Welfare Council Society , Chandigarh V. CIT(Exemption), Chandigarh

ITA 311/CHANDI/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4332 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Appeal Filed On: 10-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Condonation of delay
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 80G; 12AA

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठच瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठ , च瀃डीगढ़ च瀃डीगढ़च瀃डीगढ़ च瀃डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर आयकरआयकर आयकर अपील अपीलअपील अपील सं संसं सं./ ITA No. 311/CHD/2020 Assessment Year. : 2020-21 Welfare Council Society, Sector 44-A, Chandigarh. बनाम VS The CIT (Exemptions), Chandigarh. 瀡थायी लेखा सं./PAN /TAN No: AAAAW8744Q अपीलाथ牸/Appellant 灹瀄यथ牸/Respondent िनधा榁琇रती क琉 ओर से/Assessee by : Shri Deepak Aggarwal, Advocate राज瀡व क琉 ओर से/ Revenue by : Shri Sarabjeet Singh, CIT-DR तारीख/Date of Hearing : 13.07.2022 उदघोषणा क琉 तारीख/Date of Pronouncement : 22.09.2022 आदेश आदेशआदेश आदेश/ORDER PER DIVA SINGH The present appeal has been filed by the assessee assailing the correctness of the order dated 11.03.2020 passed by CIT (Exemptions) Chandigarh under Section 80G (5)(vi) of the Income Tax Act. The order has been assailed on the following ground : “The ground raised in the appeal pertains to rejection of application for registration u/s 80G as per order no ITBA/EXM/S/EXM2/2019-20/1026421123(l) dated 11/03/2020. That having regard to the facts and circumstances of the case , Ld. CIT EXEMPTIONS CHANDIGARH) has acted arbitrarily in passing the rejection order. ITA 311 /CHD/2020 A.Y. 2020-21 Page 2 of 10 That the appellant craves, leave to add, alter, amend or vary and/or withdraw any or all of the aforesaid grounds of Appeal or at time of hearing of the above appeal.” 2. Before addressing the issues raised by the assessee in the present appeal, it is first necessary to address the delay of 93 days pointed out by the Registry in the filing of the present appeal. 3. The Ld.AR inviting attention to the condonation of delay application on record filed by the President of the assessee Society submitted that the limitation of 60 days from the date of issue of the order expired on 10.05.2020, however before the nationwide lockdown on 24.03.2020, the President had flown to Bangalore and he could not return on account of the fact that his flight was cancelled. Reading from the application, it was his submission that the President Mr. R.D. Garg on his return on 31.07.2020 was quarantined for 14 days. Hence, there has been a delay. These facts have also been affirmed in an affidavit. Relying upon the decision of the Apex Court in MA No. 21 of 2022 ,MA No. 665 of 2021 in Suo-moto Writ petition No. 3 of 2020 wherein the Court had been pleased to extend the period of limitation till further orders. It was submitted that the delay, if any may be condoned. ITA 311 /CHD/2020 A.Y. 2020-21 Page 3 of 10 4. The ld.CIT-DR considering the submissions and the contents of the application etc. submitted that he has no objection if the delay is condoned. 5. We have heard the submissions and perused the material available on record. Considering the pleadings on record supported by the affidavit and the decision of the Apex Court, we are of the view that the delay is adequately explained. It is further seen that no advantage has been derived by the assessee by filing the present appeal late nor any vested right of the revenue can be said to be disturbed if the delay in the present facts and circumstances is condoned. Ordered accordingly. 6. The parties were consequently required to make their submissions on merits . 7. The ld. AR inviting attention to the impugned order submitted that the appeal of the assessee has been dismissed on the grounds that the activities of the assessee are religious in nature and hence 80G Registration has been denied. Reliance was placed on the decision of the Hon’ble Gujarat High Court in the case of CIT Vs Aravindbhai Maniar Charitable Foundation (2014) 91 CCH 0104 (Gujrat). Attention of the counsel was invited to the distinguishing fact as the order of the ITAT which had been upheld was in ITA 311 /CHD/2020 A.Y. 2020-21 Page 4 of 10 the context of a new Charitable Trust having no past history. In the facts of the assessee's case, on the other hand, it is an ongoing Society since 1989. As per paper book page 15 it has been registered in 1989. Thus, the evidences of past activity etc. cannot be outrightly considered to be irrelevant. In the facts of the present case admittedly the ld. CIT (Exemptions) has taken note of the fact on record wherein 12A Registration has been granted to the assessee society under the head “Religious Activities”. Thus, examining the reply of the assessee filed in the course of the hearing as extracted in para 7, it has been seen that all the vouchers of expenses only support the celebration of various religious occasions. In the said background the position of law has been summed up in para 9 to 11 in the following manner : “9. Simple reading of aforesaid Explanation make it clear that, only those institution/fund are eligible for approval u/s 80G(5) which are established for a charitable purpose and charitable purpose does not include any purpose the whole or substantially whole of which is religious in nature. In the instant case, more than 80% worth of assets (i.e. land, building, idol etc.) of applicant society are for the purpose of temple and religion. Moreover, as discussed above in para 7, applicant society's regular activities and regular expenditures are also religious in nature. Hence, from aforesaid facts and discussion it is very clear that, applicant society is a primarily religious organization. It is worth discussing here that, applicant society has also contended that, as per section 80G(5)(iii) exemption is not available to the institution/fund established for the benefit any particular community of caste and applicant society does not promote any particular religious community or caste. In this regard attention is sought to above discussion on Explanation 3 to section 30G(5) of the Income Tax Act, 1961, whereby religious activities are not considered as charitable activities. Further, as per section 2(15) if the Income Tax Act, 1961, religious activities are not included under the definition of charitable activities. Hence, from above discussion it is clear that, applicant is performing and closely associated with ITA 311 /CHD/2020 A.Y. 2020-21 Page 5 of 10 various religious activities and does not qualify for granting approval u/s 80G(5) of the Act, as it is precluded by Explanation 3 to section 80G(5) of the Income Tax Act, 1961. 10. Moreover, various judicial pronouncements also preclude such trusts/societies from approval u/s. 80G of the Act whose any one aim & object are of religious in nature. In the case of Upper Ganges Sugar Mills Ltd 227 ITR 578 (SC) the Hon'ble Supreme Court has held that even if one object is wholly or substantially religious in nature, the institution is not eligible for approval under section 80G of the IT. Act. Also in East India Industries (Madras) Pvt. Ltd. (1997) 65 ITR 611(SC) the Hon'ble Madras High Court held that the question whether donation to an institution are deductible under section 80G has to be decided with reference to all the objects of the institution. If some objects are non charitable, the institution is not eligible for approval. Clearly in the case at hand there are some objects (explained above), that get precluded from the ambit of "charitable purpose" because operation of Explanation "3" of section 80G(5). 11. Finally it is concluded that Applicant is primarily religious organization and specifically gets precluded by the Explanation 3 to section 80G(5) of the Income Tax Act, 1961. Moreover, registration u/s. 12AA of the Income-tax Act was granted to the applicant under the head Religious Activities. In light of the above, I have no option but to proceed on merits and reject the application for approval u/s 80G of the Income Tax Act, 1961.” 8. Accordingly, ld. AR was required to make his submissions addressing the specific facts and the provisions of law. In response to the same Ld. AR relied upon the decisions mentioned in the case law at serial No. 1 and 3 i.e. Sh. Kaila Devi Temple Trust Vs CIT (2017) 51 CCH 0146 (Jaipur Trib.) and Shiv Mandir Devsttan Panch Committee Sanstan Vs CIT (2012) 34 CCH 0108 (Nagpur Trib.). Elaborating the facts, it was conceded referring to page 38 of the Paper Book running into 84 pages that the assessee at the time of seeking Registration in Form No. 10A had himself mentioned that the Trust/Institution is religious. Consequently, the impugned order has been passed, it was ITA 311 /CHD/2020 A.Y. 2020-21 Page 6 of 10 submitted, that even in the said fact, the statutory limit i.e. more than 5% of the expenses could not be for religious purposes, could have been addressed. It was also submitted that the assessee infact has made a fresh application setting out that the nature of activities of the assessee Trust. These have been elaborated as charitable and the objects of the Trust therein are clearly spelt out as ‘Relief of the Poor Education, Medical Relief, Yoga, Advancement of any other objects of general public utility”. Accordingly, ultimately it was his limited prayer that the matter may be remanded back for a fresh appreciation as registration by the CIT(E) has been granted on 24.09.2021. Accordingly, it was his prayer that the matter may be remanded back for fresh appreciation. 9. The ld. CIT-DR relied upon the order, however, considering the fact that a prayer for fresh appreciation in the changed circumstances were canvassed, no objection was posed to the said request for remand back. 10. We have heard the rival submissions and perused the material available on record. It is a matter of fact that registration u/s 12AA has been granted to the assessee on 20.09.2019 taking the following aims and objects into consideration : ITA 311 /CHD/2020 A.Y. 2020-21 Page 7 of 10 1. T0 perpetuate the teachings of humanity who imports spiritual light and guidance to the mankind. 2. To perpetuate the massage of Humanity. 3. To extend help to needy person, i.e. poor, students, windows destitute and handicap persons. 4. To promote cultural activities of public interest. 5. To eradicate social evils, which prevail in the country's social structure by effectively preaching the various themes of the spiritual preachings. 6. To donate funds to charitable organizations. 7. To promote feeling of unity, level sympathy and fellow feeling among the citizen of the llaqa. 8. To arrange social and cultural functions through education. To cause in the public an instinct of brotherhood and friendly relations and seeking public cooperation and participation in campaign for fighting and doing away with the social evils. 10.1 The assessee was required to respond to the queries raised on the activities conducted by the ongoing Trust. After considering the reply of the assessee, it was noticed that as per supporting evidences, no charitable activity was noticeable and only religious activities have been conducted. The assessee Society, as per record has constructed and is maintaining the Radha Krishna Temple in Sector 44, Chandigarh for the aforesaid purposes on the land which was allotted by Chandigarh Administration in 2002. The assessee Society had constructed a temple on the allotted land. The impugned order shows that registration has been granted under the head of ‘religious activities’. It is a matter of fact that the assessee has filed another application vide Form No. 10A to seek registration as a charitable society. It is a matter of fact that registration has been granted to the ITA 311 /CHD/2020 A.Y. 2020-21 Page 8 of 10 assessee as a charitable society. The assessee seeks a remand seeking consideration of changed facts. On considering the request, we are of the view that remand in terms of the prayer is maintainable in case the assessee is able to show what were the charitable activities carried out in the year under consideration. The statutory limits on the activity as available under law shall also come into play. 10.2 We have taken into consideration the decisions relied upon by the ld. AR which we find are distinguishable on facts. In the decision rendered by the Hon'ble Gujrat High Court in CIT Vs Aravindbhai Maniar Charitable Foundation (2014) 91 CCH 0104 (Gujrat), 80G registration immediately after 12AA registration was sought and the direction given therein was in the background of the fact that it was a new Trust. In the facts as considered by the Co-ordinate Bench in the case of Shri Kaila Devi Temple Trust (supra), we have seen that no doubt there were religious ceremonies and expenditure on maintenance of the temple premises, however, at the same time Shri Kaila Devi Temple was also running schools, hospitals etc. which were found to be charitable in nature. Accordingly, in the facts of the present case, the assessee has not shown that the expenses incurred for religious purposes is less than 5% which is the statutory mandate. In the eventuality the assessee can show the facts ITA 311 /CHD/2020 A.Y. 2020-21 Page 9 of 10 to the satisfaction of the CIT(E), the assessee may have a case otherwise, to our understanding the assessee in view of the changed circumstances by virtue of the order dated 24.09.2021 in the case of a Trust which is created on 06.09.1989 may need to file a fresh application seeking 80G registration. 10.3 Similarly in the case of Shiv Mandir Devsttan Panch Committee Sanstan , the fact pleaded on record was that the assessee was carrying on yoga training, tailoring training and free distribution of opticals to the poor and needy people. The building was required for training yoga etc. Food distribution to the needy and poor being called as maha Prasad was a fact argued. Temple was open to everybody without caste and creed. In the facts of the present case, we find that no such submission in regard to the charitable nature of activities carried out is available on record. It need be emphasized that the trust has been in existence from 06.09.1989 and is not a brand new trust incapable of demonstrating the facts required to be considered. 11. Accordingly, we find that on facts, the decisions relied upon are distinguishable.In view thereof, in terms of the above directions,the appeal is remanded back in terms of the ITA 311 /CHD/2020 A.Y. 2020-21 Page 10 of 10 prayer of the parties. Said order was pronounced in the Open Court at the time of hearing itself. 12. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 22 nd September, 2022. Sd/- Sd/- (VIKRAM SINGH YADAV) (DIVA SINGH) लेखा लेखालेखा लेखा सद瀡य सद瀡यसद瀡य सद瀡य/ Accountant Member 瀈याियक 瀈याियक瀈याियक 瀈याियक सद瀡य सद瀡यसद瀡य सद瀡य/ Judicial Member “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. आयकर आयु猴 (अपील)/ The CIT(A) 5. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar