBUTING FOR CHARITY. MOREOVER, THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE ACT PERSISTS AND HAS NOT BEEN WITHDRAWN. KEEPING I N VIEW ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT GRANT OF RENEWAL OF 80G CERTIFICATE HAS WRONGLY BEEN REFUSED TO THE ASSESSEE AND ACCORDING TO THE FACTS OF THE CASE THE ACTIVITY OF THE ASSESSEE IS VERY MUCH CHARITABLE IN NATURE AS THE SAME WAS CONSTITUTED TO PROVIDE EDUCATION TO THE NEEDY PERSON AND FEMALES TO ENABLE THEM TO BECOME SELF DEPENDENT. NO SPECIFIC INSTANCE HAS BEEN BROUGHT ON RECORD BY THE LD. CIT(A) TO SHOW THAT WHAT IS STATED BY THE ASSESSEE IS NOT CORRECT. RATHER THE ASSESSEE H AS SUBMITTED ALL THE DOCUMENTS AS CONTENDED IN THE GROUNDS OF APPEAL. THEREFORE, WE FIND NO JUSTIFICATION IN NON GRANT OF RENEWAL OF CERTIFICATE U/S 80G. THEREFORE, WE DIRECT THE LD. CIT TO GRANT RENEWAL TO THE ASSESSEE U/S 80G. 7. WE THUS FIND THAT THE AFORESAID DECISION DOES NOT SUPPORT THE CASE OF THE ASSESSEE AS IN THAT CASE THERE WAS NO ALLEGATION OF THE ASSESSEE BEING ENGAGED IN RELIGIOUS ACTIVITIES. 8. FURTHER WE FIND THAT IN THE CASE OF INTERNATIONAL SUFI CENTRE [SUPRA], THE HON'BLE KARNATAKA HI GH COURT HAS HELD AS UNDER: PAGE 5 OF 8 I.T.A. NO. 2190 MDS/20 1 0 THEREFORE, IT IS CLEAR FROM THE AFORESAID RECITALS THAT SUFISM IS A PART OF ISLAM. PROBABLY IT IS A WING PROPAGATING ISLAM RELIGION. MERELY, BECAUSE THE SAID DOCUMENT CONTAINS THE ASPECTS OF CULTURE, SOCIAL AND NONPOLITICAL ORGANIZATION, IT WILL NOT COME UNDER TH E CATEGORY OF CHARITABLE INSTITUTION. THE CONTENTS OF THE SAID DOCUMENT MAKE IT VERY CLEAR THAT THE WHOLE OBJECT IS TO SPREAD AND PREACH ISLAM, A RELIGION. THEREFORE, THE AUTHORITIES WERE JUSTIFIED IN DECLINING TO GRANT RECOGNITION. THERE IS A SPECIFIC BAR FOR GRANTING SUCH EXEMPTION TO SUCH A RELI G IOUS TRUST. WE DO NOT SEE ANY EXEMPTION TO SUCH IRREGULARITY COMMITTED BY TH E AUTHORITIES. THE ORDERS PASSED BY THE AUTHORITIES ARE LEGA L AND VALID AND DO NOT CALL FOR ANY INTERFERENCE. NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL TO ENTERTAIN THE SAME. ACCORDINGLY IT IS DISMISSED. 9. A READING OF THE ABOVE SHOWS THAT IN THAT CASE THE ASSESSEE WAS ENGAGED IN PROPAGANDING A RELIGION WHICH IS NOT THE CASE OF THE REVENUE IN THE INSTANT CASE. THEREFORE, IN OUR CONSIDERED OPINION, THE ABOVE DECISION RELIED UPON BY THE LD. D.R. ALSO DOES NOT SUPPORT THE CASE OF THE REVENUE. PAGE 6 OF 8 I.T.A. NO. 2190 MDS/20 1 0 10. WE FIND THAT IN THE INSTANT CASE, ASSESSEE HAS B EEN GRANTED REGISTRATION U/S 12A OF THE ACT AND THE LD. CIT HAS OPINED THAT GRANT OF REGISTRATION U/S 12A WAS IN ORDER. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE IS ACTIVELY ENGAGED IN RELIGIOUS ACTIVITIES BY DOING ANNADHANAM ONLY IN TEMPLES. PROVISIONS OF SECTION 80 ( 5 B ) OF THE ACT READS AS UNDER: NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (II) OF SUB - SECTION (5) AND EXPLANATION 3, AN INSTITUTION OR FUND WHICH INCURS EXPENDITURE, DURING ANY PREVIOUS YEAR, WHICH IS OF A RELIGIOUS NATURE FOR AN AMO UNT NOT EXCEEDING FIVE PER CENT OF ITS TOTAL INCOME IN THAT PREVIOUS YEAR SHALL BE DEEMED TO BE AN INSTITUTION OR FUND TO WHICH THE PROVISIONS OF THIS SECTION APPLY 11. WE FIND THAT THE LD. CIT HAS NOT BROUGHT ON RECORD THE AMOUNT OF EXPENDITURE AS PERCE NTAGE OF THE TOTAL INCOME OF THE ASSESSEE WHICH HAS BEEN APPLIED FOR ANNADHANAM ACTIVITY OF THE ASSESSEE. NEITHER OF THE PARTIES BEFORE US HAS BROUGHT ANY MATERIAL IN THIS REGARD. FURTHER, IT IS OBSERVED THAT THE CONT ENTION OF THE ASSESSEE IS THAT THE ANNADHANAM WAS MADE FOR GENERAL PUBLIC WHO VISITED TEM PLE. FORM THE ABOVE STATEMENT OF THE ASSESSEE, IT APPEARS THAT ANNADHANAM WAS NOT TO THE TEMPLE BUT TO THE NEEDY PUBLIC WHO VISITED THE TEMPLE. PAGE 7 OF 8 I.T.A. NO. 2190 MDS/20 1 0 12. ON THE OTHER HAND , THE LD. CIT HAS STATED THAT ANNADHANAM WAS DONE IN TEMPLE. BUT HE HAS ALSO NOT STATED WHETHER ANNADHANAM WAS DONE TO TEMPLE OR AT PUBLIC AT LARGE. IN OUR CONSIDERED OPINION, THE ACTIVITY OF ANNADHANAM TO PUBLIC IS NOT AN ACTIVITY OF RELIGIOUS NATURE. HOWEVER, ANNADHANAM TO RELIGIOUS PLACES LIKE TEMPLE, MOSQUE, CHURCH, ETC., CAN BE RE GA RDED AS RELIGIOUS ACTIVITY. WE THUS FIND THAT THE MATERIAL REQUIRED TO ADJUDICATE THE ISSUE COMPLETELY HAS NOT BEEN BROUGHT ON RECORD BY BOTH THE PARTIES. WE ALSO FIND THAT THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SHRI SARDAR MAL SANCHETI CHARITABLE TRUST VS. UOI & ANR. [2010] 322 ITR 167 HAS HELD AS UNDER: SINGLE INSTANCE OF DONATION OF MORE THAN 5 PER CENT OF INCOME FOR RENOVATION OF TEMPLE WOULD NOT BY ITSELF DISENTITLE THE TRUST FROM CLAIMING THE EXEMPTION PARTICULARLY WHEN THERE IS NO CLAUSE IN THE TRUST DEED INDICATING THAT THE INCOME OF THE TRUST WAS TO BE APPLIED WHOLLY OR SUBSTANTIALLY FOR A PARTICULAR RELIGION. 13. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, IT SHALL BE FAIR AND JUST TO RESTORE THE ISSUE BACK TO THE FILE OF THE LD. CIT FOR ADJUDICATING THE ISSUE AFRESH AFTER VERIFICATION IN THE LIGHT OF THE ABOVE DISCUSSION S BY PASSING A SPEAKING ORDER. THE ASSESSING OFFICER SHALL AL LOW REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH. PAGE 8 OF 8 I.T.A. NO. 2190 MDS/20 1 0 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE COURT 03 - 06 - 2011. SD/ - SD/ - (( U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 3 RD JUNE, 201 1 . VL C OPY TO: ASSESSEE / AO / CIT (A) / CIT / D.R. / GUARD FILE