ACIT (E), CIRCLE- 2(1), NEW DELHI V. THE INDIAN SOCIETY OF CHURCH OF JESUS CHRIST OF LATER DAY SAINTS, NEW DELHI

ITA 2361/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9071 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 05-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: C S AGGARWAL
• Keywords: Charitable institution
• Section: 12A; 13; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 2360/DEL/2018 : ASSTT. YEAR : 2013-14 ITA NO. 2361/DEL/2018 : ASSTT. YEAR : 2014-15 ACIT(E), CIRCLE-2(1), NEW DELHI VS THE INDIAN SOCIETY OF CHURCH OF JESUS CHRIST OF LATTER DAY SAINTS, C-37, CONNAUGHT PLACE, NEW DELHI-110001 (APPELLANT) (RESPONDENT) PAN NO. AA ATT0672R ASSESSEE BY : SH. C. S. AGGARWAL, SR. ADV. REVENUE BY : MS. NIDHI SRIVASTAVA, SR. DR DATE OF HEAR ING: 02 . 0 8 .20 2 1 DATE OF PRONOUNCEMENT: 06 .0 8 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDERS OF LD. CIT(A)-40, NEW DELHI DATE D 02.01.2018. 2. SINCE, THE ISSUES INVOLVED IN BOTH THE APPEALS A RE IDENTICAL WHICH WERE HEARD TOGETHER. 3. IN ITA NO. 2360/DEL/2018, FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT O F EXEMPTION TO THE ASSESSEE AS THE ACTIVITIES OF THE ITA NOS. 2360 & 2361/DEL/2018 INDIAN SOCIETY OF CHURCH 2 ASSESSEE ARE PRIMARILY OFF RELIGIOUS NATURE AND IN CLEAR VIOLATION OF SECTION 13(1)(B) OF THE INCOME TAX ACT , 1961. 4. THE RELEVANT PART AS EXTRACTED FROM THE ORDER OF THE LD. CIT (A) IS AS BELOW: 5. THE ASSESSEE SOCIETY IS REGISTERED UNDER SECTION 12A AS A CHARITABLE ORGANIZATION VIDE REGISTRATION DATED 23. 10.1982. THE MAIN OBJECTS OF THE ASSESSEE SOCIETY ARE TO UNDERTA KE THE DISSEMINATION OF USEFUL RELIGIOUS KNOWLEDGE IN CONF ORMITY WITH THE PURPOSES OF THE CHURCH OF JESUS CHRIST OF LATTE R DAY SAINTS, TO ASSIST IN THE PROMULGATION OF WORSHIP IN THE IND IAN UNION, TO ESTABLISH PLACES OF WORSHIP IN THE INDIAN UNION, TO PROMOTE, SUSTAIN AND CARRY OUT PROGRAMMES AND ACTIVITIES OF THE CHURCH, WHICH ARE AMONG OTHERS EDUCATIONAL, CHARITABLE RELI GIOUS, SOCIAL AND CULTURAL ETC . 6. THE ASSESSING OFFICER EXAMINED THE AMENDED MEMOR ANDUM OF ASSOCIATION WHICH WAS ADOPTED ON 21.09.2002, IN WHICH, ARTICLE IV PERTAINING TO POWERS (H) STATES AS UNDER : ' IN ORDER TO SERVE THE CHARITABLE PURPOSES OF THE CH URCH OF JESUS CHRIST OF LATTER-DAY SAINTS ('THE CHURCH') IN PROVIDING EDUCA TIONAL OPPORTUNITIES TO ITS YOUNG MEMBERS WHO CANNOT AFFORD TO FINANCE THEI R EDUCATION, (I) TO ACT AS AN AGENT OF THE CHURCH OR AN AFFILIATED ENTITY T HEREOF TO DISBURSE, COLLECT, AND SERVICE LOANS TO STUDENTS WHO QUALIFY FOR LOW INTEREST LOANS UNDER THE PERPETUAL EDUCATION FUND AND INTERNATIONA L EDUCATION FUND PROGRAMS OF THE CHURCH, ETC.' 7. ACCORDINGLY, THE ASSESSEE ORGANIZATION DECLARED IT TO BE A CHARITABLE ORGANIZATION WHOSE OBJECTS AS PER MEMORA NDUM OF ITA NOS. 2360 & 2361/DEL/2018 INDIAN SOCIETY OF CHURCH 3 ASSOCIATION AND ACTIVITIES PERFORMED SHOWED THAT IT WAS WORKING TOWARDS THE BENEFIT OF A PARTICULAR COMMUNITY. 8. THE AO HELD THAT MOST OF ITS OBJECTS AND ACTIVIT IES ARE GEARED FOR THE BENEFIT OF CHRISTIAN RELIGION WHICH WAS HELD TO BE IN VIOLATION OF THE PROVISION OF SECTION 13(1)(B). ACCORDINGLY, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY EXEM PTION SHOULD NOT BE DENIED SINCE THE SOCIETY HAD PURELY R ELIGIOUS OBJECTS AND NO CHARITABLE ACTIVITY HAS BEEN CARRIED OUT BY THE SOCIETY EXCEPT SOME DONATIONS TO OTHER SOCIETIES AN D ONLY RELIGIOUS ACTIVITY EXTREMES ARE CLAIMED AS MAJOR EX PENSES. 9. THE ASSESSED EXPLAINED THAT, (I) THE OBJECTS NOWHERE STATE THAT THE BENEFITS AN D ACTIVITIES MUST ONLY BE DONE FOR THE CHRISTIAN COMMUNITY. (II) ON PERUSAL OF THE OBJECTS, IT IS ABUNDANTLY C LEAR THAT THE SOCIETY IS NOT A PURELY A CHARITABLE SOCIETY BUT A 'PUBLIC REL IGIOUS-CUM-CHARITABLE SOCIETY' AND THE BENEFIT OF ITS ACTIVITIES ARISES T O THE PUBLIC AT LARGE. (III) THE ACTIVITIES OF THE SOCIETY ARE ENTIRELY F REE AND OPEN FOR ALL INDIANS AND WITHOUT ANY DISTINCTION AS TO CASTE, CR EED OR RELIGION. (IV) SOME OF THE OTHER ACTIVITIES OF THE SOCIETY W HICH ARE CONDUCTED ALL OVER ITS BRANCHES ALL OVER INDIA ARE IN THE FORM OF SEMINARS, CONFERENCE, CLASSROOMS ETC, AND WHICH ARE A REGULAR FEATURE AT ALL THE BRANCHES OF THE SOCIETY AND WHICH ARE OPEN TO THE PUBLIC AT LARGE A ND WHICH INVOLVE PRESENTATIONS REGARDING SOCIAL AND MORAL VALUES. (V) IT IS A FACT THAT THE SOCIETY HAS NOT BEEN CRE ATED OR ESTABLISHED ONLY FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNI TY OR CASTE WHICH IS A PRE-REQUISITE CONDITION FOR APPLICABILITY OF SECTIO N 13(1)(B) AND SECTION 13(1)(B) IS NOT APPLICABLE AT ALL SINCE THE PRIMARY REQUIREMENT OF SECTION 13(1)(B) OF CREATION OR ESTABLISHMENT OF A TRUST OR INSTITUTION ONLY FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CA STE IS NOT FULL-FILLED. ITA NOS. 2360 & 2361/DEL/2018 INDIAN SOCIETY OF CHURCH 4 (VI) THERE WAS NO CHANGE IN THE OBJECTS AND THE ACT IVITIES OF THE ASSESSEE AS COMPARED TO THE PREVIOUS YEAR. (VII) AS REGARDS THE CONTENTION THAT ONLY RELIGIOUS ACTIVITIES EXPENSES ARE BEING CLAIMED AS MAJOR EXPENSES, THE SAME WAS DENIE D. THE EXPENSES BEING INCURRED BY THE ASSESSEE ARE TOWARDS THE FULF ILLMENT OF THE OBJECTS OF THE SOCIETY AND THE EXPENSES ARE IN THE NATURE OF E XPENSES THAT WOULD ORDINARILY BE INCURRED BY ANY ORGANIZATION WHICH IS SIMILAR TO THE ASSESSEE ORGANIZATION AND NOT TO BENEFIT A PARTICULAR RELIGI OUS COMMUNITY. 10. THE AO WHILE AGREEING WITH THE FACT THAT THE OB JECTS OF THE SOCIETY ARE CHARITABLE BUT HELD ITS ACTIVITIES ARE TOWARDS BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY. IT WAS ALSO HELD THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13( 1)(B) AND HENCE THE EXEMPTION AVAILABLE TO ASSESSEE UNDER SEC TION 11 WAS DENIED. APPLICATION OF INCOME RECEIVED BY THE ASSES SEE SOCIETY UNDER THE HEAD ADVERTISEMENT ALLOWANCES, CONFERENCE & SEMINARS, CONSTRUCTION, RENT, WELFARE EXPENSES, AND DONATIONS AND RENOVATION WAS ALSO DENIED. 11. THE BRIEF HISTORY OF THE ASSESSEE IS AS UNDER: ISSUES FOR ASSTT. YEAR 2009- 10, 2010-11, 2011-12, 2012-13 AND 2013- 14 DECISION OF THE ITAT DELHI BENCH FOR ASSTT. YEAR 2009-10 DECISION OF THE CIT (APPEALS)-40 FOR ASSESSMENT YEARS 2010-11 AND 2011- 12 DECISION OF TH E ITAT, DELHI BENCH AND HON'BLE DELHI HIGH COURT FOR ASSTT. YEAR 2012- 13 (I) VIOLATION OF PROVISION OF SECTION 13(1)(B) LEADING TO DENIAL OF EXEMPTION UNDER SECTION 11 EXEMPTION UNDER SECTION 11 IS AVAILABLE TO THE ASSESSEE AND NO VIOLATION OF PROVISION OF SECTION 13(1) (B) EXEMPTION UNDER SECTION 11 IS AVAILABLE TO THE ASSESSEE AND NO VIOLATION OF PROVISION OF SECTION 13(1) (B) EXEMPTION UNDER SECTION 11 IS AVAILABLE TO THE ASSESSEE AND NO VIOLATION OF PROVISION OF SECTION 13(1) (B) (II) DISALLOWANCE OF EXPENDITURE OF RS. 8.74 CRORES UNDER 8 HEADS OF INCOME FOR ASSESSMENT YEAR 2009-10 RS.11.99 CRORES UNDER SAME THE EXPENDITURE IS FULLY ALLOWABLE AND THE DISALLOWANCE IS NOT WARRANTED THE EXPENDITURE IS FULLY ALLOWABLE AND THE DISALLOWANCE IS NOT WARRANTED THE EXPENDITURE IS FULLY ALLOWABLE AND THE DISALLOWANCE IS NOT WARRANTED ITA NOS. 2360 & 2361/DEL/2018 INDIAN SOCIETY OF CHURCH 5 8 HEADS FOR ASSESSMENT YEAR 2010-11, RS.15.88 CRORES UNDER SAME 8 HEADS FOR ASSESSMENT YEAR 2011-12 AND RS. 7.57 CRORES UNDER THE SAME 8 HEADS FOR ASSESSMENT YEAR 2012-13 AND RS. 8.49 CRORES UNDER THE SAME 5 HEADS FOR ASSESSMENT YEAR 2013-14 12. WE FIND THAT THE ISSUES FOR THE INSTANT YEAR AR E FULLY COVERED BY THE ORDER OF THE CO-ORDINATE BENCH OF IT AT, DELHI WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 AND THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEALS)-40 FOR ASSESSMENT YEAR 2010-11 AND 2011-1 2 ALSO STANDS DECIDED IN FAVOUR OF THE ASSESSEE. FURTHER O N THE SAME ISSUES, THE ORDER OF THE CO-ORDINATE BENCH ITAT, DE LHI DECIDED IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2 012-13 AND THE APPEAL FILED BY THE REVENUE DEPARTMENT AGAINST THE ORDER OF THE ITAT HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE HIGH COURT VIDE ITS ORDER DATED 7TH SEP TEMBER, 2017. 13. THE HONBLE HIGH COURT IN ITA NO. 319/2017 HELD THAT, 16. THE CIT (A) HAD PROCEEDED ON THE BASIS THAT AL THOUGH THE ASSESSEE SOCIETY WAS FOR BOTH RELIGIOUS AND CHARITA BLE PURPOSES, SINCE IT WAS FOR THE BENEFIT OF ONLY ONE RELIGIOUS COMMUNITY THE PROVISION OF SECTION 13(1)(B) WOULD APPLY TO DENY I T EXEMPTION UNDER SECTION 11 OF THE ACT. THE ABOVE CONCLUSION W AS LEGALLY FLAWED. IT WAS CONTRARY TO THE DECISION OF THE SUPR EME COURT IN ITA NOS. 2360 & 2361/DEL/2018 INDIAN SOCIETY OF CHURCH 6 DAWOODI BOHRA JAMAT (SUPRA) WHICH HELD THAT EVEN WH ERE THE TRUST OR SOCIETY HAS BOTH RELIGIOUS AND CHARITABLE OBJECTS, IT NEEDS TO BE EXAMINED WHETHER SUCH RELIGIOUS-CHARITA BLE ACTIVITY CARRIED ON BY THE TRUST ONLY BENEFITS A CERTAIN PAR TICULAR RELIGIOUS COMMUNITY OR CLASS OR SERVES ACROSS THE C OMMUNITIES AND FOR SOCIETY AT LARGE'. IN THAT CASE IT WAS FACT UALLY FOUND THAT 'THE ACTIVITIES OF THE TRUST THOUGH BOTH CHARI TABLE AND RELIGIOUS ARE NOT EXCLUSIVELY MEANT FOR A PARTICULA R RELIGIOUS COMMUNITY AND, THEREFORE SECTION 13(1)(B) WAS NOT ATTRACTED. IN THE PRESENT CASE TOO, THE FACTUAL FINDING OF THE ITAT IS LIKEWISE. IT HAS BEEN FOUND THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY, THOUGH BOTH RELIGIOUS AND CHARITABLE, WERE NOT EXCLUSIVELY MEANT FOR ONE PARTICULAR RELIGIOUS COMM UNITY. IT WAS, THEREFORE, RIGHTLY NOT DENIED EXEMPTION UNDER SECTION 11 OF THE ACT. 14. THUS, WE FIND THAT THE SIMILAR ISSUE HAS BEEN C ONTINUOUSLY AGITATED BETWEEN THE ASSESSEE AND THE REVENUE FROM THE ASSESSMENT YEARS 2009-10 ONWARDS AND THE MATTER HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE BY THE TRIBUN AL, HONBLE JURISDICTIONAL HIGH COURT. 15. ON GOING THROUGH THE WIDER INTERPRETATION GIVEN BY THE AUTHORITIES AS TO WHAT CONSTITUTES PUBLIC RELIGIOU S AND CHARITABLE TRUST AND RELIGIOUS AND CHARITABLE PUR POSE, WHICH WAS DULY FOLLOWED BY THE LD. CIT (A), WE HEREBY DEC LINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). ITA NOS. 2360 & 2361/DEL/2018 INDIAN SOCIETY OF CHURCH 7 16. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/08/2021. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 06/08/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR